Polaris and Victory: Entering and Growing the Motorcycle Business of Polaris

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Polaris and Victory: Entering and Growing the Motorcycle Business of Polaris essay
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Introduction

This paper seeks to analyze the decision made by Polaris Industries Inc. (Polaris) to crossover into the motorcycle manufacturing industry. Polaris is notably known for being the world’s largest manufacturer of snowmobiles and all-terrain recreational and utility vehicles (ATVs) in the United States. In the 1990s Polaris embarked upon the motorcycle business as a corporate level strategy to strengthen the company position and diversify its portfolio. This strategy now allows Polaris to compete against Yamaha, Suzuki, Ducati and the likes in the motorcycle manufacturing industry. This paper will analyze the production, acquisition and value chain as well as the R&D and make recommendations to address strategic issues faced by Polaris and Victory.

Polaris Overview

Polaris carried out wide varying research before deciding to embark upon expanding its offerings into motorcycles. This includes market trends, size of the industry, competition, and market trends before settling on expanding into offroad motorcycles. The infrastructure was perfect to accommodate this new venture as well as the overwhelming feedback received from loyal customers that welcome this new expansion. There was already a strong sales forces along with a dealer network along with a service and warranty operation in place. There was also a functioning part, accessories, and sales department in place. Conversely, Polaris already possess industry experience that was gained from its recreational vehicles manufacturing and distribution system, its engineering and design capabilities, along with strong marketing expertise. These experiences could be easily transferred to the manufacturing of motorcycles which would increase sales and make the venture successful. Data retrieved from the Motorcycle Industry was favorable to new entrants positively council that had established that there was an unmet industry potential that would sustain a new entrant. Conversely, the analysis favored the cruise segment globally with a potential of up to $3 billion in revenue. Sale for the cruisers was in high demand during 1993 and 1997 with expected sales above 11 percent over the next five years. This is also great for new entrants to easily position themselves in this market.

Given the lengthy deliveries of Harley-Davidson, this was perceived as a vulnerability to the 54% market share they hold if a new entrant is capable of delivering a new product that has superior functionality in a shorter time period. Additionally, Polaris believed that it could offer lower prices to help enhance its competitive edge. Polaris also strategically considered branding its motorcycles as “American Made”. This would help it compete strongly against its Japanese competitors. This would position the company to meet the increasing domestic demand for motorcycles.

Key Competitors

The main competitors in the industry include Japanese manufacturers, Harley-Davidson, Excelsior-Henderson, BMW and Big Dog. The Japanese manufacturers have the lead in the overall market share and sales since they have diversified their product lines. This makes them stronger competitors. Harley-Davidson takes advantage of its high-quality bikes which allow it to sell them at a premium price. On the other hand, BMW is known for its high-quality motorcycles built for comfort and style. They also have an engineering advantage and is able to charge premium prices for its products.

Introduction of the Victory Line: Successes and Failures

The addition of the Victory motorcycle line to Polaris’ portfolio enabled the organization to balance its seasonal production cycles. This significantly helped to improve its operational efficiencies besides its ability to extend its production line. Polaris increased its cross-selling opportunities to its large network of more than 2000 dealers. In this move, Polaris gave attention to power and handling as the key areas of motorcycle performance and leveraged it with its strengths in design, engineering, and manufacturing. In addition, it made the design decisions based on customer preference, costs as well as sourcing considerations. The company also did extensive benchmarking which helped it to develop motorcycles with 50% additional horsepower. The combination of all these strategies helped Victory emerge as a class leader in terms of quality, style, and innovation. Therefore, with its high quality and competitive price point, Polaris was able to effectively compete with high-profile industries such as Harley-Davidson. However, despite investing $100 million in the production of Victory, Polaris did not realize its projected sales targets.

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Challenges in Polaris Market Approach Strategy

Even with extensive research, Polaris made some key mistakes in its market approach. These include;

  1. Polaris failed to take into account the responses that its direct competitors would have upon the introduction of Victory into the market. In addition, Polaris did not factor in the potential for other new entrants into the market following the increasing demand and attractiveness of the cruiser segment.
  2. The move to pursue on-road cruiser motorcycles instead of sportbikes was not in line with Polaris’ portfolio of recreational vehicles designed for off-road adventures on alternative terrains.
  3. The company over-relied on its already established distribution channel and its dealerships. This limited the effectiveness of its marketing and distribution plan which also curtailed the ability of the Victory model to reach its full potential.
  4. Polaris also pitched itself directly against Harley-Davidson when it selected the high-end segment of the cruise market. It would have been more effective if it had cut its own niche in the younger market segment which had a longer growth outlook as well as a higher potential to capture lifelong brand loyalties.
  5. Polaris also overestimated the influence of the American Made branding strategy while underestimating the strength of Honda as the largest motorcycle producer globally.

Current Market Conditions Facing Polaris

Since it was introduced into the market, Victory has continually released innovative and futuristic cruisers. Besides, the company has acquired, integrated and relaunched the legendary Indian Motorcycle brand to help enhance its brand recognition in the heavy wright segment. This move has also helped Victory expand its spectrum in the motorcycle market and enhanced its growth. Moreover, the company has acquired part of Brammo and entered into a joint venture with Eicher Motors. These deals have helped provide access to electric power train as well as battery back technologies besides enabling the company to market its products in India. In addition, the company has also introduced its first electric motorcycle, the Victory Charger. Due to these developments, Victory has experienced strong sales growth and improved financial performance in recent years. However, competition is increasing from key players in the industry.

It is also important to note that sales in the motorcycle industry have rebounded since 2009. Even then, the competition is even stronger compared to when Polaris made an entry into the market. Harley-Davidson stands as the closest competitor to Victory. It has since solved its production delays. On the contrary, it is faced with the challenge of aging riders which has slowly reduced its market since it initially targets young riders. Despite its challenges, Harley Davidson has also announced new motorcycle models that its hopes will it in addressing the market challenges. These include a new electric motorcycle known as Live Wire. This is known for its speed and quiet motor.

The motorcycle industry is a highly competitive market. While Polaris failed to appreciate the possible retaliation strategies from its competitors, they reacted appropriately. For example, the Japanese manufacturers made improvements in their motorcycles and improved their presence in the heavyweight category. In addition, large industry rivals have also invested in developing high-end electric-powered motorcycles.

Effects of the Current Market Position on Polaris Strategic Decisions on Victory Going Forward

As it stands today, Victory has a well-established line of touring motorcycles and premium cruisers. Victory brand is well managed and it delivers over 95% customer satisfaction. Victory provides great products in the market in terms of quality, engine performance, torque, storage as well as stability. Besides, the company has established its intention to remain in the heavyweight category even as it pursues further innovation. Victory needs to maintain its high-quality design and engineering in its entire production process. This will help the organization improve its ability to meet customer expectations. In addition, Polaris needs to keep its focus on maximizing its profits. As the financial report indicates, Victory sales more than tripled in 2010 and the profit margins have substantially improved. With these growth lies the challenge of continuing to innovate and grow in a market that is increasingly becoming competitive and crowded. Moreover, Polaris has also identified that the demand for the Victory model among its existing customers is not enough to steer the organization onto the desired level of growth. There is also a need for greater exposure and more presence and positioning in the on-road market segment. Therefore, in order to address these issues, Polaris must employ various appropriate strategies. The recommendations are outlined below.

Recommendations

Polaris can employ a few strategies to help it deal with the current challenges it is facing in the market. These include;

  1. Cost leadership: This will allow the company to compete for a wider customer base based on the prices of its products. This will require that Polaris maintains low manufacturing costs so that it is able to charge lower prices compared to its competitors. This strategy is very advantageous because it implies less rivalry. It also makes the market less attractive to new entrants and it is also easy to fight for substitutes. On the contrary, this strategy can have the customers leave at the slightest increase in price and as such, it may put a lot of pressure on the manufacturing costs and a strain on the company’s resources just to maintain the customers.
  2. Differentiation: This will allow the company to have a wide variety of products available to their customers. It also implies that the company is not competing in terms of its prices but rather on the quality of its products. It is advantageous for this strategy is that it reduces the costs of the buyers since the product is of high quality. On the contrary, this strategy might be disadvantageous because the product might not be unique, might be easier to imitate and the products might lose their value.
  3. Market focus: This refers to the identification of a specific market. Therefore, Polaris can identify and concentrate on a specific market. Polaris is able to create niche products that can be targeted to a specific market. This strategy is advantageous because the customers will be served better and it is possible to cut a niche in the market. On the contrary, it is easy to get out of focus and there might be stringer competition from bigger companies.

Among the three recommendations, the best strategy for Polaris is product differentiation. Using this strategy the company can demonstrate it has unique products that no other motorcycle manufacturer has availed in the market. The Victory model is a key demonstration of product differentiation. It has a unique engine, bodylines and motorcycle frames set it apart. Differentiation is a good strategy since the customers can easily identify and relate to the products of Polaris.

Conclusion

Polaris has come a long way to boldly pitch itself against strong competitors in the motorcycle. The introduction of the Victory brand can potentially help the company increase its market share in the motorcycle industry. Despite the challenges of its initial entry market entry strategy, Polaris has gained adequate experience on what works and what does not. Based on this analysis, differentiation, market focus and cost leadership are some of the strategies that it can use going forward. Due to the high competition in the motorcycle industry, differentiation fits as the most appropriate strategy that Polaris can use to position itself in the market.

This essay is graded:
Satisfactory
minus plus
Expert Review
The essay provides a comprehensive analysis of Polaris Industries Inc.'s decision to enter the motorcycle manufacturing industry. It covers various aspects such as market research, competition, successes and failures, challenges, and current market conditions. The essay also offers recommendations for Polaris to address the strategic issues it faces.
minus plus
What can be improved
1. The essay lacks a clear and concise thesis statement. It would benefit from a more focused and specific introduction that clearly states the purpose and main argument of the paper. 2. The essay could benefit from a more organized structure. It jumps between different topics and ideas without clear transitions, making it difficult for the reader to follow the flow of the argument. 3. The essay could provide more specific examples and evidence to support its claims. It relies on general statements and lacks specific data or case studies to back up its analysis. 4. The essay could benefit from a deeper analysis of the strategic issues faced by Polaris and Victory. It briefly mentions some challenges, but does not provide a thorough analysis or evaluation of their impact on the company's performance. 5. The essay could use more varied sentence structures and vocabulary to enhance readability and engagement. Overall, the essay provides a satisfactory analysis of Polaris' entry into the motorcycle industry, but it could be improved with a clearer thesis, better organization, more specific evidence, and deeper analysis of the strategic issues.
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