Harley Davidson: Porter's Five Forces Model

In the year 1905, William Harley and Arthur Davidson, established Harley Davidson. Within two years the company already sold 50 motorcycles. With one full-time employee, the company filed for incorporation in 1907. From the beginning, Harley Davidson bikes were a huge success. It was when Japanese players like Honda, Suzuki and Kawasaki entered the US market in the 1960s, the leadership position of Harley was threatened. Harley Davidson’s market share started to decline and soon American Machine and Foundry (AMF) brought the company. However, AMF’s management could not add much productivity and growth to Harley Davidson and later in 1985, the company was bought out by Harley Davidson’s management through a management buyout procedure. Harley

• Porters Five Force Model

Michael Porter designed the Porters Five Force framework for understanding competition at work in an industry, and what drives the way economic value is divided among industry actors. Let’s us the five-force model to analyse Harley’s industry.

Rivalry: This identifies the impact of other competition in the motorcycle industry environment. Harley had a strong force in competition rivalry as there were high number of firms and substitute available in the market. The company had to competes with a large number of firms. Also, substitutes such as private cars and public transportation were available to their potential customer. Based on the Five Forces Analysis, Harley-Davidson must maintain competitiveness, especially in terms of product quality, to protect its business from other firms.

Threat of Subtitles: This identifies the effect of substitute product in Harley’s industry. There are many substitutes to Harley’s products such as cars, and public transportation, however the overall force of threat of subtitles are moderate as Harley’s customers are into riding chopper motorcycles and would not prefer to shift to other

This is also used in business to understand the features of a company’s industry. A detailed SWOT analysis of Harley Davidson’s features is discussed below.

Strength: Harley Davidson’s strength lies in the fact that it has been in the business for more than a century now and have created brand image. The other strengths of Harley’s industry are their strong base of customer and being the expert producers of chopper motorcycles.

Weaknesses: The weakness of the industry of Harley Davidson can be broken down to three parts. Firstly, its limited mix of products as they only focus on chopper motorcycles. The company’s is weak when it comes to market reach, as most of their sales comes from North America. Thirdly there is limited supply chain within Harley that discourages them to expand globally.

Opportunities: This can also be analysed by looking at the weaknesses of the industry. Harley’s industry has various opportunities in ways in which it can grow its sales. Firstly, Harley can take strategic steps to expand into other markets, especially developing markets. Secondly, investing in producing diverse array of motorcycles can help the company to attract more customer base. Last but not the least, Harley can look into partnering or merger with other companies to increase their market