Harley Davidson Case Study - Strategic

Framework

1 ASSIGNMENT

1.1 Guidelines mentioned in class

 Do NOT just answer the questions form the case study

 Do it like you are working for McKinsey

 Use all the relevant theory and analytical frameworks

 Develop comments on the architecture

 Finally answer the questions

1.2 Questions from reader

1.2.1 1. Do a strategic analysis on the company utilising the appropriate tools and practices
associated with Strategic Management.

1.2.2 2. What are the key elements of Harley-Davidson’s strategic architecture as of 2004?

1.2.3 3. Which of the five generic competitive strategies best fits what Harley-Davidson is
doing to build a competitive advantage? Includes an activity system view.

1.2.4 4. What strategic issues confront the company as of 2004? What should Harley-
Davidson’s management be worried about?

1.2.5 5. What recommendations would you make to the management of Harley-Davidson to

sustain the company’s growth and support continued strong financial performance in the
years ahead?

2 MACRO ANALYSIS

2.1 A - Millennium Goals

2.1.1 Starting point for macro analysis, develop from here

2.1.2 Eradicate extreme poverty and hunger

2.1.3 achieve universal primary education

2.1.4 Promote gender equality and employer women

2.1.5 Reduce child mortality

2.1.6 Improve maternal health

2.1.7 Combat HIV/Aids, malaria and other diseases

2.1.8 Ensure environmental sustainable

2.1.9 A global partnership for development

2.2 1 - Pestle
Macro Economic Trends (PESTLE) Impact or Implications Probability

Political

Economic

Social

Technology

Legal

Environment

2.2.1 Method
 Given the macro economical, what are the major macro trends what will have an
impact on the business in:
o the shorter term (6 - 12 months)
o the longer term (12 - 36 months)
o Describe the trend and then the impact as the probability of the impact
o Scale - 1 - 10 : 1 small, 5 medium, 10 high)

2.3 2 - Stakeholder analysis

Key Stake holders Core Expectations/Issues Strategic implications

Examplesof stakeholders
 Employees
 Customers
 Communities
 Investors
 Regulators

2.4 3 - Industry Dominant Factors

Factors Strategic Importance
Factors/Characteristics
 Market size and growth rate
 Number of rivals
 Scope of competitive rivalry
 Buyer needs and requirements
 Degree of product differentiation
 Product innovation
 Supply/demand conditions
 Pace of technological change
 Vertical Integration
 Economies of scales
 Learning and experience curves

2.5 4 - Industry Driving Forces

Driving Force Impact of driving force Strategy changes needed fir impact of driving
forces

2.5.1 Three Key Steps to doing analysis

Step 1 - Identify likely to exert greatest influence over the next 1 -3- years

Step 2 - Assess impact

Are the forces acting to cause the market demand to increase/decrease

Are the driving forces for competition more/less intense

Will the driving forces lead to higher or lower industry profitability

Step 3 - Determine what strategy changes are needed to prepare for impact of driving forces

Common types of driving forces

 Emerging new Internet capabilities and applications
 Increasing globalisation of industry
 Changes in long term industry growth rate
 Changes in who buys the product and how they use it
 Product innovation
 Marketing innovation
 Entry of exit of major firms
 Diffusion of technical knowledge
 Changes in sot and efficiency
  Consumer preferences shift form standardized to differentiated products
 Changes in degree of uncertainty and risk
 Changing societal concerns. attitudes and lifestyles

3 INDUSTRY ANALYSIS

3.1 1 - Industry Trends: A General Analysis

3.1.1 Key questions to answer

 In what industry do we play?

 What are the challenges and rivalries in this industry

 What are the key trends that we observe?

 What orthodoxies exist in the industry that we can capitalize on?

3.1.2 Example of industry trend analysis

Industry Trends Implications Opportunities/Threats

Industry Company

Degree of regulatory issues

Existence of environmental issues

Degree of branding and/or consumer loyalty

Extent of potential supplier sources

Economies of scales required

3.2 2 - Industry Issues

What are the issues? So what?

A condition, tension or burning question external to the organisation that if it continues will
have a significant impact on the company
What - Identify issues
So What - Implication for the industry
3.3 3 - Competitive Forces - Porter 5 Forces Analysis

3.3.1 Steps

Identify competitive pressures associated with each of the 5 forces

Evaluate the strength of each force - Moderate, weak, String

Determine the collective strength of the 5 forces

3.3.2 5 forces
Use framework on page 13

3.4 4 - Industry Values Chain Analysis

 Activities, costs and margins of suppliers

 Internally performed activities, costs, and margins

 Activities, costs, and margins of forward channels allies and strategic partners

 Buyer or end user value chains

3.5 5 - Critical Success Factors

3.5.1 KSF's

3.5.2 Identify 5 - 6 KSF's that are truly relevant

Key Success Factor Impact on financial and competitive success of industry
members

4 COMPETITOR ANALYSIS

4.1 1 - General Competitor Analysis

4.1.1 Key Considerations

Main Competitors Core business, offerings and strengths

 Who are our real competitors

 Who is the strongest, why?
 What are the value propositions of others
 Value Chains
4.2 2 - Strategic Group Analysis/Competitor Group Analysis

4.2.1 What position do rivals occupy in the industry

4.2.2 Strategic group mapping

Steps
 Identify competitive characteristics that differentiate firms in an industry from one
another
 Plot firms on a variable map using differentiating factors
 Assign groups that fall into the same strategy space to the same strategic group
 Draw cisrcles around each group, making the size proportional so the groups share
of the total industry sales
 Guidelines
 Variables selected on axis should not be highly correlated
 Variables chosen should expose big differences in how rivals compete
 Several maps can be drawn
 Interpret
 The closer the circles the stronger the cross-group competitive rivalry tends to be
 Not all positions on the map are equally attractive

4.3 3 - Competitor strength, weaknesses and strategies

Key competitor trends Implications/Opportunities/threats

4.3.1 Assess the following

 Which rivals has the best strategy?
 Which rivals appear to have weak strategies?
 Which firms are poised to gain market share, which ones are loosing ground?
 Which rivals are likely to rank in the top 5 year from now?
 Are the any upcoming rivals that will overtake the industry leader?

4.3.2 Things to consider in predicting moves of rivals

Strategic Intent Current Actions Expectation

· Competitive Scope · Strategic Posture · Competitive position/ situation

· Strategic Intent · Competitive strategy
· Market Share Objective

p. 26

 Which rivals need to increase their unit sales and market share? What strategies are
they likely to pursue?
 Which rivals are likely to make major strategy changes?
 Which rivals are good candidates to be acquire or acquire others?
 Which rivals are likely to enter new geographical areas?
 Which rivals are likely to expand their product offering?
4.4 4 - Competitor relative evaluation
KSF 1 KSF 2

Competitor 1

Competitor 2

Competitor 3

4.4.1 Questions to answer

 How does the company rank relative to others in terms of KSF's
 Does the company have a net advantage or disadvantage vs competitors?

4.4.2 Process
 List KSF's and other relative measures of competitive strength
 Rate the firm and key rivals on a scale of a 1- 10 (1 = very weak, 10 = very strong)
 Use rated system or not, quantify
 Sum individual ratings to get overall competitive strength
 Based on rating determine overall competitive strength

4.5 5 - External Perspective Analysis: Competitors

4.5.1 Key questions

Competitor trends Implications Countering Competitors

External
Environment

Industry Trends

Competitor trends
and comparisons

Customer trends

 Who are our real competitors?

 What are they beating us and why?
 What are their business designs?
 How can we counteract their competitive positioning?

5 CUSTOMER ANALYSIS

5.1 Steps

5.1.1 Categorize customers

5.1.2 Establish answers to

 What do customers currently value and prefer (per segment)
 How have priorities changed?
 How is the current offering overlapping with their needs?
 What are the obvious gaps?
5.1.3 Customer trends and opportunities Matrix
Segment Current Customer Future Present Gaps &
Description needs Customer needs Offering implications
Features for new
offerings

Industry Trends

Competitor
trends &
comparisons

Customer
Trends

6 EXTERNAL ANALYSIS INTEGRATION

6.1 Development of opportunities and threats based on external analysis

Threat Impact Scale (1 = Weak, String 10)

Opportunities Impact Scale (1 = Weak, Strong = 10)

7 INTERNAL ANALYSIS

7.1 Financial Analysis

 Trends in sales and market share
 Acquiring/retaining customers
 Trends in profit margins, ROI, EVA
 Overall Financial Strength and credit ranking
 Trend in stock prices, stock holder values
 Image and reputation with customers
 Internal Value Chain Analysis

7.1.1 Primary Value Chain Activities

 Where most of the value is created for customers
 Activities
 Supply Chain Management
 Operations
 Distribution
 Sales and Marketing
 Profit Margin
 Service
7.1.2 Support value chain activities
 Facilitate primary activities
 Activities
 Product R & D
 Systems Development
 HR
 Administration

7.2 Competencies and capabilities

7.2.1 Identify
 Strength
 Enhances competitiveness
 Competencies/Capabilities
Core capabilities Criteria
Customer Value
Uniqueness
Leverage

 Core
 Distinctive

7.3 Product Positioning analysis

 Product Portfolio Mix
 Product Portfolio Analysis
 Product Market Mix
 Modes of market entry

7.4 SWOT

7.4.1 Internal
 Strengths
 Weaknesses

7.4.2 External
 Opportunities
 Threats

7.5 Strategic Issues

 Worry List

8 ANSWER CASE STUDY QUESTIONS