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Case study Harley Davidson

Presented by;


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Introduction of the Company

Harley-Davidson is an American motorcycle manufacturer.

The company sells heavyweight (over 750cc) motorcycles

Especially noted for the tradition of heavy customization

Harley-Davidson sustains a loyal brand community


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WHO ISHARLEY

DAVIDSON?

The history of Harley-Davidson began in 1903, in a 10'

x 15' shed located in the Davidson family's Milwaukee

backyard.

The Davidson brothers William D., Walter, D., Arthur

and William S. Harley crafted their first motorcycle using

the best tools they had available mostly their hands


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HARLEY-DAVIDSON

Type Public (NYSE-HOG)

Founded 1903

Founder(s) 1. William S. Harley

2. Arthur Davidson

3.W

alter Davidson4. William A. Davidson

Headquarters Milwaukee, United States

Products Motorcycles

Key people K. E. Wendell CEO

Revenue US$6.8 Billion (FY 2010)

Employees Around about 10,000 (2010)

Website www.harley-davidson.com


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Vision Statement Says;

Harley Davidson is an action-oriented international company, a leader

in its commitment to continuously improve mutually beneficial

relationships with stakeholders (customers, suppliers, employees

shareholders, Government, and society). Harley-Davidson believes that

key to success is to balance stakeholder interests through the

empowerment ofall employees to focusonvalue-added activities.


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Proposed Vision Statement;

The best quality motorcycle, motorcycle products and financial

services will be provided world wide is the commitment of Harley

Davidson.

Customer satisfaction is the Harley-Davidson motto.

Harley-Davidson is dedicated to use the advanced technology to

produce the most superior motorcycle in

domestic and international markets.

Honesty and customer loyalty and these morals are the heartbeat of

Harley-Davidson organization.Stay competitive and continue

growths worldwide remain profitable and survive is our philosophy


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Mission Statement Says;

We fulfill dreams through the experiences ofmotorcycling by providing to motorcyclistsand to the general public an expanding lineof motorcycles branded products and servicesin selected market segments


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Proposed Mission Statement:

To be branded as the best motorcycle available inthe world through innovations.

The total team effort of Harley-Davidson

employees is devoted to fulfilling dreams ofcustomers


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MISSION

STATEMENT ANALYSIS

COMPONENT YES / NO

CUSTOMER YES

PRODUCTS & SERVICE YES

MARKET YES

CONCERN FORSURVIVL YES

PHILOSOPHY YES

SELF CONCEPT YES

CONCERN FOR PUBLIC IMAGE YES


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Business Code of Conduct

Harley-Davidson also lives by a Business Code of Conductthat is driven by a value system that promotes honesty,integrity and personal growth in all of dealings with

stakeholders. H.D values are the rules by which theyoperate.

Tell The Truth

Be Fair

Keep Your PromisesRespect The Individual


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Samia

SattarRoll No 51


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Harley-Davidson

History


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HISTORY

1870; Birth of William A. Davidson, Milwaukee,

1876 ; Birth of Walter Davidson, Milwaukee,

1880; Birth of William S. Harley, Milwaukee, WI.As he was born just after Christmas, his parents gave

him the middle name Sylvester.

1881: Birth of Arthur Davidson, Milwaukee,


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1901

William S. Harley, aged 21, completes a blueprint for

an engine designed to fit into a bicycle.1903

Harley and Arthur Davidson build the first production

Harley-Davidson in 1903. It features a 3-1/8-inch bore

and a 3-1/2-inch stroke yielding 7.07 cubic inches(116cc).

1904

The first Harley-Davidson dealer, C.H. Lang of

Chicago, opens for business.1906

A new 28 by 80-foot factory is built on Chestnut

Street. The company has grown to have six employees


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1907;

William A. Davidson joins the firm. Harley-Davidson

Motor Company is incorporated, with stock shared by

the Harley and the three Davidson brothers.

1908;

Walter Davidson scores a perfect 1,000 points at the 7th

Annual Federation of American Motorcyclists

Endurance and Reliability Contest.

1909;

The Motor Company makes its first V-Twin. It has a

displacement of 49.5 cubic inches and produces seven

horsepower.


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1912

Harley-Davidson begins exporting motorcycles to Japan.Construction begins on a six-storey headquarters. The

Parts and Accessories Dept. is formed. The company has

more than 200 dealers across America.

1917

About a third of the companys production is

purchased by the Army. To train Army mechanics, the

company starts the Quartermasters School.

1918

Almost half of all H-D motorcycles produced are sold

for use by the U.S. military in World War I. After

Armistice is signed,


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1920

Now the largest motorcycle manufacturer, H-D boasts

over 2,000 dealers in 67 countries.

1929

The stock-market crash heralds the Great Depression.In 1929, the company sells 21,000 motorcycles.

1933;

The company sells only 4,000 motorcycles this year.1937

William A. Davidson dies, two days after signing an

agreement that makes the company a union shop.


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1942; Walter Davidson dies.

1943; William S. Harley dies.

1945

The war finally ends. Between 1941-45 the company

produced almost 90,000 WLA models for military

use.1950; Arthur Davidson dies.

1953

its 50th anniversary this year will be only real

motorcycle manufacturer in the U.S. for the rest ofthe century.


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1964

The humble Serve-Car is the first of the companysmachines to be fitted with an electric starter

. 1969

Sell the company to the American Machine and

Foundry Company.1973;

A new assembly plant is opened in New York,

1981

After years of AMF mismanagement, Harley-Davidsonhas lost almost all customer loyalty and profits are in

freefall.


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1983

The Harley Owners Group (H.O.G.) is formed. The

company petitions the International Trade Commission (abranch of the U.S. federal government) to impose a tariff

on Japanese motorcycles of over 700cc.

1986

Harley-Davidson diversifies with the acquisition of the

Holiday Rambler motor home company.

1993

H-D buys a minority interest in the Buell Motorcycle

Company.


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1996

Sales of parts and accessories are an increasingly important part ofthe business

1998

The company opens its first foreign factory in Manaus, Brazil. The

remaining shares of Buell are also acquired.

2003

It is estimated that 250,000 people come to Milwaukee to celebrate

The Motor Companys 100th anniversary.


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2008

The Motor Company opens its impressive newmuseum in time for Harleys 105th anniversary.

2009

Keith Wendell becomes the first person since 1981 to

become CEO of Harley-Davidson who hadnt had anyprevious connections to The Motor Company.


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Price Ranges of

Harley Davidson Motorcycles

Sportster Price

883R-XL $6,795

883-XLH $5,975

883 Hugger $6,435

883 Custom $7,075

1200-XLH $8,255

1200 Custom $9,425

1200 Sport $8,960

Touring Price

Road King $16,215

Road King-CL $17,405

Road Glide $17,450

Electra Glide $14,710

Electra Glide-CL $16,765

Ultra Classic $19,760


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Four Points of H.D Future

1. Growth

2. Continuous Improvement

3. Leadership Development

4. Sustainability


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GROW

THHarley-Davidson is not only one of the strongest brands

in the world it is also believe a brand with tremendous

untapped potential.They have chosen to focus their investments behind the

Harley-Davidson brand because we believe it provides a

superior means for realizing the substantial long-term

opportunities of the global motorcycle industry.


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Continuous Improvement

We do many things very well at Harley-Davidson. Butte reality isthat there is tremendous opportunity to do many things even better inour product development, our business processes and our

manufacturing operations.Continuous improvement is about much more than reducing costs.We are driving out unnecessary steps and complexity and building ingreater edibility and efficiency in a products path from design todealership.

Its how we get better at managing supply and demand,continuously improving quality and responding faster and more

effectively to the needs of our market sand the desires of riders


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Leadership

Development

The third pillar of H.D strategy is leadership developmentthe foundation for their ability to compete and win fordecades to come.

H,D will only succeed with great people individuals whowill challenge the status quo, and who are creative,collaborative and accountable.

To full our brand and business potential, we must prepare

strong, committed leaders who live our values and deliverevery day.


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Sustainability

The stature of our company and the visibility of our

brand in society gives Harley-Davidson a particular

obligation to seize the opportunities of sustainability andgiving back.

We are continually expanding the ways in which we

incorporate social and environmental responsibility in our

work, our manufacturing processes and our products.


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AISHAAISHA LATIFLATIFROLL NO. 41


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PESTLE Analysis

Political

Economical

Social

Technological

Legal

Environmental


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POLITICAL

U.S Government and People are consideringHarley-Davidson as an American icon.

Opportunities in emerging economies [India, China]but uncertain operating situations. The governmentsare not deducting the taxes and duties, they considerHarley-Davidson as an American idol so that they arenot welcoming Harley-Davidson into their soil.


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ECONOMICAL

Confidence in economy is directly proportional to the

purchasing of consumer items.

The economic crisis will hit this segment very much.

Currency fluctuation is also a big problem in this industry


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SOCIAL

Academy of Motorcycling for those interested in learning to ride

motorcycle. In U.S the number of motorcycle users is less so that by

introducing this type of academy will encourage more and more

public to come to motorcycling.

This shows their social responsibility by teaching and educating the

public how to ride bikes responsibly. Riders-Edge the motorcycling

academy of Harley-Davidson introduced more than 1000 aspiring

motorcyclists to the sport in 2000. Number of accidental death in U.S

is increasing so that this shows their social responsibility.


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Average purchasers of a U.S Harley-Davidson have ahousehold income of $78,600.

Over two thirds of the sales of Harley-Davidson

motorcycles are to buyers with at least one year of

education beyond high school.30% of the Harley-Davidson buyers have college

degrees. The customers of Harley-Davidson

motorcycles are creditworthy persons who are well

educated and having a social responsible life.Only about 9% of Harley-Davidson U.S retail

motorcycles are to women, this shows not only men

but also women are interested in Harley-Davidson.


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TECHNOLOGICAL

This segment needs more and more technologicaladvancements because customers are going for more and moreenergy efficient and technologically advanced bikes now a day.

Harley-Davidson is one of the main manufacturer and userof V-ENGINE configuration.

Harley-Davidsons have a wide variety of productsaccording to Standard, Performance, Touring & custom.


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LEGAL

A new assembly facility opens in Manaus, Brazil, thefirst operations outside of the U.S, reduces taxes, makethem more affordable to a larger group of Braziliancustomers.

Harley-Davidson is facing some legal problems in

Asian countries, in India there is 60% tariff and variousother taxes will cause the price of the bike to double.


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ENVIRONMENTAL

This industry is the first attacked by environmental activities,

the environmental laws varies from country to country.

Harley-Davidsons one of the main problem is thisenvironmental problems.

Noise pollution and some emission standards of Harley-

Davidson bike is not up to the level of some countries acrossthe globe


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PORTERS FIVE

FORCESInternal Rivalry: [High]

Potential entrants: [Medium]

Substitute products: [Medium]

Bargaining Power of suppliers: [Low]

Bargaining Power of Customers: [Medium]


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Internal Rivalry: [High]

Four major competitors are mainly concentrated on these

heavyweight motorcycle segments: in addition to Harley-

Davidson the other three are Yamaha, Suzuki, Honda all are

Japanese companies.Some of the major competitors of Harley-Davidson have

larger financial and marketing resources and are more

diversified

Example:Yamaha, half of its revenue is only from motorcycles


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Polaris (American snowmobile/ATV manufacturer)

producer of Victory motorcycles priced its

motorcycles below the Harley-Davidson motorcycles.

Strategic alliance between Suzuki and Kawasaki in

the areas of product development, design,

engineering, and manufacturing of motorcycles, this

alliance strengthened both companies' global

motorcycle businesses.

Honda, the main competitor of Harley-Davidson in

U.S eats up some market share of Harley-Davidson.


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Potential Entrants: [Medium]

Entry barrier is very high in this segment, because this

segment needs a lot of capital investment and the industry

icon at maturity stage, so that there is only four maincompetitors.

The economies of scale are low in this segment, which is

the reason why there are only four major players.


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There is some small scale producers, who aremaking these custom made motor cycles but the

amount of their productions not at all a threat for

Harley-Davidson, and they are increasing theinterest of motorcycles among the general public.

Training and installing machinery for this type

of heavy weight segment is highly capital

required.


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Substitute Products:

[Medium]

Harley-Davidson motorcycles are a luxury vehicle, sothat there is only a few close substitutes for heavy weightmotorcycles that could seriously affect the market.

Passenger cars, sports bikes, scooter bikes are the mainsubstitutes of Harley-Davidson motorcycles. Even cycle isa substitute for this industry. Most of the buyers of this

heavyweight motorcycle are travelers, so even rail andairways can be substitute for this product.


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Bargaining Power of

Suppliers:[Low]

Steel, basic electrical equipments and shipping of final

motorcycles are the main things Harley-Davidson seeks from

suppliers. For these items the number of suppliers is also highs

the bargaining power is low.

Harley-Davidson has a wide span of suppliers, so that if one

supplier attempted to increase the price, they can easily switchto the alternate suppliers without any problem in production.


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Bargaining Power of

Customers: [Medium]

Consumers of Harley-Davidson motorcycles are individual

customers, so that they cant seriously affect Harleys financial

position.

The numbers of dealers around the globe are also less and

they are also dependent to the individual customers, that can't

affect Harley-Davidsons financial position.


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Adnan NawazRoll No. 32


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Financial AnalysisNet Margin Ratio

Year Harley

Davidson

Honda Suzuki Yamaha

2008 16.5% 5.4% 1.5% 3.4%

2009 17.7% 5.7% 2% 8.5%

2010 18% 5.6% 2.6% 4%


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0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

Harley

Davidson

Honda Suzuki Yamaha

2008

2009

2010

The profits that HarleyDavidson earns per 100 dollar of revenue are much higher than

any of its three major competitors. In addition, the profit margin that Harley receives on

its motorcycles has been increasing over the past several years.


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RETURN ON ASSETS

Year Harley

Davidson

Honda Suzuki Yamaha

2008 15.50% 5.60% 2% 3.50%

2009 16.40% 5.60% 2.80% 8.50%

2010 18.20% 5.20% 3.60% 3.90%

.


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Harley Davidson has much better return on assets than any of

its competitors. Over the last few years Harley has also been

increasing its return on assets

0.00%

2.00%4.00%

6.00%

8.00%

10.00%

12.00%14.00%

16.00%

18.00%

20.00%

Harley

Davidson

Honda Suzuki Yamaha

2008

2009

2010


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RETURN ON EQUITY

Year Harley

Davidson

Honda Suzuki Yamaha

2008 25.70% 16.20% 4.80% 8.6%

2009 27.60% 16.20% 6.30% 18.4%

2010 31.10% 14.80% 8.10% 7.40%


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Among the four major heavyweight motorcycle manufacturers Harley Davidson also has the

highest return on equity of the group. And again, Harley Davidson has been improving its

return of equity over the past few years. Their operations are financed by a lower percentage

of debt than the other three companies

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Harley

Davidson

Honda Suzuki Yamaha

2008

2009

2010


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International Markets Shares

In the US, Harley had the largest market share,46.4 percent.

In Europe Harley ranked sixth with only 6.6

percent of the market share behind HondaYamaha, BMW, Suzuki and Kawasaki.

Harley had the largest market shares for 2000,2001, and 2002 in Asia/Pacific.

Harleys women costumers rose from 2 % in1987to 9% by 1999 and 12% by 2010


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CONTINUE;

American Market

ShareEuropean Market

Share

Harley-Davidson 46.40%

Honda 20.20%

Suzuki 9.80%

Yamaha 9.30%Kawasaki 7.10%

BMW 2.50%

Other 4.60%

Honda 21.00%

Yamaha 17.70%

BMW 15.10%

Suzuki 14.80%Kawasaki 8.50%


Other 16.20%


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Asia/Pacific Market Share


Honda 19.10%

Kawasaki 15.80%

Yamaha 13.60%

Suzuki 10.10%

BMW 7.30%Other 12.80%


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SWOT ANALYSIS

STRENGTHS

WEAKNESS

OPPORTUNITIES

THREAT


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StrengthsMarket Share

Only major American heavyweight motorcycle manufacturer.

30% of worldwide share of heavyweight bikes.

Brand Image

Well established in the consumers mind with the image of freedomand strength Organizations like HOG (Harleys Owners group) andBRAG(Buell Riders Adventure Group) promote brand loyalty

Customized Motorcycles

Customization of the bikes :Harley-Davidson s major revenue maker


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Diversification

Operates in two segments: Harley-Davidson motorcycles & relatedproducts and HDFS (Harley-Davidson Financial Services)

Other FactorsExcellent relationship with the supplier

Strong long-term relationship with employees

Strong marketing and distribution channel in the U.S.

The HOG (Harley Owners Group), which have a 7,50,000members

world wide is the industrys largest company sponsored motorcycle

organization


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WEAKNESS

High Price

Charging high price from the customers

Declining Market Share

Loss of market share steadily, especially in the European market

Late Entry In Asia

MARKET Ventured into Indian market only last few years

Required Production is not met, analyzing the futureof Heavyweight motorcycle market


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Opportunities

The European demand for Harley Davidson is the highest in theinternational market and represents the single largest motorcyclemarket in the world.

Harley-Davidson can exploit this situation by introducing more products into European soil (Harley-Davidson and Buellproducts).

Women and younger riders are increasingly becoming interestedin bikes.


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Harley-Davidson is now concentrated on U.Smarket but the global market is growing and

Harley-Davidson can exploit this by going into

more and more global markets like Asian and

European countries.

Market share increasing in Europe and Asia for

the last few years. Making use of their Buelldivision they can get into joint venture with Asian

and European vehicle manufacturers.


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Increasing demand in US markets for bikes. 92% of itsmotorcycle customers ready to repurchase.

Harley-Davidson have a good brand value among its

customers and in U.S people so they can exploit thissituation, by teaching and educating the customers what is

considered as a quality product and what are the things

they are using for manufacturing their bikes. This will

increase the customer loyalty to this brand and this willhelp in a market penetration


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ThreatHarleys on going capacity restraints a shortage supply and aloss in domestic market share in recent years.

High rise in the Oil prices. Harley-Davidson vehicles areheavyweight motorcycles and this is one of the major threatsthey are facing, because their vehicles are more oil consuming.

The European Unions motorcycles noise standards are morethan those of Environmental Protection Agencies in the U.S and

increased environmental stand


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STRATEGY

RECOMMENDATION

&

IMPLEMENTATION:


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1. Market Penetration

2. Product Development

3. Market Development

4. Diversification


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Market Penetration

Get some more market share from the existing market, likeU.S,U.K, and Japan etc through more marketing techniques likeadvertising. Harley-Davidson has a good brand name so its easy forthem to eat up the competitor market share if they can provide somemore customer benefit.

Competition is high in this segment mostly in U.S so marketpenetration can be a good choice for the company.

Expand the HOG (Harley Owners Group) to Asian countries if the

company can provide the customer satisfaction that they areproviding to the U.S customers to the Asian customers they canincrease the sales.

P d D l


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Product Development

Younger generation and female are now coming to this segment so

expand the motor cycle segments to younger generation and females.

In Europe they can increase or expand the Buells market share byintroducing new motorcycles.

New hybrid bikes, low cost street bikes, Energy efficient bikes for

the developing countries and new environmental friendly bikes will

help Harley-Davidson to get more market share.

M k D l


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Market Development

Harley-Davidson can bring in their vehicle to Asian countries like

India and China, because these countries have a high population and

the market potential is also high.

The cost to bring in the old vehicles (old product) to Asia is so

much difficult because there are so much environmental laws are

there which wont allow that type of vehicles to come to Asia and its

difficult that taxes and duties are high in Asia so starting new plant inAsia can solve this problem. Negotiations with the Government can

solve these problems.


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Diversification

Bring in new vehicles to new markets like India and

China is good choice, but its too costly.

Bringing new types of vehicles is a best choice.


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Recommendation

Expand European and Asian market.

Increase the sales of Buell sport bike and Harley-Davidson to

younger customers and females.

Acquires or develops new products that could appeal to its

current customer groups even though those new products maybe technologically unrelated to the existing product lines


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Thank You For

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