Motorcycle Market and International Expansion

¶ … e-Activity, outline the opportunities for and threats to H-D that its closest foreign competitor poses. Propose the strategic manner in which you, as a manager, would use the information that you have outlined to your advantage.

Opportunities

Threats

Customer retention due to customization of motorcycles.

Transitioning itself into a global brand connecting with other cultures.

Expanding product sales into international markets such as India, China, and other European and Asian countries.

Diversification of product portfolio to include clothing and accessories

Cheaper goods from international competitors

Alternative modes of transportation could possibly become prominent

Economic downturn

Market Saturation in the companies primary markets

Lack of demand in international markets such as Europe, which relies heavily on public transportation

As a manager, I would focus on product differentiation and value proposition. I would focus of building a lasting brand that resonates with consumers as oppose to simply competing based on price. Fortunately, H-D already has a very strong brand and commanding market share in the motorcycle market. According to its 2014 Annual Report, the company has 74% market share in many of the top categories of motorcycles. This is a testament to the strong brand appeal of the franchise and product line up. Due to this strong brand, I would look to expand to international markets that have similar purchasing behavior to America.

From the second e-Activity, examine two (2) instances when multinational companies have used offensive or defensive competitive strategies. Determine the major advantages that global companies would have over domestic competitors in sustaining competitive advantage as a result of using offensive or defensive competitive strategies.

Global companies now have a distinct advantage due to economies of scale and global diversification. The world is now becoming more interconnected. What occurs in one part of the world may have grave consequences for a seemingly unrelated party. A recent example occurred with Greece and the possibility of default. Although Greece has a national GDP the size of New Jersey, analysts worried about the ripple effects of a Greece default and exit from the Euro. Global companies therefore often have an advantage over their domestic competitors in terms of their ability to endure an area related crisis. For example, Harley Davidson outsources production of its parts in varying countries. Through the diversification of locations the company is less susceptible to currency exchange risk or activities within one particular country.

Currently, the dollar is appreciating against many of the world currencies. As a result exports of American good are now more expensive relative to imports. However, as Harley Davidson, produces some its products in other countries, it is now better hedged against the rising dollar. Competitors that produce solely in America however are now at a competitive disadvantage.

Similarly, international companies can benefit from economies of scale. As manufactures like Toyota, Harley-Davidson, or GM become larger, the per-unit cost of production is diminished. This allows the companies to produce products more cheaply on a per unit basis. Cheaper goods that are produced around the world provide these firms with another competitive advantage over domestic producers.