Harley-Davidson’s Operations Management:

10 Decisions, Productivity
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY PAULINE MEYER

A Harley-Davidson
motorcycle at the Voorschotense Oldtimer Vereniging Show in the Netherlands. Harley-
Davidson’s operations management satisfies the 10 strategic decision areas to support
optimal productivity. (Photo: Public Domain)
Harley-Davidson’s operations management (OM) ensures that the company maintains
effective and efficient business activities to support productivity and business resilience
and competitiveness. Harley-Davidson’s managers must determine the best options for
the 10 strategic decision areas of operations management. These 10 decisions cover
the key business areas that involve suitable operations management approaches. To
optimize the productivity of its facilities, Harley-Davidson continues to develop its
operations management practices to suit evolving business needs. For instance,
motorcycle designs are regularly tested to determine satisfaction of customers’
expectations and regulatory requirements.

An evaluation of Harley-Davidson’s operations management actions for the 10 strategic

decision areas highlights brand image and customers’ needs. This focus helps Harley-
Davidson manufacture high-quality premium motorcycles with a strong brand image.

Harley-Davidson’s Operations Management, 10

Decision Areas
1. Design of Goods and Services. Harley-Davidson motorcycles are known for their
unique and handcrafted designs. In this strategic decision area of operations
management, the company’s objective is to support its brand image based on available
resources. This brand image emphasizes Harley-Davidson motorcycles’ quality and
high-end chopper design.

2. Quality Management. The objective in this strategic decision area is to maintain

operations management practices to maximize output quality that matches the Harley-
Davidson brand image and customers’ expectations. The company has strict
requirements for suppliers to ensure high quality motorcycles.

3. Process and Capacity Design. Harley-Davidson’s operations management

approach for this strategic decision area involves high quality and new technologies.
Optimal production process is an objective in this decision area. At Harley-Davidson,
operations managers automate processes for maximum efficiency in producing
motorcycles and related products. Also, the company’s production facilities address
demand and cost considerations in the global market.

4. Location Strategy. Most of Harley-Davidson’s authorized dealers are located in town

and city centers. Many of these dealers are involved in deciding the location of the
dealerships. Thus, Harley-Davidson’s operations management addresses this strategic
decision area through partially decentralized decision-making for dealership locations.
In addition, the locations of the company’s warehouses are based on the locations of
authorized dealers to optimize the transportation efficiency of Harley-Davidson
motorcycles and related products.

5. Layout Design and Strategy. This strategic decision area of operations

management is concerned with optimal efficiency in the movement of people, materials,
and information. For company-owned facilities like motorcycle production buildings,
Harley-Davidson’s operations management approach for this decision area involves
traditional models adjusted to suit the facility’s purpose. Also, a standardized set of
layout design requirements are implemented for authorized Harley-Davidson
dealerships.

6. Job Design and Human Resources. Human resource adequacy and capability are
the main concerns in this strategic decision area of operations management. Harley-
Davidson uses training programs and a participatory approach that empowers
employees. To maximize career opportunities and optimally utilize talent, Harley-
Davidson’s operations management implements a succession-planning policy where
leaders share information about employees’ performance. These factors contribute to
high quality motorcycles and related products from Harley-Davidson.

7. Supply Chain Management. Harley-Davidson maintains a Supplier Diversity policy

to address this strategic decision of operations management. This decision area is
concerned with optimized supply chain for the company’s growth. Harley-Davidson’s
policy ensures optimal productivity and capacity of its supply chain based on the
availability of a wide variety of suppliers.
 8. Inventory Management. In this strategic decision area, operations managers focus
on inventory adequacy and timeliness. Harley-Davidson addresses these concerns
through automated inventory monitoring in company-owned facilities. The company also
has an online system for orders and requests involving authorized dealers.

9. Scheduling. Harley-Davidson has streamlined schedules for its business activities.

In this strategic decision area, operations managers focus on short-term and
intermediate schedules to maximize capacity. Harley-Davidson addresses such concern
through automated schedules for the supply chain and orders involving authorized H-D
motorcycle dealers. Traditional operations management approaches are also used for
scheduling employees’ activities at Harley-Davidson’s offices.

10. Maintenance. Reliability of processes is the objective in this strategic decision area
of operations management. Harley-Davidson’s motorcycle production processes are
standardized with redundancy measures. For example, the company coordinates the
activities of production facilities, which minimize stockouts by supporting each other
during demand peaks. Harley-Davidson also has maintenance teams for buildings and
equipment.

Harley-Davidson’s Productivity
Harley-Davidson’s operations management approaches are partly aimed at maximizing
productivity. Operations managers evaluate productivity levels based on a number of
measures or criteria. Some of these productivity measures at Harley-Davidson are as
follows:

1. Revenues per sales employee (H-D Dealership employee productivity)

2. Supply stockout rate (productivity of Harley-Davidson’s suppliers)
3. Motorcycles per day (productivity of H-D production facilities)

Harley-Davidson’s Stakeholders: A CSR

Analysis
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY JESSICA LOMBARDO
 A Harley-Davidson
motorcycle at the Voorschotense Oldtimer Vereniging Show in the Netherlands. Harley-
Davidson’s corporate social responsibility (CSR) strategy and programs satisfy the
interests of stakeholders, especially customers. (Photo: Public Domain)
Harley-Davidson’s success is partly built on the effectiveness of its corporate social
responsibility (CSR) strategies in addressing stakeholders’ needs and interests. Based
on Archie Carroll’s theory of corporate social responsibility, stakeholders are individuals
or groups that affect and are affected by the business. In Harley-Davidson’s case,
stakeholders significantly influence customers’ perception about the company and its
brand and products. The firm must address stakeholders’ interests. These interests
serve as a reflection of Harley-Davidson’s target customers’ concerns. Through
appropriate corporate social responsibility programs, Harley-Davidson satisfies its
stakeholders’ interests. In turn, these stakeholders provide adequate support to ensure
the company’s resilience and competitiveness.

Based on Archie Carroll’s theory of corporate social responsibility (CSR), a stakeholder

analysis of Harley-Davidson’s corporate responsibility programs shows focus on the
company’s contributions to customers’ mobility and community development. In
addition, Harley-Davidson’s CSR programs satisfy stakeholders’ interests regarding
business sustainability.

Harley-Davidson’s Stakeholder Groups & CSR

Initiatives
Based on major issues facing the motorcycle industry, Harley-Davidson’s corporate
social responsibility programs target specific interests of stakeholders. Harley-
 Davidson’s CSR programs prioritize stakeholders groups as follows, arranged according
to significance:

1. Customers (top-priority stakeholders)

2. Communities
3. Environmentalists
4. Suppliers
5. Employees

Customers. Harley-Davidson gives top priority to its customers as a major stakeholder

group. The company’s corporate social responsibility programs are focused on ensuring
that these stakeholders’ interests and expectations on quality, design, and
craftsmanship are met. Customers are significant stakeholders because they directly
determine Harley-Davidson’s sales revenues and profitability. This influence leads the
company to implement corporate social responsibility strategies and programs that
satisfy customers’ interests. For example, Harley-Davidson uses its dealerships to
obtain feedback from customers about their preferences and experiences. Such
information is used in designing H-D motorcycles.

Communities. This stakeholder group is interested in Harley-Davidson’s contributions

to community development. Communities are significant stakeholders because they
affect the company’s reputation and brand image. The company’s corporate social
responsibility programs aim to support these interests about community development.
For example, the Harley-Davidson Foundation works with charitable organizations for
goals in improving education and health. In addition, the company’s Supplier Diversity
policy supports minority-owned and female-owned suppliers.

Environmentalists. Harley-Davidson has become increasingly sensitive toward the

interests of environmentalists as a stakeholder group. These stakeholders are
significant because they push businesses to contribute to environmental protection and
conservation. The Harley-Davidson Foundation partly addresses these interests. For
example, the Foundation gives financial support to charitable organizations that have
environmental conservation programs. As part of its corporate social responsibility
efforts, Harley-Davidson also has a sustainability strategy where the company maintains
partnerships with organizations like The Nature Conservancy to support environmental
conservation. Moreover, Harley-Davidson implements new technologies to ensure
optimal efficiency and to minimize the environmental impact of its business.

Suppliers. Harley-Davidson’s suppliers are significant stakeholders that influence the

company’s production capacity and corporate social responsibility programs. This
stakeholder group determines the availability of materials that the company uses to
manufacture its motorcycles. The interests of suppliers include continued and stable
partnership with Harley-Davidson. The company addresses these stakeholders’
interests to ensure business resilience and adequate production capacity. For example,
Harley-Davidson’s Supplier Diversity policy includes maximizing support for a wide
variety of suppliers instead of focusing on just a few big ones. In this corporate social
responsibility strategy, small community-based suppliers benefit through partnerships
with Harley-Davidson.

Employees. Employees are significant stakeholders because they influence Harley-

Davidson’s output quality and capacity. The interests of this stakeholder group include
fair treatment and career opportunities. Harley-Davidson’s corporate social
responsibility strategy addresses these interests through employment policies and
programs based on the company’s core values (e.g. Respect the Individual, Encourage
Intellectual Curiosity) and expected behaviors (e.g. teamwork, creativity, and diversity).
The Harley-Davidson Foundation also promotes employee involvement in outreach
programs to improve employee morale.

Harley-Davidson’s CSR Performance in Addressing

Stakeholders’ Interests
Harley-Davidson’s business resilience is partly based on the success of its corporate
social responsibility (CSR) strategy and programs. The company understands the
importance of stakeholders and their impact on the business. For example, Harley-
Davidson’s Supplier Diversity Policy helps promote inclusive development of
communities. The company also prioritizes the interests of customers as a major
stakeholder group. This prioritization enables the firm to effectively satisfy the
preferences and expectations of its target market. Harley-Davidson’s corporate social
responsibility programs are satisfactory in addressing stakeholders’ interests and
supporting long-term business success.

Harley-Davidson PESTEL/PESTLE Analysis

& Recommendations
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY ANDREW THOMPSON
 A Harley-Davidson
Duo-Glide motorcycle. A PESTEL/PESTLE Analysis of Harley-Davidson highlights
major opportunities for product improvement and global growth based on external
factors in the remote or macro-environment. (Photo: Public Domain)
Harley-Davidson stands as a bastion of the chopper motorcycle culture. With annual
revenues exceeding $5 billion, the company is a profitable and stable business.
However, Harley-Davidson’s management must address concerns raised in this
PESTEL/PESTLE Analysis to ensure long-term profitability. The PESTEL/PESTLE
Analysis identifies the external factors in the remote or macro-environment of Harley-
Davidson. The analysis determines if these external factors create opportunities or
threats for the business. With a strong brand, Harley-Davidson expects to continue as a
major player in the motorcycle industry. However, for long-term profitability in the
domestic and international markets, Harley-Davidson must address the opportunities
and threats identified herein.

A PESTEL/PESTLE Analysis of Harley-Davidson shows that the company has many

opportunities to grow its business and improve its resilience. However, the
PESTEL/PESTLE Analysis also highlights the importance of strategic reform based on
external factors in Harley-Davidson’s remote or macro-environment.

Political Factors Affecting Harley-Davidson’s

Business
The political climate affects markets where Harley-Davidson operates. Governmental
influence on companies is evaluated in this component of the PESTEL/PESTLE
Analysis. The following external political factors significantly affect Harley-Davidson’s
remote or macro-environment:
1. Free trade agreements (opportunity & threat)
2. Increasing support for e-commerce (opportunity)
3. Improving inter-governmental support for patent protection (opportunity)

Harley-Davidson benefits from free trade agreements, which facilitate the company’s
global expansion. However, such a political external factor threatens the business by
increasing the influx of cheaper products or substitutes that compete against Harley-
Davidson. On the other hand, the increasing support for e-commerce creates
opportunities for the company to improve its market reach through online media. Harley-
Davidson also has better patent protection for its products, based on intergovernmental
efforts on patent law. This component of the PESTEL/PESTLE Analysis indicates that
the current political external factors in the remote or macro-environment brings
opportunities for Harley-Davidson’s global growth.

Economic Factors Important to Harley-Davidson

Harley-Davidson must address the economic aspect of the motorcycle market. This
component of the PESTEL/PESTLE Analysis examines the economic aspect of the
remote or macro-environment of the firm. The economic external factors relevant in
Harley-Davidson’s business are as follows:

1. Economic stability of major markets (opportunity)

2. Economic growth of developing countries (opportunity)
3. Stable credit accessibility (threat & opportunity)

The economic stability of major markets presents opportunities for Harley-Davidson to

stably grow its business in its core markets, especially in the United States. In relation,
the company has opportunities for rapid growth and expansion in some high-growth
developing countries where there is demand for chopper motorcycles. On the other
hand, the stable credit accessibility could support competitors, which threaten Harley-
Davidson. Nonetheless, the company can capitalize on its economies of scale to protect
its business from competition in the remote or macro-environment. The economic
external factors in this component of the PESTEL/PESTLE Analysis shows that Harley-
Davidson has significant opportunities for domestic and international development.

Social/Sociocultural Factors Influencing Harley-

Davidson’s Business Environment
Sociocultural changes can impact the remote or macro-environment of Harley-
Davidson’s business. In this component of the PESTEL/PESTLE Analysis, social
conditions are considered. The following sociocultural external factors are important to
Harley-Davidson:

1. Increasing attitudes about leisure (opportunity)

2. Increasing involvement of women in chopper biking (opportunity)
3. Increasing attitudes about green technology (threat & opportunity)

Harley-Davidson must include social issues in strategy formulation based on the

company’s remote or macro-environment. For instance, the increasing attitudes about
leisure create opportunities for the firm to market its products as leisure motorcycles.
Also, the increasing involvement of women in chopper biking presents an opportunity for
Harley-Davidson to increase its marketing efforts to target female customers. The
increasing attitudes about green technology are a threat to the company because most
of its products have combustion engines with significant emissions. Nonetheless,
Harley-Davidson can improve the green technologies in its products to address this
concern. This component of the PESTEL/PESTLE Analysis points out the significant
opportunities for marketing and product development based on the effects of
sociocultural factors in Harley-Davidson’s remote or macro-environment.

Technological Factors in Harley-Davidson’s Business

Technologies are an essential aspect of Harley-Davidson’s products and business
operations. This component of the PESTEL/PESTLE Analysis evaluates the impact of
technological changes and trends on the company’s remote or macro-environment. In
Harley-Davidson’s case, the following technological external factors are relevant:

1. Increasing availability of green technologies (opportunity)

2. Moderate R&D investments in the motorcycle industry (opportunity)
3. Increasing use of computing technology in vehicles (opportunity)

Harley-Davidson has the opportunity to improve its products by integrating green

technologies. This opportunity can boost the company’s performance because most
chopper motorcycles do not have high green-technology ratings. Also, Harley-Davidson
can increase its research and development (R&D) investments to develop features of
products or technologies as a major selling point. Moreover, the firm can integrate
additional computing technology features to make its products more attractive. The
technological external factors in this component of the PESTEL/PESTLE Analysis
indicates that Harley-Davidson has opportunities to improve its products’ features to
boost business performance in the remote or macro-environment of the motorcycle
industry.

Ecological/Environmental Factors
Harley-Davidson’s business performance responds to ecological conditions. The effects
of ecological trends and changes are considered in this component of the
PESTEL/PESTLE Analysis. The following ecological external factors are most notable
in Harley-Davidson’s remote or macro-environment:
1. Increasing interest in business sustainability (opportunity)
2. Low-carbon lifestyles (opportunity)
3. Climate change (threat & opportunity)

Current ecological trends emphasize business sustainability. Harley-Davidson can

address this concern through changes in its business operations for higher sustainability
ratings. Also, the company can highlight the environmentally friendly features of its
products to attract customers with low-carbon lifestyles. However, climate change can
reduce the attractiveness of Harley-Davidson’s products, which tend to have mediocre
emissions ratings. Nonetheless, the company has the opportunity to improve the fuel
efficiency of its products to attract environmentally conscious customers. This
component of the PESTEL/PESTLE Analysis shows that Harley-Davidson must
consider changing its business processes and product features to address the effects of
ecological external factors on the remote or macro-environment.

Legal Factors
Harley-Davidson must satisfy legal requirements. This component of the
PESTEL/PESTLE Analysis outlines the influence of legal or regulatory conditions on the
firm’s remote or macro-environment. Harley-Davidson must address the following legal
external factors:

1. Expanding emissions regulations (opportunity)

2. Environmental protection laws (opportunity)
3. Loopholes in international patent laws (threat)

Harley-Davidson has the opportunity to satisfy and exceed the requirements of

emissions regulations. In relation, the company can improve its sustainability policies as
well as contributions to environmentalist programs. Despite intergovernmental efforts,
some loopholes in international patent laws threaten Harley-Davidson through weak
protection against imitation, which also affects other firms in the remote or macro-
environment. Based on the legal external factors shown in this component of the
PESTEL/PESTLE Analysis model, Harley-Davidson can improve its business processes
and products to satisfy environmentalist regulations.

Harley-Davidson’s PESTEL/PESTLE Analysis –

Recommendations
The external factors enumerated in this PESTEL/PESTLE Analysis of Harley-Davidson
emphasize major opportunities for business growth and resilience. These opportunities
are based on conditions of the remote or macro-environment. It is recommended that
Harley-Davidson should implement changes in its global growth strategy. These
changes must address the opportunities based on free trade agreements and the
economic growth of developing countries. Also, Harley-Davidson can further develop its
online marketing campaigns to take advantage of increasing support for e-commerce.
Based on opportunities for product development, it is recommended that Harley-
Davidson should improve the green technology and environmental impact of its
products. Such improvement will address the opportunities based on attitudes about
green technology, low-carbon lifestyles, and expanding emissions regulations.
Moreover, this PESTEL/PESTLE Analysis indicates that Harley-Davidson should reform
its marketing strategies. Such reform must address the opportunities based on
increasing attitudes about leisure and women’s interest in chopper motorcycles. Harley-
Davidson can significantly increase its business performance through these
opportunities.

Harley-Davidson Marketing Mix (4Ps)

Analysis
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY EDWARD FERGUSON

A Harley-Davidson
motorcycle’s Twin Cam engine. Harley-Davidson’s marketing mix creates competitive
advantage through a careful combination of products, place, promotion, and price.
(Photo: Public Domain)
Harley-Davidson is a success story in the motorcycle market. The company remains
profitable despite challenges in the global automotive industry. Harley-Davidson’s
marketing mix provides insights on how the firm maintains its business resilience. The
marketing mix (4Ps; Product, Place, Promotion, Price) is the set of strategies and tactics
used to execute a marketing plan. In the case of Harley-Davidson’s marketing mix,
concerns about promoting and strengthening the brand are effectively addressed. Even
though the company has increased its advertising efforts, its marketing mix remains
practically the same. Through this marketing mix, Harley-Davidson competes well in the
domestic and global motorcycle markets.
 Harley-Davidson’s marketing mix (4Ps) indicates how a motorcycle company can focus
on personal selling to promote its products, brand, and business. This factor in the
marketing mix supports the company’s efforts for a resilient brand despite strong and
growing competition.

Harley-Davidson’s Products (Product Mix)

Harley-Davidson has a limited product mix. This component of the marketing mix covers
the outputs that the company sells. The product lines in Harley-Davidson’s product mix
are as follows:

1. Motorcycles
2. Engines
3. Parts and Accessories (Example: H-D’s Screamin’ Eagle brand)
4. MotorClothes Merchandise and Collections
5. Rentals through Authorized H-D Rental Dealers

Harley-Davidson is most popularly known for its chopper/custom motorcycles. However,

the company offers others product lines, such as engines and motorcycle parts and
accessories. Harley-Davidson also provides apparel and related merchandise under the
MotorClothes brand. Moreover, the company offers a variety of its motorcycles for rent.
This component of the marketing mix shows that Harley-Davidson has diversified its
business through a limited number of product lines, mostly focused on chopper/custom
motorcycles.

Place/Distribution in Harley-Davidson’s Marketing Mix

Harley-Davidson’s products are distributed to maximize sales revenues. The venues for
reaching customers are considered in this component of the marketing mix. In Harley-
Davidson’s case, the following are the places for distributing its products:

1. Authorized H-D Dealers

2. Authorized H-D Rental Dealers
3. Harley-Davidson Online Store

Authorized Harley-Davidson dealers are the primary places for distribution of the
company’s products. Majority of the firm’s revenues are generated through these
dealers. Some dealers are also authorized to rent out Harley-Davidson motorcycles. In
addition, the company’s online store allows customers to place online orders for
motorcycle parts and accessories, apparel and other merchandise. This component of
the marketing mix presents Harley-Davidson’s strategy to optimize the efficiency of its
authorized dealers.
 Harley-Davidson’s Promotion (Promotional Mix)
Harley-Davidson’s brand and products are commonly promoted alongside the
chopper/custom biker culture. Communication strategies and tactics are covered in this
component of the marketing mix. Harley-Davidson’s promotional mix contains the
following strategies/tactics, arranged according to significance:

1. Personal selling (field selling)

2. Public relations
3. Advertising
4. Sales promotion
5. Direct marketing

Personal selling is the most significant promotional strategy in Harley-Davidson’s

business. Specifically, the field selling technique is used to encourage customers to
explore and try the company’s motorcycles at authorized dealerships. Harley-Davidson
also uses public relations, such as by organizing and supporting Harley Owners Group
(H.O.G.) rallies in various locations, to promote and increase awareness about the
company’s brands and products. In addition, the company advertises its products to
reach large populations of potential customers. Sales promotion is occasionally used in
Harley-Davidson’s marketing mix. Direct marketing is the least significant of the
company’s marketing communication strategies and tactics. This component of the
marketing mix highlights the importance of personal selling as an effective way for
Harley-Davidson to promote its brand and products to customers and to optimize sales
revenues.

Harley-Davidson’s Prices and Pricing Strategy

Harley-Davidson uses the premium pricing strategy. Relatively high price ranges are
applied in this pricing strategy. For instance, Harley-Davidson motorcycles are generally
more expensive than most other motorcycle brands available in the American market.
The company justifies these high prices by emphasizing the craftsmanship and quality
of its products. This component of the marketing mix relates with Harley-Davidson’s
generic strategy of differentiation, which capitalizes on uniqueness to set products apart
from the competition.

Harley-Davidson Five Forces Analysis

(Porter’s Model)
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY JUSTIN YOUNG
 An old Harley-
Davidson motorcycle at the Auto & Technic Museum in Germany. A Five Forces
Analysis of Harley-Davidson indicates that competition is a major force based on
external factors in the motorcycle industry environment. (Photo: Public Domain)
Harley-Davidson’s success as one of the main players in the chopper/custom
motorcycle market is linked to the company’s ability to respond to the Five Forces in its
industry environment. Michael Porter’s Five Forces Analysis examines the external
factors that affect business strategy and development. In Harley-Davidson’s case, the
motorcycle industry and automotive industry environments present challenges that
could hamper global business growth. The company has maintained a conservative
stance toward global expansion. In this regard, business stability is emphasized in
Harley-Davidson’s strategy in addressing the Five Forces affecting its business and the
industry environment. However, strategic reform is needed to ensure that Harley-
Davidson overcomes these external factors while the business internationally expands.

A Five Forces Analysis of Harley-Davidson reveals competitive rivalry and the

bargaining power of customers as the most significant external forces that affect the
motorcycle industry environment. These factors must be among the priorities in Harley-
Davidson’s strategies.

Overview: Harley-Davidson’s Five Forces Analysis

A Five Forces Analysis of Harley-Davidson requires consideration for the external
factors in the motorcycle industry environment and the automotive industry environment
in general. The company is relatively stable compared to other firms. The following are
the intensities or strengths of the Five Forces affecting Harley-Davidson:

1. Competitive rivalry or competition (strong force)

2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (weak force)
4. Threat of substitutes or substitution (moderate force)
5. Threat of new entrants or new entry (moderate force)

Recommendations. Based on this Five Forces Analysis, Harley-Davidson needs to

focus on counteracting the effects of the strong force of competition and the strong
bargaining power of customers. For example, Harley-Davidson can increase product
development efforts, along with investment in technological innovation. The external
factors in the motorcycle industry environment also point to the limited but significant
effects of the threat of substitution and the threat of new entrants. Harley-Davidson can
address these concerns through strategic alliances, market penetration, and global
expansion.

Competitive Rivalry or Competition against Harley-

Davidson (Strong Force)
Harley-Davidson’s performance responds to competition. This part of the Five Forces
Analysis identifies other companies’ impact in the motorcycle industry and automotive
industry environments. In Harley-Davidson’s case, the following are the external factors
that create the strong force of competitive rivalry:

 High number of firms (strong force)

 High availability of substitutes (strong force)
 Moderate variety of firms (moderate force)

Harley-Davidson competes with a considerably large number of firms, including small

ones in local markets. Also, the company faces effective substitutes, such as private
cars and public transportation. The moderate variety of firms leads to considerable
competition, as customers value product features and uniqueness. Based on the
external factors in this part of the Five Forces Analysis, Harley-Davidson must maintain
competitiveness, especially in terms of product quality, to protect its business from other
firms.

Bargaining Power of Harley-Davidson’s

Customers/Buyers (Strong Force)
Customers are a factor in Harley-Davidson’s business performance. This part of the
Five Forces Analysis outlines the external factors that enable consumers or buyers in
influencing the motorcycle industry environment. The following external factors
contribute to the strong bargaining power of Harley-Davidson’s customers:

 High substitute availability (strong force)

 High quality of information (strong force)
 Moderate switching costs (moderate force)

Easy access to substitutes imposes a strong force against Harley-Davidson. In relation,

the external factor of moderate switching costs enable customers to move away from
Harley-Davidson and use substitutes and other products instead. Also, companies in
the motorcycle industry and the automotive industry now provide high quality
information to customers to empower them in making better purchase decisions. In this
part of the Five Forces Analysis, it is shown that customers are a major force in Harley-
Davidson’s industry environment.

Bargaining Power of Harley-Davidson’s Suppliers

(Weak Force)
Suppliers affect Harley-Davidson in terms of the sufficiency of materials used for its
business. This part of the Five Forces Analysis tackles how suppliers influence the
motorcycle industry environment. In Harley-Davidson’s case, the following external
factors create the weak bargaining power of suppliers:

 Low forward integration (weak force)

 High supply stability (weak force)
 Moderate size of suppliers (moderate force)

Harley-Davidson’s suppliers are weak because they have minimal forward integration.
This means that the suppliers have low control on the distribution and sale of their
products to companies like Harley-Davidson. Also, because of the high stability of
supply, individual suppliers have low leverage in imposing their demands on Harley-
Davidson. Only the moderate size of some suppliers enables them to have moderate
effect on the company. Based on the external factors in this part of the Five Forces
Analysis, Harley-Davidson can safely attribute low priority to the bargaining power of
suppliers.

Threat of Substitutes or Substitution against Harley-

Davidson (Moderate Force)
Harley-Davidson’s business performance partly depends on the effects of substitutes on
customers’ behaviors. This part of the Five Forces Analysis indicates how substitute
products influence the motorcycle industry environment. The following external factors
lead to the moderate threat of substitution against Harley-Davidson:

 Moderate switching costs (moderate force)

 Moderate substitute variety (moderate force)
 High substitute availability (strong force)
 There are many substitutes to Harley-Davidson’s products. For example, cars and
public transportation are available. This condition exerts a strong force on Harley-
Davidson. However, the overall threat of substitution against the company is only
moderate because customers who are really into using chopper motorcycles are less
likely to readily shift from Harley-Davidson to such substitutes. Also, the moderate
substitute variety makes substitutes have a significant but limited attractiveness. This
part of the Five Forces Analysis shows that Harley-Davidson must include the moderate
force of the threat of substitution as a significant concern in strategic formulation.

Threat of New Entrants or New Entry against Harley-

Davidson (Moderate Force)
New entrants can reduce Harley-Davidson’s customer base. This part of the Five
Forces Analysis determines the potential effects of new firms on Harley-Davidson and
the motorcycle industry environment. The moderate force of the threat of new entry is
based on the following external factors:

 Moderate economies of scale (moderate force)

 Moderate switching costs (moderate force)
 High cost of brand development (weak force)

Companies like Harley-Davidson benefit from moderate economies of scale. Only some
new entrants can easily achieve the same benefit. Also, Harley-Davidson must consider
moderate switching costs, which means that it is moderately easy for customers to shift
to other brands or companies. However, the high cost of brand development prevents
many new entrants from successfully competing against companies like Harley-
Davidson. As shown in this part of the Five Forces Analysis, Harley-Davidson must
address the threat of new entrants as a considerable issue in the motorcycle industry
environment.

Harley-Davidson SWOT Analysis

UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY ROBERTA GREENSPAN
 A Harley-Davidson
motorcycle in Germany. A SWOT analysis of Harley-Davidson points out the need for
reforms in product and market strategies. (Photo: Public Domain)
Harley-Davidson is the fifth biggest motorcycle manufacturer in the world. The
company’s success is hinged on its ability to address the issues pointed out in this
SWOT analysis. The SWOT analysis indicates the internal strategic factors (strengths
and weaknesses) and external strategic factors (opportunities and threats) most
relevant in the business. In Harley-Davidson’s case, these factors support potential
expansion and a stable performance in the global motorcycle market. However, this
SWOT analysis indicates changes in expansion strategies to improve the company’s
standing. Harley-Davidson can benefit from more aggressive expansion to negate the
effects of aggressive competition.

Harley-Davidson’s SWOT Analysis highlights the need for change in the company’s
product mix, innovation, and global market strategies.

Harley-Davidson’s Strengths (Internal Strategic

Factors)
Harley-Davidson’s strengths are primarily linked to the company’s brand image and the
chopper motorcycle market culture. This element of the SWOT analysis identifies the
internal strategic factors that contribute to the firm’s capabilities for growth and
development. In Harley-Davidson’s case, the following are the most significant
strengths:

1. Strong brand image

2. Strong base of loyal customers
3. Expertise in custom/chopper motorcycle production
 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, 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. In this element of the SWOT
analysis, Harley-Davidson’s strengths ensure business stability despite aggressive and
low-cost competitors.

Harley-Davidson’s Weaknesses (Internal Strategic

Factors)
Harley-Davidson’s weaknesses are based on the current limited focus of the business.
This element of the SWOT analysis tackles the internal strategic factors that prevent the
company from maximizing its performance. The following are Harley-Davidson’s most
notable weaknesses:

1. Narrow product mix

2. Limited market reach
3. Limited supply chain

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. In this element of the
SWOT analysis, it is shown that Harley-Davidson must overcome its weaknesses to
support global growth and expansion.

Opportunities for Harley-Davidson (External Strategic

Factors)
Harley-Davidson’s opportunities are related to the global motorcycle market’s potential.
This element of the SWOT analysis identifies external strategic factors that can facilitate
business growth and development. Harley-Davidson’s most significant opportunities are
as follows:

1. Global expansion
2. Product diversification
3. Alliances with complementary businesses

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. As shown in this element of the SWOT analysis, Harley-Davidson has
significant opportunities to grow its business, especially internationally.

Threats Facing Harley-Davidson (External Strategic

Factors)
The threats facing Harley-Davidson are based on market trends and legal structures.
This element of the SWOT analysis covers the external strategic factors that could
reduce the company’s performance. The following are notable threats against Harley-
Davidson:

1. Aggressive competition
2. Imitation
3. Increasing preference for electric vehicles

Aggressive competition threatens Harley-Davidson. For example, Toyota and other

motorcycle manufacturers are aggressive in selling low-cost products. Harley-Davidson
also faces the threat of imitation, especially now that other companies are also offering
custom/chopper bikes. Moreover, the environmentalism trend has a negative impact on
Harley-Davidson, whose products and brand are known for internal combustion
engines. In this element of the SWOT analysis, Harley-Davidson must implement
product innovation strategies to address the threats to its business.

Harley-Davidson’s SWOT Analysis –

Recommendations
The SWOT analysis of Harley-Davidson reveals the need for 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. 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

Harley-Davidson’s Organizational Culture

Characteristics: An Analysis
 UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY DANIEL KISSINGER

A Harley-Davidson
V-Rod Destroyer. Harley-Davidson’s organizational culture has features that strongly
match the custom/chopper biker culture in the U.S. market. (Photo: Public Domain)
Harley-Davidson’s organizational culture is directly linked to the chopper biker culture.
The organizational culture specifies the traditions, habits and values that influence
employees’ behaviors and managerial decisions. As one of the top players in the global
motorcycle market, Harley-Davidson maintains an organizational culture that supports
the company’s industry position. In addition, this corporate culture strengthens the
company’s customer base of bikers loyal to the brand and the chopper biker culture. As
such, the organization and the chopper biker culture benefit from Harley-Davidson’s
organizational culture.

The custom chopper biker culture permeates Harley-Davidson to define the company’s
organizational culture. This culture supports the business and its position in the
motorcycle market.

Features of Harley-Davidson’s Organizational Culture

Harley-Davidson’s organizational culture is similar to the chopper biker culture in the
motorcycle market. This situation benefits the company in maintaining a large
population of loyal customers. The following are the most significant characteristics of
Harley-Davidson’s organizational culture:

1. Bold rebellious attitude

2. Customer-centrism
3. Harley-Davidson’s business values
4. Leadership development
Bold Rebellious Attitude. This characteristic of Harley-Davidson’s organizational
culture directly relates to the custom chopper biker culture in the market, especially in
the United States. People in the custom chopper biker culture are typically seen as bold
and rebellious. Harley-Davidson is strongly associated with this culture.

Customer-Centrism. Harley-Davidson’s organizational culture emphasizes

consideration for customers’ preferences and expectations. For instance, the company
develops its designs based on current and emerging customer preferences for
custom/chopper motorcycles. Through this feature of the organizational culture, Harley-
Davidson ensures customer satisfaction.

Harley-Davidson’s Business Values. To guide employees and managerial decisions,

Harley-Davidson promotes suitable values through its organizational culture. For
example, the company’s notable values are integrity, accountability, diversity, teamwork
and creativity. This characteristic of Harley-Davidson’s organizational culture supports
business ethics, while minimizing problems in the long term.

Leadership Development. Harley-Davidson promotes sustainability through leadership

in its organizational culture. For instance, the company facilitates sustainability
leadership development throughout the organization. This condition improves Harley-
Davidson’s human resource management for continuous leadership from within the
organization.

Harley-Davidson’s Organizational Culture:

Advantages & Disadvantages
An advantage of Harley-Davidson’s organizational culture is its support for a strong
match between the company’s activities and customers’ lifestyles and preferences.
Also, the firm ensures continuous leadership through its internal leadership
development efforts. However, a disadvantage is that customer-centrism requires
Harley-Davidson’s organizational culture to change according to changes in customers’
lifestyles and changes in the custom/chopper biker culture.

Harley-Davidson’s Organizational Structure

Analysis
UPDATED ONUPDATED ON SEPTEMBER 8, 2018 BY JUSTIN YOUNG
 A Harley-Davidson
motorcycle at Rockanje, the Netherlands. Harley-Davidson’s organizational structure
emphasizes centralized control. (Photo: Public Domain)
Harley-Davidson’s organizational structure facilitates centralized control of the business.
The organizational structure is the company’s arrangement or design of its components
in terms of their interactions and functions. As the fifth biggest motorcycle manufacturer
in the world, Harley-Davidson Inc. maintains an organizational structure that suits its
current focus on a limited number of markets. While the business continues to grow, its
global expansion is relatively slow. As such, Harley-Davidson’s corporate structure
focuses mainly on the fact that most of the company’s revenues are generated in the
United States.

Harley-Davidson’s organizational structure is based on the company’s aim to ensure

centralized control of business activities. This organizational structure has limited
support for the company’s potential global expansion.

Features of Harley-Davidson’s Organizational

Structure
Harley-Davidson has a functional organizational structure that is based on the
company’s current focus on the motorcycle markets in developed countries, especially
the United States. The following are the basic characteristics of Harley-Davidson’s
organizational structure:

1. Function-based groups
2. Centralization
3. Global hierarchy

Function-Based Groups. This feature is the most notable in Harley-Davidson’s

organizational structure. Each group was developed based on specific business
 functions in the motorcycle manufacturing and sales business. The following are the
main function-based groups in Harley-Davidson’s organizational structure:

1. CEO’s Office
2. Communications
3. Human Resources
4. Harley-Davidson Foundation
5. Global Demand
6. Financial Services
7. General Counsel/Legal
8. Finance
9. Motor Company Product & Operations

Centralization. Harley-Davidson uses centralization in its organizational structure. This

characteristic involves a central command system. For example, Harley-Davidson’s
headquarters are the main control base for the global business. This feature of the
organizational structure ensures direct and immediate control and corresponding action
throughout Harley-Davidson’s international organization.

Global Hierarchy. Harley-Davidson’s organizational structure has a global hierarchy

that relates with centralization and the function-based groups. For example, the
corporate headquarters have the highest authority in the global organization. Concerns
experienced in local motorcycle markets are escalated toward the corporate
headquarters in the United States.

Harley-Davidson’s Organizational Structure

Advantages & Disadvantages
Harley-Davidson’s organizational structure has the advantage of strong control on all
business activities. Also, the company can easily monitor changes in the market and
corresponding business performance. However, Harley-Davidson’s organizational
structure has the disadvantage of low flexibility in handling differences among markets.
In addition, a disadvantage of this organizational structure is that it does not strongly
support autonomy of regional or local operations. Thus, the recommendation is for
Harley-Davidson to reduce the centralization and global hierarchy of its organizational
structure to address these issues.

Harley-Davidson’s Generic & Intensive

Growth Strategies
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY PAULINE MEYER
 A Harley-Davidson
motorcycle in the Netherlands. Harley-Davidson’s generic strategy (Porter’s model) and
intensive growth strategies support competitive advantage and business resilience.
(Photo: Public Domain)
Harley-Davidson, Inc. is one of the most prominent motorcycle manufacturers in the
world. The company achieved this market position through its generic strategy for
competitive advantage and its intensive strategies for growth. Harley-Davidson’s
generic competitive strategy (based on Michael Porter’s model) pushes for product
innovation. The company uses its innovation processes to ensure competitiveness
against other popular motorcycle manufacturers. Also, Harley-Davidson’s intensive
growth strategies indicate product innovation along with increased reach in the global
motorcycle market. However, the company could benefit from some adjustments in its
intensive growth strategies. Harley-Davidson’s generic strategy for competitive
advantage and intensive growth strategies are supportive of resilience in the face of
market fluctuations.

Harley-Davidson’s generic competitive strategy (Porter’s model) reflects unique product

features as a main selling point of the business. The intensive strategies facilitate
potential growth for Harley-Davidson through appropriate strategic objectives.

Harley-Davidson’s Generic Strategy (Porter’s Model)

As the fifth largest motorcycle manufacturer in the world, Harley-Davidson has used its
generic strategy to ensure competitive advantage for this market position. A
combination of generic competitive strategies are applied in Harley-Davidson’s
business, as follows:

1. Differentiation Generic Strategy

2. Focus Generic Strategy

Harley-Davidson applies differentiation as its main generic strategy for competitive

advantage. Unique product features are the main point in this generic strategy. For
example, Harley-Davidson popularized the chopper motorcycle style through unique
customization. However, the company also uses the focus generic strategy in
combination with differentiation. The focus generic strategy supports competitive
advantage by increasing Harley-Davidson’s customer base in certain market segments.
For example, the company focuses on motorcycle enthusiasts, especially those who are
interested in the chopper biking culture. A strategic objective linked to the differentiation
generic strategy is to build Harley-Davidson’s competitive advantage based on unique
product innovation. In relation, the focus differentiation strategy leads to the strategic
objective of strengthening the chopper biker culture that enables Harley-Davidson’s
competitive advantage in this market segment.

Harley-Davidson’s Intensive Strategies (Intensive

Growth Strategies)
Market Penetration. Harley-Davidson’s primary intensive growth strategy is market
penetration. The company grows by using this intensive strategy in reaching more
customers in its current markets, such as the United States. For example, Harley-
Davidson promotes and sells more products to new customers in America. This
intensive strategy is the main approach that leads to the company’s continued growth. A
strategic objective linked to market penetration is to increase Harley-Davidson’s sales
network. Also, the differentiation generic strategy empowers Harley-Davidson to
penetrate current markets.

Product Development. Product development used to be Harley-Davidson’s primary

intensive strategy for business growth. Product innovation is the key point in this
intensive strategy. For example, Harley-Davidson’s customization for the chopper
motorcycle style attracts and retains customers. However, now that other motorcycle
manufacturers have developed similar styles, Harley-Davidson now uses product
development as an intensive growth strategy secondary to market penetration. A
strategic objective linked to the product development intensive growth strategy is to
increase research and development (R&D) investment that leads to highly competitive
unique motorcycles. This intensive growth strategy supports Harley-Davidson’s mission
and vision statements through value-added activities and expansion of the product mix.
In relation, product development aligns with the differentiation generic competitive
strategy.

Market Development. Harley-Davidson applies market development as a supporting

intensive growth strategy. The company grows by applying this intensive strategy in
entering new markets. For example, Harley-Davidson can establish new operations in
more countries. At present, however, this intensive strategy has only a supporting role
because the company limits its global expansion. A strategic objective based on this
intensive growth strategy is to increase Harley-Davidson’s supplier network to support
global expansion and growth. The company can use this intensive growth strategy to
support the focus generic strategy for competitive advantage.

Harley-Davidson’s Vision Statement &

Mission Statement
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY ANDREW THOMPSON

A Harley-Davidson
V2 1200 cc model 1926 motorcycle in Finland. Harley-Davidson’s vision statement and
mission statement provide insight on the company’s strategies and growth path. (Photo:
Public Domain)
Harley-Davidson, Inc. is the fifth biggest player in the global motorcycle market.
Established in 1903, the company is known for manufacturing heavyweight motorcycles.
However, as its mission statement indicates, Harley-Davidson now offers more
products. The mission statement shows the company’s aims and approaches to
develop its business. Also, Harley-Davidson’s vision statement emphasizes leadership
in stakeholder management. The vision statement establishes the company’s overall
business direction. Harley-Davidson’s success is linked to its effectiveness in following
its corporate vision statement and corporate mission statement. An examination of
Harley-Davidson’s mission and vision statements reflects the potential trajectory and
future strategies of the business.

Harley-Davidson’s vision statement shows focus on international leadership. Also, an

expanding product mix is presented in Harley-Davidson’s mission statement. These
statements have a direct impact on the company’s strategic objectives.
 Harley-Davidson’s Vision Statement
Harley-Davidson’s vision statement is as follows: “Harley-Davidson, Inc. is an action-
oriented, international company, a leader in its commitment to continuously
improve our mutually beneficial relationships with stakeholders (customers,
suppliers, employees, shareholders, government, and society). Harley-Davidson
believes the key to success is to balance stakeholders’ interests through the
empowerment of all employees to focus on value-added activities.” This vision
statement reflects the company’s values and business strategies. The following are the
main components of Harley-Davidson’s vision statement:

1. Action-oriented business
2. International scope
3. Leadership in stakeholder management
4. Employee empowerment
5. Value-added activities

In this vision statement, Harley-Davidson highlights the importance of an action-oriented

approach to develop its business. Also, the company aims for international success,
which indicates plans for further expansion in the global market for motorcycles and
related products. In addition, Harley-Davidson’s vision statement shows commitment to
satisfy stakeholders. Addressing stakeholders’ interests improves the company’s
relations with the market. The vision statement also integrates employee empowerment,
which supports Harley-Davidson’s business resilience despite the competitive force of
other motorcycle manufacturers. The value-added activities in Harley-Davidson’s vision
statement enhance competitiveness and attract investor. A strategic objective related to
this vision statement is to globally expand Harley-Davidson’s business to satisfy aims
for an international business scope.

Harley-Davidson’s Mission Statement

Harley-Davidson’s mission statement is “We fulfill dreams through the experiences
of motorcycling, by providing to motorcyclists and to the general public an
expanding line of motorcycles and branded products and services in selected
market segments.” The following are the components of Harley-Davidson’s mission
statement:

1. Fulfilling dreams through motorcycling

2. An expanding line of products and services
3. Selected market segments

This mission statement outlines Harley-Davidson’s approaches for growing its business.
For example, the company uses dream fulfillment and experiences of motorcycling as
basis for attracting customers to penetrate markets. Harley-Davidson’s mission
statement also emphasizes the significance of expanding its product mix. For example,
within this product mix, the company is expected to add more product lines to grow its
business. Moreover, this mission statement indicates market segmentation, which
Harley-Davidson uses to focus on certain groups of customers in the global motorcycle
market. A strategic objective related to this mission statement is product diversification,
which supports expanding the company’s lines of products and services. Harley-
Davidson’s mission statement also points to the strategic objective of maintaining a
strong brand-related motorcycling culture to attract and retain customers.