Harley Davidson SWOT & PESTLE Analysis

Strength

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Weakness

1. Greater reliance on third parties for company operating and administrative activities: Harley Davidson depends on third party suppliers for pricing and delivery of services. This sometimes leads to unfavorable pricing, delay in delivery of activities as well as poor quality of services. The company also depends on third party suppliers for raw materials which sometimes lead to poor quality and untimely delivery of raw materials. Harley Davidson has only single supplier for certain parts that leads to greater supply risks for the parts.

2. Less market share outside domestic market in international stage: Harley Davidson is unable to address the needs of the consumers in the international market effectively. In Europe, Harley Davidson holds a market share of 10.8% in 2016 as the touring and cruiser needs are less in Europe than US. In the developing markets, there is little demand of 600+ cc bikes as a percentage of total sales which reduces the chances for Harley Davidson sales.

3. Decrease in net income for the company by 8%: Harley Division reported net income of $692.2 in 2016 down from $752.2.in 2015. Operating income has decreased by $102.1 million compared to last year. Independent retail sales through dealers have decreased globally by 1.6% compared to last year due to lesser shipments, unfavorable exchange rates and manufacturing costs. Operating income for Harley Davison financial services also decreased by 1.7% or $4.7 million due to higher provision of credit losses.

Opportunity

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Threat

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Political

1. New international trade policies owing to new elected president in US: New elected president of US- Mr. Donald Trump vows to make amendments in the international trade policies. Free movement of labor from cheaper foreign countries and a blank ban on outsourcing labor from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen have put corporations in a tough spot. This is likely to spike labor costs for domestic sourcing and thus hike manufacturing costs. On the other hand, domestic employment generation will grow as major outsourcing service and industries will be forced to hire US workers. This will generate more income for Americans and is likely to increase sales of Harley Davidson. US government is also in the process of renegotiating trade agreements like NAFTA and TTIP with EU for better investment and trade opportunities for home grown countries like Harley Davidson.

2. Regional governments extending sops to local manufacturers: Harley Davison is facing stiff competition over pricing from regional players in other countries as the regional governments are extending subsidies to the domestic manufacturers which makes Harley Davidson’s imported products less competitive compared to the local brands.

Economic

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Social

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Technological

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Legal

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Environmental

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