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Harley Davidson Case Analysis

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Introduction

Harley Davidson Case Analysis Joshua Baptiste April 25, 2005 Prof. Bill Evans Strategy & Policy I. Executive Summary This senior paper report examines the Harley-Davidson (H-D) phenomenon. From near bankruptcy to double-digit growth every year, H-D has something working for them. That something is called"strategic planning and development." With the growing global economy, companies are looking for ways to improve their market share. Many excellent firms have learned how to beat their competitors through then implementation of new management, marketing, and/or manufacturing techniques (Hitt, Ireland Hoskisson). H-D is one of those excellent companies whom have challenged traditional ideas. This report will identify those strategies that have worked and brought the company and its shareholders success each year. Today, Harley-Davidson Inc., an employer of 8,100 workers, consists of H-D Motor Company based in Milwaukee and Eaglemark Financial Services Inc. based in Chicago, Illinois. These are strategic business units are they are managed separately based on the fundamental differences in their operations, products and services. In addition, there are nearly 1,500 dealerships worldwide. Harley's commitment toward continuous improvement is exemplified in their financial statements. II. Vision, Mission of Harley Davidson H-D has realized since the 80's an impressive marketing strategy was giving H-D a brand name that more recognized than any other company. Indeed, the strategy was not to focus on reducing the costs, or on the distribution improvement, but the main element was to create customer value. In other words, H-D's will was to give more credibility, trust, safety, desires, quality of product and service, and thus fidelity to its brand. In order to reach that goal, H-D centralized its marketing on these topics, for example creating a Harley Owners' Group who rallies more than 900,000 members worldwide (www.harley-davidson.com). The main interest of this group is to ensure members to know each other, and become a second family who share the same interests, wills, and thoughts. ...read more.

Middle

Harley has already understood this new opportunity. Another key issue for the future is the problem of the accessories. Indeed, those products such as perfumes or cosmetics are decreasing a lot. So, Harley-Davidson should take a decision about this unsuccessful strategy of brand stretching. But, this strategy has a lot of success regards to the leatherwear and fashion area. According to me, Harley-Davidson should continue to improve this brand stretching and not leave the market of cosmetics and perfumes. V. Financial Assessment of Industry & Harley Davidson Past & Current Financial Performance Year 2003 * $ 4.6 billion total revenue (up 13% from '02) * $ 761 million net income (up 31% from '02) * $650 million free cash flow (up 59% from '02) * Repurchased 2.3 million shares of stock * Return an average equity >20% * 291,000 H-D units shipped (up 10% from'02) * 36% Gross Profit margin (up from '02) * Gross profit margin 37.87% of revenue Year 2004 * $5.0 billion total revenue (up 8.5% from'03) * $889 million net income (up 16.9% from '03) * Repurchased 10.6 million shares of stock * Return on average equity >25% * 317,289 motorcycle units shipped (up 9% from '03) * EPS 3.0 (20% increase form last year) (Hoovers Online) Trends & Forecasts Pushed by an increase in female riders, wider age group, and the broadening appeal of motor scooters and other small, less-expensive two-wheelers, motorcycles sales rose 4.7% to top 1 million for the second-consecutive year (Woodyard). However a market slowdown is looming due to the weak dollar, costs of steel and other materials are rising; this will cause makers to rises prices or take a hit on profits. Currently all segments in the market are increasing, however scooters and classically styled so-called cruiser bikes are of the most heavily increasing and popular segments (Woodyard). Business Models of Firms in the Motorcycle Industry Firms in the motorcycle industry operate in two modes of the business model; Just-In-Time and Built-To-Order. ...read more.

Conclusion

H-D implemented changes in the '90's to prepare for the future challenges and stay ahead of competition. They have targeted towards improving and expanding manufacturing and creating new products and services. Thus far, the strategies have been very successful and have built strong relationships with all their shareholders. H-D has found new ways to extract margins from its customer base through finance contracts, licensing agreements, product upgrades, and accessory goods. It has expanded it product line to the small and mid-size range with the purchase of Buell Motorcycle Co. They know who their customers are, and which markets they need to expand on. They also have happy unionized workers who share the same values as the management team. Most importantly through the decades, H-D motorcycles have had the ability to generate emotion. This emotion and loyal has never been duplicated by any company to date, and probably never will. If H-D continues to innovate there is not question that they continue to gain market share. Appendix Harley Davidson Company (2005) The History Timeline of Harley Davidson Retrieved March 28, 2005, from http://www.harleydavidson.com Henshaw P., Kerr I. (2001) The Encyclopedia of the Harley-Davidson. USA Hitt M., Ireland D., Hoskisson R.(2005). Strategic Manangement: Competitiveness and Globalization, Ohio: Thomson. Hoovers Online, Retrieved March 28, 2005 from http://premium.hoovers.com/subscribe/co/factsheet.xhtml?ID=10706 Jaffe, Same (2000) Business Week. Harley is Riding High on the Hog. Retrieved March 28, 2005 from http://www.businessweek.com/bwdaily/dnflash/nov2000/nf20001117_421.htm Klein, Daniel (1984) Taking America for a Ride: The Politics of Motorcycle Tariffs. Retrieved January 25, 2005, from http://www.cato.org/pubs/pas/pa032.html La Monica, Paul (2005) Hog Heaven? Is it to late to hope on board for a ride? Retrieved March 28, 2005, from http://money.cnn.com/2005/01/19/news/fortune500/harley/index.htm Mitchell, Doug (2001) 100 years of Magnificent Machines: The Motorcycle Chronicles Lincolnwood, Illinois: Publications International, Ltd. Standard & Poor's NetAdvantage Retrieved April 10, 2005 from http://www.netadvantage.standardpoor.com/NASApp/NetAdvantage/simpleSearchRun.do?ControlName=HomePageSearch Teerlink, R (2000) More Than a Motorcycle - The Leadership Journey at Harley-Davidson. Harvard Business Review. Woodyard, Chris (2005) USA TODAY: Motorcycle sales rev up to top 1 million. Retrieved March 28, 2005, from http://www.usatoday.com/money/autos/ ...read more.

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