The rivalry will also be intense if customers are not loyal with existing brands and it is easier to attract others’ customers due to low switching costs. Similarly, there are some factors that increase the Rivalry among existing firms for Harley-Davidson Inc For example, the company will face intense Rivalry among existing firms if market players are strategically diverse and target the same market. The exit barriers are low, which means firms can easily leave the industry without incurring huge losses. The economic/psychological switching costs for consumers are high. The products are highly differentiated, and each market player targets different sub-segments There are only a limited number of players in the market The Rivalry among existing firms will be low for Harley-Davidson Inc if Profitability in such industries is low as firms adopt aggressive targeting and pricing strategies against each other. The Rivalry among existing firms shows the number of competitors that give tough competition to the Harley-Davidson Inc High rivalry shows Harley-Davidson Inc can face strong pressure from the rival firms, which can limit each other’s growth potential. Lastly, it can improve the quality, maximise value for money and set strong differentiation basis to discourage customers from using the substitute product. It can raise switching costs by working on loyalty. It should provide convincing reasons to the customers by offering a better experience and high value for money. Harley-Davidson Inc can reduce the Threat of Substitute Products or services by clearly emphasising how its offered product/service is better than the available substitutes. How Harley-Davidson Inc can tackle the Threat of Substitute Products or services? The switching cost of using the substitute product is high (due to high psychological costs or higher economic costs)Ĭustomers cannot derive the same utility (in terms of quality and performance) from substitute product as they derive from the Harley-Davidson Inc’s product. However, this threat is substantially low for Harley-Davidson Inc when Substitute product offers the same or even superior quality and performance as offered by Harley-Davidson Inc’s product. The psychological switching costs of moving from industry to substitute products are low. The Threat of Substitute Products or services increases when Ī cheaper substitute product/service is available from another industry Various factors determine the intensity of this threat for Harley-Davidson Inc High substitute threat shows that customers can use alternative products/services from other industries to meet their needs. The availability of substitute products or services makes the competitive environment challenging for Harley-Davidson Inc and other existing players.
Threat of Substitute Products or services New entrants will be discouraged if access to the distribution channels is restricted. The threat will be low if psychological switching cost for consumers is high and existing brands have established a loyal customer base. In this case, new players will be required to fulfil strict, time consuming regulatory requirements, which may discourage some players from entering the market. Harley-Davidson Inc will face the low threat of new entrants if existing regulatory framework imposes certain challenges to the new firms interested to enter in the market.
This force also loses the strength if product differentiation is high and customers place high importance to the unique experience. Here are some factors that reduce the threat of new entrants for Harley-Davidson Inc:Įntry in the industry requires substantial capital and resource investment. If the industry will be profitable and barriers to enter the industry will be low, it will attract more players and hence, the threat of new entrants.
Threat of new entrants reflects how new market players impose threats to the existing market players. The analysis can also be used to make some strategically wise decisions that could improve the performance of Harley-Davidson Inc and ensure long-term survival. Harley-Davidson Inc Porter Five (5) Forces AnalysisĪpplication of this model can help Harley-Davidson Inc to determine the industry attractiveness and understand its competitive positioning in the market.