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The Attached Swot Analysis Affects Harley Davidson Inc Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 4819 words Published: 1st Jan 2015

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The content of the SWOT analysis provides a simple but powerful tool for sizing up a company’s resource capabilities and deficiencies, its market opportunities, and the external threats to its well being. The most important parts of the SWOT analysis are drawing conclusions and translating these conclusions to strategic actions to better match the company’s strategy to its resource strengths and market opportunities; to correct the important weaknesses; and to defend against external threats.

I reviewed Harley-Davidson’s most recent strategy statements in the company’s 2008 Annual Report and 10K filing. I compared it to some of its most recent quarterly financial results for 2009. I also researched recent articles on the internet and news posted on the company’s website.

A company’s strategy tells how management intends to grow the business. It is predicated on actions, business approaches and competitive moves setting the company apart from its rivals. It’s unlikely that a company strategy will prove suitable over time. As with most companies, Harley must be willing, ready and able to modify its strategy in response to changing market conditions. A company’s present strategy is temporary and on trial. It is a work in progress. A major strategy shift is called for when a company faces a financial crisis.

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The SWOT analysis states that Harley strengths include a strong global market share, unique brand image, a wide distribution network, and enjoys the best inventory turnover ratios in the industry. The SWOT analysis also reveals that there has been some recent weakening of financial performance and efficiency from 2006 to 2008. Revenues and income have deteriorated slightly from each of its key businesses: motorcycles, related products and financial services. There is also the issue of unfunded pension obligations. The SWOT analysis states that Harley has a huge opportunity in 2008-2010 to increase revenue and profits by introducing new and improved models globally. The analysis states that this is an ideal time to introduce new products since the global motorcycle market is expecting to reach a volume in of 52.7 million units by 2012, representing an increase of 60.7% from 2007. The threats within the analysis are primarily regulatory compliance for emissions and noise levels by 2010 along with increased labor costs and potential union contract disputes in the next few years. Each of these issues could negatively impact operations and net profits. The analysis anticipates declines in global GDP growth and consumer confidence. An economic downturn could negatively impact consumer spending along with a tightening of credit for Harley products by consumers, suppliers, and dealers.

The evolving and adapting nature of a company’s strategy is a blend of “proactive” and “as needed” actions. The content of the SWOT analysis provides some insight to what “proactive” actions the company might take to improve their financial performance and “as needed” actions to unanticipated developments from fresh market conditions. A portion of a company’s strategy is developed on the fly. Therefore, a company’s strategy tends to be a blend of proactive and reactive elements. At times, some strategies will need to be abandoned.

Few if any companies could withstand the economic downturn that started at the end of 2008. From my research, it appears that Harley-Davidson made swift changes to its strategies. By early 2009, Harley Davidson announced a three-part strategy for managing through the global economic downturn and strengthens its operations and financial results going forward. That strategy consists of: 1) continue to invest in the Harley-Davidson brand; 2) create the appropriate cost structure; and 3) obtain funding to support the lending activities of Harley-Davidson Financial Services. From the quarterly financial results, Harley provided additional details how they plan to take action on each of the three initiatives including steps to reduce volume, consolidate production operations, eliminate some product lines, sell off some product lines, eliminate 1,100 jobs, and stabilize up their financing arm. By the end of 2009, net income declined 89.7% from 2008. In the fourth quarter of 2009, Harley moved forward with the execution of its business strategy: “To deliver results by focusing on Harley-Davidson products and experiences, global expansion, demographic outreach and commitment to core customers. Additionally, the company expanded its initiative to enhance profitability through continuous improvement in manufacturing, product development and business operations. We expect to achieve sustainable gains in efficiency of our operations through continuous improvement.”

Interesting enough, some of the opportunities (like introducing new product lines) in the SWOT analysis were abandoned, and some of the threats such as labor issues fixed themselves. Harley took advantage of the declining labor market and entered into a new seven-year labor agreement with their employees. Their employees understood the company could not continue the financial course they were on.

Industry analysis requires a good understanding of forces driving the industry. Why is this understanding important? Explain.

The most powerful agents of change are driving forces. Because there are many different potential driving forces, it is too simplistic to view industry change only in terms of moving through the different stages in an industry’s life cycle (takeoff, rapid growth, early maturity, slowing growth, market saturation, and stagnation or decline) and why a full understanding of all types of change drivers is a fundamental part of industry analysis.

The first part of industry analysis requires a good understanding of the driving forces. The most common “driving forces” are: 1) Emerging new Internet capabilities, 2) Increasing globalization, 3) Changes in an industry’s long-term growth rate, 4) Changes in who buys the product and how they use it, 5) Product innovation, 6) Technological change and manufacturing process innovation, 7) Marketing innovation, 8) Entry or exit of major firms, 9) Diffusion of technical know-how across more companies and countries, 10) Changes in cost and efficiency, 11) Growing buyer preferences for differentiated products instead of a commodity product, 12) Reductions in uncertainty and business risk, 13) Changes in societal concerns, attitudes, and lifestyles.

It’s important to determine which of the driving forces are minor and which are major. The industry conditions change because important forces are driving industry participants (competitors, customers, or suppliers) to alter their actions; the driving forces in an industry are the major underlying causes of changing industry and competitive conditions. They have the biggest influence on how the industry landscape will be altered. Some driving forces originate in the outer ring of macro environment and some from the inner ring.

Simply identifying the driving forces is not enough. The second part and more important issue in driving force analysis are to determine whether the prevailing forces are acting to make the industry environment more of less attractive? We need to understand the answers to three main questions: 1) Are the driving forces causing demand for the industry’s product to increase or decrease? 2) Are the driving forces acting to make competition more or less intense? 3) Will the impact of the driving forces lead to higher or lower industry profitability?

The third step of driving-force analysis which is where the real payoff for strategy making comes. Managers need to draw some conclusions about what strategy adjustments will be needed in order to deal with the impacts of the driving forces. It pushes managers to think about what’s around the corner and what the company needs to be doing to get ready.

Picture your professional self as a company. What strategy will you be following after graduation? And how will it provide sustainable competitive advantage? Explain.

A company’s strategy is their action plan for running the business and conducting operations. The company’s strategy is all about “how”. To picture myself as a company, I would similarly develop my strategy by first asking myself three questions: 1) What is my present situation? 2) Where do I need to go from here? 3) How do I get there?

I would like to employ a strategy of “developing expertise and resource strengths that give me competitive capabilities that my rivals can’t imitate or trump with capabilities of their own”. My strategy has a better chance of succeeding if I back it with actions, approaches, and competitive moves aimed at making me appealing to as many potential employers thus setting me apart from other candidates and allowing me to carve out my own market position.

Following graduation my goal is to incorporate my music skill sets and combine them with my general business knowledge to find the right opportunity in the music business. My sustainable competitive advantage which I have developed (over 15 years) is my music expertise. This resource strength provides a competitive advantage over other potential candidates. This competitive advantage could be attractive to a number of potential employers. My competitive advantage includes: 1) My ability to play and compose music and, 2) My general business knowledge which in turn could help to take the business to another level.

What is it in what a manager does that indicates that he/she is a strategic thinker? Provide examples.

A strategic thinking manager evaluates their company’s industry and competitive environment using some well-defined concepts and analytical tools to get clear answers to these seven questions: 1) What are the industry’s dominant economic features? 2) What kinds of competitive forces are industry members facing and how strong is each force? 3) What forces are driving industry changes and what impacts will they have on competitive intensity and industry profitability? 4) What market positions do industry rivals occupy 5) What strategic moves are rivals likely to make next? 6) What are the key factors for future competitive success? 7) Does the outlook for the industry present the company with sufficiently attractive prospects for prosperity?

There are many examples of strategic thinkers. The first one I think of is Steve Jobs, CEO of Apple. His industry is characterized by creating and improving one product after another. He knows he must invest heavily in R&D. He has a strategy of continuous product development. It is a condition of survival in his fast pace industry of phones, music, games and computers.

Other examples of strategic thinking managers are the CEO’s of McDonalds, Coca-Cola, and Nike. They constantly evaluate competitive pressures using the five forces model of competition (rival sellers, new entrants, substitute products, supplier bargaining power, and buyer bargaining power). The fast food and retail industry is a competitive battlefield. They have to be on top of their game.

Some examples of strategic thinkers that deal with driving forces might be the CEO’s of Dell, HP, Sony, Office Depot, Schwab, Expedia, and EBay. Changes brought about from the most common driving forces can affect company performance. Look at how Dell changed the way customers order and customize their personal computers. Office Depot changed the ordering process for businesses to order supplies on-line. Expedia provided an on-line experience for customers wanting to book flights, hotels and rental cars and cut out the travel agents. EBay provided an auction opportunity for the average consumer to buy and sell goods on-line.

Some examples in clothing retail might be the CEO’s of Wal-Mart, Target, Kohl’s, TJ Maxx, Macy’s, Dillard’s, Nordstrom, Ralph Lauren, Neiman Marcus, Saks, and Gucci. All of them are industry members but each of them targets various customer groups. By using group maps they can see which rivals are similarly positioned and those that are distant. Wal-Mart provides low costs to their customers by squeezing their suppliers where Saks goes after an affluent customer by providing unique and high quality garments.

Each of the managers with the above companies evaluates competitive intelligence to figure what their next moves are. They gain this information from multiple sources such as annual reports, 10K fillings, newsletters, press releases, and trade shows. From this information, strategic thinkers predict their competitor’s next moves. Strategic thinking managers understand the key success factor’s is a top priority. An example (until just recently) might be the CEO of Toyota. Toyota has perfected the production process, has achieved great scales of economies, possesses quality control know how, has a strong network of distributors, a breadth of product lines across consumer needs, has a well respected brand name, is known for their design expertise, and provides overall lower costs and good value. It will be interesting to see how they overcome their current issues.

Examples of strategic thinking managers evaluate what the outlook is for the industry. If an industry’s overall profit prospects are above average, the industry environment is attractive; if industry profit prospects are below average, conditions are unattractive. An example might be the CEO’s of E-Trade and Schwab. They took an industry where brokers charged high fees and provided little service and allowed investors to purchase stocks, mutual funds and bonds by themselves, cheaply. Another example is the record or CD industry. The way people obtain their music has drastically changed. The ability to obtain music on-line at a fraction of the cost has made that industry unattractive.

When is a niche strategy attractive? What are the risks associated with it? Identify a company currently following a niche strategy.

A focused strategy aimed at securing a competitive edge based on either low cost or differentiation becomes attractive as more of the following conditions are met:

The target market niche is large enough to be profitable and offers good growth potential.

Industry leaders do not see that having a presence in the niche is crucial to their own success.

It is costly or difficult for multi-segment competitors to put capabilities in place to meet the specialized needs of buyers comprising the target market niche and at the same time satisfying the expectations of their mainstream customers.

The industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its resource strengths and capabilities.

Few, if any rivals are attempting to specialize in the same target segment – a condition that reduces the risk of segment overcrowding.

The focuser has a reservoir of customer goodwill and loyalty that it can draw upon to help stave off ambitious challengers looking to horn in on its business.

The advantage of being able to focus your entire competitive effort on a single market niche is considerable, especially for smaller and medium size companies that may lack breadth and depth of resources to tackle going after a broad base of customers with a “something for everyone” line-up of products.

There are several risks associated with niche strategy as well.

Competitors could find an effective way to match the focused firm’s abilities in serving the target niche – perhaps by coming up with products or brands specifically designed to appeal to buyers of the target niche or by developing expertise and capabilities that offset the focuser’s strengths.

There is the potential for the preferences and needs of niche members to shift over time toward the product attributes desired by the majority of buyers. An erosion of differences across buyer segments lowers entry barriers into a focuser’s market niche and provides an open invitation for rivals in adjacent segments to begin competing for customers.

The segment may become so attractive it is soon inundated with competitors, intensifying rivalry and splintering segment profits.

Some example of companies that are currently following a niche strategy is FOX News, Trader Joe’s, Progressive Insurance (my insurance company), and Ben and Jerry’s ice cream.

Identify and discuss the Key Success Factors in the car manufacturing industry.

The key success factors in the automotive manufacturing industry are competitive factors that most affect the industry member’s ability to prosper in the marketplace. It includes the particular strategy elements, product attributes, resources, competencies, competitive capabilities, and market achievements that spell the difference between being a strong competitor and a weak competitor and sometimes between profit and loss.

Identifying Key Success Factors in light of prevailing and anticipated industry and competitive conditions is a top priority analytical and strategy-making consideration. Company strategists need to understand the industry landscape well enough to separate the most important factors from the least important.

The answers to these three questions help identify key success factors:

On what basis do buyers of cars choose between the competing brands of sellers? In other words, who are our customers and what do our customers want?

What resources and competitive capabilities do we need to have to be competitively successful? In other words, what drives competition, how intense is competition, and how can we obtain a superior competitive position?

What shortcomings do we have that can put our company at a significant competitive disadvantage?

The common types of industry Key Success Factors in the automotive business are: Technology, Manufacturing, Distribution, Marketing, and Skills.

Technology: Who in the automotive industry has the expertise and the best technology to improve the process of producing cars efficiently with lower production costs? With gas costs, who is improving mileage efficiencies? Who is manufacturing hybrid cars? Who is developing battery technology for the future?

Manufacturing: Who can achieve economies of scale and capture and use their experience curve effects? Who has the best quality control methods? Who has access to materials and high skilled and productive labor? Who can produce cars with the best designs and engineering at lower costs? Who has the ability to customize cars for customers? Who has access to the best priced parts suppliers?

Distribution: Who has a strong network of dealerships to sell their cars? Who has too few dealerships? Are their locations convenient to customers? Are the dealerships modern and provide high tech operations? Do they offer buyers the ability to buy cars directly via the Internet?

Marketing: Do they offer different models and designs of cars with different price points? Do they have a website that is customer friendly, functional and professional? Who has a strong and respected brand name? How is customer service? What type of warranties is offered? How well do they market and advertise their product and brand? What type of financing do they offer customers?

Skills and Capabilities: How skilled are their salespeople? How skillful are the professionals working behind the scenes in design, supply chain management, e-commerce, distribution, accounting, finance?

Other: How well capitalized are the firms? How well can they provide fast, convenient after sale service on the cars? Do they have any technology or design features that are patent protected?

In today’s environment the automobile industry is in a state of flux. General Motors is now owned by the government. The well respected and industry leader Toyota is dealing with design and technology issues? There are new entrants like Kia that is making huge gains in quality and sales.

How is strategic management an ongoing process? Explain.

I spent some time on this issue with question #1 as I studied Harley Davidson. As with most if not all companies, it is highly unlikely that a company strategy will prove suitable over time. Companies must be willing, ready and able to modify its strategy in response to changing market conditions, financial crises, advancing technology, fresh moves by competitors, shifting buyer needs and preferences, emerging market opportunities, new ideas for improving the strategy, and mounting evidence that a strategy is not working. A company’s present strategy is only temporary and is on trial. It is a work in progress.

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The evolving and adapting nature of a company’s strategy is a blend of “proactive” and “as needed” actions. A company might take a “proactive” action to improve their financial performance. A company might take an “as needed” action to unanticipated developments from fresh market conditions. Regardless, a portion of a company’s strategy is developed on the fly. Therefore, a company’s strategy tends to be a blend of proactive and reactive elements. There are also times when some strategies will need to be abandoned.

Read the attached “The Book of Jobs” article. Discuss what this recent product release says about Apple’s strategy and how it will provide (or not) sustainable competitive advantage to the company.

Apple has the distinct reputation as the most innovative company in the world. This reputation has given them a sustainable competitive advantage over rivals because their strategy causes an attractive number of buyers to have a lasting preference for their products. They have developed expertise and resource strengths that give Apple competitive capabilities that rivals can’t easily imitate with capabilities of their own. As the article suggest, Apple is not a “first mover” but rather they have gained an excellent reputation for employing a “late mover” strategy. Then they go on the offensive and leapfrog competitors by being the first adopter of the next-generation technologies. Their pursuit of continuous product innovation draws sales and market share from less innovative rivals. This has happened three times thus far with the introduction of the Mac PC, the iPod, and the iPhone. Apple is hoping to pull it off once again with the iPad. If history repeats itself, Steve Jobs will succeed. Rivals are fearful.

Over the past few years, Apples rivals have introduced individual products like readers, video players, net books, and music players. Apples strategy is to put all those capabilities onto one device, the iPad. If they are right, more consumers will take the plunge into this technology.

As we have learned in this course, the heart and soul of any strategy are the actions and moves in the marketplace that leaders take to improve the company’s financial performance, strengthen its long-term competitive position, and gain a competitive edge over rivals. Apple has done that.

If all things were possible, should a company follow a cost-based competitive advantage or a differentiation advantage? Explain.

I don’t think I can answer that question with an either/or answer. I think it depends what they company’s product or service is that I’m selling. Each has their advantages. A cost-based strategy can be focused (narrow buyer segment) or broad (large buyer segment) based. A differentiation strategy can also be focused or broad based.

A cost-based advantage is a powerful competitive advantage in markets with many price-sensitive buyers. Successful low-cost leaders are exceptionally good at finding ways to drive costs out of their business through the management of value chain activities. Cost-based advantages work best when selling commodity products (paper, steel) where product differentiation has little value to buyers. As a rule, the more price-sensitive buyers are, the more appealing a cost-based competitive advantage is.

A differentiation advantage is attractive whenever buyers’ needs and preferences are too diverse to be fully satisfied by a standardized product. A company attempting to succeed must study buyers’ needs and behaviors carefully to learn what buyers consider important, what they think has value, and what they are willing to pay. Successful differentiation allows a company to command a premium price, and/or increase unit sales because buyers are won over by the differentiating features, and/or gain buyer loyalty to its brand. As a rule, differentiation yields a longer-lasting and more profitable competitive edge when it is based on product innovation, technical superiority, quality, reliability, and great customer service.

A “cost-based” competitive advantage can defeat a “differentiation advantage” when buyers are satisfied with a basic product and don’t think extra attributes are worth a higher price.

Write a 300-word memo to the President of Reinhardt University outlining what the University’s strategy should be for the next five years. Provide a justification for your recommendations.

TO: Dr. J. Thomas Isherwood

FROM: Brian Schmidt

RE: Five Year Strategy

As a senior at Reinhardt College, I would like to share my thoughts and provide some insights regarding the strategic direction of Reinhardt University for the next five years. The knowledge I have gained from my BUS460 course on “Crafting and Executing Strategy” with Dr. Brisebois has provided me an opportunity to look at business differently and after all education is a business.

When I was a senior at Walton High School, I had to make a decision where I wanted to attend college. Like everyone, you have the normal pressures of family members and friends encouraging you to make certain decisions. In my decision making process, I travelled to various schools and evaluated the size of the student population, curriculum, professor to student ratios, campus life and feel, and costs. At the end of my investigation, I chose to attend Reinhardt. It was an easy decision for me. Looking back, I now understand it was because of Reinhardt’s core competencies.

Reinhardt University doesn’t try to be all things to all people. Reinhardt focuses on a narrow market niche and earns a competitive edge by doing a better job than rival schools of serving the special needs and tastes of students. I believe Reinhardt can strengthen its competitive edge in the next five years if it stays focused on several key strategies:

Maintain the ratio of faculty to students at current levels

Continue to provide professors who have strong academic credentials and who care about us

Continue to add challenging degree programs for undergraduate and graduate students

Keep a Christian based campus which provides clubs and organizations, extra curricular activities, athletics, and resident hall life

Keep educational costs competitive

Continue to upgrade facilities and technology for the professors and students

Expand offerings of on-line classes for undergraduate and graduate students

Market our core competencies to high schools throughout Georgia, but in particular the Greater Atlanta Area.

Reinhardt has a 125 year history and the future looks bright. In this economic climate, many of Georgia’s major universities are experiencing severe cuts in funding. Students at these universities will suffer. I believe Reinhardt will capitalize if that trend continues. Reinhardt has an enormous opportunity to attract additional students from the Atlanta area. Atlanta has tremendous growth and there is an interest in Christian education. I believe it is a monumental moment for Reinhardt. The name change will definitely bring a prominent atmosphere to the school, as well as those graduates who are in the workforce. As students, we have to believe and trust that you and the board will make the right decisions for what is right for the college.


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