Harley Davidson and Manufacturing

Polaris & Victory: Entering & Growing the Motorcycle Business Strategic Profile and Case Analysis Purpose This is a case study of Polaris Industries and how they managed to enter the motorcycle market in 1998 with the Victory brand of motorcycles. The charge was led by Matt Parks who joined the company in 1987, by being asked to conduct research on the viability of Polaris entering the motorcycle market (Hitt, Ireland, & Hoskisson, 2016). The name Victory was coined when the company was still pursuing the possibility of starting motorcycle production.

Victory was a confidential codename for the project, and it is Parks who came up with the name. Research indicated that there was room for another competitor to enter the market especially in the cruiser business that was currently dominated by the Japanese producers and Harley-Davidson. Leveraging on its manufacturing capabilities, Polaris was able to begin developing a prototype for the Victory cruiser that was led by Geoff Burgess.

The team analyzed different cruisers in the market and went ahead to develop a unique cruiser motorcycle that would suit the American market. Polaris opted to develop their own engine to ensure that it does not compromise on performance, but they had to make use of outsourcing and manufacturing their own equipment. The Victory became a reality on February 19, 1997, when the company finally made the announcement, and the first bike rolled off the line on July 4,1998.

With the production of the Victory motorcycles progressing positively, Polaris managed to acquire companies like Indian Motorcycles, and Brammo. The acquisitions were all aimed towards boosting the development of the motorcycle division of Polaris. Polaris had opted to limit sales of Victory motorcycles to its dealerships only, but there is a concern if this was a good strategy or could it be affecting the company's sales. External Situation Analysis Polaris began by carrying out research to establish its viability and potential customers of the motorcycles.

The potential customer was identified as comeback riders who have had careers, children, and mortgages. There are not targeting the youth market. With the Victory motorcycle, Polaris wanted to offer the American riders another American made motorcycle apart from Harley-Davidson, which is what most of the riders would prefer. Targeting to destabilize the status quo Polaris is most likely to gain opportunities since it is also an American company. Polaris has hired experienced individuals to lead the development of the engine and design of the Victory motorcycle.

This gives the company some technological advantage over its rivals. Outsourcing other components ensure that the company can receive the best quality from the outsourced companies. The price tag for the Victory would be much lesser than that of if rivals and this would give the company economic opportunities and increase its sales. The company is looking into expanding into the global market. Based on Porters five forces model the threat of new entrants in the market is quite high.

There are many motorcycle manufacturers, and they would like to tap into the American market. There is no threat of substitutes since the target market for the motorcycles are experienced and mature individuals who like to ride American made motorcycles. Customers have a bargaining power, and this has been demonstrated by the price point selected for selling the Victory. Customers might not willing to pay high prices for the motorcycles. Suppliers do not have much bargaining power since there are numerous suppliers of the same components within the industry.

Industry rivalry within the industry is not too high, and most competitors prefer to concentrate on their products. The pricing of the products is what sets each competitor apart (Porter, 2008). The key competitors within the industry are Japanese manufacturers. Harley-Davidson, Excelsior-Henderson, BMW, and Big Dog. The Japanese manufacturers have large overall sales because they have diversified product lines, which makes them strong competitors. Even with the entry of the Victory, they were still dominating the market. Harley-Davidson has a variety of products, and they have been a rider's dream bike.

They have high-quality bikes that allow the company to sell them at a premium. However, with the increase in demand the company was not able to meet the demand of its bikes, which forced customers to wait for over a year for the delivery of the bike. This impacted the company negatively and resulted in them losing sales. Excelsior-Henderson was founded in 1876 and resurrected in 1993 by brothers Dave and Dan Hanlon. The company intended to compete with Harley-Davidson and Victory, though they were charging a higher price.

The company's production facilities never reached the expected targets, and the company went bankrupt in 2000. BMW has always produced high-quality performance motorcycles that have comfort and style. They have an engineering advantage, and they can charge premium prices for their bikes. Internal Situation Analysis Diversification is a key strategy for the company that has ensured that the company is able to keep its plants busy all year round. Diversification is a strength for the company.

The company has a strategy for research where it extensively analyses and surveys its potential customers before beginning the manufacturing of a product. While research is necessary, it takes up vital time and could turn out to be a weakness. The human resource strategy has ensured that the Polaris employees do not need union representation and this has been a strength for the company. Innovation is another critical strategy for Polaris. The company tries to build and come up with new products that would rival the current market.

This is a strength for the company. The primary activities of a value chain are inbound logistics, operations, outbound logistics, marketing & Sales, and service (Dekker, 2003). The support activities of a value chain are firm infrastructure, human resource management, procurement, and technology. The parts of the company that adds value are Human resource management because it ensures that the company has the required and experienced employees to perform the required tasks.

Technology allows the company to innovate and build products as efficiently as possible and to also reduce the production costs. Marketing & sales are also vital because these are the activities that push for the company's products in the market. Operations also add value as this is the link between the distributors and the company. Inbound logistics handle all the incoming materials and ensure that the company has the necessary materials at any given time. Outbound logistics ensures that dealers have the products on time.

Procurement and firm infrastructure do not add much value. SWOT Analysis The strengths of the company are it has established itself and has loyal customers. They offer low prices for quality products. Have a wide dealership network across the country. Weaknesses include relying too much on research, expanding too fast, and heavily relying on its dealerships. Opportunities are there is a market for the cruiser motorcycles manufactured in America, there is potential to increase market share by producing the Indian Motorcycles, and aggressive marketing would result in increased sales.

Threats have to do with the entry of Chinese manufacturers. Polaris should continue offering competitive prices to ensure that it has cost advantages over its rivals. Leverage on its wide dealership and at the same time accept sales to occur in other areas. Maintaining the quality and uniqueness of products will always set the company apart in the industry. Pushing on its current customers, the company can increase its sales since most of them would be willing to purchase another product by Polaris.

There is little the company can do to reduce the threat of Chinese manufacturers, but it can set a strong base by pushing for the made in America strategy. Strategy Formulation The strategies are cost leadership, differentiation, and market focus. Cost leadership allows a company to compete for a wider customer base based on the price of its products. Polaris has to ensure that it controls its manufacturing costs in order to have lower prices (Nandakumar, Ghobadian, & O'Regan, 2010).

The advantages of this strategy are that there will be less rivalry, the market is less attractive to new entrants, and it's easier to fight off substitutes. The disadvantage of this strategy is that in the case of a slight price increase customers might run.