Harley davidson

Harley Davidson Inc. 2008THRIVING THROUGH A RECESSION

Mission:

“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.”

Vision:

“Harley Davidson is an action oriented, international company, a leader in it’s commitment to continuously improve it’s 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.

The Statements

The History of Harley Davidson

1901: William S. Harley, age 21, and friend Arthur Davidson started company in backyard shed.

1903: William Harley and Arthur Davidson make available to the public the first production Harley Davidson Motorcycle. Three were built and sold. 1904: Production increased to eight motorcycles. The company moved to Juneau Avenue, Milwaukee, Wisconsin. This is the site of the company’s present offices.

1907: The company was incorporated.

1918: Almost half of all Harley Davidson motorcycles produced are sold for use by the U.S. military in World War (20,000 estimated used by the war’s end).

1920: Harley Davidson is the largest motorcycle manufacture.

1933: An art-deco “eagle” is painted on all gas tanks.

1941: Production of civilian motorcycles is almost entirely suspended in favor of military production.

1945: World War II ends and HD has produced almost 90,000 models for military use.

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Before

After

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1969: HD merges with American Machine and Foundry Company (AMF), a longtime producer of leisure products.

1974: Production expanded from 15,000 in 1969 to 40,000. AMF favored shot term profits.

1975:1980: HD ignored the Japanese competition (Honda, Suzuki and Yamaha).

1981: Vaughn Beals, head of HD, and 13 other executives conducted a leveraged buyout of the company for $65 million.

1985: Citicorp refused to lend HD any more funds, 4 hours before bankruptcy a deal was made.

1993: Acquired 49% interest in Buell Motorcycle Co. , a manufacturer of sports performance motorcycles. Buell’s mission was to develop and employ innovative technology to enhance “the ride” and give owners an experience no other brand could provide.

1995: HD acquired all common stock, and all equivalents, of Eaglemark Financial Services, Inc. They provided credit to leisure product manufacturers , their dealers, and customers in U.S. and Canada.

1996: discontinued operations of Transportation Vehicles segment to concentrate its financial and human resources on it’s core motorcycle business.

1997: Harley Davidson created an internal makeover. The unsung hero was Garry Berryman, former vice-president of Materials Management/Product Cost at Honda.

2000: New Softail model was introduced with twin cam 88B engines. Fuel injection added 2001. Buell Blast single –cylinder bike offered. HD introduced new rider’s course aimed at new riders and owners, offered at HD and Buell dealerships.

2001: the V-rod was introduced to appeal to the younger and international markets that wanted sleeker and faster bikes.

2002: The first Harley bike to combine fuel injection, overhead cams, liquid cooling, with new 115 horsepower. First female racer added to Harley Davidson racing team in an effort to capture female support.

2003: Harley Davidson introduced Lightning XBS9.

2004: Sportster refitted with rubber engine mounting, new frame and wider rear tire.

2005: XL 883 Sportster featuring a lowered seating aimed at aging baby boomers. Bikes reminiscent of 1939 and 1949’s bikes introduced.

2007: Harley Davidson Financial Services financed 55% of new HD motorcycles retailed by independent dealers in the U.S.

MODERN

DYNAMICPROFESSIONAL

INNOVATIVE SOPHISTICATED

CREATIVE

The SWOT Analysis

Strengths: * Domestic and International Market share * Financial status * Product quality * Strong brand loyalty * H.O.G.s (Harley Owners Group) & B.R.A.G. (Buell Riders Adventure Group) * Strong distribution network

Weaknesses: * Harley Davidson does not emphasize price in it’s product * Harley Davidson has had difficulty gaining market share in some European countries.

Opportunities: * The international heavy weight market is growing and almost as large as the U.S. heavyweight market.

* The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world.

* Women and younger riders are increasingly becoming interested in bikes – Japan has more female H.O.G. members.

* Alliances with other automobile manufacturers are possible.

* Industry registrations of domestic heavyweight motorcycles are increasing.

* Market share increasing in Europe and Asia for the last few years.

* Increasing demand in U.S. markets for motorcycles.

* Customers value quality parts and accessories.

Threats: * Harleys ongoing capacity restraints caused a shortage of supply and a loss in domestic market share in recent years.

* Harleys average buying age is 46 years old and increasing.

* The European Union’s motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U.S. and increased environmental standards.

* Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified.

* Shifts in buyer needs and tastes.

* Customer loyalty in European and Asia countries.

* Costs could become expensive from international importing – for example – in India 60% tax on total cost for importing an automobile and 30% road tax.

Harley-Davidson has had numerous Marketing slogans over the years. One of the earliest, from 1910, proclaimed the bike is "Always a trusted friend." Later the company issued, "The motorcycle that is not that uncomfortable." "Get a kick out of life" came out in 1927. More recent slogans have emphasized the unique Harley biking lifestyle: "Live to ride, ride to live;" "Turn on your own thunder;" "The road starts here. It never ends;" "The legend rolls on;" "It's time to ride; "Until you've been on a Harley-Davidson, you haven't been on a motorcycle;" and "It's not the destination, it's the journey."

Industry Conditions in 2007

More than 516000 units registered in U.S. & 403000 in Europe (651+cc)

Rising income level in emerging countries – major industry growth drive force. Demand for heavyweight bikes outpaced smaller in U.S. from late 1990’s until 2003.

In 2007 demand for heavyweight motorcycles decreased by 6.2% in the U.S. and increased by 13.7% internationally.

651+cc accounted for largest portion of demand in North America and Europe.

North American 651+cc (Heavyweight) Motorcycle Registrations(Units in thousands)

2005 2006 2007

Total new market registrations 517.6 543 516.1

Harley Davidson new registrations 252.9 267,9 251.4Buell new registrations 3.6 3.8 3.7

Total company new registration 256.5 271.7 251.1

Percentage Market ShareHarley Davidson motorcycles 48.9% 49.3% 48.7%Buell motorcycles 0.7% 0.7% 0.7%

Total Company 49.6% 50.0% 49.4%

Honda 16.6% 15.1% 14.2%Suzuki 12.4% 12.9% 12.5%Yamaha 8.9% 8.6% 9.2%Kawasaki 6.5% 6.8% 7.2%Other 6.0% 6.6% 7.5%

Total 100% 100% 100%

European 651+cc (Heavyweight) Motorcycle Registrations(Units in thousands)

2005 2006 2007

Total new market registrations 350.7 376.8 403

Harley Davidson new registrations 29.7 34.3 38.7Buell new registrations 4.6 4.1 4.6

Total company new registration 34.3 38.4 43.3

Percentage Market ShareHarley Davidson motorcycles 8.5% 9.1% 9.6%Buell motorcycles 1.3% 1.1% 1.1%

Total Company 9.8% 10.2% 10.7%

Competition in Global Motorcycle Industry

• Rivalry criteria – performance, styling, breadth of product line, image, reputation, quality of after sales services, price.

• Difficulty US and European Manufacturers had in attracting price sensitive European market.

Market Share segment

• In the North American market – Harley Davidson had 48%

• In the European market – Harley Davidson had 9.8%

Harley Davidson’s Strategy to Successfully Compete in the Motorcycle Industry• After LBO company felt need to rebuild from the ground up• Products were unreliable & had poor performance in relations to less

expensive Japanese motorcycles.• Greasy, run down shops.• Management realized that a strong alliance to Harley brand by many

bikers was their only strength.• Market research to know customers – negative feedback.• Adopted Japanese management practices.• Promotions at bike rallies.• Improved dealer network.• Pilot program – clean and attractive showrooms to showcase

Harley’s improved motorcycles, display apparel and other Harley merchandise.

• 1400 dealers – 75% space for accessories and earned 25 – 40 percent of their earnings from sale of apparel and accessories

Harley Owners Group (H.O.G.)

Came together at events and rallies for fun, adventure, a love of their motorcycles and the open road.

• Loyal club formed in 1983• Created to form sense of community• Organized rides, raised money for charities• Started with 33,000 in 1983 and had grown to over

1,000,000 in 2007.• B.R.A.G. (Buell Riders Adventure Group) was created in

1995 and HD plans to grow both organizations.• 2007 H.O.G. continued to sponsor motorcycle events on

local, regional, national, and international levels.

Distribution and Sales in United States, Europe, Asia Pacific, Latin America, Canada• US - 684 independently owned full service Harley

dealerships. In addition had 104 Secondary Retail Locations, 68 Alternate Retail Outlets and 12 Secondary Retail Outlets.

• European Countries (32) – 370 Harley Davison dealerships.

• Asia Pacific- 130 independent dealerships in Japan, 49 independent Harley Davidson dealership in Australia and New Zealand.

• Latin America – 12 countries served 31 independent dealerships.

• Canada – 75 independent Harley Davidson Dealerships.

Revenue

Harley Davidson Motorcycles: $4,446.8Parts & Accessories: $868.3

General Merchandise: $ 305.4

Buell Motorcycles: $100.5

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