Harley Davidson Motorcycles example essay topic

Harley-Davidson Case Study Introduction of the Company In 1903 William Harley and Arthur Davidson produced the first Harley-Davidson motorcycle for sale to the public. The first year's production was only three motorcycles with one dealer. In 1909, Harley-Davidson introduced the first? V-twin engine, which is still the company standard today. Harley-Davidson rapidly grew to the largest motorcycle manufacturer in the world by early 1920's, with 2,000 dealers in 67 different countries. By the 1930's all of the American competition was gone.

Harley-Davidson suspended production of civilian motorcycles during World War II, and only built motorcycles for the military, exclusively. When the war was over, Harley-Davidson converted back to civilian production. Harley-Davidson's growth was fueled by acquisitions as well as capitalizing on new technologies. In 1969 Harley-Davidson merged with American Machine and Foundry (AMF). By the 1970's other competitors were entering the global market, and many of them were from overseas.

In an attempt to transform the company, in 1981, a senior executive of Harley-Davidson bought the company from AMF and turned the company around dramatically. Harley-Davidson emerged with new products and innovations along with a new commitment to quality, creating the dynasty Harley-Davidson has become today. Harley-Davidson's success continued to grow as they received tariff relief from the International Trade Commission on 700 cc motorcycles. Another event contributing to Davidson's renewed success was the formation of the Harley Owners Group (H.O.G. ).

This company sponsored club consisted of riders who transformed motorcycling into a family-oriented social sport. It continues to be very successful with 600,000 owners and 1,200 chapters worldwide. Economic Indicators Internationally, Harley-Davidson revenue has exceeded $816 million, which accounts for 18% of the net revenue for motorcycles. The Harley-Davidson emblem is an international icon and the sound of V-twin engine is unmistakable.

Harley-Davidson is the number one motorcycle manufacturer and is also the number one seller of heavyweight bikes in the U.S. They also sell a line of clothing and accessories as well as make bikes under the Buell nameplate. Harley-Davidson's attire has attitude and rightfully so, there is no other motorcycle as classy as the "Harley". One Harley-Davidson tee-shirt slogan seems to capture the spirit by simply stating, "Put your ass on some class" (Williams, 2004, 1). Mission and Vision Statement Analysis of Mission Statement Harley Davidson's Mission Statement states: "We fulfill dreams through the experiences of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products, and services in selected market segments (David, 2003 p 12)". The components of a mission statement should address; attention to customers, products and services the company provides, technology, concerns for survival, growth and profitability, philosophy, self-concepts, public image, and concerns for employees.

The customer component is addressed in Harley- Davidson's mission statement and is identified as motorcyclists and the general public. The products and services component is identified in their motorcycles and the Harley-Davidson brand products. The mission statement mentions the target market as riders, and those who may want to become a rider. The Philosophy component of Harley-Davidson's mission statement is fulfilling dreams though the experience of riding a Harley. Harley Davidson's mission statement does not mention the following components; concern for survival, growth and profitability, technology, public image or the concern for employees. Analysis of Vision Statement According to the Davidson text, Harley Davidson's Vision Statement states:" Harley-Davidson is an action-oriented, international company, a leader in its commitment to continuously improve (its) mutually beneficial relationships with stakeholders (customers, suppliers, employees, shareholders, government, and society).

Harley-Davidson believes the key to success is to balance stakeholders' interests through the empowerment of all employees to focus on value-added activities (David, 2003 p 12)". Customers are addressed in the vision statement as stakeholders. Stakeholders include the customers, suppliers, employees, shareholders, government, and society. The concern for survival component is outlined in the vision statement as the commitment by Harley-Davidson to continuously improve its mutually beneficial relationship with stakeholders. The self-concept of the vision statement is expressed in the empowerment of all employees. The following components are not mentioned specifically in Harley-Davidson's vision statement; products and services, market, and technology, and philosophy.

Most of these components are indirectly included the mission and vision statement as Harley-Davidson expresses their desire to bring quality products to the market it serves. The mission and vision statements articulate this overarching philosophy to remain number one. Internal and External Audits Internal and external auditing in a company is necessary in determining its strengths, weaknesses, opportunities and threats or its SWOT analysis. Included in the analysis is the internal factor evaluation (IFE), which specifically weighs the strengths and weaknesses, and the external factor evaluation (EFE), weighing the opportunities and threats. Each of these is an assessment of each SWOT element that affects Harley-Davidson's efforts to achieve its mission (See Appendix A). Harley-Davidson's case study determined the following SWOT analysis: Internal Factors Strengths Harley-Davidson's internal strengths are their domestic and international market share, financial status, and product quality.

Harley Davidson's market share, both domestic and international, consists mainly of men between the ages of 40-50, who fall in upper income levels. Harley-Davidson is a national icon, and is also known for their quality products and brand recognition. Another very important internal strength is the fact that Harley-Davidson's financial status has had a steady increase in profit for over 18 years. Weaknesses One major weakness found within Harley-Davidson is the untapped target markets of both the female and African American riders, however, there are recent Harley-Davidson commercials airing that are beginning to target these markets. External Factors Opportunities The five opportunities evaluated in the EFE are an increased product line, loyal customer base, untapped markets, and brand recognition.

Harley-Davidson has several products available to their customers; however, they are undergoing new ways to increase their product line to keep up with the demands of new products. According to the 2003 Annual Report, Harley-Davidson opened a new plant in York, PA called Softail, which was built to support production flexibility in order to maximize output. Harley-Davidson's customers are considered to be part of the Harley Owners Group or H.O.G. family of riders. They have maintained their constant customer growth through word-of-mouth by advertising through their current customer base. H.O.G. members are invited to attend Harley-Davidson annual events specifically for their loyal customers, or H.O.G. members and serve two purposes: make the current members feel important and to entice new customers of which are friends / family of current members.

Men are the main focus group when selling motorcycles, because Harley's are thought of as fast, heavy and dangerous machines. Women have placed themselves in a more equal role with men in sports, and the need for adventure in the last few decades. Harley-Davidson has recently began taking the opportunity in attracting the female market. Harley-Davidson has brand recognition of being the most familiar name in the motorcycle retail industry today.

They are continuing this effort by building the Harley-Davidson Museum in Detroit, MI in 2006. The income will benefit both the company and the town, with an estimated $12 million in state and local revenue (Harley-Davidson, 2004). Threats Harley-Davidson has four potential threats, which are; a sudden drop in demand, unexpected regulatory changes, terrorism and its proven impact on retail sales, and H.O. G's association with crime. Many businesses come to a plateau in sales and Harley-Davidson will not be an exception. With Harley-Davidson's history and stable financial projections, business should remain at a 7 percent to 9 percent growth rate. Harley Davidson is taking preventative measures to "avoid unexpected changes in the regulatory environment for its products" (Harley-Davidson, 2004, p. 56) They are also taking into account the loss of operation time and capital expenditures due to any unforeseen circumstances such as terrorism.

History has proved however, that the 9/11 event did not impact sales or production. Competitive Assessment / Strategies Harley-Davidson's top five competitors in the market of motorcycles are Honda, Yamaha, Polaris, Kawasaki, and Suzuki. Among the five competitors, Honda seems to be Harley-Davidson's major competitor. According to two interviews done at Harley-Davidson dealerships in Fairfax and Manassas, Harley-Davidson is not in all the markets that Honda is in, some of which include engine marine, Active Terrain Vehicles (ATV), and automobiles. The strategy of Harley-Davidson is to continue to fuel the demand for their high quality products.

Harley-Davidson motorcycles fetch heavy premiums in both foreign and domestic markets. The money for research and development to improve the Harley-Davidson design is being directed, once again, towards making Harley-Davidson among the best motorcycles in the world. According to, Senior Vice-Presidents Bleu stein and Davidson, "Harley has managed to survive because of the passion people feel for its product (Harley-Davidson, 2004)". Marketing Review Historical Data As mentioned in the 2003 Form 10 K, "Harley-Davidson believes that its higher growth rate was driven by increasing market share, the stock market and its associated wealth effect of the mid and late 1990's and most recently, the excitement leading up to Harley-Davidson's 100th Anniversary" (Davidson, 2003, p 12).

During 2003, Harley-Davidson shipped 291,147 motorcycle units, 27,494 more units than in 2002 (Dicarlo, 2004). The increase in the number of motorcycle units shipped was due to the high demand for Harley-Davidson 100th Anniversary edition motorcycles, and the new 2004 model motorcycles. Harley-Davidson's wholesale motorcycles are distributed through an independent worldwide dealer network. During 2003 growth in retail sales of Harley-Davidson, motorcycles outpaced other heavyweight motorcycles (Davidson, 2003). Customers continue to pay a premium over list price. Harley-Davidson motorcycles range from $5,500 to $23,000 suggested list price.

Not only are customers paying these prices, they are waiting up to six months to take delivery of the motorcycle (Dicarlo, 2004). This demand and willingness to pay top dollar for their products indicates Harley-Davidson's marketing strategies have been successful in the years past. Long-Term Strategy Harley-Davidson, Inc., expects to grow its business by delivering a continuous stream of exciting new motorcycles, related products, and services. Harley-Davidson has set new goals for the company to be able to satisfy a yearly demand of 400,000 Harley-Davidson motorcycles in 2007 (Bolfert, 2002). According to Dicarlo, "Harley-Davidson believes that by offering innovative products and services, and by driving product gains in all facets of its business, the company is confident that they can deliver an earning growth rate in the mid-teens (Dicarlo, 2004 p 45) ". Harley-Davidson Merchandise and Lifestyle Harley-Davidson's merchandising line has expanded beyond just motorcycles.

Their merchandise line includes; clothing, tattoo patches, coffee mugs, belt buckles and infant wear to memorabilia. Today Harley-Davidson promotes the Harley lifestyle experience through 'designer store' dealerships. These stores feature customer lounges and rider meeting rooms with Harley-Davidson pinball machines, antique bikes, and rally videos. Stores are designed to enhance the owner's experience and highlight the premium quality of Harley-Davidson products (Bolfert, 2002).

Advertising Method Harley-Davidson's catalogs, brochures, and annual reports compliment the designer stores. Included in every annual report, is a Harley-Davidson motorcycle poster that is often displayed in stores. Harley-Davidson's catalogs are designed by Carmichael Lynch Advertising in Minneapolis and are considered to be collector's items. According to Bolfert "customers rarely throw away these catalogs, instead they are likely to be found on coffee tables all over the world (Bolfert, 2002 p 23)". As part of Harley-Davidson advertising strategy, Harley-Davidson never shows people on motorcycles; the idea is that "with a Harley you can be anyone you want to be" (Bolfert, 2002 p 52).

The company has also licensed its logo to more than 100 manufacturers, which gives the company ever-present exposure. Harley-Davidson has also found a marketing niche in its H.O.G. clubs; the bikers in these clubs are considered to be rolling convoys of free advertising for the company. Product / Brand Differentiation The Harley-Davidson name alone takes you back a half-century when it comes to the other brands of motorcycles that are on the market today. That's because no other motorcycle on earth can do for the rider what a Harley can do.

What makes the Harley-Davidson product / brand different are some of the following things; reliability, the V-twin engine, their line of motor clothes, custom parts / accessories, resale value, and brand image. V-twin Engine. The classic Harley-Davidson engines are two-cylinder, V-twin engines with pistons placed at 45-degree angles. What this angling does, is provide more horsepower to the engine for the rider. The engine design, which is covered under several United States patents, produces the unique, signature throbbing sound of the Harley-Davidson (Harley-Davidson, 2004).

Motor Clothes. Harley-Davidson manufactures all Harley-Davidson brand motor clothes for men, women, and children. The customer can purchase anything from leather jackets, helmets, undergarments, boots, to hair accessories. Most Harley riders can be seen wearing at least once piece of the long line of motor clothes that contribute to the Harley-Davidson brand image.

Parts / Accessories. Harley-Davidson parts and accessories are designed to work together for that end-to-end custom look. The owner can add as much or as little as they like, whenever they like. All the custom accessories have that unique brilliant shine of chrome and the Harley-Davidson trademark stamped on each part.

The design is a perfect fit. Resale Value. Harley-Davidson has the highest resale value of any motorcycle. According to Motor Cycle Price Guide, when a person purchases a Harley-Davidson, after owning it for a few years, the resell value is very close to what was actually paid. (Harley-Davidson, 2004). Brand Recognition.

Many Harley-Davidson owners purchased their bikes for the brand name and the proven quality of the product (Harley-Davidson, 2004). Yamaha, Honda, Kawasaki, Polaris, and Suzuki have tried to duplicate what Harley-Davidson has done, and some of them have succeeded in the areas of; style, motor clothes, and parts / accessories, but they have not had the same success Harley-Davidson has accomplished. Management Assessment Harley-Davidson is the parent company for many independent dealers under the Harley-Davidson Motor Company. Also Buell Motorcycle company and Harley-Davidson Financial Services are separate entities under the Harley-Davidson name.

All three divisions under the parent company, together, make up Harley-Davidson. Harley Davidson's management strategy has been contributory to their success as well as their vision beyond U.S. boarders. Financial Analysis Harley-Davidson is in sound financial shape. Shareholders equity has been steadily increasing since 1999 as Harley-Davidson continues to hold the market share on U.S. heavyweight motorcycles and good percentage of the international market (Ziemer, 2003). Revenues Harley-Davidson's 2003 revenues increased over previous years and have held the largest market share in the U.S. for heavyweight motorcycles since 1986.

International revenue was $816 million, which accounts for 18% of the net revenue of the Motorcycles segment. Changes in the product within the Company's motorcycle families generally resulted in higher revenue during 2003. Foreign currency exchange rates also had a favorable effect on revenue. Approximately $60 M in 2003 was a result of stronger foreign currencies, primarily in Europe and Japan. (Ziemer, 2003) Profitability The company experienced higher gross profit in 2003 than in previous years. This is not simply related to higher net revenue.

While royalty revenues from licensing activities are relatively small, the profitability of this business is relatively high. Licensing has proven to be an effective means for enhancing the Company's image with consumers. In addition to the royalty revenues, the custom touring motorcycles are generally the most expensive vehicles in the market and the most profitable for the company, also contributing to the higher gross profit in 2003. (Ziemer, 2003) Finally, the Company's growth required several factory expansions which provided the opportunity to thoroughly modernize and improve productivity, quality and manufacturing margins (Ziemer, 2003). Cash Flow and Liquidity The company's cash flow and liquidity continue to be solid as well. There was an increase of $531,521 in cash and cash equivalents from 2002 to 2003.

Company continues to maintain positive cash flow. The company's main source of liquidity is cash from operating activities. They generated $935.6 M of cash from operating activities compared to $7775.6 M (Add real number) in 2002 (Ziemer, 2003). Harley-Davidson's current ratio of 2.86 and their quick ratio of 2.64 show that the company is in a good position to meet their short term obligations and do not have to rely on the sale of their inventory to meet these obligations.

The company is also in a good position to cover their retirement plans. During 2003 and 2002 the company contributed $192 M and $153.6 M respectively to its defined benefit pension plans. These contributions were made from cash on hand for the direct purpose of improving the funded status of the Company's pension plans and were in excess of the minimum required amounts for the plans. Cash balances are maintained at levels adequate to meet near term plan expenses and benefit payments (Ziemer, 2003). Success Factors Harley-Davidson attributed their success to the ability to deliver new products to the market, attract new customers, retain existing ones and expand capacity in a responsible way (Ziemer, 2003).

Recommendations Harley-Davidson has a proven track record of success and holding on to the leading market share in the U.S. along with their sound financial position and strong brand recognition, it may appear as if they can't improve much more than they already have. As with any business, the one thing Harley-Davidson can do wrong is be too confident in their success. They have to search for new markets and continuously improve their current products. They need to remain flexible and knowledge of their internal and external strengths and weaknesses. As with any company in the lead, competitors will seek to copy what they have or improve upon their technologies. Harley-Davidson's loyal market is aging and they have not been successful in tapping into the female riders or the African American riders.

Recently Harley-Davidson commercials have begun appearing on certain networks targeted for these markets. The new commercials also feature the female rider. If Harley-Davidson is successful is attracting these new markets, they will also have to expand their products to meet the demands of the new demographic. Harley-Davidson appears to be poised to go after this market and if history repeats itself, Harley-Davidson will continue to stay in front on their strategies and continue to remain a force to be reckoned with in this industry..