Conserve Strategy: Harley-Davidson Case Study
The decision made by Harley-Davidson to expand conservatively does not appear as the right strategy to be adopted by the company. Although the decision was informed by factors such as the need to increase quantity at the expense of quality and the understanding that the company had loyal customers and the company could capitalize on its products position, the strategy ignored key factors as discussed in this paper.
First, while the company realized notable success in 1993, the success came with a new problem. The firm could not meet its demand. Consequently, the waiting time of up to six months would be frustrating even to the most loyal customers. This had led to damaged corporate image such as misuse of the company’s logo. According to the American Management Association, a satisfied customer will tell a friend while an unhappy customer will tell the world. This means that the firm would not only miss out on its loyal customers but also the prospective customers. Also, the firm, just like any firm that adopts a conservative expansion strategy risked losing key business partners such as suppliers and dealers who would prefer foreign imports to having empty stores and show rooms.
Secondly, the strategy would be a risky plan in a business that is highly competitive and highly dynamic regarding consumer behavior. While the firm maintained its corporate philosophy, competitors such as the Japanese Manufacturers of Honda had entered the market with full force with quality motorcycles. Accordingly, Harley-Davidson could no longer enjoy the competitive advantage of quality. Sadly, during that time, the firm’s quality was on a decline adding to the problems of the firm that was already fighting for control of the market share.
The conservative approach also meant that the firm did not have the capacity to adopt growth and expansion strategies presented by key partners such as the AMF. AMF had envisioned that expansion and aggressive strategy was important in keeping up with the competition. Unfortunately, Harvey-Davidson did not have the equipment for strategy change, and AMF ended up making an average operating loss of $4.8 million for eleven years. Later, the firm would find itself in a very desperate situation when its only hope was its Tariff protection
Eventually, they deemed it fit to adopt a rather aggressive strategy to meet demand and increase customer satisfaction. It opened new engine plants in Milwaukee and another one in Kansas City. The move was to diversify production to satisfy the growing demand of customers across all ages. However, despite the perceived advantages of an aggressive strategy, a firm should be careful not to mistake a fad for a sustainable business opportunity.