LAUNCHING OF HARLEY

DAVIDSON IN BRAZIL
IMT PASSION 2009

Team Name: Goblins

Symbiosis Institute of International Business, Pune
Nancy Rawat: 9579191228
Arti Golas: 9766495469

10/12/2009
Table of Contents

Product........................................................................................................................................ 3
Geographical Expansion................................................................................................................ 3
Requirements............................................................................................................................... 3
Reasons for choosing Brazil ........................................................................................................... 4
SLEPT Analysis .......................................................................................................................... 4
Customers................................................................................................................................ 5
Geert Hofstede Matrix ........................................................................................................... 5
Conclusion ................................................................................................................................... 6
References ................................................................................................................................... 6

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Product
A bike (motorcycle) is a single-track vehicle whose propulsion is provided by an engine. These
generic characteristics are combined with > 800 cc engine, hand-finished designs, seamless built and
smoother ride than any other bike results in the advent of a unique experience – Harley experience.
Harley-Davidson is an inspirational bike for every bike rider or designer, every bike is designed
keeping in mind the vision of ‘providing extraordinary customer experience’. In doing so, it has
differentiated itself on two aspects:

1. Tangible – These are the product characteristics.

 Customized designs
 Seats highly comfortable due to cross bones and sprung solo seat
 Unique colours
 Hand finishing
 Seamless tank made by deep drawing that ensures corners are not cut
 Saddle bags
 No Unsightly welds
 Exhaust pipes are designed to be in sync with the overall design
 Rider controls on handlebars are clear
 Water-cooled bike, stylised radiator

These are some of the attributes of Harley-Davidson not found in competitor’s bikes.

2. Intangible

Intangible characteristics are image, status, identity. Harley Davidson is a bike that gives the rider an
image of an adventurous person who is seeking freedom. The status imparted is very high; this
brings a sense of exclusivity. The person can identify himself with the group of riders who inspire to
fulfil their dreams. These characteristics make Harley an ‘experience’ and not just a vehicle.

Geographical Expansion
With the median age of people (40+ years) riding Harley in US is increasing it should be looking
forward for a geographic expansion. Every MNC is looking for a market with a large consumer base
and rising disposable income to establish their foot hold and increase revenues. The most sought
after economies in this segment are BRIC (Brazil, Russia, India and China) economies.

Requirements
 For a bike – large number of male/female riders in the age bracket above the legal driving
age.
 For a cruising bike – good roads alongside the enthralling landscapes, cult following culture
and people with disposable income who can afford these bikes.
 For business into other country – rules and regulations should not hinder the business. The
business should be profitable for the company.

The amalgamation of the conditions fulfilling these requirements can be found in Brazil. Amongst
the BRIC economies Brazil is the best choice for launching Harley-Davidson.

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Reasons for choosing Brazil
 SLEPT (Socio-culture, Legal, Economical, Political and Technological) Analysis: It helped in
understanding Brazil as a market for Harley Davidson
 Geert Hofstede Matrix: To understand the people of Brazil as potential customers

SLEPT Analysis
1. Socio-culture: Brazil has a heterogeneous culture owing to its history of immigration of
various ethnic groups across the world. The population between 15-64 years of age is 66.8%
of total population of 198,739,269. This age group is majorly influenced by the attributes of
Harley. The median age of Brazil is 28.6 years (male: 27.8 years and female: 29.3 years). The
rate of urbanization is 1.8% pa and 86% of total population resides in urban areas. This
indicates towards the large number of people who are influenced by urban culture
(generalized as American culture). This gives a large potential customer base. The sex ratio in
15-64 years of age is 0.98 male(s)/female and there is not much gender disparity in Brazil.
This is a good indicator for Harley-Davidson which is developing new models targeting
women.

2. Legal: Brazil is one of the top ten automobile manufacturing countries in the world by
volume. The import cost is CIF + (import duty+ misc. taxes of 1%) + Industrial Federal Tax
(IPI). In addition to this Common External Tariff (CET by MERCOSUL) and Merchandise
Circulation Tax (ICMS) of different states is applicable. However, for auto parts CET and ICMS
is not applicable in Brazil. This offers an added advantage to Harley- Davidson as it reduces
the price. Further, the labor cost is low in Brazil as compared to US and 100% FDI in
automobile industry is allowed. These two reasons indicate that Harley can set up its
manufacturing unit in Brazil which will help to reduce cost and capture market more
effectively.

3. Economic scenario: There is large income disparity in Brazil. But with a GDP growth of 8.6%
and ranking ninth in purchasing power parity it is an attractive market.

Inequalities in Brazil take place across different racial groups and regional dimension.
Regional inequalities in Brazil originate from a strong north-south divide. The per capita
income is highest in southeast, south and central west. The Southeast region of Brazil is the
economic hub with 40% of Brazilian population residing there.

Regional Diversification (%):

Per Capita Per adult equivalent

Percentage Income income
Sample Mean 100 240.54 464.46
Urban 79.91 277.49 533.31
Rural 20.29 95.38 193.93
North 4.83 180.2 377.65
Northeast 29.07 130.22 265.51
Southeast 43.87 309.24 589.05
South 15.39 268.19 503.35
Central West 6.83 249.25 484.72

Source: http://www.sussex.ac.uk/Units/PRU/wps/wp24.pdf

4. Political: The form of government is democratic republic and is stable. The Government is
working towards improving the infrastructure specifically the road network of the nation.
However, it has not been very successful in reducing the income disparity.

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 5. Technological:

Road network and landscapes - There is abundance of official funds for roads in Brazil. Few
Brazilian companies dominate the technology to design and build roads; these companies
(such as OAS, Odebrecht) are the largest contributors of the Brazilian election campaigns
and are hence supported. Also, the building and maintenance of roads is a means for
governments to inject cash in the economy and generate an increase in employment levels.
Brazilian roads reach almost every city, and are well networked in the southeast and south
region which has people with high disposable income and beautiful landscapes around Sao
Paulo and Rio de Janeiro. This is a good indicator of the target market with the spending
power to buy Harley.

Customers
Geert Hofstede Matrix

1. Power Distance (PDI): Brazil power distance index is 69. This implies that people value and
accept difference in social status. Harley is a product that gives sense of exclusivity and
hence, high social status. Hence, it will be accepted by the people who can afford it as a
symbol of their social status.

2. Uncertainty Avoidance (UAI): For Brazil it is 76. This is low as compare to that of US which is.
This implies that Brazilians tend to be risk averse comparatively and less adventurous. This
may pose a challenge for Harley to position its bike amongst the target market.

3. Individualism v/s Collectivism (IDV): In Brazil collectivism is preferred, their culture supports
one's obligation to the group such as organizations and institutions, and they place
importance on belonging. This implies successful prevalence of cult culture which is an
integral part of Harley’s marketing strategy.
4. Masculinity v/s Femininity (MAS): Brazil prefers a masculine dimension which implies that
people have more assertive characteristics and an inclination towards acquisition of wealth.
This will help is projecting the image of Harley as a bike for people who are inspiring and
freedom seekers. There is equality between genders. This will help Harley to target women
as the potential customers.

5. Long term orientation (LTO): It is high as compared to world average. Although might not be
of much relevance to Harley.

Description of Geert-Hofstede Dimensions of Brazil as compared to World

76
80 69
65 62
70
56.5
60 49 51 48
45
50
38
40 Brazil
30 World Average
20
10
0
PDI IDV MAS UAI LTO

Source: http://www.geert-hofstede.com/hofstede_brazil.shtml
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Conclusion
Thus, the SLEPT analysis of countries and Geert-Hofstede dimensions of Brazilians describe that for
Harley Davidson, Brazil is the best country as a new market.

References
http://www.harley-davidson.com/en_US/Content/Pages/home.html

www.ciaworldfactbookfile.com

http://www.geert-hofstede.com/

http://forum.bridgat.com/brazil-import-regs-tariffs-taxes-t721.html

http://www.rncos.com/Report/IM582.htm