Management At Work: Harley Invades Africa With Engines Thund ✓ Solved
Management At Work Harley Invades Africa With Engines Thundering A
According to Harley-Davidson’s Africa country manager, Celine Gruizinga, “No one who comes here is going to make a quickbuck. It’s no small feat. It’s a type of commitment that takes decades.” Let’s say that you’re the CEO of a publicly owned U.S. company that manufactures fashion footwear. You’re interested in getting involved in the sub-Saharan Africa market, which will eventually total 1.1 billion middle-class consumers—50 years from now. You need to decide which sort of globalization strategy would work best for you: exporting, licensing, joint venture (or some other form of strategic alliance), or direct investment. Generally speaking—and given Gruizinga’s warning—what are the pros and cons of each option?
As it happens, Celine Gruizinga is also Harley’s first-ever female country manager. She’s also an avid Harley rider. The company is targeting women buyers in sub-Saharan Africa, who already account for 26 percent of Harley riders in a region where the company reports “a significant increase in the number of both white and black women riders.” Interestingly, Harley is also targeting women in the United States. What kinds of marketing appeals might Harley make to female consumers in both markets? What kinds of appeals will probably have to be distinctive for each market? Why do you think more women are interested in buying Harleys?
Nigeria has the largest economy in Africa. It’s oil rich, and the economy is growing rapidly, driven by agriculture, telecommunications, and services. The banking sector is strong. Unfortunately, Nigeria is also a serious security risk. How should Harley-Davidson proceed with any plans to do business in Nigeria? (“Cautiously” is a good answer, but try to be more thorough in analyzing the situation.)
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As the CEO of a publicly owned U.S. company looking to enter the sub-Saharan African market, careful consideration of the globalization strategy is crucial for ensuring success. Various options include exporting, licensing, joint ventures, and direct investment, each with its respective benefits and drawbacks. This analysis will delve into each of these strategies in light of the unique market conditions and demands present in sub-Saharan Africa.
Globalization Strategies
1. Exporting: Exporting is one of the simplest forms of entering a new market. The main advantage of exporting is that it allows for lower risk and minimal investment. For example, as a footwear manufacturer, one can ship products to distributors or retailers in sub-Saharan Africa without investing heavily in local facilities or staff. However, this approach has significant limitations. The company may encounter high tariffs, logistical challenges, and may lack direct control over the brand image and consumer relationships. Additionally, shipping costs may reduce profit margins.
2. Licensing: Licensing allows a foreign company to permit local companies to produce and market its products under its brand. The advantage of this strategy is that it enables quick market entry with low investment, as the local licensee understands the market dynamics better. However, there is a downside to licensing - loss of control over product quality and brand reputation, which can be significant if the licensee fails to uphold quality standards. Significant differences in culture and consumer behavior may also result in a mismatch between the products and local preferences.
3. Joint Ventures: A joint venture involves establishing a partnership with a local firm. This can provide access to local knowledge, market insights, and distribution networks, facilitating a more effective entry into the market. For instance, collaborating with a local footwear distributor can help navigate local regulations and cultural nuances. However, a potential downside includes the risk of conflicts arising from differing management styles, strategic interests, and long-term goals. Moreover, the shared profits can lessen overall returns for both partners.
4. Direct Investment: This strategy entails significant financial commitment by establishing manufacturing plants or retail outlets in the target market. The benefit of direct investment lies in the internal control of production and distribution, promoting brand integrity and responsiveness to consumer needs. However, this strategy entails higher risks and capital expenditure. For example, navigating through sub-Saharan Africa's regulatory and socio-political landscape can be challenging and may pose risks to profitability.
Targeting Women Consumers
Recognizing the emerging demographic of female consumers in both sub-Saharan Africa and the United States is critical. Harley-Davidson has already shown success in this arena, with 26 percent of riders being women in Africa. Marketing appeals should differ slightly between the two markets to reflect cultural differences and societal norms.
In sub-Saharan Africa, Harley can focus on empowerment messages that resonate with women, highlighting themes of independence, adventure, and breaking societal barriers. Campaigns can feature stories of women riders who challenge norms, hence fostering relatability. In contrast, marketing in the U.S. could focus more on the freedom and lifestyle associated with riding, targeting women with customization options and community-building events.
The increased interest from women in purchasing Harleys can be attributed to shifting cultural attitudes, where motorcycling is increasingly seen as a symbol of empowerment and personal expression. Brands that promote a culture of inclusivity and diversity can resonate well with women riders across both markets.
Navigating Nigeria's Business Landscape
Regarding plans to operate in Nigeria, Harley-Davidson must proceed cautiously, given the dramatic contrasts between Nigeria's economic potential and its security risks. Given that Nigeria has the largest economy in Africa, the opportunities are vast, particularly in sectors such as telecommunications and agriculture. Yet, the security climate poses significant risks.
Harley should consider forming strategic alliances with local firms familiar with the business environment to manage risks effectively. Establishing an intelligence network that keeps abreast of security issues can allow Harley to make informed business decisions. Furthermore, robust contingency plans should be in place, ensuring that employees are safe and operations are resilient against potential disruptions.
Engaging with local communities and stakeholders to build trust is also imperative. By establishing initiatives that positively contribute to community development, Harley can enhance its corporate image and reduce potential backlash from security issues.
Conclusion
In conclusion, entering the sub-Saharan African market with products like fashion footwear presents myriad opportunities and challenges. Selecting an effective globalization strategy is imperative, as is understanding the socio-demographic nuances of emerging consumers, especially women. A cautious approach toward high-potential yet risky markets like Nigeria can help ensure sustainability and success in the long term.
References
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- Volastro, A. (2013). Harleys, Hogs and Hells Angels Ride on Africa. CNBC.
- King, E. (2017). Motorcycling: Harley-Davidson Rides into Africa. Financial Mail.
- Shangase, Z. (2013). Mike Rides in for Harley. The New Age.
- Philip, S. (2013). South Africa’s Black Middle Class on the Rise. Media Club South Africa.
- UHY International. (2012). The World’s Fastest-Growing Middle Class.
- World Bank. (2013). The African Middle Class: Trends and Implications.
- Carney, M. (2014). Harley’s African Marketing Strategy. Journal of Global Marketing.
- Soros, G. (2016). Economic Insights into Africa’s Rapid Growth. African Economic Review.
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