GM, Pfizer, and Harley-Davidson: Stock Outlook & Strategy

Stock Price Outlook for the Next Year

General Motors (GM) has a good outlook for its stock price over the next year. It has often been said that what is good for GM is good for America — meaning that the health of the stock market and the broader American economy is closely tied to how the largest companies are performing (Levinson, 2006). When the American economy does well, large companies tend to do well, and vice versa. As one of the largest automakers in the world, General Motors exerts significant influence on the stock market, and the country is affected by how well the company performs. Fortunately for both the American public and the American stock market, General Motors is continuing to grow, and its research and development of vehicles that consumers want to buy is increasing (Levinson, 2006). This is allowing the company to build not only greater market share but also more revenue and income. By doing so, GM is able to acquire new technology, pay down debt, expand, hire more workers, and accomplish countless other tasks — both large and small — that help the economy continue to prosper within the United States.

For Pfizer, things are somewhat different. While large drug makers are still showing strong revenue and profit margins, they are running into increasing trouble with the FDA and other governing bodies that oversee the pharmaceutical industry. They are also facing problems with lawsuits and drugs being removed from the market due to safety concerns, side effects, and patient deaths (Barrett, 2005). The recalls and lawsuits are taking a toll on all major drug makers, and as a result it appears that Pfizer's stock will not rise significantly within the next year. It is possible that this outlook could change due to new FDA regulation or a breakthrough drug brought to market, but for now these outcomes appear unlikely (Barrett, 2005). The Pfizer Company will not disappear or go bankrupt, however, because it has too many medications generating strong market share and revenue. The company still performs well overall; it simply appears that the next year will not be one of significant stock market growth for Pfizer.

Harley-Davidson's stock price outlook is more difficult to predict. In general, the company has performed steadily and well throughout its history, but it recently moved into the Chinese market (Sui, 2006). At present, the expensive motorcycles are not well-received by Chinese consumers — primarily because of the high duty taxes, rules, and regulations imposed on them in that country. It is believed that this will change over time, and when it does, Chinese consumers will be able to purchase and ride the motorcycles more freely in cities and on public roads. Currently, Harley-Davidson engines are too large to be legal in most Chinese cities, and many roads are not safe for riders, as China records a high number of traffic fatalities each year due to unsafe driving and inconsistently enforced road rules (Sui, 2006). When these conditions improve, the Chinese market will become far more lucrative and Harley-Davidson's stock price will likely rise; for now, however, it seems that the stock will remain relatively close to its current level (Sui, 2006).

Even though not all of these companies appear to be performing at their full potential at the moment, each seems to have selected the right process type for its industry. The process type that General Motors has employed throughout its history has allowed the company to continue manufacturing vehicles and maintaining strong market share while other companies have struggled with more severe problems. This does not mean that General Motors has never faced difficulties — only that it has struggled less than many other automakers still in operation today. Indeed, some car companies have gone completely bankrupt while GM has remained generally strong and stable.

Process Type and Rationale

Pfizer uses a different process type from General Motors. As a drug maker, Pfizer is primarily focused on gaining FDA approval for new drugs and keeping its existing medications available to the patients who need them. Its process type is constrained by the regulations imposed on it and other pharmaceutical companies by the FDA. The governance framework in the United States directly shapes what a drug maker can and cannot do in marketing and selling its products, and this directly affects Pfizer — which might operate with a somewhat different process type if it had more flexibility to do so.

Harley-Davidson, by contrast, uses a process type that is arguably the most distinctive of all three companies. Harley-Davidson has maintained a clear competitive advantage in its products and services, even though it faces some challenges. Founded in 1903, the Harley-Davidson motorcycle company is about far more than motorcycles — it represents a way of life. Competitors also sell motorcycles, but a sense of freedom, rebelliousness, and romance has become almost exclusively associated with the Harley-Davidson brand. This brand identity influences why many consumers choose a Harley-Davidson over a competitor's model. Even though this feeling is not a tangible product or service, it has been attached to the brand for so long that many consumers cannot imagine another motorcycle company delivering the same experience. This is largely why motorcycle groups across the country ride solely Harley-Davidson motorcycles and often do not welcome riders of Japanese or other competing brands.

The Harley-Davidson Company also tends to market its motorcycles in a notably traditional way. The company does maintain a website and makes use of it; however, digital marketing is not the primary or most prominent channel through which it sells its motorcycles. Much of what Harley-Davidson relies on is the prestige accumulated over more than 100 years of producing quality motorcycles. This prestige is a key driver of purchase decisions, and brand recognition functions as one of the company's most powerful marketing tools.

One of Harley-Davidson's most important competitive advantages is its deliberate cultivation of this prestige. The company works to communicate to prospective buyers that owning one of its motorcycles is about far more than riding something flashy down the road. Many of its bikes carry a sense of class and craftsmanship, and Harley-Davidson motorcycles have evolved into status symbols in a way that competitor brands generally have not achieved. This combination of heritage, lifestyle association, and brand prestige forms the foundation of Harley-Davidson's competitive strategy and helps explain its enduring appeal in the marketplace.