When we talk about the motorcycle market, there are a few top players that come to our mind and Harley Davidson is one of them. When we analyze any specific industry through porter’s five forces, we get to know about all the external factors that have a huge effect on business development. Being in this growing market, we should get to know about all the strengths, weaknesses as well as threats that we may potentially face so that we could appropriate steps in this regard. Harley Davidson is a reliable as well as the stable company as compared to all other available firms of this industry. Being reputed company, the customers trust and rely on it for purchases.
Quick Overview of Porter’s Five Forces Analysis for Harley Davidson
As compared to the all other firms in this industry, the company is somewhat stable, as already mentioned above. Following is the quick overview of porter’s five forces of Harley Davidson.
1. Competition or competitive rivalry – high
2. Bargaining power of customers – high
3. Bargaining power of suppliers – low
4. Threat of substitute products – moderate
5. Threat of new entrants – moderate
Competitive Rivalry
This force of porter analysis identifies the competition against a company in the specific industry. When we talk about Harley Davidson, what are the external factors creates a high competitive power or competitive rivalry for it?
There are three major factors to consider in this regard, for instance, the large number of firms manufacturing motorcycles, the high availability of firms as well as the moderate firm’s variety. There are lots of firms with which the Harley Davidson competes, including local to international markets. Other than this, the high availability of public transportation also affects the company sales. In this regard, Harley Davidson needs to maintain as well as improve product quality to stay strong and to stand out in this high rate of competition.
Bargaining Power of Buyers
When we talk about the Harley Davidson’s bargaining power of suppliers, it’s strong. What are the external factors that serve as a basis for it? These are the high availability of substitute products, the high knowledge of customers as well as the low switching costs. The low switching costs for the customers makes it really easy for them to switch to other available substitutes as they are given a variety of options in this regard. So, if Harley Davidson raises the prices, the customers are going to switch easily for the reason that they have enough knowledge to judge the better option for them so they can make best decisions in this regard.
Bargaining Power of Suppliers
This force of porter analysis determines the effect of suppliers in the industry. When we talk about the bargaining power of suppliers of Harley Davidson, it’s weak. What are the external factors that serve as the basis for it? Minimal forward integration is the major reason for which the suppliers bargaining power is considered weak in this regard. The other factor is the high stability of supply for the suppliers. Also, the moderate size of a number of suppliers allows them to have an effect on the company but not so high but moderate.
Threat of Substitute Products
This force of porter analysis tells us about the substitute product’s threat for our company. When we talk about the Harley Davidson, the threat of substitute products is moderate. What are the external factors that serve as a basis for the moderate threat of substitute products against Harley Davidson? These factors are the availability of a number of substitute products, the moderate substitute variety as well as the low switching costs. For instance, the availability of cars, as well as the public transportation, is being utilized by the people much that have a huge effect on Harley Davidson sales. But the motorcycle is something really personal as well as cheap so the customers can’t be getting attracted by these available substitutes so for Harley Davidson, the threat of substitute products is considered moderate. However, if the company raises the prices, the customers can switch to other substitutes like motor scooter etc.
Threat of New Entrants
The analysis of this force tells us about the threat of new entrants against a firm. For instance, when we talk about the Harley Davidson, the threat of new entrants for the company is medium. What are the factors that serve as a basis in this regard? These factors are moderate economies of scale, moderate costs for switching as well as the high costs required for brand development. As a matter of fact, the first and foremost thing to consider in this regard is that the Harley Davidson is considered to be a recognized brand around the world. The brand development and to gain the customer’s trust isn’t so easy task for the reason that high costs and enormous efforts are required for this. So, this is the major barrier for any new entrant to enter into this industry. But at the same time, there is one more important thing to consider that it is really very easy for customers to switch from one brand to other if that is proffering the same quality motorcycles at the much low prices. So, the Harley Davidson needs to address this issue as the threat of new entrant for it isn’t low but medium.
Conclusion
As discussed above, based on porter’s five forces analysis, the Harley Davidson necessitate focusing on the first two forces i.e. high competition in the industry as well as high bargaining power of suppliers. Both these aspects should be addressed for sake of maintaining the top position in this market so Harley Davidson needs to take appropriate steps in this regard. For instance, increasing the developmental efforts as well as reasonable investment in technological improvement can bring the positive results for the company.