Value Chain

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Transcript of Value Chain

Introduction

The purpose of this assignment is to decipher and understand the inner and outer working of Harley Davidson Motorcycles Company by using different tools and techniques used in class. By studying this company from all possible angles we could determine the future of the company and how it could cope in a so ever changing world. External and internal analysis will be used with a wide range of tools to determine threats and opportunities that can affect this company.

The Harley Davidson Company is well known for their V-twin engine cruising motorbikes. All the needed information about this company is in the case study papers. Harley Davidson is a major market leader in the USA for cruising bikes and also it offers a lifestyle that other companies cant replicate. With the advancement of mechanical and manufacturing technology and increasing competition, Harley faces a rough time to sail through. Mainly manufacturers from the Far East have targeted Harley for competition by bringing up their own version of cruisers in which they succeeded. They also came along with more advanced engine technology at a cheaper price tag and also by sheer volume compared to that Harley can output.

By using the tools to analyse the market situation, threats, opportunities and other variables a draw-up of Harleys future can be achieved.

Vision: Harley Davidson vision statement: We fulfill dreams inspired by the many roads of the world by providing extraordinary motorcycles and customer experiences. We fuel the passion for freedom in our customers to express their own individuality www.harley-davidson.com Harley Davidsons vision expresses to be unique in every way with by standing by its roots and delivering superior motorcycles to the market with prosperity quality and character built in.

Mission:

Harley Davidsons mission statement: We ride with our customers and apply this deep connection in every market we serve to create superior value for all of our stakeholders www.harley-davidson.com

Harley Davidson has a objective and aim which is to provide its customer the ultimate riding joy and a global Harley Davidson community not only for the enthusiast and to attract more customers for more people to enjoy and share the pleasure of owning a Harley Davidson motorcycle

Internal Audit

Ashridge Model:

www .emeraldinsight.com

Purpose: Values: Harley Davidson to remain an iconic legendary heritage to American culture. To maintain prosperity and uniqueness of the Harley Davidson brand and the image it is selling. To dominate the heavy motorcycle segment globally and make a statement of being one of the oldest all American motorcycle producers and its authenticity to American culture. To produce quality motorcycles for customers to experience the ultimate riding experience. To build a global community of Harley Davidson riders not only for enthusiasts.

Being one of the oldest all American motorcycle producers in the world and its developed expertise and experience developed over a century. Its loyalty to America as it served its part during the war eras for providing them motorcycles throughout and being the only sole American motorcycle to survive. Its loyalty to customers. The Harley Davidson brand not only represents motorcycles but also a lifestyle and culture. The unique styling and character with Harley Davidson motor bikes setting trends for heavy weight motorcycles. Developed a very good reputation very early stage compared to its competitors. During the early 1900s through racing to being the suppliers of motorcycles to the American army and police the brand is very strong and well known globally.

Strategy: Globalization, dealerships worldwide. Harley Davidsons involvement with its customers, The Harley Owners Group (HOG) worldwide events held including rallies organised by Harley Davidson. Using and the well known brand as a tool to convince that its not only a bike its a lifestyle, this can create an emotional attachment with the product as it is also used as a way of expressing yourself and your style. The brand represents a tradition and authenticity to American cultures showing loyalty to its American roots works in their favour. Harley Davidson also owns beull and mv agusta in order to capture the lighter weight sports bikes category.

Standards and Behaviours: Since the buyout the company has seen many changes especially in the hr department they have developed a more non hierchial management approach which has led to better employee involvement and commitment. Harley has been improving their products and technology and moved on from their old fashioned ways and technology in order to compete with its competitors. Harley Davidson has also changed its initial thoughts about entering the lightweight motorcycle segment and has introduced new bikes to compete in this segment. Harley Davidson has broadened its target audience with its new products.

The standards and behaviours of Harley Davidson is influenced by its values and purpose as it reflects upon Harleys own values from their website which includes encouraging intellectual curiosity, respect for individuals and fairness

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Firm Infrastructure Main market share holder in heavyweight cruising bikes Non hierarchical management and more team based structures Over 1000 dealers world wide 4 manufacturing plants in the USA Differentiator firm also known for their custom seats and other motor bike parts Buell Motorcycles for sportier bikes MV Augusta, Italian super bike manufacturer purchased

Human Resource Management -Improved dealership customer service quality -Harley Davidson Learning Centre for staff training and improvement -Good health and leave benefits offered to employees + bonuses

Technical developments -JIT manufacturing systems implemented to their plants in order to produce bikes faster and better quality -Harley only made around 90 Patent applications during the last decade - Harley have now developed liquid cooled engines with electronic ignition -improved suspension and brakes for the European Market

Margin

Procurement -Lots of bought-it parts from other suppliers, which meant that manufacturing costs were too high.

Inbound Logistics -9 Main site around the USA of which 7 in the state of Wisconsin Including the Head Office -Wheel manufacturing in Australia (which will incur delay from shipping, delay orders) -MV Production and Assembly in Italy

Operations -2 power train plants in Wisconsin -Plastic parts manufacturing facility in same state -2 motorcycle parts manufacturing plants in other states close by -Motorcycle wheel production in Australia -Brazil assembly plant for that market Outbound Logistics -Products distributed through over 1000 dealerships worldwide, -manufacturing plants located in Italy, Brazil, USA mainly, Australia and Europe

Marketing and Sales -HOG group, selling more of a Harley experience -Hundreds of dealers worldwide -main market is middle aged middle class men -company branded merchandise sold (perfumes, caps, tshirts,etc)

Service -Harley Financial Services (buy on finance) -improved customer service -try before you buy (test ride facility) -Customisation, consultation (including Chrome Consulting) -Service/repair facilities

Value chain EvaluationHarley Davidson have always been a market leader in the USA heavyweight cruising motorcycles but as they increased production capacity by introducing JIT systems in their plants, the competition was getting heavier with other Japanese manufacturers introducing rival models resembling to Harleys. The competition was set to produce as much as 30 times heavyweight bikes including ones that looked alike in style, and also that came with more powerful and economic engines. H.D. has many of its parts bought from other suppliers and small manufacturers which account for a major part of manufacturing costs as they do not have strong bargaining power, this is also due to their philosophy of letting other companies thrive rather than making it in-house. How ever in the last decade Harley made some patent applications and has improved their engines by adding electronic injection and liquid cooling. A major concern is their manufacturing and assembling plants including headquarters, are all far apart from each other and located though out the USA. Most of its plants are located within the Wisconsin state but the others are in distant places. The two part fabrication plants are located hundreds of miles apart not to mention their wheel manufacturer which is located in Australia. The main problems this poses is transportation costs and time. However there is good infrastructure within the USA, and the parts would be transported on cargo lorries but this would take hours or even days before parts can arrive. They have a Research and development centre in the same town as one of their power train production plants which is good as communication can be done in a fast way. What is not known is that if they are in the same industrial estate. Also their R&D didnt have the advantage to pass on knowledge from other entities such as car manufacturing like some other competitors were doing. Although they did have this facility, they tend to stick to traditional design and technology which might have put off some potential customers. This slow laid back attitude towards R&D and adapting new technologies just led to two new types of engines decades apart while the likes of Honda could churn out new engine models nearly every year. Engines wasnt the only technical department Harley was behind with, but also mechanisms such as gears, braking and suspension were primitive compared to those of BMW and others. In order to keep up and prolong the life of Harleys, they offered constant upgrade