Index / Business / Harley-Davidson Porter's 5 Forces
Harley-Davidson Porter's 5 Forces
This free essay Harley-Davidson Porter's 5 Forces
. If you do not find your term paper, you can search our essay database for other topics on the search page essays.
Words: 537 | Pages: 3
Porter's 5 Forces
Threat of New Entrants: Low
Like any automobiles, Harley-Davidson's industry requires large manufacturing facilities and equipments to enter. New Entrants would have to have a large amount of capital is start in this industry. Already established firms such as Harley-Davidson, Honda, Suzuki, Kawasaki, Yamaha, and Ducati have the advantage of brand recognition from all over the world. These companies also established customer loyalty, especially Harley-Davidson. This means that any new entrants trying to enter the industry have to spend tons of money in advertising and promotion to receive the same amount of brand recognition and customer loyalty that these powerhouse companies in this industry already have gained. With the lack of brand recognition and customer loyalty, retailers would be afraid to carry such product because of the risk it carries if it doesn't give you profit.
Threat of Substitutes: Low
Motorcycles are seen as leisure products and don't take much out of one's income. Some substitute items for a motorcycle is a motor scooter and dirt bikes. Customers will switch to the substitutes if price increases and purchasing a cheaper substitute will be the better choice. However, give the fact that Harley-Davidson has a strong image of a lifestyle, the substitute products are no match to Harley-Davidson products. This will sway customers from buying substitutes because it is just not the same.
Bargaining Power of Buyer: High
Satisfying customer's needs are really important when it comes to Harley-Davidson. Harley-Davidson thrives in their customer loyalty and makes most of their profits off their current Harley-Davidson riders by offering them better products than the ones they own currently. Despite having customer loyalty, pricing will always be somewhat of a factor. Other Japanese manufacturers, such as Honda and Suzuki, offer a cheaper price than Harley-Davidson. Harley-Davidson has differentiated their products from Japanese product lines but price will always be a factor when purchasing a motorcycle.
Bargaining Power of Supplier: Low
Like any automobile, motorcycles are mainly made from steel. Steel ores are abundance in the world and there are many small manufactures that can supply Harley-Davidson. Harley-Davidson's bargaining power with the suppliers is high because they can look for small companies who are willing to do business with them at a cheaper price. Also, Harley-Davidson can even purchase several small steel manufacturers to get rid of any kind of bargaining power of suppliers.
Intensity of Rivalry: High
Harley-Davidson's intensity of rivalry is high because of Japanese manufacturers. In the motorcycle industry, money is spent to advertise to certain markets and create new innovations to satisfy customer's needs. This makes it hard for new entrants to come in. These Japanese manufacturers can product cheaper and better looking motorcycles that can attract the young Americans. Despite all the Japanese manufacturers, Harley-Davidson controls about most of the market in the United States but fails to control international markets in Europe and Asia. With cheap products that are produced by international manufacturers, Haley-Davidson differentiates their products by a little so pricing wouldn't be much of a factor. Harley-Davidson values its customers so much that The Harley-Davidson Owners Group (H.O.G.) is an organization that is created for Harley enthusiasts. The Harley Owners Group is a successful organization that has united over a million people through their passion for living a Harley-Davidson life.