CEO of Harley-Davidson I would first compare the advantages and disadvantages of using exports. First of all the Harley-Davidson company would grow from exports bigger profits for Harley-Davidson and more jobs for American and foreign workers. The advantages of export I think would extend the sales potential of existing products more customers globally than just at home in the USA. I think the disadvantages for export would be the great amount of money spent for the initial set up for global expansion.
Secondly modifying your product changing the look of Harley-Davidson motorcycles to fit Japanese taste. In this case producing a shinier motorcycle which Japanese prefer. Third of all Harley would need to change and develop all-new promotional material to be on the same page with the Japanese market. And last Harley would need to obtain all new export licenses. I think joint ventures in foreign subsidiaries could be helpful in expanding international sales because some countries, the only avenue for entering a certain market is to be partners with the foreign country.
Also Harley would use the joint venture if Harley had a small project to prevent the hassle of purchasing a company for one or two contracts to be completed. Much money would be saved through joint venture. Also joint venture retains his individual ownership. Also easy to borrow another company’s resources or expertise. (1) The disadvantages of or pitfalls for Harley would recall quality control issue sometimes these problems arise. Example, if Harley Davidson’s joint venture company is not up to Harley Davidson standard of customer service Harley Davidson doesn’t like it because it’s damaging the reputation of Harley-Davidson.
Another example is Harley has spent more man hours on the project and believes it has not been compensated fairly. I think in Asia, Africa and South America I don’t think they really care about such things as a Harley Davidson motorcycles. In these three countries the cultures are financially depressed making it almost impossible to afford a high end and expensive Harley-Davidson motorcycle. India has the second-largest motorcycle population in the world. But India buys small inexpensive utility bikes that cost roughly $1200 a use for those who can’t afford to buy a car.
Also the roads and NPR are pothole filled and India has 1 billion people and does not easily offer open roads for Harley riders is it is known to have cheek to cheek traffic. If I were to start-up a new manufacturing plants in China and India. I would analyze which market-entry strategies would be cost effective before an expensive investment like Joint venture or Strategic alliances. My first step, Global sourcing, analyze the advantages of international wage gap by sourcing products in China and India. To take advantage of the fact these countries can manufacturer Harley-Davidson’s at a lower cost.
A second strategy, analyze Exporting goods to China and India creating a market to increase sales. A third strategy, analyze Licensing agreements with foreign markets would cost effectiveness out-weigh the risks associated with it. And forth strategy, analyze franchising as a low cost start-up in foreign markets before deciding to make an investment in Joint Venture and Strategic Alliances. (2) Today Harley-Davidson’s is the largest manufacturer of heavyweight motorcycles in the world. Buy market share Harley captured half the US market and a third of the global market.
Harley-Davidson maintains a large margin and domestic sales in US. But in other parts of the world they must compete against Honda, Suzuki, Yamaha, Kawasaki, Harley-Davidson is faced with banks making it harder to get financing on a Harley-Davidson motorcycle for the first time in 16 years the company has posted a loss of $218 million dollars. Eighty percent Harley’s revenue comes from core bike sales and twenty percent comes from parts and merchandise. Harley’s international sales are 27 percent of the Companies revenue. Harley’s main competitors are Honda and Suzuki, holding 13 and 14 percent of the market.
The past four years Harley Davidson has maintained 34 percent return on equity and 26 percent return on capital. I think from the information shown buying Harley Davidson stock would be a safe risk.
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