Harley-Davidson Strategic Analysis

HARLEY-DAVIDSON

MGT485-0602A-10: Global Strategic Management

Unit 4 - Assignment 1, Individual Project: Strategy Implementation

2006

Strategic Audit for Harley Davidson (1981)

I. CURRENT SITUATION

A. Current Performance

Losing money, market share, and relevance in a changing industry with new foreign competitors.

* Stiff foreign competitors introducing new designs

* HD was too slow in development and unpredictable in reacting

* Outmoded technologies

* Poor quality and shoddy workmanship

B. Strategic Posture

I. Mission -"We fulfill dreams through the experiences of

motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments (Harley-Davidson website, p.2)."

2. Objectives

a) "We deliver experiences"

b) Developing relationships with all stakeholders--customers, employees, investors, suppliers, governments, and society.

c) Provide a good quality cycle

d) Employees are both enthusiasts and customers

3. Strategies

a) 1981 13 H-D executives, including William Davidson

(grandson of founder Arthur Davidson), conducted a

leveraged buyout of AMF to reacquire H-D and ward

off bankruptcy of the company.

b) Implemented Total Quality Management

c) Implemented Just-In-Time inventory

d) Lobbied Washington for tariffs on imports

e) Direct marketing to the loyal customer base

f) Sponsored the Harley Owners' Group (HOG)

g) Launched SuperRide to attract a new customer base

h) Offered customers a free one-year membership to groups, publications, receptions, etc.

4. Policies

a) Short-term profits more important than R&D and

retooling

b) Stiff foreign competition ignored

c) Employees has little or no input in the company

d) Very slow R&D; very slow in reacting to more advanced technological changes

II. Strategic Managers

A. Board of Directors

1. Nine members, seven are outsiders

2. Respected Americans, four have been affiliated with HD since

the early 1970s

3. Three have specialized marketing experience; four have

international backgrounds

B. Top Management

1. Thirteen top executives who conducted the leveraged buyout

2. All have worked for or been affiliated with HD since early 1970s

3. Goal was to reacquire and restructure the company to stave off bankruptcy.

III. External Environment (EFAS)

A. Societal Environment

1. Economic

a) Stagflation, or "bottle-neck" inflation, since early 1970s

coupled with the OPEC oil embargo created a huge market

for smaller vehicles and excellent gas mileage--spurred the

motorcycle market

b) Japanese manufacturers Honda, Kawasaki, and Yamaha

take the top spot which HD had held for years--there were no tariffs on imports

2. Technological

a) HD is extremely slow in developing new designs for its

bikes

b) Technologies are outdated

c) Foreign economies are becoming more interconnected to the world market

3. Political-Legal

a) No tariffs on imported goods

b) Very stiff competition

c) Environmental laws reflects changes in attitudes on fuel consumption and exhaust emissions

4. Sociocultural

a) New Japanese designs create a huge following in the U.S.

b) Baby Boomers want sleek new designs along with good gas mileage

c) Women are now moving into the motorcycle market

d) Fuel shortage gives rise to cheap means of transportation

B. Task environment

1. American market becomes extremely competitive--economic

savvy consumers want new styles, good quality, and at a good

price.

2. Global industry sagging just as the American industry

3.