Harley-Davidson Case Study

EXECUTIVE SUMMARY

This report examines the Harley-Davidson phenomenon. From near bankruptcy to double-digit growth every year, Harley-Davidson 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 the implementation of new management, marketing, and/or manufacturing techniques. Harley-Davidson is one of those excellent companies whom has 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 Harley-Davidson Motor Company based in Milwaukee and Eagelmark 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 the supplemental financial statements, Appendix section.

Harley's strategic objective is to continue to provide, safe, high technology heavyweight bikes and keep customer satisfaction at high levels. This quality vision more than doubled Harley-Davidson's market share and increased its brand loyalty.

Harley-Davidson's products include: motorcycles, parts & accessories along with financing services. Three main geographic markets comprise the bulk of motorcycle sales: North America, Asia and Europe.

Harley-Davidson's customers are comprised of both male and female with the female segment the fastest growing market at 5% yearly. Expansion into the European and especially Asian markets will be forthcoming. These new market opportunities will require new designs that are lighter, easier to use, comfortable and stylish. Motorcycles are no longer thought of just a mode of transportation. The Harley-Davidson motorcycle welcomes you into a family, a culture of the free and willing sprit.

Future threats to prepare for include the increase in European trade tariffs on well-known brands such as named, Harley-Davidson. Production plant expansion should shorten the wait time for manufacturing new bikes. This has been a weakness of Harley-Davidson for years. It adds to the mystique, but the risk of losing customers is also present.

The latest financial reports found in the Appendix section confirm Harley-Davidson's successful strategies. Year 2001 sales at $3,363.4 (mil), a growth of 15.7% from previous period. Year 2001 net income at $437.7 (mil), a growth of 25.9%. Harley-Davidson has successfully captured 60% of the motorcycle market.

The future at Harley-Davidson is expected to do very well and increase market share even more where penetration into the Asian and European market is expected. The 100-year anniversary is scheduled for August 2003 in Milwaukee, WI where approximately half a million people are anticipated to participate in the celebration. The American icon is very much alive and desired among people around the world. The Harley-Davidson tradition knows no boundaries but is a culture of its own. With that kind of brand recognition and strategic management, this company is expected to enjoy success another 100 years.

HARLEY DAVIDSON INC.

Case study of an American icon and the successful strategies

INTRODUCTION

Harley-Davidson Inc. at a Glance

Founded: 1903

Headquarters: Milwaukee

2001 Net Sales: $3,363.4 million

2001 Net Income: $437.7 million

Business Units: Harley-Davidson Motor Co.,

Eaglemark Financial Services Inc.

Number of Employees: 8,100

Number of Dealers: 1,200 worldwide

Number of Motorcycles Produced per Year: 263,000 in 2002; targeting 289,000 by 2003

Perhaps more than any other 20th century product, the Harley-Davidson motorcycle is revered as an American icon - a symbol of free-spiritedness. While this gives Harley marketing advantages, it carries the responsibility of upholding the qualities that customers identify as the essence of Harley.

Harley-Davidson is the only major US maker of motorcycles and the nation's #1 seller of heavyweight motorcycles who has held the largest share of the U.S. heavyweight motorcycle market since 1986. Besides its bikes, Harley-Davidson sells a licensed line of clothing and accessories with the company name and now offers financing. Also, gaining attention are the Harley-Davidson Cafes, located in various cities including New York City and Las Vegas. In addition, many of Harley-Davidson owners/riders are members of the Harley Owners Group better known as H.O.G., with more than 500,000 members nationwide.

The demand for Harley-Davidson motorcycles continues to rise. Other motorcycle manufacturers have tried to compete with Harley-Davidson, but none have been able to match Harley-Davidson in terms of customer loyalty and sales. The dedication to its existing customers has created a loyalty that is enviable by many other companies. The case study will allow an in-depth look into what strategies have made the company so successful and what to expect in the future.

INDUSTRY ANAYLSIS

The industry is this case study is the motorcycle industry consisting of five major manufacturers: American (Harley Davidson, Indian Motorcycle), and Japanese (Honda, Yamaha, Kawasaki, Suzuki) and some European companies (mainly BMW of Germany and some other Italian companies). Industry sales of motorcycles were shrinking in the early l990s because of the recession and the competition from computers and electronic products decreasing consumers' discretionary income. The sales of accessories and parts make up 36% of total retail sales and are a viable area for producers to explore because people want something to personalize their bikes.

Previously, motorcycles were viewed as a cheap means of transportation. By 1992, they came to be viewed as a recreational, or a luxury item. This new perception of motorcycles led to the introduction of more expensive models with higher prices. This in turn created a new market for Harley-Davidson