Harley-Davidson stands as a bastion of the chopper motorcycle culture. With annual revenues exceeding $5 billion, the company is a profitable and stable business. However, Harley-Davidson’s management must address concerns raised in this PESTEL/PESTLE Analysis to ensure long-term profitability. The PESTEL/PESTLE Analysis identifies the external factors in the remote or macro-environment of Harley-Davidson. The analysis determines if these external factors create opportunities or threats for the business. With a strong brand, Harley-Davidson expects to continue as a major player in the motorcycle industry. However, for long-term profitability in the domestic and international markets, Harley-Davidson must address the opportunities and threats identified herein.
A PESTEL/PESTLE Analysis of Harley-Davidson shows that the company has many opportunities to grow its business and improve its resilience. However, the PESTEL/PESTLE Analysis also highlights the importance of strategic reform based on external factors in Harley-Davidson’s remote or macro-environment.
Political Factors Affecting Harley-Davidson’s Business
The political climate affects markets where Harley-Davidson operates. Governmental influence on companies is evaluated in this component of the PESTEL/PESTLE Analysis. The following external political factors significantly affect Harley-Davidson’s remote or macro-environment:
- Free trade agreements (opportunity & threat)
- Increasing support for e-commerce (opportunity)
- Improving inter-governmental support for patent protection (opportunity)
Harley-Davidson benefits from free trade agreements, which facilitate the company’s global expansion. However, such a political external factor threatens the business by increasing the influx of cheaper products or substitutes that compete against Harley-Davidson. On the other hand, the increasing support for e-commerce creates opportunities for the company to improve its market reach through online media. Harley-Davidson also has better patent protection for its products, based on intergovernmental efforts on patent law. This component of the PESTEL/PESTLE Analysis indicates that the current political external factors in the remote or macro-environment brings opportunities for Harley-Davidson’s global growth.
Economic Factors Important to Harley-Davidson
Harley-Davidson must address the economic aspect of the motorcycle market. This component of the PESTEL/PESTLE Analysis examines the economic aspect of the remote or macro-environment of the firm. The economic external factors relevant in Harley-Davidson’s business are as follows:
- Economic stability of major markets (opportunity)
- Economic growth of developing countries (opportunity)
- Stable credit accessibility (threat & opportunity)
The economic stability of major markets presents opportunities for Harley-Davidson to stably grow its business in its core markets, especially in the United States. In relation, the company has opportunities for rapid growth and expansion in some high-growth developing countries where there is demand for chopper motorcycles. On the other hand, the stable credit accessibility could support competitors, which threaten Harley-Davidson. Nonetheless, the company can capitalize on its economies of scale to protect its business from competition in the remote or macro-environment. The economic external factors in this component of the PESTEL/PESTLE Analysis shows that Harley-Davidson has significant opportunities for domestic and international development.
Social/Sociocultural Factors Influencing Harley-Davidson’s Business Environment
Sociocultural changes can impact the remote or macro-environment of Harley-Davidson’s business. In this component of the PESTEL/PESTLE Analysis, social conditions are considered. The following sociocultural external factors are important to Harley-Davidson:
- Increasing attitudes about leisure (opportunity)
- Increasing involvement of women in chopper biking (opportunity)
- Increasing attitudes about green technology (threat & opportunity)
Harley-Davidson must include social issues in strategy formulation based on the company’s remote or macro-environment. For instance, the increasing attitudes about leisure create opportunities for the firm to market its products as leisure motorcycles. Also, the increasing involvement of women in chopper biking presents an opportunity for Harley-Davidson to increase its marketing efforts to target female customers. The increasing attitudes about green technology are a threat to the company because most of its products have combustion engines with significant emissions. Nonetheless, Harley-Davidson can improve the green technologies in its products to address this concern. This component of the PESTEL/PESTLE Analysis points out the significant opportunities for marketing and product development based on the effects of sociocultural factors in Harley-Davidson’s remote or macro-environment.
Technological Factors in Harley-Davidson’s Business
Technologies are an essential aspect of Harley-Davidson’s products and business operations. This component of the PESTEL/PESTLE Analysis evaluates the impact of technological changes and trends on the company’s remote or macro-environment. In Harley-Davidson’s case, the following technological external factors are relevant:
- Increasing availability of green technologies (opportunity)
- Moderate R&D investments in the motorcycle industry (opportunity)
- Increasing use of computing technology in vehicles (opportunity)
Harley-Davidson has the opportunity to improve its products by integrating green technologies. This opportunity can boost the company’s performance because most chopper motorcycles do not have high green-technology ratings. Also, Harley-Davidson can increase its research and development (R&D) investments to develop features of products or technologies as a major selling point. Moreover, the firm can integrate additional computing technology features to make its products more attractive. The technological external factors in this component of the PESTEL/PESTLE Analysis indicates that Harley-Davidson has opportunities to improve its products’ features to boost business performance in the remote or macro-environment of the motorcycle industry.
Harley-Davidson’s business performance responds to ecological conditions. The effects of ecological trends and changes are considered in this component of the PESTEL/PESTLE Analysis. The following ecological external factors are most notable in Harley-Davidson’s remote or macro-environment:
- Increasing interest in business sustainability (opportunity)
- Low-carbon lifestyles (opportunity)
- Climate change (threat & opportunity)
Current ecological trends emphasize business sustainability. Harley-Davidson can address this concern through changes in its business operations for higher sustainability ratings. Also, the company can highlight the environmentally friendly features of its products to attract customers with low-carbon lifestyles. However, climate change can reduce the attractiveness of Harley-Davidson’s products, which tend to have mediocre emissions ratings. Nonetheless, the company has the opportunity to improve the fuel efficiency of its products to attract environmentally conscious customers. This component of the PESTEL/PESTLE Analysis shows that Harley-Davidson must consider changing its business processes and product features to address the effects of ecological external factors on the remote or macro-environment.
Harley-Davidson must satisfy legal requirements. This component of the PESTEL/PESTLE Analysis outlines the influence of legal or regulatory conditions on the firm’s remote or macro-environment. Harley-Davidson must address the following legal external factors:
- Expanding emissions regulations (opportunity)
- Environmental protection laws (opportunity)
- Loopholes in international patent laws (threat)
Harley-Davidson has the opportunity to satisfy and exceed the requirements of emissions regulations. In relation, the company can improve its sustainability policies as well as contributions to environmentalist programs. Despite intergovernmental efforts, some loopholes in international patent laws threaten Harley-Davidson through weak protection against imitation, which also affects other firms in the remote or macro-environment. Based on the legal external factors shown in this component of the PESTEL/PESTLE Analysis model, Harley-Davidson can improve its business processes and products to satisfy environmentalist regulations.
Harley-Davidson’s PESTEL/PESTLE Analysis – Recommendations
The external factors enumerated in this PESTEL/PESTLE Analysis of Harley-Davidson emphasize major opportunities for business growth and resilience. These opportunities are based on conditions of the remote or macro-environment. It is recommended that Harley-Davidson should implement changes in its global growth strategy. These changes must address the opportunities based on free trade agreements and the economic growth of developing countries. Also, Harley-Davidson can further develop its online marketing campaigns to take advantage of increasing support for e-commerce. Based on opportunities for product development, it is recommended that Harley-Davidson should improve the green technology and environmental impact of its products. Such improvement will address the opportunities based on attitudes about green technology, low-carbon lifestyles, and expanding emissions regulations. Moreover, this PESTEL/PESTLE Analysis indicates that Harley-Davidson should reform its marketing strategies. Such reform must address the opportunities based on increasing attitudes about leisure and women’s interest in chopper motorcycles. Harley-Davidson can significantly increase its business performance through these opportunities.
- Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA.
- Harley-Davidson, Inc. (2016). About Harley-Davidson.
- Harley-Davidson, Inc. Form 10-K, 2015.
- Housing Industry Association (2011). An Introduction to PESTLE Analysis. HIA Ltd.
- Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE Analysis. Business Horizons, 17(5), 27-38.
- Roper, K. (2012, November). BIM Implementation: PESTEL Drivers & Barriers (Cross-national Analysis). In World Workplace 2012. IFMA.