ycle market. Just in the past two years, Harley/Buell introduced nine motorcycles. In 2010, they plan to launch nine more models. Harley is releasing these models to stay with the ever changing market flow. The release could possibly increase Harley’s product portfolio and revenues. This will be quite beneficial to any plans to grow the global motorcycle market. This particular market has shown significant growth recently. It has been forecasted that the performance of the market is going to accelerate which will drive the market value to a value of $122.4 billion by end of 2012. It can be said that expanding end market will likely drive demand for the company’s products. This opportunity is one that Harley could capitalize on and expand its revenues and profits. These opportunities can possibly decrease the before mentioned weaknesses if not make them nonexistent. There is definitely a need for a strategy that would use these opportunities to the fullest.
The DATAMONITOR SWOT analysis shows Harley-Davidson threats as being regulatory compliance, labor issues, and forecasted recession in North America and Europe. On the subject of regulatory compliance, because EPA (US Environmental Protection Agency) along with other entities started to enforce stricter regulations on applicable emissions and noise standards this is putting pressure on companies to adapt their product portfolio. These new rules will increase costs and obligations on the company’s operations. Some other costs that have been steady increasing over time are labor costs across the world for Harley-Davidson. In the US, the costs come mostly from the increase in minimum wage. This increase has adversely affected the bottom-line in the US. In addition, union contracts will be expiring soon. With how things are progressing currently, there is no guarantee that the negotiations with these unions will go well for the Harley. If a new agreement is not settled on this could cause work stoppages or labor disruptions. This will then flow over to cause problem with customer relationships and general operations.
With a forecast of recessions in North America and in Europe, Harley is definitely in for a rough time this year. With most of their business here in the US and the profitability of automotive business is tied to the performance of the economy in which the company operates, the forecast isn’t too surprising. To add on to this bad news, it is reported that the consumer confidence in the US is expected to decline. Once confidence starts to fall, spending will start to fall also. This then signals that there is a depression in the economy since consumer spending accounts for 2/3 of our GDP. Of course this all causes a challenge for Harley with the decrease in the demand for their products since people just aren’t spending. With these threats, I can see how they affect all the other aspects of the analysis. Each part is interconnected. These threats of course need to be neutralized. But how to do that is of course always the question when it comes to making a strategy. I would suggest starting with the opportunities, then strengthen the weaknesses, maintain strengths and from there eliminating threats might be easier done.
2) The reason why a good understanding of the forces driving the industry is necessary is because strong knowledge of the five forces will help determine the profit potential in an i
