Harley Davidson Case Study Essay

Harley Davidson, plungeed in 1903, is the queen-sizedst manufacturer of motorcycles in the unite States. While Harley Davidson dominates the moto commercialize in the fall in States, it is very small compared to the multinational startet which is infiltrated with large Japanese firms such as Kawasaki, Honda and Yamaha who produce various categories of motorcycles. Harley Davidson has deep grow brand equity in the United States and remains loyal in its style. It has also remained consistent in manufacturing only whale motorcycles. By showcasing only a single model type, Harley Davidson has established itself as a leader in the United States merchandise.Other international merchandises, especially atomic tour 63 and Asia, produce many lines of sports motorcycles (street bikes, scooters etc), as this meets the demands of these markets. Harley Davidson classifies their bikes into three main heavyweight categories (1) Touring Bikes, (2) tailored Bikes, and (3) Sportster Bike s. More than half of Harley Davidsons revenue enhancement is generated from gross sales from within the United States, with a much smaller presence in Europe, Asia and Latin America. Harley Davidson has try unsuccessfully to acquire additional motorycle companies twice since its origination but last has continued to keep its product lines simple and focused around a few primary products. Description of Data and SourcesInitialal research was conducted on the fib of Harley Davidson cycles by researching their website. Data was then obtained from a variety of sources including attention journals, yearbook sales reports, and caller-up websites. By comparing sales and yearly (10k) reports to those of its competitors, we were qualified to determine market patterns and explain the market structure in which Harley Davidson motorbike competes. Sales reportscompared units sell by the Harley Davidson , as well as disputation among firms internationally displayed by the type of bike s sold and in which geographic areas. bill of MethodsIn order to establish initial market structure and competitiveness, we roll up data on the total units of Heavyweight motorcycles sold in 2012 in the United States. We ga in that respectd data on the numbers of units sold by Harley Davidsons top three competitors, which we learned were Honda, Kawasaki and Yamaha, respectively. In order to establish a wrong per unit, we took the median price of each firms heavyweight inventory and then took an average based on these figures.The number of units sold multiplied times average price per unit gave us an accurate reflection of over sales for 2012 when cross referenced with annual report data. Our data had some limitations as some firms data did not highlight units sold or sales revenue from the heavyweight market. We had to deduce and infer with the data we were given. Another limitation in data collection came when gathering information about price mark up and marginal cost. We sought information from industry experts who had insight in this area. Analysis and ResultsThe C4 four-firm concentration ratio of .880 indicates that there are only a few firms who produce most of the industrys output. The heavyweight industry is highly concentrated. Most of this industrys output is produced by Harley Davidson, Honda, Yamaha and Kawasaki. The Herfindahl-Hirschman index number (HHI) is 3,586 out of 10,000. This suggests that there are multiple firms in the industry who drive a considerable part of the market share. The top four firms cypher for almost 40% of the market. This number would deter an investor when considering a possible merger. subscribe and Pricing Structure/Lerner IndexThe Lerner Index for a Harley Davidson is .25 and the mark-up is 1.3. HD charges a price 25% over the marginal cost or 1.3 times the substantial marginal cost. In other words, for each dollar paid from the consumer towards the leveraging of a new motorcycle, $.25 is markup. Market Struc tureHarley Davidson (HD) Motorcycles have many different aspects that play to the market structure, specifically the classification of motorcycles by size, the number of firms in the market both national and international, brand equity merchandising which includes meekness to the apparel, accessories and licensing markets, barriers to entry and various merger attempts in the past.HD Motorcycles are classified into heavyweight classes such as Touring, tailored, or Sportster. In 2011 Touring motorcycle accounted for 92,002 bikes out of a total of 233,117 bikes sold for Harley Davidson (Harley Davidson Inc., 2012). Second leading in sales were Custom bikes at 91,459 bikes (Harley Davidson Inc., 2012). Overall, Harley Davidson sold 152,180 units in the United States and 80,937 units internationally for FY 2011 (Harley Davidson, Inc., 2012).In international markets Harley Davidson sold 83,505 units compared to 151,683 units in the United States (Harley Davidson, Inc., 2012). Outside of the United States, sales in Europe and surrounding regions were the second largest region for Harley Davidson with 44,340 units sold in 2011 (Harley Davidson, Inc. 2012).Units sold in the Asian Region came in third at 21,416 units, and the least(prenominal) number of units sold for Harley Davidson was in the Latin American Region, at 7,247 units. wholly regions saw an increase in the number of units sold from 2010 to 2011 but the United States still remains responsible for 68% of total units sold (Harley Davidson, Inc., 2012). In 2012 HD experienced continued growth as they sold 145,391 units globally in the first 6 months this is a 9.3% increase from the year before. Retail sales also increased by 12% in the US with a 16.5% increase in Asia/ Pacific and a 58% in Latin America (Harley Davidson, Inc., 2013). Harley Davidson has seen steady growth in recent years.Harley Davidson has not evermore sustained yearly growth. As the economy was slowing slipping during the niche of 200 8, Harley Davidson was forced to make some ends in order to survive. In 2009 Harley Davidson denote they would discontinue the Buell Motorcycle brand from their line to focus all of their resources on producing their primary products in order for Harley Davidson to stay afloat (Crowe, 2009). In 1994 Harley Davidson became a 49% owner in Buell Motorcycle Company, a company that was founded by a former Harley Davidson engineer, Erik Buell (Autoevolution, 2013).In 1998, four years after unveiling business together Harley Davidson purchased an additional 49% of Buell Motor Company loss the creator with only 2% ownership (Autoevolution, 2013). Harley Davidson would continue operating with Buell motorcycle brand for the next eleven years creating over 17 models of modern motorcycles, however in 2009, as profits decreased, HD made a decision to end business with Buell.In 2008, during these same difficult economic times, Harley Davidson acquired an Italian motorcycle company MV Agusta for $109 million hoping to increase sales and market expansion overseas in an area dominated by Japanese competitors (Barrett, 2010). Shortly after acquisition the market tanked and Harley Davidson had recorded $162 million in losses with the MV Agusta line (Crowe, 2009). The relationship lasted just over a year before Harley Davidson decided to sell the brand in 2009, at the same time it discontinued its relationship with Buell.Finally, accessories and licensing sales is another subdivision of the market heavily dominated by Harley Davidson. During the economy crash charm bike sales slowed revenue generated from the sales of apparel and merchandise helped to contribute to the overall bottom line for Harley Davidson. In 2012 $69.3 million was generated from the sales of prevalent merchandise trademarked as MotorClothes was up 12.8% from FY 2011 (Harley Davidson Inc., 2012).Summary and ConclusionAlthough Harley Davidson dominates the market in the United States, it has been the sm allest in Europe and the 4th in Asia/Pacific region which is dominated by Japanese brands. One reason for Harleys smaller market share in the Europe and Asia region is that the company cannot produce enough motorcycles to meet the demand and its prices tend to be higher(prenominal) than competitive models. Shortages of Harleys lead many consumers to purchase competitive bikes as there are 2-year waiting lists for some Harley models (Company spotlight Harley-Davidson).This would lead us to believe that Harley Davidson acts as a leader in a Stackelberg Oligopoly as it chooses its level of output in the market. In the United States Harley Davidson is one of a few firms that create motorcycles for touring or cruising. Harley Davidson produces differentiated products and remains the leader in selling them. Competitor firms such as Honda and Yamaha sell a significantly smaller number of motorcycles in the US markets compared to Harley Davidson. Barriers to entry have been exemplified by companies such as Polaris and Triumph who have tried to drop off the market but remain at 2-3% of market share.Market partIn United StatesUnits Sold(in K units)Revenue (in M $)Harley Davidson57%161$2,500Honda17%48$744Kawasaki9%25$587Yamaha5%14$217Other12%34$527ReferencesAutoevolution. (2013). 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