Harley-Davidson

Real Threat of New Entrants

The real threat of new entrants is relatively low because of the high competitiveness of the industry, brand loyalty established by the former motorcycle companies, and the manufacture capital required. Since the number of motorcycle manufactures and dealers is great, there is little incentive for new firms to enter industry due to low profitable expectation. Brand loyalty created by big motorcycle companies make it difficult and expensive to enter market with a new product, because new entrants will have to make efforts to establish brand loyalty and distribution channels for their products, and advertisement cost can be costly. Since high manufacturing cost is required to manufacture motorcycles, new entrants have to have large amount of capital to compete with companies already in the industry with high capacity to make products.

Real Threat of Substitute Products

The threat of substitute products is medium. There are several things that people could buy or use instead of motorcycles, such as cars, bicycles, and public transportations such as bus, train, and taxi; however, most people who enjoy motorcycle civilities enjoy themselves because of the unique characteristics of motorcycle that they cannot get from other thing such as openness nature of motorcycles. They are more flexible.

Bargaining Power of Suppliers

Bargaining Power of Suppliers is medium low. There is great number of suppliers with standardized parts for motorcycles. Motorcycle manufactures faces relatively low switching costs due to their similar technologies and required inputs. Moreover, dealing with big motorcycle companies makes suppliers power less due to the purchases in such large quantities. Although, bargaining power of suppliers is relatively low, it could be high when it comes to customized motorcycles