Read the case Harley-Davidson: Style and Strategy With a Global Reach beginning
ID: 457613 • Letter: R
Question
Read the case Harley-Davidson: Style and Strategy With a Global Reach beginning on page 445 of your text.
Answer the following questions:
If you were CEO of Harley-Davidson, how would you compare the advantages and disadvantages of using exports, joint ventures, and foreign subsidiaries as ways of expanding international sales?
In the United States, Harley has shifted the positioning of its products away from simply motorcycles and more toward status symbols of a particular lifestyle. What are the implications of cultural factors for positioning in other countries that Harley has targeted for growth, such as Japan, China, France, and Brazil?
If you were advising Harley’s CEO on business expansion in sub-Saharan Africa, what would you recommend in terms of setting up sales centers and manufacturing sites in countries like South Africa, Kenya, and Zimbabwe? When a new location is targeted, what would you suggest as the proper role for locals to play? Should they run everything, or should there be a mix of locals and expatriates? If the CEO wants to send expatriates from the United States into some locations, what selection criteria would you recommend, and why?
Further research: Is it accurate to say that Harley is still “on top of its game”? How well is the company performing today in domestic and global markets? Does the electric Harley have what it takes to fuel the company’s next stage of global growth?
Answers to these four questions should be well-thought-out and researched. A paper of at least 1,000 words should include two APA-cited references that support your answers to the questions.
Your response is to be a Word attachment using Times New Roman, 12-point font with 1-inch margins. Your name, class, and date should be at the top of your submission and will not count toward the 1,000-word requirement.
Explanation / Answer
1. If you were CEO of Harley-Davidson, how would you compare the advantages and disadvantages of using exports, joint ventures, and foreign subsidiaries as ways of expanding international sales?
When using the exports, its advantages are could expand its sales without concerning the others things, such as the local government’s attitude to it or if the market share is not good, their lost is very low. But the disadvantage is the tariff is so high that lack competitive advantages with other local brand. And another disadvantage is the market diffusion and infusion is very small. When using the joint ventures, the advantage is could acquire the local official permission to sell it and also could bring some profit and the tariff is not so high, but the disadvantages is the profit margin is small. When using the wholly owned subsidiaries, the advantage is the tariff is very low and the profit margin is very high, but some local people will not like to buy due to they think.
As CEO of Harley-Davidson the way that I would compare the advantages and disadvantages of exporting would be;
Exporting Gives us instant market access into a new market making us able to maximize revenue in a short amount of time. A disadvantage of exporting is the tariffs that foreign government pose on imports which drive the cost up. And in some instances being viewed as an outsider is a disadvantage.
Joint Ventures offer another opportunity and also have advantages and disadvantages. Joint Ventures allows for much faster and less costly access to foreign markets. They provide there international partner with knowledge of the local market place. Another advantage is the resident partner has existing relationships with local suppliers, customers, and knowledge of local customs and languages. It combines the resources of two companies and allows the international partner to still be seen as an insider. And decreases the start up cost to the international partner
A disadvantage of a Joint Venture is that due to the cultural differences management conflicts may arise due to different cultures having different management styles. And another disadvantage is due to profits being shared the resident partner can become a competitor.
Foreign Subsidiaries is a local operation completely owned by a foreign firm. An advantage of the subsidiary is that it eliminates some of the risk associated with joint ventures. It allows us to have full control over management procedures in areas such as quality of the product. It also allows us to gain more knowledge of the local market, while also allowing us to be viewed as an insider. Political risk creates a disadvantage for subsidiaries with the risks.
2. in the United States, Harley has shifted the positioning of its products away from simply motorcycles and more toward status symbols of a particular lifestyle. What are the implications of cultural factors for positioning in other countries that Harley has targeted for growth, such as Japan, China, France, and Brazil?
The Harley Davidson lifestyle is one that is difficult to transfer into other markets just based on the fact that the lifestyle is based on American culture. Although that is a fact who is to say that the present Harley Davidson lifestyle has to be the same in each market, for instance although the Japans may be more likely to lean towards high speed motorcycles who is to say that we can’t find the “rebel.
Common people in Asia, Africa and South America are not interested in this type of vehicle. Many people in this area have difficult lives and their main responsibility is to feed their family and survive the life that they have. I believe Harley will not succeed in these continents. However, there are still many people, especially in Asia, who like everything which comes from Europe and USA. But this is a very diminutive segment.
3. If you were advising Harley’s CEO on business expansion in sub-Saharan Africa, what would you recommend in terms of setting up sales centers and manufacturing sites in countries like South Africa, Kenya, and Zimbabwe? When a new location is targeted, what would you suggest as the proper role for locals to play? Should they run everything, or should there be a mix of locals and expatriates? If the CEO wants to send expatriates from the United States into some locations, what selection criteria would you recommend, and why?
Before entering in any market and investing a large amount of capital, I would analyze which market-entry strategies would be more cost effective. My first step is to analyze global sourcing in China and India. For instance, an analysis of international wage gap by sourcing products in China and India should be researched. Harley can take advantage of the lower cost in these two countries. A second strategy is to analyze exporting goods to China and India creating a market to increase sales. A third strategy is to look into licensing agreements with foreign markets and analyze franchising start-up cost in foreign markets before deciding to make an investment in Joint Venture and Strategic Alliances (Schermerhorn, 2011).
4. Is it accurate to say that Harley is still “on top of its game”? How well is the company performing today in domestic and global markets? Does the electric Harley have what it takes to fuel the company’s next stage of global growth?
As of 2011, Harley Davidson has proved that they started the game and are still one of the leading brands in motorcycles in the world. They are promoting newer and more affordable sleek designs while giving out free cigars and beer (Valentine, 2011).Harley Davidson faces off competition from four globally known and well established companies. These are Honda, Suzuki, Yamaha and BMW Motorcycle. Other competitors are Bayerische Motormen Worker AG, Ducati Motor Holding Spa, and Polaris Industries Inc (Morning Star, 2013).Harley is holding on to 56% of the $4 billion market for heavyweight motorcycles, those with displacements higher than 650 cubic centimeters. However, a new threat to Harley is the Polaris Industries Polaris is a maker of jet skis and snowmobiles and already owns one motorcycle maker, Victory, which explicitly targets Harley in its advertising (Taylor, 2012). According to the Morning Star ratings, Harley Davidson is still one of the top motorcycle industries. They still enjoy a higher inventory turnover over its competitors. According to Market line (2009) report on the company, Harley-Davidson’s turnover ratio FY was 9.7 as compared to 6 of Bayerische Motormen Worker, 6.2 of Suzuki Motors and 7.2 of Honda motors.
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