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Motorcycle Market
Harley-Davidson Motorcycle Corporation
Introduction
Harley-Davidson Motorcycle Company (HDMC), together with Harley-Davidson Financial Services (HDFS), belongs to the Harley-Davidson, Inc. The company has been manufacturing heavyweight motorcycles (Global Data, 2012). The company has continued to record increases in sales and earnings in recent years. For example, in the second quarter of 2012, Harley-Davidson realized a 2.8 percent growth in its motorcycle retail sales compared to the same time in the previous year. Income gotten from continuing operations in the second quarter of 2011 was $190.6 million. By the same time in 2012, it had risen to $247.3 million (Harley-Davidson USA, 2012).
However, if good results are to continue, the company must recognize the complexity and competitiveness in the global motorcycle market today. As it were, there are threats to HDMCs future as much as there are opportunities it can exploit.
Opportunities
a. Emerging Markets
For instance, the company has increased its presence in the new emerging market. For example, in November 2013, the company entered India, announcing that it would manufacture street motorcycles, which it would sell at low prices. The company targeted young audience looking for good city performance. Furthermore, the company is said to be looking to enter the segment of 250-300cc bikes. Although just 6 percent of Indias total population owns motorcycles, analysts project Indias demand for motorcycles to grow to more than 20 million by 2020. Besides India, there are also potential motorcycle markets in Brazil, Indonesia, Thailand, Taiwan and Vietnam. The market penetration standings in these countries are 7.6 percent, 20.8 percent, 25.4 percent, 62.4 percent and 29.6 percent, respectively. Indeed, there is huge potential for the growth of motorcycle markets in these countries (Global Data, 2013).
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b. Activities Focused on Research and Development (R&D) and New Product(s) Development
The company also has strong R&D unit, which has seen the company celebrated for its innovativeness. It attracts attention of the industry. Through its R&D endeavors, the companys Product Development Center (PDC) has always sought to develop new products of better quality. For the fiscal years between December 2008 and December 2012, the company spent about $725.5 million in its R&D activities. HDMC has over the years developed the Softail motorcycles that ran on a 1584cc engine, which had new features: an anti-lock option for the braking system; a larger odometer and new hand controls. In August 2013, HDMC introduced Boom! Box Infotainment System that offers quality sounds via satellite, radio and other external sources. In November 2013, the companys project RUSHMORE revealed Dark Custom motorcycles targeting urban-riders market (Global Data, 2013).
The companys R&D activities have also seen it enter the three-wheeler market. On 22 July 2008, during its annual dealer meeting held in Las Vegas, HDMC launched the Tri Glide three-wheeled motorcycle (Looney & Ryerson, 2011). It means that the company is now looking to diversify into new segments in the wider automotive market.
The company continues conducting more researches to develop new products and enhance value. If properly leveraged, it can give the company a competitive edge over other industry players.
Threats
a. Competition
The company primarily manufactures in the US, Europe, Canada and Asia. As it has been already written above, the company has focused primarily on motorcycles. On the other hand, its competitors in the heavy-weight motorcycle markets have diversified their businesses more. They may therefore compete in all motorcycle market segments, as well as in the wider automotive market. Second, HDMCs motorcycles are more expensive than its competitors. In other words, should price become a principle factor for consumers, HDMC would be at a disadvantage. The company has so far failed to respond and address these vital questions of competition, and these may have material negative effects on its market share in the future (Global Data, 2013).
b. Overreliance on a Single Supplier of Raw Materials and Components
HDMC also relies too much on its suppliers for their raw materials and components that it uses to manufacture motorcycles. In fact, for certain types of raw materials, HDMC depends on just one supplier. The company therefore depends on the suppliers being able to not only supply the raw materials, but also in time. Unfortunately, HDMC could face problems with its operation costs owing to rising costs of input (such as commodities). It could cause lower production, as well as financial difficulties for raw material suppliers. Now, should there be delay in the delivery of raw materials, HDMC will delay its delivery of products to its consumers. It could have adverse impacts on its customer relations and, ultimately, business (Global Data, 2013).
c. New Two-Wheeler Emission Standards
The emphasis on the environmentally-friendly operations has also affected the two-wheeler industry, which has seen creation of more stringent emission standards. For example, in Europe, stakeholders in the motorcycle industry plan to increase emission standards from Euro 3 to Euro 5 by 2015. It may demand changes in the vehicle designs, limiting the companys innovativeness (although it might also improve it). Still, most importantly, it may increase operating costs (Global Data, 2013).
The Implications of the HD/Lehman Trikes Alliance on both Companies
During the launch of three-wheeler, Lehman Trikes also announced its alliance with HDMC as exclusive supplier of the latters Tri Glide. Although the danger of a single supplier also applies, the important factor is that HDMC found a steady supplier for its efforts to target a new market segment. Lehman offered sustainability for HDMCs three-wheeler business. Looney & Ryerson (2011) agreed that the entrance of Harley-Davidson into the trike market would obviously legitimize and add enormous growth opportunities for the three-wheel segment of the motorcycle market (p.45). They however questioned what Lehman would gain in the deal. After all, it was so far dominating the trike market and feared that HDMCs entry would affect its dominance. As it turned out, Harley-Davidsons business became the growth engine of the past two years for Lehman Trikes (Looney & Ryerson, 2011, p. 57).
Conclusion
As this brief paper shows, business remains subject to several factors, both within and in the external environment. The factors that can affect HDMC (in this case the threats and opportunities) come from within, such as aspects of operation, and outside, such as competition. The good news, however, is that as long as the organization understands the external environment and leverages its internal operations appropriately, it can be in a position to compete sufficiently. So far, HDMC has gotten along well relative to its competitors. However, the management cannot afford to count on its historical successes. It is necessary realize the changes that are taking place, such as arrival of new market players (heightening competition) and rising costs of input and respond appropriately. It is the only way for HDMC to maintain its market competitive edge.
