Motorcycle Market Motorcycle Industry Environmental Analysis One

Motorcycle Market Motorcycle Industry Environmental Analysis One of the primary determinants of success or failure in most industries is the level of competition and response to that competition by individual firms. In many industries this is entirely straightforward, as competition is direct in terms of product offering and pricing scale: McDonald's and Burger King are clearly in direct competition with each other, for example.

Things are not quite so clear-cut in the motorcycle industry, as the product lines of many of the key players in this industry differ dramatically and cannot all be said to be in direct competition with each other, the competitive forces and macroenvironmental influences that exist in the industry can affect different companies in very different ways. Numerous Competitors: In some regards, the motorcycle industry is very well populated and well balanced, and there is not a clear industry leader.

While Harley Davidson has the largest market share at 28%, Honda's 25% share is quite close. Yamaha, Suzuki, and Kawasaki all have greater than a ten percent share (17%, 13%, and 11%, respectively), and there are several smaller companies that specialize primarily in higher-end motorcycles. Factoring in the diversity of Honda's other industries of operations -- as well as Yamaha's and Suzuki's -- makes it clear that in terms of clout and purchasing power Harley Davidson doesn't stand a chance.

This differentiation as well as the strong market shares of the top five competitors undercut Harley Davidson's seemingly-obvious position as the market leader, increasing competition. Industry Growth: Motorcycle sales in the United States have been steadily dropping over the past several years, while sales of scooters and other similar products have been increasing.

This has a mixed effect on competition, with slow growth (or actually negative growth) increasing competition for true motorcycle sales, yet with the diversification of many companies into scooters, ATVs, and other vehicles that show high rates of positive growth decreasing competition in these areas. Essentially, companies that are not poised either to effectively diversify into other product areas or stake a very strong and immediate claim on a solid market share of pure motorcycles is liable to succumb to the forces of competition.

Attempting direct competition in motorcycle sales would lead to losses for all companies, though companies that are better diversified would be better able to withstand such competition and engage in ongoing aggressive tactics as a means of securing future profitability and security through increased market share. Overall, competition is increasing. Differentiation: Much of market share and sales is built on branding, which is essentially a form of differentiation; this high level of perceived differentiation in the motorcycle industry decreases competition.

Though at one level motorcycles are a near commodity, serving as transportation vehicles that can be easily interchanged insofar as this utilitarian purpose goes, many if not most motorcycle owners derive a great deal of personal pleasure and intrinsic utility from their motorcycles. These individuals buy specific motorcycles made by specific companies for very specific reasons; a Harley Davidson enthusiast would never consider his or her bike interchangeable with a Suzuki, and vice versa. As these individuals constitute a large part of the market, differentiation is very important.

High Fixed Costs: Especially as factories become more and more high tech, the fixed costs that are a part of the motorcycle manufacturing industry grow ever higher. Real estate for dealerships also comes at a high price, and though these costs are not necessarily incurred directly by manufacturers they affect the ultimate sale price and thus sale rates of the motorcycles, and in this manner have an impact on the bottom line of these companies.

These high fixed costs serve to increase competition in the industry, as operating (and selling) at capacity creates the greatest opportunity to recoup expenditures and maintain profitability. As motorcycle sales are decreasing, however, operating at capacity would create a definite surplus unless motorcycle companies actually reduced their manufacturing capabilities through the sale of real assets, and such protectionist and cost saving measures might actually serve to increase competition slightly. If sales trends continue to decline, companies will need to begin reducing their manufacturing operations and assets to remain profitable.

Macroenvironmental Impacts In addition to the forces affecting competition identified and discussed above, certain macroenvironmental factors are also having a major impact on the motorcycle industry, though they are influencing some companies more than others. The move to "go green" and reduce carbon emissions is doubtless one of the reasons behind the surge in sales of scooters; rising oil and gasoline prices are also part of this trend.

Both of these forces make the sale of lighter and more fuel-efficient motorcycles also more attractive (though obviously not as attractive as scooters). This could serve to boost sales for Honda and other fuel-efficiency masters, but market share leader Harley Davidson is poised to suffer the biggest backlash from this trend. In addition, the overall trend in vehicular transportation over the past decade or two has been a move towards larger and safer vehicles, which is potentially one reason that motorcycle sales have begun to diminish so steadily and significantly.

As the dangers of motorcycle use receive more attention, the overall market for these vehicles is decreasing -- another potential reason for the.