Harley-Davidson Critical Thinking Example
The management of Harley-Davidson focuses on making the firm’s product ‘cult’ using a branding point of view to stress on consumer behavior. Researchers and scholars analyze the cult brands from a marketing perspective with an emphasis on advertising and integrated marketing communication. The benefits of the cult brand in the strategic management of the firm accord it numerous benefits such as penetration of overseas market and improved marketing implications. The management applies risky strategies such as premium positioning that uses the equity to fund its project other than using debt capital.
Agnihotri (2013) introduces the strategic fit concept and activity system maps model to foster tight integration of the value chain activities. The maps elaborate a good fit amidst value chain activities to make it hard for rivals to imitate to ensure they have a stable source of sustainable competitive advantage. The successful change in Harley Davidson leverage through the creation of a cult brand, configuration and connecting different value chain activities to reinforce the premium position strategy of the firm. The positioning of the firms bikes has implications for business strategy and corporate strategy to implicate Harley’s product and internal diversification strategies.
According to the top management of the firm, the riders of Harley bikes find social affiliation for all that aspire to adventure and style. Strangers that like bikes can have a feeling of shared values and shared brand community. That aspect requires direct communication and interaction with workers and clients of the firm. The Harley employees serve as a catalyst as they treat the clients as part of the firm brand community. To be able to achieve brand community, the firm eliminates barriers of power and authority to ensure it treats all as equal. The entire organization has a vertical, multiple layers, horizontal, and flat structure. Later on, the firm replaced wall offices with glass offices to enhance team collaboration. Workgroups in the firm work in participation with each other to ensure effective decision-making process.
The firm adopts a market timing theory in its strategic financial management where when the market value of equity is higher than the book value, the firm will raise capital using equity option other than debt. The firm adopts that financial policy since it exhibits a lower cost of capital. The market value of firms that invest in risky businesses such as niche segmenting and innovation opt for equity financing other than debt financing. The countervailing effect of expanding in the international market will ensure Harley has a reduced cost of capital that will boost the financial performance of the firm.
Harley adopts best practice approach in its primary value chain activities to position itself as a unique niche brand. The firm positions itself as a differentiator to deliver superior performance on different attributes of the product such as durability, conformance, serviceability, and the quality. Harley implements a tried productivity solution that focuses on the following areas: just in time system, empowering the workers and statistical operator control. The firm maintains a gap between the demand and supply where loyal customers wait for a year before delivery of their preferred bikes. The success of the strategy of the firm reflects on the annual customers that visit the firm.
Agnihotri, A. (2013). Turnaround of Harley Davidson – cult brand or strategic fit approach?. Journal Of Strategic Marketing, 21(3), 292-301.