Introduction Harley-Davidson is one of the most famous motorcycle manufacturers in the world that is based in the United States,

Milwaukee, Wisconsin. The company was founded in 1903, but in 1901 Bill Harley completed the first blueprint of a Harley engine. In 1903, Bill Harley and Arthur Davidson revealed their first motorized effort, calling it the first Harley motorcycle. It was a one-cylinder racing bike that was built in a wood shed that had Harley-Davidson Motor Company scrawled on it (Auto Evolution, 2013). Then, in 1905, they had made 11 motorcycles

and in 1908 there were 154. These were all built in the same wood shed that was built by Davidsons father (Power Passion, 2013) Analysis In 1917 the U.S. Government became one of their key customers. A third of their highpowered, reliable bikes were sent overseas to the U.S. Military to fulfill their patriotic call and to aid in the war effort. The following year, roughly half of the motorcycles produced were sold to the U.S. military. By the time the war ended, approximately 20,000 motorcycles were used in the war, most of them Harley-Davidsons (Power Passion, 2013). By the 1918 Harley-Davidson was the biggest motorcycle factory in the world. They were one of the two remaining American manufacturer to survive the Great Depression (Schermerhorn, 2011). Their competitor, Indian, eventually has fallen off the competition due to Harley-Davidsons innovative new models. By 1969, Harley-Davidsons reputation began to plunge when they were acquired by American and Foundry Company (AMF). Their motorcycles quality became known for leaking engines, unreliable performance and poor customer service. To top it off, another competitor has come into the industry. American Honda began to take over the market. Harley-Davidson tried

to produce light weight motorcycles but that was a failure. Furthermore, the company faced various issues (Power Passion, 2013): Management focused mostly on short-term returns Management did not listen to its employees or give them responsibility for the quality of what they made High inventories of parts gobbled up cash and reduced productivity Belief in quick fixes for problems, such as throwing in computers and state-of-the-art machinery to improve productivity High break-even point that left the company vulnerable to unpredictable market fluctuations To save the company 13 executives bought Harley Davidson back. They had tremendous amount of work to improve their reputation and develop a method for improvements to gain company wide support as well as the consumers. Solution For Harley-Davidson to re-cover, they need to focus on the companys strength in building the heavyweight and super heavyweight bikes. Furthermore, asking the government to help them by asking them to add tariff on international competitors would give them some edge (Schermerhorn, 2011). With the growing global economy, many companies look for ways to improve their market share. Many firms believe that implementation of new management, marketing, and/or manufacturing techniques would assist them to beat their competitors. Harley-Davidson is one of those excellent companies whom have challenged traditional ideas and their techniques have lead

to excellence. They need to analyze several aspects of their business by looking and conducting the Five-Force analysis into the following analysis (Mind Tools, 2013): o Rivalry in Motorcycle Industry Harleys competition is Honda. Honda has a diverse strategies and personalities to compete. However, Harley has a high loyalty to make the business survive. o Bargaining power of Suppliers and Seller-Supplier Collaboration in Motorcycle Industry - This is determined by the number of suppliers, the uniqueness of their product or service, their strength and control over you. The less supplier choice you have the more power your supplier is over you o Competitive Pressures from Substitutes for Motorcycle Industry Consumers taste change overtime. For the motorcycle industry, some may prefer the Japanese lighter motorcycle. However, if your products have sophisticated features, high quality, great customer service and new design then you will remain strong in the market. o Threat of Additional Entry into the Motorcycle Industry - Requiring high capital investment to enter the business because of the scale economies in production, research, marketing and service of this industry is high. Brand Identification of Harley Davidson has been strongly established for years. The entrants will face a big barrier to overcome customer loyalty of Harley. o Bargaining Power of Customers of Motorcycle Industry - The product is targeted to individual buyer rather than large-volume buyer therefore buyers will have only small power to force the price down.

Justification Before Harley Davidson implements new management, marketing, and/or manufacturing strategies, they should conduct a brief SWOT Analysis of the company to see where their current situation and environment is at (Project Management Institute, 2008): o Strengths - Flat organization structure to maximize employee involvements, strong management fosters diversity and they believe that contributions from all employees lead to company success, International presence o Weaknesses - Motorcycle availability, capacity, no solid position in international sales o Opportunities - Strong reputation cognitive brand in the heavyweight motorcycle industry, strong dealers network and high-end consumers o Threats - Consumers narrow demographic group and of course their competitors exist in foreign markets. Once management has determined where the company stands, below are a couple of recommendations for Harley-Davidson: o They should continue to invest and expand in the international market. o Continue to find strength in the heavyweight division and identify and exploit mini niches, such as customized, touring, sport/touring and sport/street motorcycles, in the heavyweight end of the market. o Lastly, they should continue to realize production efficiencies at its production facilities through the implementation of innovation manufacturing technique and increasing motorcycle availability to improve customer satisfaction.

Summary Harley Davidson has a strong brand and customer loyalty. They have seasoned management team supported by empowered workforce. The company has been growing in double-digit every year since IPO. Harley-Davidson is in a great market position however, they are danger of potentially losing some market position based on the aging Baby Boomers. They have experience good business growth and their financial performance has been good. Today, Harley-Davidson is considered an example of an American company that turned itself around from the brink of bankruptcy in 1985 and turned its financial gains back to profitability. The company now makes more money selling licensed merchandise featuring the Harley-Davidson logo than selling motorcycles. QUESTIONS: 1. If you were the CEO of Harley Davidson, how would you compare the advantages and disadvantages of using exports, joint venture, and foreign subsidiaries as ways of expanding international sales? Advantages Disadvantages

Exporting (Delaney, Direct Exporting: Advantages and Disadvantages to Direct Exporting, 2013) Your potential profits are greater It takes more time, energy and because you are eliminating money than you may be able to intermediaries. afford. You have a greater degree of It requires more "people power" to control over all aspects of the cultivate a customer base. transaction. Servicing the business will demand You know who your customers are. more responsibility from every level Your customers know who you are. of your organization. They feel more secure in doing You are held accountable for business directly with you. whatever happens. There is no Your business trips are much more buffer zone. efficient and effective because you You may not be able to respond to

can meet directly with the customer customer communications as responsible for selling your quickly as a local agent can. product. You have to handle all the logistics You know whom to contact if of the transaction. something isn't working. If you have a technological product, Your customers provide faster and you must be prepared to respond to more direct feedback on your technical questions, and to provide product and its performance in the on-site start-up training and ongoing marketplace. support services You get slightly better protection for your trademarks, patents and copyrights. You present yourself as fully committed and engaged in the export process. You develop a better understanding of the marketplace. As your business develops in the foreign market, you have greater flexibility to improve or redirect your marketing efforts. Joint Venture (Delaney, Global Strategic Alliances: Advantages and Disadvantages , 2013) Get instant market access, or at least Weaker management involvement or speed your entry into a new market. less equity stake. Exploit new opportunities to strengthen Fear of market insulation due to local your position in a market where you partner's presence. already have a foothold. Less efficient communication. Increase sales. Poor resource allocation. Gain new skills and technology. Difficult to keep objectives on target Develop new products at a profit. over time. Share fixed costs and resources. Loss of control over such important Enlarge your distribution channels. issues as product quality, operating Broaden your business and political costs, employees, etc. contact base. Gain greater knowledge of international customs and culture. Enhance your image in the world marketplace. Foreign Subsidiaries (Basu, 2013) The most important advantage is the Establishing a subsidiary is an operational and strategic control that a expensive undertaking. parent company can exercise over its The parent company might overpay for subsidiary. the company's assets, especially if

Local company facilitate easier market entry Acquiring a local company with builtin contacts speeds up any process It is easier to establish common operating processes, especially when a parent company sends its executives to manage its subsidiaries. Less risk of losing intellectual property to the competition because the parent can implement common data access and security protocols. Cost synergies are possible because a parent and its subsidiaries could use common financial systems, share administrative services and develop joint marketing programs. A parent company also controls the assets of its subsidiaries and can invest these assets as it sees fit.

there is a bidding war. It takes time to establish relationships with suppliers and customers. It may be difficult to find skilled employees to work and manage subsidiaries. Cultural barriers may prevent the integration of parent and subsidiary operations. The parent company also bears all of the risk of its subsidiaries. For example, a lawsuit aimed at a subsidiary could lead to financial losses for the parent company.

Selling products in diverse markets is very important to let people know what you are selling. In every part of the world they have their own kind of product, but by exporting you can try to convince people to try it. As for the Harley-Davidson company, they would larger profits from exporting and more jobs would be created for American and foreign workers. The advantages of exporting would increase the potential sales of existing products to global customers. Furthermore, with exporting the company has more control of every single aspect of the business. The disadvantages for export would be an immense amount of money spent for the initial set up for global expansion. Then Harley Davidson may have to modify their products to fit the countries taste in motorcycle. For example, Japanese prefer shinier motorcycle. Third, Harley would need to change and develop all-new promotional

material to be on the same page with the Japanese market. And last Harley would need to obtain all new export licenses. I think joint ventures in foreign subsidiaries would be the choice to enter the international market. Partnering with another company would be helpful in expanding international sales. Furthermore, joint venture would save a great amount of money and investment for Harley. With joint venture, you are able to retain your individual ownership and able to borrow another company's resources or expertise (Basu, 2013). Of course there is also some down side in a joint venture. Problems would arise in regards to the quality of control issues. For example if the joint venture partners customer service is not up to par Harley Davidson's standards, then conflicts may occur. 2. In America and Japan Harleys positioning has shifted from providing a product (motorcycles) toward providing a service (way of life). Will this positioning succeed in Asia, Africa and South America? Common people in Asia, Africa and South America are not interested in this type of vehicle. Many people in this area have difficult lives and their main responsibility is to feed their family and survive the life that they have. I believe Harley will not succeed in these continents. However, there are still many people, especially in Asia, who like everything which comes from Europe and USA. But this is a very diminutive segment. 3. Assume the CEO of Harley has decided to set-up new manufacturing facilities in both China and India. Which of the general environment conditions should be analyzed before Harley makes strategic investments in each country? And to get started there, should Harley set up wholly owned subsidiaries to do the

manufacturing or would it be better off entering into joint venture with local partners. Before entering in any market and investing a large amount of capital, I would analyze which market-entry strategies would be more cost effective. My first step is to analyze global sourcing in China and India. For instance, an analysis of international wage gap by sourcing products in China and India should be researched. Harley can take advantage of the lower cost in these two countries. A second strategy is to analyze exporting goods to China and India creating a market to increase sales. A third strategy is to look into licensing agreements with foreign markets and analyze franchising start-up cost in foreign markets before deciding to make an investment in Joint Venture and Strategic Alliances (Schermerhorn, 2011). 4. Is it accurate to say that Harley is still on top of its game? How is the company doing today in both domestic and global markets? Who are its top competitors in other parts of the world, and how is Harley faring against them? As of 2011, Harley Davidson has proved that they started the game and are still one of the leading brands in motorcycles in the world. They are promoting newer and more affordable sleek designs while giving out free cigars and beer (Valentine, 2011). Harley Davidson faces off competition from four globally known and well established companies. These are Honda, Suzuki, Yamaha and BMW Motorcycle. Other competitors are Bayerische Motoren Werke AG, Ducati Motor Holding S.p.A, and Polaris Industries Inc (Morning Star, 2013). Harley is holding on to 56% of the $4 billion market for heavyweight motorcycles, those with displacements higher than 650 cubic centimeters. However, a

new threat to Harley is the Polaris Industries Polaris is a maker of jet skis and snowmobiles and already owns one motorcycle maker, Victory, which explicitly targets Harley in its advertising (Taylor, 2012). According to the Morning Star ratings, Harley Davidson is still one of the top motorcycle industries. They still enjoy a higher inventory turnover over its competitors. According to Marketline (2009) report on the company, Harley-Davidsons turnover ratio in FY was 9.7 as compared to 6 of Bayerische Motoren Werke, 6.2 of Suzuki Motors and 7.2 of Honda motors.

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Schermerhorn, J. (2011). Management 11th Edition. John & Wiley Sons. Taylor, A. (2012, Oct). The Hurdles at Harley-Davidson. Retrieved from Money CNN: http://money.cnn.com/2012/10/03/autos/harley-davidson-polaris.fortune/index.html Valentine, J. (2011, July). Harley Davidson Boot Camp proves theyre still top in their game. Retrieved from Shaw Promotion: http://www.shawpromotion.com/shawtime/harley%C2%AE-davidson-boot-camp-proves-their-still-top-in-their-game/