Harvard Case - Harley-Davidson: Internationalization in the Trump Era
"Harley-Davidson: Internationalization in the Trump Era" Harvard business case study is written by Seok-Woo Kwon, Bertrand Guillotin. It deals with the challenges in the field of General Management. The case study is 11 page(s) long and it was first published on : Jun 1, 2018
At Fern Fort University, we recommend that Harley-Davidson adopt a multi-pronged approach to internationalization, focusing on strategic partnerships, targeted market expansion, and a comprehensive digital transformation strategy. This approach will leverage Harley-Davidson's iconic brand while adapting to the evolving global landscape and addressing the challenges of the Trump era.
2. Background
This case study examines Harley-Davidson's strategic response to the changing global landscape and the political pressures of the Trump administration. The company, facing declining domestic sales and increased tariffs on its motorcycles exported to the European Union, announced plans to shift production overseas to avoid these tariffs. This decision sparked controversy, raising concerns about the impact on American jobs and the brand's image.
The main protagonists in the case are:
- Harley-Davidson: A legendary American motorcycle manufacturer seeking to navigate a complex global market.
- Donald Trump: The US President who implemented tariffs on European goods, creating a challenging environment for Harley-Davidson.
- European Union: A major market for Harley-Davidson, now subject to tariffs imposed by the US.
- Harley-Davidson Employees: Concerned about job security and the potential impact of production shifts overseas.
- Consumers: Loyal Harley-Davidson enthusiasts and potential new customers in emerging markets.
3. Analysis of the Case Study
To analyze Harley-Davidson's situation, we can utilize a framework combining Porter's Five Forces and a SWOT Analysis:
Porter's Five Forces:
- Threat of New Entrants: The motorcycle industry has high barriers to entry, with established brands and significant capital investment required. However, emerging markets could see new players, particularly in the electric motorcycle segment.
- Bargaining Power of Buyers: Harley-Davidson faces moderate buyer power, as consumers have limited choices in the premium motorcycle segment. However, online platforms and increased competition can influence buyer bargaining power.
- Bargaining Power of Suppliers: Harley-Davidson has moderate supplier power, with a diversified supply chain and limited dependence on specific suppliers. However, potential disruptions from global trade tensions could impact supplier relationships.
- Threat of Substitute Products: Harley-Davidson faces increasing competition from electric motorcycles, adventure bikes, and other alternative forms of transportation.
- Competitive Rivalry: The motorcycle market is characterized by intense rivalry, with established players like Honda, Yamaha, and BMW competing for market share.
SWOT Analysis:
Strengths:
- Strong Brand Recognition: Harley-Davidson is a globally recognized brand with a loyal customer base and a strong association with American culture.
- Established Distribution Network: The company has a well-established global distribution network, allowing for efficient product delivery.
- Experienced Workforce: Harley-Davidson has a skilled and experienced workforce with expertise in motorcycle manufacturing and design.
- Innovation Capabilities: The company has a history of innovation, evidenced by the development of new models and technologies.
Weaknesses:
- High Production Costs: Harley-Davidson's manufacturing processes are labor-intensive, resulting in relatively high production costs.
- Dependence on US Manufacturing: The company's reliance on US manufacturing makes it vulnerable to trade disputes and economic fluctuations.
- Aging Customer Base: Harley-Davidson's core customer base is aging, and the company faces challenges attracting younger demographics.
- Limited Digital Presence: Harley-Davidson has been slow to embrace digital technologies, potentially hindering its ability to reach new customers and engage with existing ones.
Opportunities:
- Emerging Markets: Rapidly growing economies in Asia, Africa, and Latin America offer significant potential for motorcycle sales.
- Electric Motorcycle Segment: The rise of electric motorcycles presents an opportunity for Harley-Davidson to enter a new market segment and appeal to environmentally conscious consumers.
- Digital Transformation: Leveraging digital marketing, e-commerce, and data analytics can enhance customer engagement and drive sales growth.
- Strategic Partnerships: Collaborating with other companies in the automotive, technology, and manufacturing sectors can create new opportunities for innovation and market expansion.
Threats:
- Global Trade Tensions: Trade wars and protectionist policies pose a significant threat to Harley-Davidson's international operations.
- Economic Downturn: Recessions and economic instability can negatively impact consumer spending on discretionary items like motorcycles.
- Competition from Electric Motorcycles: The rapid development of electric motorcycles could erode Harley-Davidson's market share, particularly among younger consumers.
- Changing Consumer Preferences: Shifting consumer preferences towards urban mobility and alternative transportation options could impact demand for traditional motorcycles.
4. Recommendations
Harley-Davidson should implement the following recommendations to navigate the challenges of the Trump era and achieve sustainable growth:
1. Strategic Partnerships:
- Joint Ventures: Form strategic alliances with local manufacturers in key emerging markets, leveraging their expertise and knowledge to establish a strong local presence.
- Technology Partnerships: Partner with technology companies to develop electric motorcycles and integrate advanced technologies like connected vehicle systems and AI-powered features.
- Distribution Partnerships: Collaborate with existing motorcycle dealerships and retailers in emerging markets to expand distribution channels and reach new customers.
2. Targeted Market Expansion:
- Focus on Emerging Markets: Prioritize expansion into high-growth markets like India, China, and Southeast Asia, where there is a strong demand for motorcycles and a growing middle class.
- Adapt Products and Marketing: Tailor motorcycle models and marketing campaigns to meet the specific needs and preferences of consumers in each target market.
- Invest in Local Talent: Hire and develop local talent to ensure cultural sensitivity and effective market understanding.
3. Digital Transformation:
- Enhance Online Presence: Develop a robust online presence, including an e-commerce platform, interactive website, and social media channels, to engage with customers and drive sales.
- Data-Driven Decision Making: Utilize data analytics to understand customer preferences, optimize marketing campaigns, and improve operational efficiency.
- Embrace Digital Marketing: Implement targeted digital marketing campaigns to reach new customer segments and build brand awareness in emerging markets.
4. Operational Efficiency:
- Streamline Manufacturing Processes: Optimize production processes to reduce costs and improve efficiency, potentially through automation and lean manufacturing techniques.
- Supply Chain Optimization: Develop a resilient and flexible supply chain to mitigate risks associated with trade disputes and global economic volatility.
- Focus on Quality: Maintain high quality standards to ensure customer satisfaction and protect the brand's reputation.
5. Brand Management:
- Reinforce Brand Heritage: Continue to celebrate Harley-Davidson's iconic status and heritage while adapting to evolving consumer preferences.
- Embrace Diversity and Inclusion: Promote diversity and inclusion within the company and its marketing efforts to appeal to a wider range of consumers.
- Engage with Customers: Create opportunities for customer engagement through events, social media, and online communities to build brand loyalty.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with Harley-Davidson's core competencies in motorcycle manufacturing and design, while also supporting its mission to create a unique and enduring experience for its customers.
- External Customers and Internal Clients: The recommendations address the needs of both external customers and internal clients, including employees, dealers, and investors.
- Competitors: The recommendations consider the competitive landscape and aim to position Harley-Davidson for success in the face of increasing competition from both traditional and electric motorcycle manufacturers.
- Attractiveness: The recommendations are expected to enhance Harley-Davidson's financial performance through increased sales, improved efficiency, and reduced costs.
6. Conclusion
Harley-Davidson faces significant challenges in the Trump era, but by embracing strategic partnerships, targeted market expansion, and a comprehensive digital transformation strategy, the company can navigate these challenges and achieve sustainable growth. By leveraging its iconic brand, adapting to evolving consumer preferences, and embracing innovative technologies, Harley-Davidson can solidify its position as a global leader in the motorcycle industry.
7. Discussion
Alternative strategies include:
- Focusing solely on the US market: This would reduce exposure to global trade tensions but limit growth potential.
- Shifting production entirely overseas: This could lower production costs but damage the brand's image and potentially alienate loyal customers.
- Acquiring or merging with another motorcycle manufacturer: This could provide access to new technologies and markets but carries significant financial and operational risks.
Key assumptions:
- Global economic growth will continue: A slowdown in global economic growth could negatively impact demand for motorcycles.
- Trade tensions will eventually subside: Continued trade disputes could disrupt supply chains and increase costs.
- Harley-Davidson can successfully adapt its products and marketing to emerging markets: Failure to adapt could lead to low sales and brand damage.
8. Next Steps
Harley-Davidson should implement these recommendations in a phased approach:
- Year 1: Focus on strategic partnerships, market research, and initial investments in emerging markets.
- Year 2: Launch new product lines tailored to specific market segments, expand digital presence, and optimize manufacturing processes.
- Year 3: Continue to expand into new markets, strengthen partnerships, and invest in innovation and technology.
By taking these steps, Harley-Davidson can position itself for long-term success in a rapidly changing global landscape.
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Case Description
In 2016 the chief executive officer (CEO) of Harley-Davidson Inc., the iconic U.S. manufacturer of motorcycles, was facing a constant decline in sales and stock price due to the company's dependence on a mature U.S. market and the natural attrition of its most loyal riders, who were ageing. In May 2017, the CEO needed to determine how to return his global company to growth amid a protectionist agenda and direct business interference from the White House. Should the company expand internationally or not?
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