Harley-Davidson’s current business performance has shown significant improvement in terms of its increasing revenues from 2009 to 2011. However, improvement in the efficiency of its manufacturing plant contributed more to the increase in its profits. Considering the tight competition within the motorcycle industry, Harley-Davidson’s future business performance is at risk of losing a lot of money. Even though Harley-Davidson’s decision to improve its existing distribution, launch new models, expand its business internationally, and improve the efficiency of its manufacturing department had positive effects on the company’s business performance, targeting the baby boomers as Harley-Davidson’s target market could adversely affect its future business performance.
Key Issues or Problems. Due to constantly changing market demand, the motorcycle industry has become very much competitive over the past few years. As a consequence, Harley-Davidson’s ‘commitment to traditional design features’ increases the company’s risks of becoming vulnerable to market competition. Porter’s five forces are often used to analyze the market competition within a given industry. In line with this, the rivalry within the motorcycle industry is very high. On the other hand, the threat of new entrants is medium because of the high capital requirements and special skills needed with regards to the use of technology. Even though the threat of new entrants is technically not so high, it is given that Harley-Davidson is literally competing with other well-established brands such as BMW, Honda, Suzuki, Kawasaki, Yamaha, and Polaris. The threat of product substitutes is very high. As of 2009, end-consumers have varieties of motorcycles to choose from. These include Honda’s Shadow Spirit 750, VTX 1300C, and VTX 1800N, Suzuki’s Boulevard S50, Boulevard C90, and Boulevard M109R, Kawasaki’s Vulcan 900 Classic and Vulcan 1600 Mean Streak, Yamaha’s V-Star Custom Road Star, and Polaris’ Victory Kingpin.