Week 5 Notes
Week 5 Notes BUAD 497
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This 4 page Class Notes was uploaded by Emily Laurienti on Saturday September 24, 2016. The Class Notes belongs to BUAD 497 at University of Southern California taught by Prof. Michael Mische in Fall 2016. Since its upload, it has received 54 views. For similar materials see Strategic Managment in Business Administration at University of Southern California.
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Date Created: 09/24/16
9.20.16 Harley Davidson Case Study Harley has a connotation of freedom Started as a utilitarian vehicle—wanted to sell to post offices 1930’s Harley sold motorcycle designs to the Japanese Porter’s 5 Forces 1901-1917 o Inhabitants (rivalry) Horse traders, blacksmiths, bicycle dealers You could walk, ride a horse, take a carriage, or ride a bike o Buyers o Substitutes Motorbike Automobile—Ford—didn’t invent automobiles, car was invented in Germany Very very expensive, only aristocrats could buy a car 1908 Ford started mass production o This created economies of scale Substitutes being driven by price and range—can buy cheaply and have mobility o Suppliers o Entrants Attractiveness driven by— The economy The culture Employment rates Need for mobility More entrants means the industry is more intense and competitive Need money Need differentiation Harley Davidson Indian 53 other motorcycle manufacturers WWI—H-D starts selling to the military, not a lot of consumerism occurring Harley Timeline 1901-1917—creating the market, transformational o Innovation o Demonstration 1919-1929—Expanding through military operations, opportunistic strategy o No foreign competition, intense domestic competition After the wars, soldiers bought motorcycles 1929-1939— o Defending against the economy, trying to survive o No employment, no income, no consumption or wealth o Innovation Knucklehead 1940—WWII o Expanding, wartime production 1946-1960 o Huge expansion WWII veterans Industrialization of the economy Lifestyle changes 1961-1970’s o Defending against competition o Japan comes in o Germany starts selling o Lifestyle o IPOAMFloss of identity 1970-1980’s o Defending, still declining 1983-1990 o Creating, Expanding o 1986 EVO2 engine o Innovation is creating the market o Quality improves Questions to ask What factors contributed to the decline of H-D? o Cyclical industry o Competition entering o Bad quality products o Image of the company How did H-D turn itself around? o Focused on the image of the product and its lifestyle connotation o Gathered loyal customers o Drove resales through their image o Relied on merchandise and style to help sell the lifestyle How did they go about changing operations? o Visited Japan to understand how the Japanese were building motorcycles o Confronted reality realizing their company was inferior o Hired Accenture who brought in Enterprise Resource Planning—a lot of the tech that Harley would use to automate its plants Historical view 1920’s largest motorcycle producer in the worlds 1986 combined foreign automakers accounted for 77% of the US heavyweight and 63% of US Super-Heavyweight markets o H-D is a manufacturer which means they need economies of scale; if business is bad, production is low and cost is higher Pre-1980’s poor supply chain management and manufacturing process High pricing in comparison to foreign competitors 2007 worker strike 1987-2009 Buell motorcycles Expansion of product line Antiquated quality practices—created an opportunity for the Japanese to enter the market Inefficient manufacturing processes High rejection and rework rates Factors of Customer Experience Resources and Capabilities of Firm o Quality o Dealers o Supply chain o Service External Factors o Macroeconomic factors o Competition Mobility Barriers in Motorcycle Industry Based on price and image H-D had high price and high image BMW had high price and image All other manufacturers had a lower image Image in this industry translates to a distinct lifestyle, representing a mobility barrier Japanese Entry Created a new market—smaller motorcycles Gave off a different lifestyle (you meet the nicest people on a Honda Major Threats HD raised its prices Honda made lightweight motorcycles Changed the market—nice people Turnaround 1984 EVO2 engine comes out and Harley took off 1980’s motorcycle market declined Older baby boomers now had money to spend an Harley became a luxury item Strategic Thought Process: Company Aging customer base Primarily blue collar—susceptible to recession Newly created label as a lifestyle product Harley’s basis of competing is and always has been innovation
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