The Analysis Of H-D's External Environment

The Analysis of H-D's External Environment

Part I – Analysis of the External Environment As part of the Strategic Business Plan, you have been asked to: 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/country, etc. Summarize the strategic issues firms in this industry face and identify their biggest threats.

Paper For Above instruction

Introduction

The motorcycle industry plays a significant role in global transportation, recreational activities, and the manufacturing sector. Understanding its external environment is crucial for companies like Harley-Davidson (H-D) to develop effective strategies. This paper examines the major driving forces for changes in the industry's external environment, analyzes the competitive dynamics through Porter's Five Forces model, and summarizes the strategic issues and threats facing firms in this sector.

Major Driving Forces for Change in the External Environment

The external environment of the motorcycle industry is influenced by numerous factors that drive change and shape strategic decisions. Technological advancements, economic fluctuations, demographic shifts, regulatory policies, and environmental concerns are prominent among these forces.

1. Technological Innovation: Advances in electric vehicle technology and smart features impact motorcycle design and consumer preferences. The development of electric motorcycles (e-mobility) offers an eco-friendly alternative to traditional combustion engines, pushing firms to innovate rapidly (Kumar et al., 2020).

2. Economic Conditions: Economic growth or recession significantly influence consumer purchasing power. For instance, during economic downturns, motorcycle sales decline as consumers cut discretionary spending (Fornara & Thøgersen, 2021).

3. Demographic Shifts: An aging population in developed countries impacts demand, with younger consumers in emerging markets providing growth opportunities (Statista, 2022). Urbanization also influences preferences towards smaller, more manageable two-wheelers.

4. Regulatory Environment: Stricter emissions standards and safety regulations in many countries compel manufacturers to modify designs and incur higher compliance costs (OECD, 2021).

5. Environmental Concerns: The push for sustainability encourages innovation in electric motorcycles and discourages fossil-fuel-based vehicles, significantly affecting industry trajectories.

Analysis of Competition Using Porter’s Five Forces Model

Porter's Five Forces model offers a comprehensive lens to assess competitive intensity and profitability potential:

- Threat of New Entrants: High barriers exist due to significant capital investment, brand loyalty, and distribution channels. However, startups focusing on electric motorcycles are emerging, leveraging innovative technology (Fornara & Thøgersen, 2021).

- Bargaining Power of Suppliers: Suppliers of specialized components, especially batteries for electric motorcycles, hold moderate power owing to limited suppliers and technological dependencies (Mitra & Telang, 2020).

- Bargaining Power of Buyers: With increasing information and options, consumers have moderate to high bargaining power. Price sensitivity varies across different markets, notably in mature markets like North America and Europe.

- Threat of Substitutes: The primary substitutes include cars and public transportation. The appeal of cost-effective, convenient two-wheelers in congested urban areas increases their attractiveness (Statista, 2022).

- Industry Rivalry: Competition is intense among established players like Harley-Davidson, Honda, Yamaha, and emerging electric-focused companies like Zero Motorcycles. Product differentiation, brand loyalty, and technological innovation drive rivalry.

Industry Size and Strategic Issues

The motorcycle industry globally generates approximately $115 billion annually, with an average growth rate of 3% over the past five years. In 2022, estimated units sold exceeded 60 million motorcycles, led by Honda, Yamaha, and Samsung (IBISWorld, 2023). The U.S. motorcycle market alone accounts for roughly $7 billion in revenue, with Harley-Davidson holding about 45% market share domestically.

Strategic issues facing firms include adapting to technological disruptions, navigating regulatory landscapes, managing supply chain complexities, and addressing environmental concerns. The most significant threats are declining demand in mature markets due to demographic shifts, increasing competition from electric vehicle startups, and tightening emissions regulations.

Conclusion

The external environment of the motorcycle industry is dynamic, shaped by technological, economic, regulatory, and societal forces. Companies must strategically respond to these drivers of change, navigate intense competition, and address pressing threats to sustain growth and competitiveness.

References

• Fornara, C., & Thøgersen, J. (2021). Consumer preferences and the shift toward electric mobility: Evidence from the motorcycle industry. Transportation Research Part D: Transport and Environment, 92, 102660.
• IBISWorld. (2023). Motorcycle Manufacturing in the US - Market Research Report. Retrieved from https://www.ibisworld.com
• Kumar, A., Sinha, A., & Tripathi, P. (2020). Electric Vehicle Adoption: Technological Challenges in the Motorcycle Industry. International Journal of Electric and Hybrid Vehicles, 12(3), 245-262.
• Mitra, S., & Telang, R. (2020). Supply Chain Risks and Electric Vehicle Battery Market. Journal of Supply Chain Management, 56(2), 43-58.
• OECD. (2021). The Regulatory Environment of the Automotive Industry. Organization for Economic Co-operation and Development.
• Statista. (2022). Global Motorcycle Market Size & Growth. Retrieved from https://www.statista.com
• U.S. Department of Transportation. (2023). Motorcycle Safety and Market Trends. Federal Highway Administration Reports.