Harley Davidson External And Internal Analysis 906008

Harley Davidson External And Internal Analysis

Perform all of the elements listed below. This assignment has you complete two parts of a strategic business plan. To see how those parts fit into a full business plan, you may refer to a strategic business plan outline. Part I – Analysis of the External Environment: Identify and analyze the major driving forces for change in the external environment of the motorcycle industry. Analyze the dynamics of competition using Porter’s Five Forces Model of Competition. Correctly assess the dynamics of competition. Provide at least three statistics about the size of the motorcycle industry such as revenue, growth rate, number of units sold by manufacturer or country, etc. Summarize the strategic issues firms in this industry face and identify their biggest threats. This section should be titled "The Analysis of H-D's External Environment."

Part II – Internal Environment Analysis: Financially gather the necessary information to perform a complete ratio analysis and assess the Balance Score Card (BSC) key metrics. When creating a BSC, identify key metrics for each of the four areas: Financial, Customer, Internal Business Process, and Learning & Growth. Perform a ratio analysis using Harley-Davidson’s (H-D) five-year financial data and interpret the ratios to evaluate financial performance. Include visuals like graphs if needed. Next, identify two competitors that pose the greatest threat to H-D, perform a five-year financial ratio analysis for these competitors, and compare their trends to industry averages. Develop a section titled "The Analysis of H-D's Current Strategy: Two Views" that includes your ratio analysis and the competitor comparison. Ensure your document is comprehensive and fits within 4 to 8 pages.

Paper For Above instruction

Harley-Davidson (H-D) stands as one of the most iconic motorcycle manufacturers, embodying American motorcycle culture. Analyzing its external environment and internal financial health provides insight into the company's strategic position amidst industry challenges and opportunities.

The Analysis of H-D's External Environment

The motorcycle industry is characterized by rapid technological advancements, shifting consumer preferences, and increasing environmental regulations. One major driving force is the rising demand for eco-friendly and electric motorcycles, driven by global concerns over climate change and urban pollution (Statista, 2022). The global electric motorcycle market alone is projected to grow at a CAGR of approximately 7.5% between 2021 and 2028, reflecting significant industry transformation (Grand View Research, 2023). Additionally, demographic shifts influence market dynamics; younger consumers favor unique and experience-driven products, while older enthusiasts maintain nostalgia for traditional Harley models. Economic factors such as fluctuating fuel prices also impact consumer preferences, with some seeking more fuel-efficient options.

The Porter's Five Forces analysis reveals the competitive intensity within the industry. Threat of new entrants remains moderate due to high startup costs, brand loyalty, and economies of scale enjoyed by established players like H-D. Supplier power is relatively low because of multiple component sources but may increase with shortages of electronic parts. Buyer power is high among consumers who have access to diverse brands like Honda, Yamaha, and Ducati; switching costs are minimal, and customer loyalty varies. The threat of substitutes encompasses not only other motorcycle brands but also alternative transportation modes such as e-scooters and ride-sharing services, which appeal to urban commuters.

Industry statistics underscore the market’s size and growth trajectory. The global motorcycle market generated revenue of approximately $115 billion in 2022, with an expected compound annual growth rate (CAGR) of 4.2% over the next five years (Fortune Business Insights, 2023). The U.S. alone accounts for nearly 20% of global motorcycle sales, with around 1.3 million units sold in 2022 (Bureau of Transportation Statistics, 2023). Major manufacturers like Honda, Yamaha, and Kawasaki dominate the industry, with H-D holding roughly 11% of U.S. market share. Strategic issues facing the industry include the need for innovation in electric mobility, maintaining brand loyalty amid fierce competition, and adapting to evolving regulatory environments.

The Analysis of H-D's Current Strategy: Two Views

Financial data indicates H-D has faced challenges in maintaining robust profitability recently. A five-year analysis shows revenue fluctuated from $6.3 billion in 2018 to approximately $4.8 billion in 2022, reflecting declining sales, possibly due to a shift towards electric bikes and international competition (Harley-Davidson Annual Reports, 2018-2022). Profit margins have contracted, with net income decreasing from $1.1 billion in 2018 to $600 million in 2022. Ratios such as return on assets (ROA), return on equity (ROE), and debt-to-equity ratio highlight a need for strategic adjustment; for example, ROE dropped from 24% in 2018 to 12% in 2022, indicating decreasing efficiency in generating profits from shareholder equity.

Interpretation of these ratios suggests H-D's current strategy of refreshing its product line and expanding into electric bikes is yielding mixed results. The decline in traditional motorcycle sales impacts revenue and profitability, but diversification into electric models offers growth potential. The company's high fixed costs and capital investments also suggest a need for efficiency improvements. A Balance Score Card (BSC) approach would measure customer satisfaction levels through brand loyalty surveys, internal process improvements via production cycle time, learning and growth through employee training metrics, and financial metrics like profit margins and revenue growth.

Competitor Analysis

The main competitors poised as the greatest threats to H-D are Honda and Yamaha. Both are global giants with extensive product lines and formidable financial resources. Honda’s five-year revenue trend shows steady growth, from $72 billion in 2018 to $78 billion in 2022, with a healthy profit margin averaging around 5%. Yamaha’s revenues have similarly grown, reaching about $17 billion in 2022, with consistent profit margins of approximately 7%. Financial ratios such as ROA and ROE for Honda and Yamaha during the same period demonstrate their operational efficiency, which surpasses H-D's declining ratios. For example, Honda’s ROE remains around 15%, while Yamaha’s is near 12%, compared to H-D’s 12% in 2022. These competitors’ strategies focus on technological innovation, electric models, and mass production efficiencies, which pose significant threats to H-D’s traditional market share. Comparing these trends, H-D must prioritize electric mobility and cost efficiencies to effectively compete.

Conclusion

Harley-Davidson faces pivotal external and internal challenges. External shifts toward electric vehicles and emerging transportation options threaten its traditional market dominance. Internally, financial data suggests the need for strategic restructuring—focusing on innovation, operational efficiencies, and brand loyalty. By analyzing the financial and strategic positioning of key competitors like Honda and Yamaha, H-D can refine its approach to sustain relevance and growth. Emphasizing electric mobility, leveraging brand heritage, and optimizing operations will be critical steps for Harley-Davidson's future success.

References

• Bureau of Transportation Statistics. (2023). Motorcycle Statistics. https://www.bts.gov
• Fortune Business Insights. (2023). Motorcycle Market Size, Share & Industry Analysis. https://www.fortunebusinessinsights.com
• Grand View Research. (2023). Electric Motorcycle Market Size & Trends. https://www.grandviewresearch.com
• Harley-Davidson, Inc. Annual Reports (2018-2022). https://investor.harley-davidson.com
• Statista. (2022). Electric Motorcycle Market Revenue & Growth. https://www.statista.com
• U.S. Department of Transportation. (2023). Transportation Data and Analysis. https://www.transportation.gov
• Harvard Business Publishing. (2021). Porter’s Five Forces Framework. https://hbsp.harvard.edu
• Yamamura, N., & Suzuki, R. (2022). Strategic Challenges of Harley-Davidson. Journal of Business Strategies, 45(2), 35-52.
• Johnson, G., Scholes, K., & Whittington, R. (2020). Exploring Corporate Strategy (12th ed.). Pearson.
• Laferrière, R., & Ouellette, R. (2019). Competitive Dynamics in the Motorcycle Industry. International Journal of Business and Management, 14(3), 45-60.