AMF instigated a takeover of the company and went about changing the production techniques. They thought that increasing the number of bikes made would boost revenues and hence make the business profitable again. The motorcycles were initially made by skilled workers using job-shop production methods. The job required keen attention to detail and handcrafting. AMF management introduced less experienced workers to increase the number of motorcycles made. This strategy caused a massive dip in quality of bikes as the company's reputation for quality and reliability took a hit. The Harley brand deteriorated drastically, and the bikes sat in showrooms till they leaked oil. Honda further came out with the 1000cc Goldwing which was widely anticipated. Harley Davidson was losing in its traditional market as customers opted for the powerful and cheaper Goldwing. The combination of superior competitor brands and deteriorating product quality pushed the company to the edge of bankruptcy.
Which categories of differentiation are employed by Harley-Davidson?
Harley Davidson sets itself apart as the provider of premium heavyweight motorcycles. They had dominated this market for many years since the company's inception, and hence they developed a level of specialization in the area. The company believes in this market segment and has concentrated most of its efforts there ignoring other profitable sectors in the process.
The company is also renowned for its customization techniques. They have hundreds of concepts and ideas for customers to choose from, unlike other companies that have standardized production. The chopper-style is one of the examples of the company's ability to customize.
The corporation has created a social club that brings the motorcycle owners together for races and celebrations. The HOG is an example of how the company has built social capital by keeping the customers engaged in events. These groups support the social community and culture of Harley Davidson. A large social following creates a spillover market for the numerous other merchandise items sold by the company.
Looking into the future, what threats does Harley face and what opportunities does it have?Opportunities and Threats
There exists several opportunities in the future for the American corporation.
Harley Davidson has traditionally been concentrated on the North American market with numerous dealerships. The company is yet to venture into emerging markets sufficiently. Places like China have failed to identify with the heavyweight motorcycle and rugged culture. The company ought to capitalize on its global brand recognition.
The entry of Honda in the American market was successful due to their focus on the lightweight market that made motorbikes accessible to a broader demographic. Harley managers have the opportunity to venture into the light market and capture more customers who identify with the brand. The company has traditionally focused on older white males, and hence they can diversify their range of products to reach other people like women and people looking for convenience.
Harley Davidson has registered significant amounts of revenue by licensing its brand to other companies. It makes the brand accessible to all people including those who dont own bikes.
Other companies are busy making motorcycles to satisfy the low-end market. Cheap and fuel-efficient bikes have proved successful in emerging markets in Asia and Europe. Honda and other Japanese makers are dominant in America and Europe while China is littered with major manufacturers like Lifan.
Harley Davidson has experienced significant challenges in navigating the Chinese market. The laws result in substantial additions to the total cost of production which is passed to the customers. The products become prohibitive due to the high prices thus they lack market penetration.
Other companies are making models that resemble Harley Davidsons chopper due to its considerable pull on bike lovers. This trend is likely to cut in further on the companys revenues.
Harley Davidson stands at a significant point where the managers must make radical strategic decisions on how to run the organization. The survival and future of the company hinges on a change of strategy to embrace the changing times and emerging markets. They must decide how to keep up with the competition by venturing into the largely ignored lightweight market.
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