Strategic Management

1. ASSIGNMENT 1:
FULL-TIME, DISTANC LEARNING & PART-TIME PROGRAMMES
STRM 047, Strategic Management:
CASE STUDY: HARLEY-DAVIDSON INC., MAY 2012
Requirement:
You are required to complete the attached assignment by the date given.
In order to undertake the assignment you should critically evaluate the
case study HARLEY-DAVIDSON INC., MAY 2012 as published in the Grant
textbook. You should also be prepared to undertake further internet
based research on Harley-Davidson. You should only use material drawn
from credible sources such as: academic articles and texts; annual
reports; industry surveys; quality market research data bases, e.g.,
Mintel; quality newspaper and business periodicals, e.g., the FT and even
corporate biographies. You should not use unreliable sources such as non-
reviewed websites, e.g., Wikipedia.
The word limit is; 2,500 (I will accept submissions of up to 10% in
excess of this limit i.e. up to 2,750 without penalty). This limit excludes
appendices (please keep these to a minimum) and your references.
Please set your assignment out in the format of a management report
using: clear headings for each section, an 12 point font size in Verdana
and 1.3 spacing between lines.
The hand in date – using the electronic submission area on the STM047
Nile website – is 12
th
March, 2017
Task:
This is an integrative and topical case. The case offers an opportunity to
assess why Harley-Davidson’s business strategy has been successful and
to evaluate the current strategy in relation to its competitive advantage
and core competencies issues. Will Harley-Davidson’s competitive
advantage be undermined either by imitation by competitors or by
changing market circumstances? Further, how is Harley-Davidson
exploiting its limited resources?

2. Using appropriate academic models and relevant case information (both
qualitative and quantitative) explain the competitive advantage issues
and the business strategy of the company. (30%)
Using appropriate academic models and relevant case information (both
quantitative and qualitative); assess the core competencies and critical
success factors of the company. (30%)
Can Harley-Davidson sustain its advantage? What is your overall
assessment? (25%)
Presentation, structure and link to literature of your report. (15%)
Some Guidelines:
This assignment is all about applying models and concepts to case issues,
in order to make your own judgments and conclusions. Use the models in
an applied sense – do not describe them – and also be prepared to use
them critically, e.g., modify or adapt them. You do not have to accept
them blindly. We are also looking for your own ideas supported and
guided by the models and case data so be bold in expressing your own
opinions. It is up to you to select and apply the most useful models,
obviously you cannot use all the models you will cover on the module;
what you need to do is carefully choose a small number of relevant
models and apply them in-depth.
It is also important that you use case data effectively to support your
answers and that your analysis uses both quantitative and qualitative
sources.
Finally, pay attention to your writing style. I am asking you to conduct an
assignment that could be presented to two audiences: your academic
examiners and as a management report.
Some Specific Guidelines:
 Do introduce what you are investigating, its purpose and its
context. State your objective up front.
 Do be critical and reflective.
 Do be applied.
 Do make your discussion and argument coherent. Link them
directly to issues raised.
 Do identify implications/lessons which arise from your evaluation.

3. Therefore, do ensure:
 Do not “blindly” use SWOT/PESTL/5Fs.
 Do reference properly using the Harvard standard;
 Ensure each paragraph links to the next one (use connective text
where possible);
 Arguments are fully backed up and not left ’hanging”.
 Each section/question ends with a clear conclusion;
 Develop a ‘tight’ writing style that is unambiguous.
Please refer to the PG marking criteria to understand how your
submission will be graded.
Hand in date – 12th March, 2017
OUR BEST WISHES

4. Table of Contents
1. Introduction .............................................................................................. 2
2. Competitive advantage issues and business strategy of Harley-Davidson .......... 2
2.1 Analysis of competitive advantages issues of Harley-Davidson through value
chain model ................................................................................................ 2
2.2Analysis of business strategy of Harley-Davidson ....................................... 6
3. Core competencies and critical success factors of Harley-Davidson ................... 8
3.1 Analysis of core competencies of Harley-Davidson through VRIO model ........ 8
3.3 Analysis of critical success factors of Harley-Davidson ..............................10
4. The ability of Harley-Davidson to sustain its competitive advantages ..............12
5. Conclusion ...............................................................................................14
References .................................................................................................. 15
1

5. 1. Introduction
This report is about the analysis of rationales for the success of business
strategy of Harley-Davidson and the evaluation of the current business
strategy regarding the competitive advantages and issues of core
competencies of this company. This report also analyzes whether
competitive advantages of Harley-Davidson can be undermined either by
changing circumstances of market or by competitors’ imitation. In addition,
this report analyzes how Harley-Davidson is exploiting its limited
organization resources. This report uses suitable academic models and
relevant case information (both quantitative and qualitative) to have
explanations about issues of competitive advantages and the business
strategy of this company, assess the critical success factors and core
competencies of this company and evaluate whether this company can
sustain its competitive advantages.
2. Competitive advantage issues and business strategy of Harley-
Davidson
2.1 Analysis of competitive advantage issues of Harley-Davidson
through value chain model
The value chain model is developed by Porter (1985). In terms of primary
activities, inbound logistics have been managed effectively by Harley-
Davidson. Indeed, all processes associated with purchasing inputs from
suppliers, storing these inputs and distributing these inputs internally have
been managed seriously and effectively. Harley-Davidson has had positive
relationships with its suppliers to gain the high values from purchased inputs
to manufacture high-quality motorcycles (Grant, 2012). For the operations,
Harley-Davidson has gained effective operational systems that create high
values for it. Indeed, manufacturing operations are conducted smoothly, and
2

6. the process of monitoring manufacturing operations is controlled seriously.
As a result, Harley-Davidson has created a competitive advantage in terms
of differentiated and unique heavyweight motorcycles. Because customers
prefer the differentiated and unique heavyweight motorcycles, they are
willing to pay the premium price levels for differentiated and unique
motorcycles (Das and Ara, 2014; Barrett, 2017). Concerning outbound
logistics, Harley-Davidson collects, stores, and distributes its products to its
customers effectively and then, the process of delivering its motorcycles to
its customers is conducted effectively. This company has wide distribution
channels that are not easy for its competitors to conduct (Grant, 2012;
Montini, 2014). The marketing and sales of Harley-Davidson are effective
because its marketing and sales activities have introduced its valid
motorcycles to a large number of customers successfully and have made its
customers perceive that its brands are powerful motorcycle brands in the
world (Schembri, 2009; Agnihotri, 2013). In North America, Harley-Davidson
is the leading heavyweight motorcycle manufacturing company with more
than half the market. In Asia-Pacific market, Harley-Davidson also gains the
high market position (see table 1). In Europe, Harley-Davidson belongs to
the leading motorcycle manufacturing company group that include Triumph,
Kawasaki, Yamaha, Suzuki, BMW, and Honda, and each company in this
group with market share of 8-15% (see table 2). Harley-Davidson has also
had effective customer services by having positive communications with its
customers before, during and after purchase process. Indeed, with the good
customer service and with differentiated and unique heavyweight
motorcycles, customers prefer the brands of Harley-Davidson and become
loyal to Harley-Davidson in the long time. This company has been successful
in building close customer relationships and gaining large customer base
(Grant, 2012; Agnihotri, 2013; Jain, 2016).
3

7. Table 1: Retailing sales of heavyweight motorcycles during the
period of 2003-2011 (thousands of units)
Source: Grant (2012)
Table 2: Market share in the heavyweight motorcycle manufacturing
market during the period of 2005-2007
Source: Grant (2012)
For the support activities, Harley-Davidson has had the transparent
procurement process that all raw materials are required with the high quality
(Grant, 2012). For the management of human resources, this company has
4

8. had the effective management of human resources. Harley-Davidson focuses
much on offering training programs to its employees so that they have
innovation skills and high knowledge to create more differentiated and unique
motorcycles to serve its customers. This company has positive treatment to its
employees such as meeting needs and expectations of its employees, creating
positive working environment to its employees, and respecting benefits of its
employees. Hence, this company not only focuses on developing values for its
customers but also emphasizes the creation of values and benefits for its
employees. This company balances all benefits of all its stakeholders and this is
a positive organizational culture (a competitive advantage of Harley-Davidson).
Indeed, this company with the talented leaders has built the positive
organizational culture that gains the high business performance by focusing
much on balancing values and benefits for all its stakeholders (Grant, 2012).
For the development of technologies, this company gains the expertise of
technologies that create a various range of innovative and unique motorcycles
to meet different needs of customers all over the world. Hence, this company
has gained competitive advantages in terms of a various range of heavyweight
motorcycles and technological expertise (Das and Ara, 2014). For the firm
infrastructure, functional departments like accounting/finance, administrative,
manufacturing, and general management have been successful in conducting
their functions. This company has serious control of manufacturing costs and
operation costs to ensure that its business costs are suitable (Baroto et al.,
2012).
In short, based on the above discussions, Harley-Davidson has competitive
advantages as follows: (1) powerful brand name, (2) a various range of
heavyweight motorcycles, (3) differentiated and unique heavyweight
motorcycles with the premium price levels, (4) high customer loyalty, (5)
high customer preference for brands of Harley-Davidson, (6) close customer
relationships, (7) large customer base, (8) excellent workforce due to
5

9. effective human resource management, (9) talented leaders, (10) close and
collaborative relations with main suppliers, (11) wide distribution channels,
(12) serious control of manufacturing costs and operation costs, (13)
positive organizational culture and (14) technological expertise.
2.2 Analysis of business strategy of Harley-Davidson
Rationales for the success of business strategy of Harley-Davidson are that
this company utilizes all business opportunities to gain the sustainable
business growth in the long time. This company focuses much on
maximizing the productivity of manufacturing operations, changing its
product development systems and building distribution channels and
growing sales in emerging nations in Latin America and Asia. This company
has used the competitive strategy that focuses much on developing
differentiated and unique motorcycles with the premium price levels.
Because of the high unemployment rate, and depressed consumer spending,
demands for heavyweight and high-priced motorcycles in Europe and North
America have reduced significantly (Mohiuddin and Qin, 2013). As a result,
Harley-Davidson has expanded its business operations in the emerging
nations like Latin America and Asia and the business strategy has been
effective. In addition, the needs for luxury leisure products like heavyweight
and high-priced motorcycles in the emerging markets are continuously
increasing (Agnihotri, 2013).
In the Ansoff product/market matrix, Harley-Davidson initially uses the
marketing penetration that used current heavyweight motorcycles to
penetrate current business markets including North America and Europe.
Then, this company developed new heavyweight motorcycles to serve
current business markets including North America and Europe and it used
the product development (Grant, 2012). However, the competition level in
the heavyweight motorcycle manufacturing market increased quickly and
6

10. then, this company continued using another strategy, that is, market
development strategy to enter new business markets – Asia and Latin
America and to offer current heavyweight motorcycles (Grant, 2012).
Finally, this company has used the diversification that offer new and
innovative heavyweight motorcycles to new business markets – Asia and
Latin America (Baroto et al., 2012). Dealership network of Harley-Davidson
are indicated in table 3.
Table 3: Dealership network of Harley-Davidson
Source: Grant (2012)
Harley-Davidson has been successful in using the business strategy that
focuses much on offering values to its customers. Indeed, this company
considers values of its customers as the priority goal in conducting business
operations and then, it emphasizes to provide differentiated and unique
motorcycles to gain the premium price levels. Because customers know that
their values are respected by Harley-Davidson, this company has a large
number of loyal customers and customers have the high preference for
brands of Harley-Davidson (Baroto et al., 2012). This company considers
employees as the valuable assets deciding its business successes. To gain
the high raw materials, Harley-Davidson has emphasized on retaining the
positive relationships with its suppliers by supporting its suppliers and
offering strong cooperation with its suppliers. This company has wide
distribution channels in developed nations and developing nations and then,
it can offer all its products to all potential customers. This company has had
7

11. serious control of manufacturing costs and operation costs by ensuring a
suitable number of inventories, and reducing necessary organizational
operations and conducting plant consolidation (Baroto et al., 2012; Grant,
2012).
3. Core competencies and critical success factors of Harley-Davidson
3.1 Analysis of core competencies of Harley-Davidson through VRIO
model
Table 4: Analysis of VRIO for core competencies of Harley-Davidson
Resources Valuable Rare Inimitable Exploited by Temporary Sustainable
organization competitive competitive
advantages advantages
Powerful brand name Yes Yes Yes Yes No Yes
A various range of Yes Yes No Yes Yes NO
heavyweight motorcycles
Differentiated and unique Yes Yes Yes Yes No Yes
heavyweight motorcycles with
the premium price levels
High customer loyalty Yes Yes No Yes Yes No
High customer preference for Yes Yes No Yes Yes No
brands of Harley-Davidson
Close customer relationships Yes Yes No Yes Yes No
Large customer base Yes Yes No Yes Yes No
Excellent workforce due to Yes Yes Yes Yes No Yes
effective human resource
management
Talented leaders Yes Yes Yes Yes No Yes
Close and collaborative Yes Yes No Yes Yes No
relations with main suppliers
Wide distribution network Yes Yes No Yes Yes No
Serious control of Yes Yes No Yes Yes No
manufacturing costs and
operation costs
Positive organizational culture Yes Yes Yes Yes No Yes
Technological expertise Yes Yes Yes Yes No Yes
8

12. There are six main core competencies (sustainable competitive advantages)
that help Harley-Davidson to differentiate it from its rivals. The core
competencies are as follows: (1) powerful brand name, (2) differentiated
and unique heavyweight motorcycles with the premium price levels, (3)
excellent workforce due to effective human resource management, (4)
talented leaders, (5) positive organizational culture and (6) technological
expertise (Grant, 2012). Among the core competencies, a main core
competence that helps Harley-Davidson to retain its high position in the
heavyweight motorcycles in the globe scale is differentiated and unique
heavyweight motorcycles with the premium price levels. Indeed, due to this
core competence, the revenues and profits of this company increases over
time and the brand image of this company in minds of customers is very
strong. For example, a heavyweight motorcycle (V-twin) of Harley-Davidson
has higher price levels compared with its rivals but V-twin of Harley-
Davidson is preferred by consumers all over the world (see table 5).
Table 5: Comparison of price of V-twin in 2009
9

13. Source: Grant (2012)
3.3 Analysis of critical success factors of Harley-Davidson
There are six main critical success factors of Harley-Davidson, that is, (1)
R&D, (2) financial strength, (3) corporate social responsibility, (4)
cooperation amongst functional departments, (5) product-related aspect,
and (5) customer-related aspect (Hoskisson et al., 2012; Tanwar, 2013).
Indeed, Harley-Davidson has focused much on conducting R&D activities to
create differentiated heavyweight motorcycles to serve its customers’
changing needs and expectations. Although this company has a serious
control for manufacturing costs and operation costs, it is willing to invest
main facilities to conduct R&D activities. The main facilities of this company
are indicated in table 6.
Table 6: Main facilities of Harley-Davidson
10

14. Source: Grant (2012)
For Harley-Davidson, it has a financial strength that helps it to expand its
business operations easily and helps it to develop new unique and
differentiated heavyweight motorcycles easily (Diaconu, 2012). The financial
statement of Harley-Davidson is indicated in table 7. Although revenues of
Harley-Davidson increased during the period of 2003-2007, the revenues of
this company reduced in 2008 and in 2009 because of the economic crisis of
2008. However, with the effective business strategy of this company, the
revenues of this company have increased since 2010.
Table 7: Financial statement from 2003 to 2011
Source: Grant (2012)
In terms of corporate social responsibility, Harley-Davidson has been
successful in increasing customer perceptions about its good corporation
social responsibilities. Indeed, this company has reduced the emissions of
greenhouse gases in the manufacturing operations into the environment,
has saved the usage of water source and energy source its manufacturing
processes, has created many jobs for citizens in local markets, has helped its
11

15. suppliers, has respected benefits of its employees, has offered valid products
to consumers, has paid taxes to governments legally, and has balanced
benefits of all its stakeholders (Stock, 2015). This company has used the
good communication system that all its functional departments like
marketing department, accounting/finance department, manufacturing
department, human resource management department, sales department,
customer service department, etc. As a result, this company has gained the
smooth business process and the high cooperation between organizational
members (Hitt et al., 2014). For product-related aspect, this company
considers differentiation of products and responsive customer service as the
main factor to prioritize because this company considers values of its
customers as the way to gain the high successes in the business markets.
For customer-related aspect, this company always investigates expectations
of customers and collects innovative ideas from its employees to meet such
expectations. The effort for creating innovative products is very high and
then, it has been successful in retaining the large number of loyal customers
(Bloomberg News, 2016).
4. The ability of Harley-Davidson to sustain its competitive
advantages
Harley-Davidson’s temporary competitive advantages that can be
undermined by the changing market circumstances and the imitation of its
rivals are as follows: A various range of heavyweight motorcycles, high
customer loyalty, high customer preference for brands of Harley-Davidson,
close customer relationships, large customer base, close and collaborative
relations with main suppliers, wide distribution channels, and serious control
of manufacturing costs and operation costs. Indeed, when market
circumstances change, these temporary competitive advantages can be
undermined. For instance, when customers’ needs change too fast and
12

16. competitive strategies of rivals change too fast, Harley-Davidson can face
many difficulties to satisfy retain such temporary competitive advantages.
When, rivals of Harley-Davidson imitate these temporary competitive
advantages, this company will lose these competitive advantages. For
example, many rivals of Harley-Davidson has focused much on creating a
various range of heavyweight motorcycles to serve needs of consumers,
expanding distribution channels, building positive relationships with
suppliers, controlling business costs, and using many customer relationship
management approaches to increase close customer relationship and to gain
large customer base (Duprey, 2015).
There is the high ability of Harley-Davidson to sustain its sustainable
competitive advantages. Harley-Davidson’s sustainable competitive
advantages cannot be undermined by the changing market circumstances
and the imitation by its rivals. Indeed, six main core competencies
(sustainable competitive advantages) that help Harley-Davidson to
differentiate it from its rivals are (1) powerful brand name, (2) differentiated
and unique heavyweight motorcycles with the premium price levels, (3)
excellent workforce due to effective human resource management, (4)
talented leaders, (5) positive organizational culture and (6) technological
expertise (Grant, 2012). These core competencies are very strong and are
not easy for its rivals to gain and then, these core competencies will help
this company to the sustainable business growth in the long time (Ritson,
2015). Harley-Davidson is exploiting its limited resources effectively to gain
sustainable competitive advantages. Indeed, limited resources are excellent
workforce, unique technologies, main facilities, and talented leaders are
respected and exploited effectively by this company (Tita, 2016).
13

17. 5. Conclusion
This report explores that effective business strategy of Harley-Davidson has
helped to the high business successes since 2010. The six main core
competencies (sustainable competitive advantages) that help Harley-
Davidson to differentiate it from its rivals are powerful brand name,
differentiated and unique heavyweight motorcycles with the premium price
levels, excellent workforce due to effective human resource management,
talented leaders, positive organizational culture and technological expertise
create good conditions for this company to retain the sustainable business
growth in the long time. These core competencies cannot be undermined by
the change market and the imitation of rivals. This company should continue
to focus critical success factors like R&D, financial strength, corporate social
responsibility, cooperation amongst functional departments, product-related
aspect, and customer-related aspect to increase the business successes in
the future.
14

18. References
Agnihotri, A. (2013). Turnaround of Harley Davidson – cult brand or
strategic fit approach? Journal of Strategic Marketing, 21(3), pp. 292-301.
Ansoff, H. I. (1957). Strategy for diversification. Harvard Business Review,
35(5), pp. 113-124.
Baroto, M. B., Abdullah, M. M. B. and Wan, H. L. (2012). Hybrid strategy: A
new strategy for competitive advantage. International Journal of Business
and Management, 7(20), pp. 120-133.
Barrett, R. (2017). Harley-Davidson forecasts lower bike shipments.
[Online]. Available from
http://www.jsonline.com/story/money/business/2017/01/31/harley-
davidson-forecasts-lower-bike-shipments/97276360/ (Accessed 04 March,
2017).
Bloomberg News. (2016). Harley-Davidson’s Levatich on sales, strategy.
[Online]. Available from
https://www.bloomberg.com/news/videos/b/e0d80426-45e0-445c-88de-
ce3a58622703 (Accessed 04 March, 2017).
Das, K. K. and Ara, A. (2014). ‘Harley Davidson’ success speaks – brand
image and culture: An HR perspective. Bonfring International Journal of
Industrial Engineering and Management Science, 4(2), pp. 48-56.
Diaconu, L. (2012). Business strategies of the multinational corporations.
[Online]. Available from
http://ceswp.uaic.ro/articles/CESWP2012_IV2_DIA.pdf (Accessed 04 March,
2017).
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19. Duprey, R. (2015). Can Harley-Davidson Inc. stop sliding sales with this
strategy? [Online]. Available from
https://www.fool.com/investing/general/2015/12/05/can-harley-davidson-
inc-stop-sliding-sales-with-th.aspx (Accessed 04 March, 2017).
Grant, R. M. (2012). Case study: Harley-Davidson, Inc., May 2012.
Hitt, M., Ireland, R. D. and Hoskisson, R. E. (2014). Strategic management:
Concepts and cases: Competiveness and globalization. New York: Cengage
Learning.
Hoskisson, R. E., Hitt, M. A., Ireland, R. D. and Harrison, J. S. (2012).
Competing for advantage. New York: Cengage Learning.
Jain, S. (2016). Pallavi Singh, Harley-Davidson spills beans on marketing
strategy, 7
th
Harley Rock Riders & More. [Online]. Available from
http://www.eventfaqs.com/news/ef-13000/pallavi-singh-harley-davidson-
spills-beans-on-marketing-strategy-7th-harley-rock-riders--more (Accessed
04 March, 2017).
Mohiuddin, M. F. and Qin, X. (2013). Irrationality: Source of sustainable
competitive advantage? European Journal of Business and Social Sciences,
2(5), pp. 32-44.
Montini, L. (2014). How Harley-Davidson mastered product positioning.
[Online]. Available from http://www.inc.com/laura-montini/a-lesson-from-
harley-davidson-on-perfecting-product-positioning.html (Accessed 04 March,
2017).
Porter. M. E. (1985). Competitive advantage: Creating and sustaining
superior performance. New York: Free Press.
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20. Ritson, M. (2015). Can The Harley Davidson brand age gracefully? [Online].
Available from https://www.brandingstrategyinsider.com/2015/10/can-the-
harley-davidson-brand-age-gracefully.html#.WMTGcNKGO1s (Accessed 04
March, 2017).
Schembri, S. (2009). Reframing brand experience: the experience meaning
of Harley-Davidson. Journal of Business Research, 62(12), pp. 1299-1310.
Stock, K. (2015). Harley-Davidson stops cruising and starts fighting.
[Online]. Available from https://www.bloomberg.com/news/articles/2015-
10-20/harley-davidson-stops-cruising-and-starts-fighting (Accessed 04
March, 2017).
Tanwar, R. (2013). Porter’s generic competitive strategies. IOSR Journal of
Business and Management, 15(1), pp. 11-17.
Tita, B. (2016). Harley-Davidson gets boost from overseas sales, marketing.
[Online]. Available from https://www.wsj.com/articles/harley-davidson-
profit-falls-less-than-expected-1461066311 (Accessed 04 March, 2017).

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