Harley Davidson Example #2
1. IF you were CEO of Harley Davidson, How would you compare the advantages and disadvantages of using exports, joint ventures, and foreign subsidiaries as ways of expanding international sales?
A.)The advantage of Using Exports was that I’m able to save money in resources, taxes relief’s, and cheaper labor while exposing my product to an international market. Harley recognized that “German motorcyclist rode at high speeds-often more than 100 mph.” Pc-10. As a result the company began studying ways to cater to the German needs and provide more protection. The disadvantage would be the locally the community would loose certain jobs and the country more tax revenue.
B.) The advantage for Joint Ventures that by partnering with a foreign and local partner I immediately share the risk, pool resources, and responsibilities. My risk is less. However the disadvantage is that if I don’t find a partner that shares the interest and goals I can end up loosing company secrets like GM, “Not long ago GM executives noticed that a new car from a fast growing local competitor partially owned by GM’s Chinese joint venture partner, looked very similar to one of its models. Gm Claimed its design was copied.”p.111 Management and Globalization.
C.) The advantage of Foreign Subsidiaries is that you have complete ownership of the company while still enjoying tax reliefs while building in a foreign country. You also don’t have to worry of having your company’s secrets stolen. You also are providing jobs to the local community hence a better acceptance of your product by the locals. The disadvantage is that you take the entire risk
2. In America and Japan Harley’s positioning has shifted from providing a product (motorcycles) toward providing a service (way Of Life). Will this positioning succeed in Asia, Africa, and South America?
I totally believe this positioning would succeed in Asia, Africa, and South America. With much of its growth coming from overseas, Harley-Davidson Inc. has opened an Asian headquarters in Singapore. “Since it opened International sales, which accounted for 25% of the company’s business four years ago, were 35% in 2010. The company has set a goal of at least 40% by 2014.” (JS ONLINE, Journal Sentinel) Harley recently posted its first sales increase in 16 quarters, driven “entirely by retail growth outside the U.S.,” Levatich said. (JS ONLINE, Journal Sentinel) While cultivating sales in Asia, Harley-Davidson says for now it doesn’t plan to manufacture bikes there.
They cater their bikes as a luxury to high income communities. In Africa they hold group rides like the one happening in August 2013 held by “Harley Safari” http://www.hogafrica.com/content/harley-safari%C2%AE-august-2013. As for South America, Harley-Davidson Inc. HOG +0.31% opened a permanent Latin America headquarters, joining a growing list of U.S. companies looking to tap into the emerging market. (By Melodie Warner in Market Watch) South America has a growing economy and a huge acceptance for an icon in the motorcycle industry like Harley Davidson. In the same way Japan embraced Harley “Their economy is a fast growing luxury market” p.c11.
3.)Assume the CEO of Harley has decided to set up new manufacturing facilities in both China and India. Which of the general environment conditions should be analyzed before Harley makes strategic investments in each country. And to get started there, should Harley set up wholly owned subsidiaries to do the manufacturing, or would it be better off entering into a joint ventures with local partners. I would analyze the economic conditions to access their financial health especially those that influence customer spending, resource supplies and investment capital.
I would also analyze Legal political conditions that would determine if government regulations, policies, and proposed laws would affect my investments. Technological conditions is growing world wide but I would definitely analyze Social Cultural Conditions to take meaning of norms, customs, and demographics of the society, human rights beliefs, gender roles, life styles, etc. All need to be considered when properly managing my organization abroad. Last but not least the Natural Environment Conditions I would need to become very familiar with their feelings and laws on recycling, carbon neutral, green, and sustainable.
Protecting the natural environment is a global responsibility and it is vital that we do it by or beyond the local norms. To get started in China or India, although I love the idea of taking in all the profit; while having complete ownership through subsidiaries. I would much rather recommend a joint venture with a partner that shares the same principle values and goals. I love the idea of pooling resources and sharing risk while at the same time my partner has all the insight of the environmental conditions and access to his or hers networking system.
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