Market Overview
The key features of Harley Davidson industry can be observed and identified using the models such as porter five forces model and by analysing the external environment in which the company operates. These frameworks are useful in evaluating the key features of any industry. In case of Harley Davidson, the company operates in the heavyweight motorcycle industry. In order to understand the key features the porter five forces model is used. The five forces are; the bargaining power of buyers, bargaining power of suppliers, competitive rivalry, threat of new entrants and threat of substitutes (Hitt et al. 2012). For Harley Davidson the industry evaluation is done on the basis of these factors.
Harley Davidson in motorcycle industry became the market leader as for the last 18 years the company was leading in the market in retail sales as the company had 32% share at the global level and 50% in the United States (Nolan and Kotha, 2006). However, throughout the journey the company face stiff competition from the players like Yamaha, Suzuki, Honda and Kawasaki. Later on, the company in the US faced stiff competition from Honda. Honda was successful in tapping the untap market of younger women and older males. Harley Davidson faced high competition from Honda as in 1965 Honda became the leading player because one out of two motorcycles were of Honda in the market and with customers in the United States (Nolan and Kotha, 2006). In order to compete with such players in the market, Harley Davidson made technological improvements. As because of high competition and more players in the market the market share of the company declined. Hence, it can be said that in this industry competition amongst existing players is high.
The buyers bargaining power in this industry is high because of stiff competition and availability of substitutes (Porter, 2008). In this industry, any change in price and quality aspects pushes the customers to buy different brand motorcycle. Such as decrease in product quality of Harley Davidson pushed customers to other brands. Even in order to survive, Harley Davidson reduced the motorcycle production (Nolan and Kotha, 2006). This indicates that the impact of buyers on operations of the company is higher. Due to that, companies operating in motorcycle industry get influenced by buyer’s actions and reactions. Further, the company sales get affected because of the change in customer segment such as baby boomers who consist of major market share were aging. So in motorcycle industry the bargaining power in hand of buyers is more as any change in quality and price of motorcycle resulted in shift of people to rivals or other brands.
The supplier bargaining power in the motorcycle industry is moderate because of more players in the market. There are many suppliers in the market who can supply raw materials such as assembly parts and many other products (Porter, 2008). So availability of more suppliers in the market increased the power in hand of manufacturers like Harley Davidson. In this manner, it can be said that in case of Harley Davidson, in the manufacturing industry the bargaining power in hand of suppliers is moderate as any change in quality and price and any other aspect by suppliers may lead to switch of manufacturers to new suppliers.
Competition in the Industry
The threat of substitute in motorcycle industry is also moderate as there are substitutes such as many customers don’t prefer heavy bikes so they go for sports bikes and many other models. Even now there are other options available for women. In order to boost sales and to reduce this threat Harley Davidson launched a rental program in which motorcycles were rented to customers. Through that the company generated demand for bikes in the market. Hence, it can be said that there is limited substitutes in for this industry as customers can use different mode of transport and either go for cars. But those who want sports bike and heavy bikes will be the loyal and regular customer base for the company operating in this industry. Hence, threat of substitute is moderate.
The threat of new entrants in the motorcycle industry is low as there is huge investment that is required in order to establish or enter in this market. Moreover, the present competition in this industry is higher that make it difficult for new players to compete by investing less amount (Porter, 2008). In a nutshell, the entry of new entrants is difficult because of higher investment requirement. As seen in the case of Harley Davidson, when the company entered in the motorcycle industry the competition was not that high but now because of high competition and presence of existing players in the market it is difficult for new players to operate and survive. Hence, entry of new players is not a force that can impact on the existing players.
Change is inevitable as organizations have to change in order to survive in the market and to sustain in the market for a longer run (Kotter, 2007). Few organizations able to implement change successfully and some lack efforts to get benefits from change. In the case of Harley Davidson, the company was able to change itself with the time in order to compete with the new players in the market. In any organization, changes can be done by following a process. The change process includes identifying the need for that means urgency of change, developing vision, forming a powerful guiding coalition, ensure communication of goals and vision to empower their actions, planning and creating short term wins, consolidating improvements and institutionalizing new approaches (Kotter, 2007).
Harley Davidson had gone through major transformation as the company went bankrupt in 1970 but later on became the leader in the US motorcycle industry. For the past 18 years the company had successfully leading in the retail industry with 50% market share in the United States and 32% market share at the global level (Nolan and Kotha, 2006). Throughout this the company went through many changes and the need for change arises because of competition and change in external environment in which the company operates. Throughout the history the company established image as a raw power which was the major selling point for the company. But all these things failed when Honda entered in the US market. This threat from competitor pushed the company to adopt different technologies so that the company can survive in this competitive environment (Ford and Ford, 2009). So here the urgency for change was the stiff competition from new players like Honda. After sometime, even other Japanese firms entered in the market included Kawasaki, Suzuki and Yamaha. The changes done at Harley Davidson in order to address this issue included; additional capital and then increase in production from 15,475 units to 70,000 units. For reducing costs many less skilled workers were added but all these impacted on the quality aspect of motorcycle and that impacted on the market share of Harley Davidson negatively. Than the Japanese manufacturers gave stiff competition to Harley Davidson by introducing larger and newer motorcycles between 1970 and 1980 and at that time Harley Davidson market share declined by 80%.
Buyer Power
But the company started to restructuring the model for that created a vision that was to survive in the market and for that the company benchmarked Honda. Than this vision of survival was communicated with employees. This led senior managers to visit Honda’s Ohio plant in the United States. With that, some of techniques that were used by Honda included Just in time system. But in case of Harley Davidson the computer controlled inventory system used by Harley Davidson cost the company nearly $2 million (Nolan and Kotha, 2006). These changes directly hit the competitive advantage and situation of the company. The changes that organization did resulted in introduction of MAN, increase in inventory system, reduction in work in process inventory, increase in market share and higher international revenues. This indicates that changes resulted in performance improvements and along with that the company continued to change (Kotter, 2007). Harley Davidson continuously reinvented the process with new themes, projects and changes. Further, to make sure that employees stuck to these changes the company used different ways to boost change and to create an environment in which change is implemented (Ford and Ford, 2009). For boosting change in the organization, the leader started providing rewards and incentives to employees. Such as changed the pay system as pay was given now on the basis of performance. Further, changes in worker responsibilities and job descriptions and production processes resulted to increase worker empowerment and job enrichment (Kotter and Schlesinger, 2008). Hence, throughout the discussion it is clear that Harley Davidson transformation was successful as the company was able to implement change successfully and the change initiative and planning was done in a manner that led to the survival of the company in this industry.
There are many differences between a leader and a manager. Leader is the one who influences others to attain goals. With that there are many traits that a leader possesses due to those leaders able to contribute in the success of any organization (Fondas and Stewart, 1994). In the case of Harley Davidson, the decision making and actions taken by leaders influenced the transformation process. As a leader has different attitude towards a goal. With that, different leaders use different leadership styles in the same situation in order to lead an organization.
According to Mumford et al. (2007) the different leadership skills are required at different levels such as junior, middle and senior level. The different leadership skills are cognitive skills, interpersonal skills, strategic skills and business skills. The cognitive skills are the foundation of the leadership skills (Zaleznik, 1992). These skills include communication skills, active listening and written communication skills. Another cognitive skill is the ability to adapt and learn. The interpersonal skills include interacting with others and development of social skills so that influence can be on others (Smith et al. 2015). Business skills requirements include management of personnel and also include motivating, developing and promoting individuals in their work. Strategic skills include visioning, systems perception, determining need of changes, identification of key causes and identification of downstream. Furthermore, some of skills are emotional intelligence and social intelligence. A leader should possess these skills so that effective leadership can contribute in the success of the business.
In case of Harley Davidson, the actions that a leader could take includes the right decision making as when decisions are taken at the right time and leader has the ability to determine when to change and what to do. This can lead to effective leadership and organizations goals can be attained. Moreover, the leadership style also play significant role in that according to Smith et al. (2015) there are different leadership styles such as autocratic, democratic and laissez faire. Transformational leadership style could be effective. Transformational leaders possess traits such as set of ideal behaviours, influence followers by generating high commitment, leaders communicate promote self-confidence and high expectations (Smith et al. 2015). With that, leaders are considered as hero and change agent who can do things differently and has ability to take risk. Hence, as a leader some of steps that can be taken in Harley Davidson are; quick decision making and use of transformational leadership style.
References
Fondas, N. and Stewart, R., 1994. Enactment in managerial jobs: A role analysis. Journal of Management Studies, 31(1), pp.83-103.
Ford, J.D. and Ford, L.W., 2009. Decoding resistance to change. Harvard business review, 87(4), pp.99-103.
Hitt, M., Black, J.S. and Porter, L,W., 2012. Management. Pearson Education.
Kotter, J., 2007. Leading change: Why transformation efforts fail. Harvard business review, 86, pp.97-103.
Kotter, J.P. and Schlesinger, L.A., 2008. Choosing strategies for change. Harvard business review.
Mumford, T.V., Campion, M.A. and Morgeson, F.P., 2007. The leadership skills strataplex: Leadership skill requirements across organizational levels. The Leadership Quarterly, 18(2), pp.154-166..
Nolan, R.L. and Kotha, S., 2006. Harley-Davidson: Preparing for the Next Century. Harvard Business School.
Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard business review, 86(1), pp.25-40.
Smith, K.G., Le, J., Lee, T.W. and Thompson, J.A., 2005, August. A New Vision of Management in the 21st Century. In Academy of Management Proceedings (Vol. 2005, No. 1, pp. 2-247). Briarcliff Manor, NY 10510: Academy of Management.
Zaleznik, A., 1992. Managers and leaders: are they different?. Harvard Business Review, 70(2), pp.126-135.
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