Many companies opt to expand beyond their domestic market in order to gain acces

Question

Many companies opt to expand beyond their domestic market in order to gain access to new customers, achieve economies of scale by increasing sales volume, capitalize on core competencies, or spread risk across a wider market base. Companies can either set up operations outside their domestic boundaries or export finished goods to foreign markets. Harley-Davidson has chosen to compete in various country markets in Europe and Asia using an export strategy. Visit the Harley Davidson website (http://www.harley-davidson.com). Read the sections of the company’s latest annual report related to its international operations. Post a response to the following: In the past, Harley Davidson avoided development production facilities outside the United States. More recently and in accordance with their annual report, they developed a production facility in India. Why in your opinion and preferably supported by their annual report and/or external sources, did the company develop production facilities outside the United States? Under what circumstances might it rethink its current strategy and return production to the United States?

Explanation / Answer

Harley Davidson entered Indian market with small market share, It has since then imported motorcycles from United States.

An average tax laid by Indian government on imported motorcycle is more than 100%, which is among the highest in the world, Being one of the largest market for motorbikes in world, India certainly had potential to accomodate harley quite easily.

To avoid these huge taxes and relative success of harley in India, The company just jumped in to manufacture bikes locally to make them cost effective.

If harley has to give up its plants in India to return production to US, two things must happen

Indian government reduce import duty or People in India loose interest in Harley brand... Both of these things are not happening anyway.

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