Question

Company: Harley Davidson

Questions

A) Does the firm have a competitive advantage? What is it and can it sustain it? How can it build one, if it does not have an advantage?

B) What is the firm's generic business level strategy? How do the functional-level decisions and strategies contribute or not contribute to business level strategy?

Answer 1

Company: Harley Davidson

Introduction:- Harley Davidson, Inc. is one of the most successful motorcycle manufacturers in the world. It was founded in 1903 by William Harley & Davidson brothers. It is more famous through its name recognition, brand quality, and loyalty. The company is also more popular and got benefitted by having them made in America image which got attached to its products (thus representing a tradition of US engineering and manufacturing). Moreover, the company operates in Europe, North Africa, and the Middle East and Asia.

A) Does the firm have a competitive advantage? What is it and can it sustain it? How can it build one, if it does not have an advantage?

Answer: A good company will always have one of the competitive advantages. Harley Davidson is one of them. It is in business for over a period of hundred years and is still one of the leading sellers of motorcycles across the entire world. Some of the Harley Davidson's advantages are name recognition, brand quality, and customer loyalty. The image of a Harley rider is one of a tough, independent, free spirit, ready and willing to take on the world type of man. the sound of the vehicle itself is unique and is very much identifiable.

Harley Davidson is a rare combination of quality and value available in the market at a reasonable price. It has an advantage on the cost side owing to its scale and an advantage on the differentiation side owing to a strong natural liking for its product.

In addition to being a great business, Harley Davidson is also an excellent capital allocator. Even in the current sluggish sales environment for its motorcycles, it generates enough free cash flow to yield approximately 10% to the current market price.   

To conclude, Harley Davidson has all the sources of Competitive advantage like - Location, Customer Loyalty, Customer service, Exclusive Merchandise, Legal advantage (patents, copyrights etcc.,) and finally a quality committed employees.

B) What is the firm's generic business-level strategy? How do the functional-level decisions and strategies contribute or not contribute to business-level strategy?

Answer - According to the Poter's Generic Strategies, Harley Davidson has a Focus and Differentiation Strategy with value addition of cost advantage.

Focus Strategy -

According to William Davidson, President of Harley Davidson, "Basically we do not believe in the lightweight market. We believe that motorcycles are sports vehicles and not a transportation vehicles. Even if a man says he bought a motorcycle for transportation, it's generally for leisure time use. The lightweight motorcycle is only supplemental."

Harley Davidson focus strategy is on the heavyweight market with customers who consider their motorcycle as a luxury product.

Differentiation Strategy -

Harley Davidson products are based on customer's social and psychological needs - thus maintaining its business of selling lifestyle vehicles and not for transportation.

With this strategy, they make their product identifiable when compared with another.

Also, by creating customer value by providing - Test rides, Owners club activities and various sponsored events for Harley riders.

Functional Level strategies -

The functional level strategies of all organizations are concerned with the coordination of the functions of the organization which is marketing, finance, human resources, production, research and development, etc.

The above individual business and corporate-level strategies ensures that set goals and objectives are achieved.

At Harley, employees are not treated as machines but are allowed to be innovative in the creative development of the company. The company marks employee's involvement as critical to the accomplishment of the company's vision and mission. They management partnered with the union and this was a key component in motivating employees and encouraging them to buy-in to any change in strategy which management wished to implement at Harley. The company always believed that change will happen as long as you don't try to force it your way. If you lead participative change, it will work. Thus, focus more of team-building strategy.

Harley also provides its employees stock ownership and this strategy motivates and encourages them a sense of belonging which makes them very important in the involvement of organizational growth.

This kind of investment has also given Harley a business level of competitive advantage in the motorcycle industry.