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A CASE ANALYSIS ON THE THREATS OF DOMESTIC AND FOREIGN
COMPETITION TO THE HARLEY DAVIDSON COMPANY IN THE 21ST CENTURY
GLOBAL MARKET
EVELYN N. PUA
Case Analysis
March 28, 2019
Masters in Business Administration
Philippine Christian University
Philippine Christian University
Graduate School of Business and Management
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TABLE OF CONTENTS
I.
INTRODUCTION…………………………………………………………………3-4
II.
TIME CONTEXT…………………………………………………………………4-5
Figure 1……………………………………………………………………….5
III.
VIEW POINT…………………………………………………………………….6-8
IV.
CENTRAL PROBLEM…………………………………………………………..8
V.
OBJECTIVES…………………………………………………………………….8
VI.
AREAS OF CONSIDERATIONS……………………………………………..8-11
Figure 2………………………………………………………………………10
VII.
ALTERNATIVE COURSES OF ACTION……………………………………11-13
VIII.
RECOMMENDATIONS………………………………………………………..13
IX.
PLAN OF ACTION……………………………………………………………..14-15
X.
REFERENCES…………………………………………………………………15-16
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I. INTRODUCTION
The success of different industries all over the world is linked to their performance
in both the domestic and global markets. Competition is the fundamental reality of being
in business. To establish a trusted name is one advantage a company could have, and
while iconic status remains a constant, preference and economic value are two
changeable variables.
Harley-Davidson had long been held up as a quintessentially American company,
a producer of large motorcycles that had weathered many threats, including that of
smaller, less expensive Japanese products aimed at a younger market in the
1990s. (Heskett, 2018, paragraph 2). The long-running challenges that the company is
facing may determine its significance in the motorcycle industry. Back in the days when
motorcycles were on high demand, there was a notable growth in sales due to the
remarkable interest that the Baby Boomers showed when it comes to owning
motorcycles. Nowadays, the millennial group, which dominates three quarters of the
global workforce, shows little interest in motorcycles. CNBC recently released an article
entitled, "Millennials don’t like motorcycles and that’s killing Harley’s sales". David Beckel,
an AB analyst, quoted: "Our data suggests the younger Gen Y population is adopting
motorcycling at a far lower rate than prior generations. Gen Y's are aging into the
important 'pre-family' cohort of riders and Boomers are increasingly handing over their
keys to the smaller Gen X population."" (Franck, 2017, paragraph 4)
Given this situation, this case study is designed to appropriately address the
problem of the Harley-Davidson company in dealing with the decline in their sales over
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the past years. This study is suitable in helping to expand knowledge about the longrunning challenges of the company and address the problems using prescribed strategic
methods.
II. TIME CONTEXT
The Harley-Davidson Motor Company of Milwaukee, the sole surviving American
maker of motorcycles, has been facing a threat in the motorcycle market since the
beginning of import penetration during the 1970s. President Ronald Reagan, in his strong
protectionist action, ordered a tenfold increase in tariffs for imported heavyweight
motorcycles. This action was particularly limited to Japanese manufacturers, which are
the key players in the American motorcycle market. (The New York Times Archives, April
2, 1983, Page 001001)
Harley-Davidson, which had dominated the industry in the earlier postwar period,
is also faced with a problem of its fading popularity, since the company has struggled to
attract younger customers, whose interest in motorcycling is less compared to the past
generations. Baby boomers, earlier a boost to Harley’s sales as they hit some of their
best income-earning years, are now aging out of riding. (Barrett 2018, paragraph 5).
According to an analysis from Pew Research Center, more than 30 percent of American
workers today are Millennials. They recently surpassed Generation X in becoming the
largest share of the American work force. As more Baby Boomers retire, more and more
Millennials will be stepping up to fill management roles. (Dukes, 2017, paragraph 2). This
means that most of the earners of today are coming from the millennial population, and
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this generation has a varied preference when it comes to buying motorcycles compared
to the generations before them.
Fig. 1. Harley-Davidson sales from: Loesche. “How Harley-Davidson Sales Have Developed Worldwide”
26 June, 2018
The changes in travel behavior also affect the sales of these products. Americans
are driving less. Much ink has been spilled debating whether these changes in travel
behavior are due to changing preferences or economic circumstances. (Klein & Smart,
2016) This circumstance posted a challenge to Harley-Davidson’s motorcycle industry,
given the fact that their motorcycles are now at the Top 6 in the most expensive motor
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brands. (“10 Most Expensive Big Motor Bikes In The World” (n.d.) Retrieved from
https://financesonline.com/)
III. VIEW POINT
With the rise of other motorcycle companies offering lower cost, the HarleyDavidson company will be experiencing tough times both in the foreign and domestic
market. Polaris, a domestic competitor, is managing commendable growth levels that
could hurt Harley’s market share. (Great Speculations, September 13, 2016) Motorcycle
demand in the U.S. has slowed, meaning that companies will now look for growth in terms
of increasing market share and incentives. Harley already faces stiff competition from the
European and Japanese manufacturers, which have benefited recently from the stronger
U.S. dollar, and domestic competition in the face of Polaris. (“Harley-Davidson: Tough
Times Ahead in The Domestic Market”, 2016)
In order to respond to the threat of competition, it would be helpful to prescribe that
the company should perform strategic management styles. The key people that should
be responsible for these are the management team, the logistics team, the marketing
team, and the stakeholders.
MANAGEMENT
In the late 1980s, Teerlink, then president and COO of Harley-Davidson, began
working with fellow executives and with external management consultant Ozley to design
a new leadership model to replace the top-down one that Harley and so many other
companies had relied on for so long. They didn’t know what form such a different model
might take, but they knew they wanted it to achieve several things:
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
Encourage every employee to participate in shaping the company’s future. (As
Ozley pointed out, Harley employees were strong leaders and creative thinkers
outside the company— in their neighborhoods, parent-school relationships, and
faith-based organizations. But years of heavy-handed management control had
made them passive. The challenge facing Harley was to revive these atrophied
leadership skills in the workplace.)

Foster a culture of commitment as opposed to compliance.

Sustain the flow of energy and ideas from the Harley work force even during neutral
times, thus avoiding the addiction to crisis management that plagues many
companies.
(Johnson, “Revving Up a New Model of Change Leadership”)
LOGISTICS
The people in the Logistics are the ones responsible for the commercial activity of
transporting goods to the customers and the detailed coordination of a complex operation
involving many people, facilities, or supplies.
MARKETING
They are the ones responsible for the promotion of business, drive sales of its
products or services, and provide the necessary research to identify your target
customers and other audiences.
STAKEHOLDERS
Customers are significant stakeholders because they directly determine HarleyDavidson's sales revenues and profitability. This influence leads the company to
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implement corporate social responsibility strategies and programs that satisfy customers'
interests (Lombardo, 2017)
IV. CENTRAL PROBLEM
The Threats of Domestic and Foreign Competition to the Harley-Davidson
Company in the 21st Century Global Market
V. OBJECTIVES
This case study analysis has the following objectives:
1) To be able to conduct a customer value analysis on the target market;
2) To be able to execute effective strategies that would result to the increase of target
market share;
3) To be able prescribe methods to innovate features and styling of the Harley
Davidson motorcycles that would be suitable to the interest of the target market;
and
4) To be able to suggest strategies that can help maintain and/or improve the quality
of the Harley Davidson motorcycles to compete with other motorcycle brands.
VI. AREAS OF CONSIDERATION
STRENGTHS
Harley-Davidson has one of the strongest brand images in the motorcycle market.
This brand image is especially notable because of the custom/chopper biker culture,
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which is strongly associated with the Harley-Davidson brand. This condition has also
established a stable base of loyal customers. Moreover, more than a century of
experience creates the company’s strength of expertise in the business. (Greenspan,
“Harley-Davidson SWOT Analysis”, 2017) Harley Davidson has a strong brand equity and
brand loyalty which helps it attract and retain a loyal customer base. Its motorcycles are
known for its traditional styling and quality, which made them an icon in the motorcycle
industry.
WEAKNESSES
Harley-Davidson’s narrow product mix is a weakness because it prevents the
business from reaching more market segments. For example, the company focuses
mainly on chopper motorcycles. Harley-Davidson is also weak because most of its sales
are generated in North America. The company has insignificant or nonexistent sales in
developing countries. In relation, Harley-Davidson has a limited supply chain that
hampers potential expansion in the global motorcycle market. (Greenspan, 2017)
Furthermore, Harley is relying on limited suppliers only, which can directly affect the
company’s business in the long run. As in case of increase in input cost will lead to
increase in operational cost which in course will affect the cost of commodities. This
results to capacity constraints, lower production, and financial distress to suppliers which
will ultimately result in delivery delay & customer dissatisfaction. (“SWOT Analysis of
Harley-Davidson”, December 22, 2017, paragraph 3)
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Fig. 2 Harley-Davidson Tough Times from: Kessel. “Tough Times at HarleyDavidson” 20 July 2017
OPPORTUNITIES
Harley-Davidson has the opportunity to expand, especially in developing markets.
Also, the company can broaden its product mix to include a more diverse array of
motorcycles and related products. In addition, Harley-Davidson has the opportunity to
establish business alliances to increase its market reach, similar to its partnership with
Lehman Trikes. (Greenspan, “Harley-Davidson SWOT Analysis”, 2017) Emerging
markets and expanding demographics can be ways to expand business.
THREATS
The intense competition with other manufacturers, both in the domestic and global
market, can affect its motorcycle business. Japanese motorcycles are more likely to be
purchased than Harley motorcycles due to their lower quotation. Stable profitability has
increased the number of players in the industry over the years which has put downward
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pressure on not only profitability but also on overall sales. (“Harley-Davidson SWOT
Analysis” (n.d.) Retrieved from http://fernfortuniversity.com/term-papers/)
VII. ALTERNATE COURSES OF ACTION
A. Conduct a Customer Value Analysis on the Target Market
Customer needs analysis is the process of identifying what requirements the
customers has for a product or service. It is used in a variety of product and brand
management contexts, including concept development, product development, Value
Analysis, and Means-End Analysis or Customer Value Analysis. (“Intro to Customer
Needs Analysis Surveys” (n.d.) Retrieved from https://www.qualtrics.com/experiencemanagement/) There should be a survey to be conducted on the target market, the group
that comprises the larger percentage in the workforce all over the world, and that is none
other than the millennial group. In this way, the company will be able to assess the
preferences of the people when it comes to choosing a motorcycle, and study the factors
that affect their preferences. Needs and preferences may vary depending on different
factors such as culture, lifestyle, financial capability, and government regulations.
B. Capture the interest of the target market through advertisements and promotions
Harley uses psychographic segmentation to cater to the changing needs of
consumers, primarily because it is a lifestyle brand. You choose a Harley over others
because you love to ride and you love buying premium motorcycles. The distinct &
innovative design has helped the company in making Harley motorcycles popular across
the world. The positioning of Harley Davidson is very strong in the mind of consumers as
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a premium motorcycle brand which is known for its advanced technology and for its
design. Harley Davidson has achieved this positioning by giving hit after hit of products,
each of which is excellent and loved for the customization it offers. (Bhasin, 2017)
C. Innovate Harley-Davidson styling and features.
Customization and accessories are the major competitive advantage of Harley
Davidson. People love their Harleys and there are numerous customizations possible in
a Harley, from the handle, the stand, to the overall looks including the accessories the
driver can wear.
Majority of riders prefer lighter motorbikes nowadays since the demand for fastpaced transactions and transportations rose. In this case, the styling of a Harley bike
would be less appealing specially to the millennials. Bernstein’s analysts wrote, “If Harley
and other manufacturers want to attract more young riders, the mode of delivery might
need to change.” (Nachison, 2018) Harley-Davidson should offer its most comprehensive
lineup of motorcycles by leveling-up its industry-leading design and strong manufacturing
capabilities. This would enable them to compete with other manufacturers in many of the
largest and fastest growing segments with a full portfolio of motorcycles across a broad
spectrum of price points, power sources, displacements, riding styles and global markets.
D. Build stronger connection with customers.
Allowing customers to express themselves will help build a stronger bond between
the company and its customers. This quality of marketing and product assurance may
override the price and other issues like fuel consumption. Through customized design
and accessories, motorbike lovers can easily identify with the product. Also, the
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“customers-first” perspective will boost their market as customers want to feel important
and heard of.
VIII. RECOMMENDATION
This study reveals that the Harley-Davidson Company needs to make reforms in
the business. The global motorcycle market presents opportunities for growth. However,
Harley-Davidson has a narrow product mix, a limited market reach, and a limited supply
chain. The company also needs to address the environmentalism trend. (Greenspan,
2017) Thus, the following are the recommendations for Harley-Davidson to further grow
its business:
1. Broaden the product mix through innovation and diversification.
2. Globally expand, especially in developing markets.
3. Globally expand the supply chain.
4. Innovate to make Harley-Davidson brand and products environmentally friendly.
IXI. PLAN OF ACTION
As stated by Matt Levatich, president and chief executive officer, Harley-Davidson,
Inc.: “Harley-Davidson is iconic because we’ve never been static,” said Levatich. “In
moving forward, we are tapping into the spirit that drove our founders back in 1903 and
every one of the employees and dealers who rose to the challenges faced along the
way. Our plan will redefine existing boundaries of our brand – reaching more customers
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in a way that reinforces all we stand for as a brand and as a company and we can’t wait
to kick it into gear.” (“Harley-Davidson Accelerates Strategy”, 2018)
Here are the recommended action plans:
1. Assess the needs of the customers.
It is strongly suggested that the Harley-Davidson Company focus more on the
needs of their stakeholders, since they are the major key players in the market sales. The
management and marketing teams must devise ways on how to effectively meet
customers where they are and how they want to engage with a multi-channel retail
experience. Promotions and advertisements, as well as creating programs with a good
cause, may help the company regain their market, opening opportunities for a larger
community involvement.
2. Raise a new generation of Harley-Davidson riders.
There is a need for the company to build its next generation of riders globally, not
only in the United States. Involving the Baby Boomers to mentoring programs will help
the younger generation understand the core values of the Harley-Davidson Company.
3. Innovate the styling and features of the HD motorcycles.
Since the goal is to reach the younger generation, it will be better if the company
explore new styling and features that will suit to the taste of the millennials.
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X. REFERENCES
Farnsworth, C. H. (1983, April 2) “U.S. Raises Tariff for Motorcycles”. Retrieved from
https://www.nytimes.com/1983/04/02/business/us-raises-tariff-for-motorcycles.html
Barrett, R. (2018, Oct 23) “Harley-Davidson earnings: US motorcycle sales continue to
plunge, but profit jumps”. Retrieved from
https://www.usatoday.com/story/money/cars/2018/10/23/harley-davidson-motorcyclesales/1736906002/
Klein, N.J. & Smart, M. J. (2016, Aug 10) “Millennials and car ownership: Less money,
fewer cars”. Retrieved from
https://www.sciencedirect.com/science/article/abs/pii/S0967070X16305571
Trefis Team & Great Speculations (2016, Sep 13) “Harley-Davidson: Tough Times
Ahead In The Domestic Market”. Retrieved from
https://www.forbes.com/sites/greatspeculations/2016/09/13/harley-davidson-toughtimes-ahead-in-the-domestic-market/#78183df21fb9
“10 Most Expensive Big Motor Bikes In The World: Is Harley Davidson Still A Top
Brand?” [Web log post] (2018) Retrieved from https://financesonline.com/10-mostexpensive-big-motor-bikes-in-the-world-is-harley-davidson-still-a-top-brand/
Greenspan, R. (2017, Feb 7) “Harley-Davidson SWOT Analysis”. Retrieved from
http://panmore.com/harley-davidson-swot-analysis
Bhasin, H. (2017, Dec 22) "SWOT Analysis of Harley Davidson". Retrieved from
https://www.marketing91.com/swot-analysis-of-harley-davidson/
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“Harley-Davidson SWOT Analysis / Matrix” [Web log post] (n.d) Retrieved from
http://fernfortuniversity.com/term-papers/swot/1433/432-harley-davidson.php
“Intro to Customer Needs Analysis Surveys” [Web log post] (n.d.) Retrieved from
https://www.qualtrics.com/experience-management/research/customer-needs-analysis/
“Millennials Aren’t Riding: Should They Be?” [Web log post] (2018, July 31). Retrieved
from https://blog.rumbleon.com/millennials-and-motorcycles
Huber, T. (2018, Apr 17) “Millennials Kill Again - This Time it's Motorcycles”. Retrieved
from https://www.rideapart.com/articles/244832/millennials-kill-again-this-time-itsmotorcycles/
“Motorcycle tariffs and Harley-Davidson: Lessons from the last time” [Web log post]
(2018, Mar 5) Retrieved from https://www.revzilla.com/common-tread/motorcycle-tariffsand-harley-davidson
Nachison, D.M. (2018, Apr 13) "Motorcycles: Why Millennials Aren’t Buying, and What
to Do About It". Retrieved from https://www.barrons.com/articles/motorcycles-whymillennials-arent-buying-and-what-to-do-about-it-1523632340