External Analysis and SWOT (Strategic Management)
SWOT analysis is a very important tool for evaluating strength, threats, opportunities and weakness in strategic planning for any business project. It shows both the internal and external factors that would be very vital in the fulfillment of a particular business project. SWOT is very important in analyzing current and some of the expected future situations which integral to the business project. This makes SWOT a very important tool in strategic management. The Company of focus in this paper will be Harley-Davidson (HD). SWOT will be done in the light of external analysis where general environment and industrial environment will be looked at.
Harley-Davidson (HD) is a major player in the automotive industry and is involved in the production of heavyweight motorcycles, accessories and general merchandise, apparel and motorcycle parts. It is one of the leading automotive companies. It is also engaged in the provision of financial services which include retail and wholesale financing and insurance programs. HD is a public traded company under the name of Harley Owners Group (HOG) in the New York Stock Exchange (GlobalData 2012). Its base of operation is majorly in the United States with his headquarters in Wiscons (Milwaukee). It has employed a population of about 7,900. A look at the Company’s revenue for the year 2009 and 2008 showed that the Company recorded revenue of $4,781.9 million during the financial year ended December 2009 (FY2009). This was a decrease of 19.7% in comparison to FY2008. This decrease was attributed to difficult economic environment experienced in FY2009. It is also worth noting that there was a decrease of 81.5% in the Company’s operating profit in comparison to FY2008. This was $196.1 million in FY2009. The fourth Quarter of 2012 revenue from accessories and motorcycle parts was$161.6 million. This quarter also had a gross margin of 31.8% in comparison to 31.2% in the fourth quarter of 2011. For the year 2012 the company shipped a total of 247,625 of motorcycles to dealers and distributors. This was 6.2% increase in comparison to 2011(UMC Staff, 2013).
SWOT of Harley-Davidson (HD) revealed the following with regards to strengths, weakness, opportunities and threats:
Key strengths of HD include; the market for heavyweight motorcycles which has an approximate of 70% market share. HD is also the only American brand engaged in the manufacture of heavyweight motorcycles. They have heavy operation in the manufacture of motorcycles and the financial services such as retail and wholesale financing and insurance programs are also strength for the Company. The Company also generates a significant amount of revenue from custom motorcycle. The formation of Buell Riders Adventure Group (BRAG) with the aim of supporting the brand and engage customers has a great influence on their standard of fidelity. The strong brand associated with the image of strength and freedom is great influence in the mind of consumers. The operations of HD shows a very strong association good relationship with the supplier and this has resulted to the achievement of work integrity and performance without incurring expenses with regards to quality. The Company has a very strong durable relationship with the employees which are on long term basis. The involvement of employees in the community is also a strength factor. This gives the Company a very strong image. Admission of Breast Cancer Network of Strength (SNBC) is also strength of the Company. The Company’s compatibility with Muscular Dystrophy Association (MDA) in terms of provision of financial recourses for many years has played a very great role in the Company. The Company has a very strong customer loyalty and some even tattoo their brands. HD also has a very strong distribution and marketing avenues in the United States.
Besides a number of strengths have seen above, HD also has some weakness. They are as follows: The prices of their brands are very high thus only few individuals are able to purchase their products. Because they are not keen in investing in other parts, there is loss of market share more so the European market. They do not also have good marketing strategies and techniques and this is not attracting new customers with regards to the international market. The bad boy image of the company is also a weakness since most people do not want to be classified as hooligans (Taylor, 2012).
The weaknesses above notwithstanding, HD also has a number of opportunities. These include; relatively high demand for Harley Davidson in international markets and more specifically in Europe, the Company must engage in a serious process of marketing their products in international markets. They need to diversify their market base if they to compete favorably with other players such BMW (Marketingteacher.com, 2011). There is the need for the Company to consider tapping into potential markets for motorcycle such as India. There is the need for the Company to attract more women, minorities, and young riders than just focusing on the bad boy image. The Company also needs to shift their attention from the U.S. market and move to international market which is larger in comparison to the U.S. market. By doing this, they will enhance their revenue base.
There are a number of threats that Company is facing, these include: New entrants of the Companies in car manufacturing market because of low cost of production associated with the manufacture motorcycle. This would increase the competition. They also have constraints with regards to capacity and shortage in supply which is a projection of loss. This has made the Company to be toppled by close competitors such as BMW. The purchase average age of 42 and above is alarming and is such a great threat since the population is made up of mainly young people (Harley Davidson, 2012). Increase in the standards in the European market and the environmental regulation also poses a great threat to the Company. Because the Company is not very keen on marketing compared to their competitor, increased marketing of the product line by the competitors would be a great risk factor for the Company due to lack of diversification of the product line.
The alliance between Lehman Trikes and Harley Davidson provided a marketing opportunity for HD due to the fact that this was just a new product line. It would have taken them a long time to penetrate the market. Thus using the an established manufacturer of three-wheeled motorcycle not only helped in marketing, but also increased their capacity for the production of the product line (three-wheeled motorbike). On other hand, it was an opportunity for Lehman Trikes since it enhanced their production making it a very vital engine of growth of Lehman Trikes. The benefit was twofold but the pull by HD had a great impact on Lehman Trikes since it was a loss of business on their side. HD had an alternative (Looney and Ryerson, 2011).
Despite the fact that the SWOT analysis reveals a number of strengths that the Company has, it would be important for the Company to pay attention to their weaknesses and threats and also to maximize on the opportunities that they have. This would help the Company to compete favorable with other players in the market such BMW.
GlobalData. (2012). Harley-Davidson, Inc. – Financial and Strategic Analysis Review. Retrieved from:
Harley Davidson. (2012). Harley Davidson shows continued improvement. Retrieved from: http://www.harley-davidson.com/en_US/Content/Pages/HD_News/Company/news.html?article=en_US/News/1483_press_release.hdnews
Looney, D. C., & Ryerson, A. (2011). Lehman Trikes: A story within a story. Journal Of The International Academy For Case Studies, 17(7), 45-58.
Taylor, A., (2012). The Hurdles at Harley-Davidson. CNN Money – Fortune. Retrieved from http://money.cnn.com/2012/10/03/autos/harley-davidson-polaris.fortune/index.html
UMC Staff. (2013). Harley-Davidson | 2012 Worldwide Sales Up 6.2%. Ultimate Motorcycling. Retrieved from http://ultimatemotorcycling.com/harley-davidson-2012-worldwide-sales-up-6-2/.
Marketingteacher.com. (2011). SWOT Analysis. Retrieved from http://marketingteacher.com/lesson-store/lesson-swot.html
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