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Case 16 – Harley Davidson Strategic Audit of a Corporation III. External Environment: Opportunities and Threats (SWOT) Natural Physical Environment: Sustainability Issues 1. What forces from the natural physical environmental are currently affecting the corporation and the industries in which it competes? Which present current or future threats? Opportunities? a. Climate, including global temperature, sea level, and fresh water availability b. Weather related events, such as severe storms, floods, and droughts c. Solar phenomena, such as sun spots and solar wind . Do these forces have different effects in other regions of the world? No, weather will always be a factor to some degree no matter what part of the world you are in. Societal Environment 1. What general environmental forces are currently affecting both the corporation and the industries in which it competes? Which present current or future threats? Opportunities? a. Economic – current state of the economy has a huge impact on how people spend, which in turn affects business for Harley as well as the companies they compete with.
When spending is down, sales will also have a slight downturn. b. Technological – With new technology being invented daily, the company can offer new and more innovative products to consumers. c. Political-legal d. Sociocultural 2. Are these forces different in other regions of the world? Task Environment 1. What forces drive industry competition? All of the areas listed below drive industry competition. Are these forces the same globally or do they vary from country to country? I think the forces would be the same globally. Rate each force as high, medium, or low. . Threat of new entrants – Medium b. Bargaining power of buyers – High c. Threat of substitute products or services – Medium d. Bargaining power of suppliers – Medium e. Rivalry among competing firms – High f. Relative power of unions, governments, special interest groups, etc. – Low 2. What key factors in the immediate environment (that is, customers, competitors, suppliers, creditors, labor unions, governments, trade associations, interest groups, local communities, and shareholders) are currently affecting the corporation? Which are current or future? Threats?
Opportunities? Summary of the External Factors – EFAS Table Table 4-5| | External Factors| Weight| Rating| Weighted Score| Comments| 1| 2| 3| 4| 5| Opportunities| | | | | The international heavy weight market is growing and is now larger than the U. S. heavyweight market develop environmental friendly products| 0150| 2| 0. 300| Protection of environment| The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world| 0150| 2| 0. 300| | Interest rates are at historical lows. 0. 100| 2| 0. 200| | Women and younger riders are increasing becoming interested in bikes| 0. 100| 4| 0. 400| | Alliances with Ford Motor Company or other automobile manufacturers are possible. | 0. 025| 1| 0. 025| | Industry registrations of domestic heavyweight motorcycles are increasing. | 0. 050| 3| 0. 150| | Market share increasing in Europe and Asia for the last two years. | 0. 025| 3| 0. 075| | Increasing demand in US markets for bikes. | 0. 025| 4| 0. 100| | Customers value quality parts| | | | | Threats| | | | |
Harley’s ongoing capacity restraints caused a shortage supply and a loss in domestic market share in recent years. | 0. 100| 2| 0. 200| | . Harley’s average buying age is 42 years old and increasing| 0. 050| 2| 0. 100| | The European Union’s motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U. S and increased environmental stand. | 0. 050| 2| 0. 100| | Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified| 0. 025| 1| 0. 025| | Environmental protection laws. 0. 025| 3| 0. 075| | Shifts in buyers needs and tastes. | 0. 025| 3| 0. 075| | Customer loyalty in European and Asian Countries| 0. 025| 2| 0. 050| | Costs could become expensive from international importing| 0. 025| 2| 0. 050| | The Buell division needs to continue to produce a quality motorcycle under Harley’s brand name| 3| 0. 075| 0. 075| | TOTAL| 1. 00| | 2. 38| | http://www. soopertutorials. com/business/strategic-management/1028-external-analysis-of-harley-davidson-inc. html IV. Internal Environment: Strengths and Weaknesses (SWOT) Corporate Structure 1.
How is the corporation structured at present? a. Is the decision-making authority centralized around one group or decentralized to many units? Authority is decentralized around both foreign and domestic operations. b. Is the corporation organized on the basis of functions, projects, geography, or some combination of these? It is a Multi-National Corporation and it is organized geographically. It currently has operations in Asia, Africa, Canada, Europe, Latin America, Middle East, and the U. S 2. Is the structure clearly understood by everyone in the corporation?
The structure is understood by all employees. Employees generally review structure changes and adapt accordingly. 3. Is the present structure consistent with current corporate objectives, strategies, policies, and programs, as well as with the firm’s international operations? Yes, all areas are consistent with Harley’s current geographical structure. 4. In what ways does this structure compare with those of similar corporations? It is similar in comparison with Honda’s structure. Both company’s’, sell globally and both are MNC’s that have adopted the geographic organization structure.
Corporate Culture 1. Is there a well-defined or emerging culture composed of shared beliefs, expectations, and values? Yes, at Harley, they believe in making the customer happy and achieve this goal by providing products and services that delight customers while also offering value. The H-D culture provides employees with continued opportunities for growth and professional development because they believe that people are their only long term competitive advantage. Their culture values and promote employee development, diversity, and leadership excellence. . Is the culture consistent with the current objective, strategies, policies, and programs? Yes 3. What is the culture’s position on environmental sustainability? The Company has developed a multicultural, multigenerational strategy focused on four pillars–growth, continuous improvement, leadership development and sustainability. 4. What is the culture’s position on other important issues facing the corporation (that is, on productivity, quality of performance, adaptability to changing conditions, and internalization)?
Together, the Company’s leadership team and employees throughout the organization are charting new ways to broaden the customer base and start the journey for new generations of riders, deepen relationships and extend the journey with current customers, and expand the Harley-Davidson footprint in markets around the globe. 5. Is the culture compatible with the employees’ diversity of backgrounds? Yes, the diversity of employees is used to provide different perspectives in the planning and implementing of Harley-Davidson products. 6.
Does the company take into consideration the values of the culture of each nation in which the firm operates? Yes Corporate Resources 1. Marketing c. What are the corporation’s current marketing objectives, strategies, policies, and programs? The main objective is to have happy and satisfied stakeholders, which is inclusive of customers, employees, suppliers, investors, government and society. Their strategies are based on customer desires which are gathered through surveys, interviews and focus groups. i. Are they clearly stated or merely implied from performance and/or budgets? They are clearly stated. ii.
Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments? Yes d. How well is the corporation performing in terms of analysis of market position and marketing and marketing mix (that is. Product, price, place, and promotion) in both domestic and international markets. As far as product, they are the nations #1 seller of heavyweight motorcycles with 35 models and more than 1500 dealers worldwide. Comparatively priced with Japanese models, Harley’s cannot compete as the Japanese models sell for much less so Harley’s tend to sell more on the customization abilities.
Harley –Davidson holds approximately 50%of the market share when compared to its competitors and their share is increasing globally. Harley –Davidson uses a series of HOG activities to promote its products. How dependent is the corporation on a few customers? How big is the market? Where is it gaining or losing market share? What percentage of sales comes from developed versus developing regions? What are current products in the product life cycle? iii. What trends emerge from this analysis? iv. What impact have these trends had on past performance and how might these trends affect future performance? . Does this analysis support the corporation’s past and pending strategic decisions? vi. Does marketing provide the company with a competitive advantage? e. How well does the corporation’s marketing performance compare with that of similar corporation’s? For all of Harley-Davidson’s new marketing efforts, it lags slightly behind its competitors Kawasaki and Suzuki in percentage of motorcycle sales to women in large part because the Japanese companies offer a wider range of smaller bikes that are less intimidating to many novice female riders. f.
Are marketing managers using accepted marketing concepts and techniques to evaluate and improve product performance? (Consider product life cycle, market segmentation, market research, and product portfolios. ) Yes, they are developing more bikes that are woman-friendly as well as developing complete clothing and accessory lines geared specifically to the female rider. g. Does marketing consider environmental sustainability when making decisions? Yes h. Does marketing adjust to the conditions in each country in which it operates? Yes i. What is the role of the marketing manager in the strategic management process?
Marketing managers are frequently accountable for influencing the level, timing, and composition of customer demand. This usually occurs because the role of a marketing manager can vary significantly based on a business’ size, corporate culture, and industry context. 2. Finance a. What are the corporation’s current financial objectives, strategies, and policies and programs? There is moderate revenue growth mainly through international sales and lowering operations in the United States. The company went public in 1986, since then, about 18,000% gain in company stock. . Are they clearly stated or merely implied from performance and/or budgets? Implied from performance and budget ii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments? yes b. How well is the corporation performing in terms of financial analysis? (Consider ratio analysis, common size statements, and capitalization structure. ) How balanced, in terms of cash flow, is the company’s portfolio of products and businesses? What are investor expectations in terms of share price?
They are performing fairly well in comparison to their competition. In 2005 revenue grew to $5. 34 Billion a 6. 5% increase over 2004, while net income grew 7. 8% to $959. 6 million. Revenue for Buell was $93. 1million in 2005, a 17. 8% increase from 2004, on a 13. 3% growth on shipments. iii. What trends emerge from this analysis? There seems to be a trend of decrease. iv. Are there any significant differences when statements are calculated in constant versus reported dollars? v. What impact have these trends had on past performance and how might these trends affect future performance? i. Does this analysis support the corporation’s past and pending strategic decisions? vii. Does finance provide the company with a competitive advantage? c. How well does the corporation’s financial performance compare with that of similar corporations? d. Are financial managers using accepted financial concepts and techniques to evaluate and improve current corporate and divisional performance? (Consider financial leverage, capital budgeting, ratio analysis, and managing foreign currencies. ) e. Does finance adjust to conditions in each country in which the company operates? . Does finance cope with global financial issues? g. What is the role of the financial manager in the strategic management process? 3. Research and Development (R;D) h. What are the company’s current R&D objectives, strategies, policies, and programs? High performance with focuses on quality, powerful engine and sleek design. viii. Are they clearly stated or merely implied from performance or budgets? ix. Are they consistent with the corporations’s mission, objectives, strategies, and policies and with internal and external environments? . What is the role of technology in corporate performance? xi. Is the mix of basic, implied, and engineering research appropriate given the corporate mission and strategies? xii. Does R;D provide the company with a competitive edge? i. What return is the corporation receiving from its investment in R;D? j. Is the corporation competent in technology transfer? Does it use concurrent engineering and cross-functional work teams in product and process design? k. What does technological discontinuity play in the company’s products? l.
How well does the corporation’s investment in R;D compare with the investments of similar corporation’s? How much R&D is being outsourced? Is the corporation using value-chain alliances appropriately for innovation and competitive advantage? m. Does R&D adjust to the conditions in each country in which the company operates? n. Does R&D consider environmental sustainability in product development and packaging? o. What is the role of the R&D manager in the strategic management process? 4. Operations and Logistics p.
What are the corporations’ current manufacturing/service objectives, strategies, policies and programs? The company expanded its international operations in Windsor, England to manage the European market. xiii. Are they clearly stated or merely implied from performance or budgets? xiv. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments? q. What are the type and extent of operations capabilities of the corporation? How much is done domestically versus internationally?
Is the amount of outsourcing appropriate to be competitive? Is purchasing being handled appropriately? Are suppliers and distributors operating in an environmentally sustainable manner? Which products have the highest and lowest profit margins? xv. If the corporation is product oriented, consider plant facilities, type of manufacturing system (continuous mass production, intermittent job shop, or flexible manufacturing), age and type of equipment, degree and role of automation and/or robots, plant capacities and utilization, productivity ratings, and availability and type of transportation. vi. If the corporation is service oriented, consider service facilities (hospital, theater, or school buildings), type of operations systems (continuous service over time to same clientele or intermittent service over time to varied clientele), age, and type of supporting equipment, degree and role of automation and use of mass communication devices,(diagnostic machinery, video machines), facility capacities, and utilization rates, efficiency ratings of professional and service personnel, and availability and type of transportation to bring service staff and clientele together. . Are manufacturing or service facilities vulnerable to natural disasters, local or national strikes, reduction or limitation to resources from suppliers, substantial cost increases of materials, or nationalization of governments? s. Is there an appropriate mix of people and machines (in manufacturing firms) or of support staff to production (in service firms? t. How well does the corporation perform relative to the competition? Is it balancing inventory costs (warehousing) with logistical costs (just-in-time)?
Consider per unit of labor, material, and overhead; downtime; inventory control management and scheduling of service staff; production ratings; facility utilization percentages; and number of clients successfully treated by category (if service firm) or percentage of orders shipped on time (if product firm). xvii. What trends emerge from the analysis? xviii. What impact have these trends had on past performance and how might these trends affect future performance? xix. Does this analysis support the corporations’ past and pending strategic decisions? xx.
Does operations provide the company with a competitive advantage? u. Are operations managers using appropriate concepts and techniques to evaluate and improve current performance? Consider cost systems, quality control and reliability systems, inventory control management, personnel scheduling, TQM, learning curves, safety programs, and engineering programs that can improve efficiency of manufacturing or of service. v. Do operations adjust to the conditions in each country in which it has facilities? w. Do operations consider environmental sustainability when making decisions? . What is the role of the operations manager in strategic management process? 5. Human Resources Management (HRM) y. What are the corporations’ current HRM objectives, strategies, policies, and programs? xxi. Are they clearly stated or merely implied from performance or budgets? xxii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments? z. How well is the corporations’ HRM performing in terms of improving the fit between the individual employee and the job?
Consider turnover, grievances, strikes, layoffs, employee training, and quality of work life. xxiii. What trends emerge from this analysis? xxiv. What impact have these trends had on past performance and how might these trends affect future performance? xxv. Does this analysis support the corporations’ past and pending strategic decisions? xxvi. Does HRM provide the company with a competitive advantage? {. How does this corporations’ HRM performance compare with that of similar corporations’? |. Are HRM managers using appropriate concepts and techniques to evaluate and improve corporate performance?
Consider the job analysis program, performance appraisal system, up-to-date job descriptions, training and development programs, attitude surveys, job design programs, quality of relationships with unions, and use of autonomous work teams. Yes }. How well is the company managing the diversity of its workforce? Our diversity mission is to foster a culture that integrates diversity and inclusion into all aspects of the business in order to further fulfill dreams through the experiences of motorcycling.
What is the company’s record on human rights? Does the company monitor the human right records of suppliers and distributors? ~. Does HRM adjust to the conditions in each country in which the company operates? Does the company have a code of conduct for HRM for itself and key suppliers in developing nations? Are employees receiving international assignments to prepare them for managerial positions? . What is the role of outsourcing in HRM planning? ?. What is the role of the HRM manager in the strategic management process?
The senior executives’ resolutions in HRM initiatives are to stick with the fundamentals of quality and service and to improve productivity and profitability by coaching each employee, regardless of rank and work stream. 6. Information Technology (IT) ?. What are the corporations’ current HRM objectives, strategies, policies, and programs? xxvii. Are they clearly stated or merely implied from performance or budgets? xxviii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments? . How well is the corporation’s IT performing in terms of providing a useful database, automating routine clerical operations, assisting managers in making routine decisions, and providing information necessary for strategic decisions? xxix. What trends emerge from this analysis? xxx. What impact have these trends had on past performance and how might these trends affect future performance? xxxi. Does this analysis support the corporations’ past and pending strategic decisions? xxxii. Does IT provide the company with a competitive advantage? ?.
How does this corporation’s IT performance and stage of development compare with that of similar corporations? Is it appropriately using the internet, intranet, and extranets? ?. Are IT managers using appropriate concepts and techniques to evaluate and improve corporate performance? Do they know how to build and manage a complex database, establish Web sites with firewalls and virus protection, conduct system analyses, and implement interactive decision-support systems? ?. Does the company have a global IT and Internet presence? Does it have difficulty with getting data across national boundaries? . What is the role of the IT Manager in the strategic management process? Summary of Internal Factors IFAS Table 5-2 Table 5-2| | Internal Factors| Weight| Rating| Weighted Score| Comments| 1| 2| 3| 4| 5| Opportunities| | | | | Develop environmental friendly products| 0. 05| 1. 00| 0. 05| Protection of environment| Increase female buyers| 0. 15| 4. 00| 0. 60| Trend for women riders| Increase motorcycle buyers due to high gas prices| 0. 04| 1. 50| 0. 06| To commute by motorcycle to save gas compared to car. | Increase new market shares to international markets| 0. 13| 3. 00| 0. 9| Globalization among businesses| Bargaining power of buyers| 0. 07| 2. 50| 0. 18| Provide unforgettable experience to the buyer to promote buyer loyalty. | | | | | | Threats| | | | | Economy downtime| 0. 09| 3. 00| 0. 27| Prepared for opportunities when economy recovers| Inability to distinguish motorcycle from traditional products| 0. 08| 2. 50| 0. 20| Development of more distinguishable products| Intense competition brought on by new entrants to the market| 0. 15| 4. 00| 0. 60| Response to competition in order to maintain market shares| Loss of loyal customers due to product substitutions currently on the market| 0. 0| 3. 50| 0. 35| Bikes with lower prices, lighter weight and better gas mileage being produced by Japanese in the market| Bargaining power of suppliers| 0. 06| 2. 00| 0. 12| Insufficient flexibility to switch suppliers due to treating suppliers as team members. Price control by suppliers| Rivalry among competing firm| 0. 07| 3. 00| 0. 21| Loosing market shares due to foreign manufactures ability to expand their market shares in the US market rapidly| Relative power of safety concerns of interest groups| 0. 01| 1. 50| 0. 02| Inability to implement an airbag system for rider safety. | | | | | | TOTAL| 1. 77| 1| 3. 05| |