Harley Davidson vs Honda Strategy

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

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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

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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

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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