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TAS 2015 In-house Selection Process Ambarish Ambuj

Tata Steel Ltd

TASScheme of the presentation

ORGANIZATION

LEADERSHIP

STRATEGY EXECUTION

SALES AND MARKETING

SEGMENTATION

Harley-Davidson in IndiaIconic American motorcycle brand best known for touring bikes. Associated with strong masculine, even outlaw image

In 1981, was bought back by Harley-Davidson Management group. Strict quality control and return to profitability

Downturn in 2008 due to economic crisis and production overshooting in US. Posted loss in 2009

Anoop Prakash joined Harley Davidson as Country Manager, India in March 2009

Started in 1907, Global Market leader in 1920s with strong overseas presence

In 1969, AMF bought it. Quality plummeted and sales declined

Started looking at emerging international markets. Transformation to global company begins

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ORGANIZATION Please comment on

the organisational readiness of Harley Davidson for an international business operation.

From the case description highlight specific observations about the organisation’s structure to support your views above.

TASOrganizational Readiness

• In 2000s, started looking at emerging global markets• In 2009, management took the strategic decision to make 40% sales outside US by 2014

•Opened subsidiaries in Europe, China & now India• In 2012, set up regional headquarter in Singapore•Regional team in India hired local talent with relevant experience from competitor companies

•But, still very small functional teams in subsidiaries•Matrix organization with limited authority to regional teams

Management Readiness

•Dealership network across globe (more than 50% of them outside US)•Sales & Distribution subsidiaries in Europe & Japan to sell US assembled bikes

•Assembling unit in Brazil since 1999 (1st overseas plant) •1st dealership in China in 2006, subsidiary in 2010•Decided to enter Indian market in 2008 and set up a sales and distribution unit, assembling unit in 2011

•Very small after-sales service network

Operational Readiness

•Developed a bike (XR1200) specifically for Europe in 2008•Conducted market assessment project in India to develop/customize bikes suited to Indian customers

•Obtained necessary environmental clearances for its bikes in India•Yet to develop the competence for producing components locally• Implementation of Euro-IV by 2016-17 & Euro-V by 2020-21: Need to boost R&D to reduce emissions

Technical Readiness

Willingness

Organization Structure

Regional Teams

Low High

Management Readiness

Distribution Network

Production Units

After-Sales Services

Low High

Operational Readiness

Product Development

Market Assessment

Regulatory Needs

Low High

Technical Readiness

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LEADERSHIP Comment on the

leadership styles at Harley Davidson – Parent Organisation and India Business.

Is the leadership style appropriate for the business objectives – globally and in emerging markets?

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Leadership Styles at Harley-Davidson – Global Leadership

Visionary & Democratic with some Bureaucratic Traits

Consultative Democratic

Allows country managers to

generate ideasIdeas are forwarded to headquarter

Headquarter takes final decision

Focus on Long Term

Goals

Thinking Differently

Visionary

Visionary• Taking difficult decisions for long term goals (CKD units in

India despite concerns back home)• Appreciating cultural diversity (Different strategy for India

compared to USA)

• Transformation of Sportster series from ‘compromise Harley’ or ‘girl’s bike’ to ‘cool bike for young adults’

Consultative Democratic• Incorporating ideas from country managers

• The letter from angry Harley owner prompting service programs like road-side assistance

Bureaucratic:• As evident from the T-shirt case, matrix organization slows

down decision making and bulk of decision making authority is with headquarter

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Leadership Styles at Harley-Davidson – Indian Leadership• Data Driven & Strategist –

• Market Assessment Project (Convincing the top management for changes suited to Indian conditions)

• Choosing the right customer segment to target (mid to high income group) by appropriately selecting the locations for dealers

• Assembling right team by hiring top talents from the industry, trained by Japanese and German companies

• Taking feedback from HOG and taking key decisions based on their inputs

• Goal Oriented – • Asked the board before joining “how oriented the company was towards investing in India”

• Perseverance during the T shirt issue and convinced headquarters for local sourcing

• Visionary – • Passed on the entire savings of shifting from CBU to CKD to the customers to grow market

• Unique marketing strategy - Positioning of Harley-Davidson bikes as competing against activities like golf & travel and not against bike

• Increasing the number of models being assembled as the import duty on CBU bikes increased

• Making a case for sourcing of about 40% components locally to further bring down cost

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STRATEGY EXECUTION Please comment on

the operational challenges of Harley Davidson business in India in the initial years.

What would be your recommendations to address the challenges mentioned above.

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Strategy Execution

Challenges

Very High Tariff Rate on CBU bikes

Indian bike market is largely utilitarian. Small market for leisure driving in India

Customer expectations different from US & European markets

Poor Customer Service due to lack of service stations and unavailability of spare parts

Decision making process – less authority at country level resulting in delayed decisions and lost

opportunities

Recommendations

Increasing CKD business. In addition, looking at manufacturing some components in India

Organizing events like HOG rally, social media campaigns, sponsoring college fests, IPL

Customizing a bike suitable for Indian conditions – low cost, liquid cooled, high ground clearance

Increasing service stations (by collaboration with other players). Online HOG for registering the problem, spares inventory at select locations.

Organizational restructuring to allow decision making by country managers in all functional units

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SALES AND MARKETING Comment on the sales

and distribution network of Harley Davidson in India.

Highlight the areas of improvement in marketing of the Harley Davidson Brand in India.

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Sales & Distribution Network of Harley-Davidson in India

• From 9 authorized dealerships all across India in 2012 to 14 dealerships in 2014

• Strong program to train and support the dealers with marketing campaigns and materials

• Dealers have local market knowledge: No additional cost for market research

• Positioning right between high and mid tier markets (e.g. show room in Delhi is in upper middle class mall right next to a luxury mall)

• One CKD assembly facility in Haryana caters to all dealers

• No separate after-sales or service network

• Roadside assistance program launched in May 2013 for assistance to registered Harley owners in dealership cities

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Areas of Improvement in Marketing

• Different strategies for three categories of prospective customers:

• Willing to buy & able to pay – simply make aware (targeted promotional events)• Willing to buy but not able to pay – financial services (collaboration with banks)

• Able to pay but not considering to buy – attractive packaging (after-sales services, promotional events)

• Increase the reach of HOG rallies – reach in tier 2 cities to give exposure to people

• Women empowerment based themes to promote bikes for women. (eg. An all women HOG rally on Women’s day)

• Street 500 & Street 750 – targeted promotion to attract young adults, newly employed

• Targeted promotions at tier-1 colleges and events like IPL

• Celebrity promotions• Increase service network – they serve dual purpose

• Use of apparels and general merchandise as promotional tools

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SEGMENTATION Comment on the

market- size and buying behavior of customer segment of Harley Davidson in India.

Would the global products of Harley Davidson succeed in India? Please support your arguments with data from the case.

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1) India is world’s second largest motorcycle market, but the market of leisure bikes is still very small and only 1810 heavyweight (800cc and above) bikes were sold in 2011.

2) GDP per capita and size of middle class have steady upward trend3) Indian customers are mainly the professionals in the age bracket of 35-40 years who have achieved

financial success and want to reward themselves4) According to TechSci Research “India Premium Motorcycles Market Forecast & Opportunities,

2019”, the market for premium motorcycles in India is projected to grow at a CAGR of more than 30% till 2019.

5) Organized motorcycle clubs in India like HOG expected to significantly contribute in increasing riders interest in the coming years.

Preferences of Indian Customers:• Higher ground clearance (due to quality of road)• Liquid cooled engine (due to ambient conditions)• Aggressive styling• Low Cost

Customer Segment of Harley-Davidson in India

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1) Indian customers have different expectations compared to US customers. So to succeed on a large scale, Harley Davidson needs some changes in its US models. (Market Assessment Project)

2) Price and performance limitations of US models mean that simply shipping US bikes to India would not be sufficient.

3) Style & Look and Brand play important role in premium segment. Harley-Davidson is number one premium segment brand in customer perception survey.*

4) Market of higher displacement bikes has an upward trend.*

Future of Global Products in India

Source: ACG Customer Perception Survey

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Thank You