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Harley Davidson vs Honda Strategy
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Harley Davidson Inc. & Honda Motor Co.
ANCHAL KHARE (003)KISLAYA SHARMA (120)
HARLEY DAVIDSON Headquartered in Milwaukee, Wisconsin, U.S.
50% market share in the super-heavyweight motorcycle market segment.
market capitalization of $10.73 billion (approx)
Revenue US$ 5.31 billion Net profit US$
599.1 million
HONDA
Headquartered in Tokyo Honda is the largest
manufacturer of Motorcycles & IC engines in the world.
market capitalization of $67 billion (approx)
Revenues of US $ 107 billion
Net profit of US $ 6.8 billion
History of HD
William S. Harley & Arthur Davidson (Walter)
1907 – Company incorporated
1909 – First V-twin powered bikes, it became most enduring icons of Harley Davidson history.
1920 – By 1920, Harley-Davidson was the largest motorcycle manufacturer in the world1930–Survived the Depression, by manufacturing industrial power plants based on their motorcycle engines1952– Harley-Davidson was charged with restrictive practices for demanding 40% tax on imported motorcycles1969, American Machine and Foundry (AMF) bought the company
1981, AMF sold the company to a group of thirteen investors led by Vaughn Beals and Willie G. Davidson 1986 Market loss due to the aging of baby-boomers, Harley-Davidson bought Holiday Rambler1990- Introduction of the "Fat Boy" 20012004–HD recorded its 19th consecutive year of record earnings 2009– Harley-Davidson announces expansion into India.2009–Value of the Harley-Davidson brand fell by 43% to $4.34 billion in 2009Harley is the only major American Manufacturer of heavy weight motor cycles.
History of HD
History of Honda
1947Honda’s first product, the A-type bicycle engine, produced (a year before the establishment of Honda Motor Co., Ltd.).1949Production of the Dream D (2-stroke, 98cc), Honda’s first production motorcycle, begins.1952Honda motorcycle exports begin.
1953 Power equipment production started with H-type engine1955Honda becomes No. 1 producer of motorcycles in Japan.1958Long-selling Super Cub 50 cc first introduced.
1959 Honda opens its first dealership in Los Angeles selling motorcycles1963Motorcycle production in Belgium begins (Honda’s first overseas production).
History of Honda 1963 Automotive manufacturing started with
T360. 1963 Automotive manufacturing started with
T360. 1968Total motorcycle production reaches 10 million units.
1980 Goldwing 1000cc touring motorbike. 1982 Honda Racing corporation was formed 1997 Worldwide motorcycle production reaches
100 million units. 2003 Developed diesel engine
Harley Davidson
Resources:- Brand name, traditional design,
Capabilities :- Price premium, retro-look appeal of the “hog.”
Core competency :- Community
Honda
Resources:- Economies of scale, learning ,adaptability, productivity
Capabilities :- Cost advantage, High power to weight ratio engines
Core competency :- engine expertise
Resource comparision
Capabilities comparison
11
Punctuated Equilibria
Changing demography and rapid evolution in a new eco-system
Emerging markets presence - emerged as one of the most resilient business models, and these institutions making presence in emerging markets.
Structural substitution: a sustained shift in environment friendly due to regulations
Dynamic View- Harley Davidson
12
Strategy
Activities
Developing Capabilities
•Competing in new markets
Resource
Endowments• Brand Name
•Differentiated products
Activities
• Traditional design
•Community
• Emerging markets
Resource Commitments
-Deliver an enhanced customer experience
- Brand management
Dynamic View- Honda
13
Str
Developing CapabilitiesEnvironment friendly technologies
Fuel efficient Small engines
Resource
Endowments• Brand Name
•Engine expertise
•Diversified presence
Activities•Strengthening of manufacturing facilities
•Future technologies
Resource Commitments
-Research & development facilities
- Production facilities in low cost market
Strategic Architecture- Honda
Static vs Dynamic efficiencyHarley Davidson - Static
Honda – Dynamic
•Circle organization Structure•Self managed team•Less Focus on innovation – traditional designs•More Focus on Customer relationship
•Honda use matrix organization structure•Geocentric HRM, an open-door employment policy•Direct contact with key people, 3G•Three joys• Focus on innovations
Diversification Timeline of Harley Davidson
Licensing In 1929, licensed Rikuo of Japan
DivestitureAeronautica facility sold to Cagiva
Horizontal Integration
In 1987 acquired Buell motorcycle Co
Diversification Timeline of Harley Davidson
Complementary Product
In 1995 bought Eaglemark
financial services
Vertical integrationIn 2006, bought
Castalloy of Australia
DivestitureIn 2009 ,
discontinued production of Buell
Motorcycles
Diversification Timeline of Honda
In 1973 JV with Mariwasa Co in
Philippines
In 1992, Wuyang-Honda, a joint
venture in China
In 2001, Sundiro Honda Motorcycle
Co., Ltd. a joint venture in China
Strategic Rationale for Diversification
to produce outside US and widen product line
to increase sales outside US
to enter into sports bike segment
divested some business to focus on its core product
• to produce close to customers
• to gain early mover advantage
• to reduce cost of production
• To increase sales worldwide
Harley Davidson
Honda Motorcycles
Corporate Advantage
strong brand name growing Harley
Owner Group HOG strong association
with motorcycle rallies around the world
USP of heavy-weight motorcycle
Harley Davidson •Improved
employee relationships•presence across all over the world with affordable bikes•economies of scale•technical Knowhow•Known for Quality and fuel efficiency bikes
Honda Motorcycles
Corporate Strategy of Harley Davidson
Focus on heavy-weight motorcycle market re-engineer the whole operating structure by
integrating a more cost-oriented structure Market penetration- increase advertising and
marketing expenses in existing markets Product development – through innovative
measures improve fuel efficiency Horizontal diversification and concentric
diversification
Corporate Strategy of Honda Diversifying into different markets with
affordable and fuel efficient bikes Focus on product innovation so as to
reduce the cost keeping improved quality intact
Umbrella branding and manufacturing help bring R&D cost
Provide eco-friendly and efficeint mode of transportation
Model of Corporate Management
Unrelated diversification using efficient engines as core product
Resource related diversification
Automobile,marine engines, generators
•Related diversification in motorcycle industry•Using brand as a resource to extend its product line.•Merchandise, beer and bars
Harley Davidson
Honda Motorcycles
Strategic Issues
Declining market share in US
Environmental protection laws challenge
High production cost
Capacity constraint faced due to concentration of production facilities
• Increasing R&D costs and advertising costs
• Uncertainties the company is facing in terms of alliances in different markets which is the key to its business model
Harley Davidson
Honda Motorcycles
Recommendations for Harley Davidson Focus on removing ongoing capacity
constraints by providing licensing in local markets to manufacture
Made new strategic alliances with some local bike companies to produce low cost in India
Product Development to expand motorcycle line for younger market and women riders
Recommendations for Honda
Reduce dependence on top japanese managers for foreign markets
Significantly reduce dependence on japanese production facilities
World needs better transportation and not better motorcycles