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STRATEGIC MANAGEMENT

CASE ANALYSIS

CASE:

HARLEY DAVIDSON, Inc. -2004


By
RICHARD.A.COX
FRANCIS MARION UNIVERSITY

Analyzes by,
HARI PRAKASH.N.V
Harley Davidson, Inc
Mission Statement says:

“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 Statement says:

“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.
MISSION statement analysis

COMPONENTS YES / NO
CUSTOMERS YES
PRODUCTS & SERVICES YES
MARKETS NO
CONCERN FOR SURVIVAL YES
TECHNOLOGY NO
PHILOSOPHY YES
SELF CONCEPT YES
CONCERN FOR PUBLIC IMAGE YES
CONCERN FOR EMPLOYEES NO
MISSION STATEMENT EVALUATION MATRIX

PROPOSED MISSION STATEMENT:


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. To be branded as the best motorcycle available in the world
through innovations. The total team effort of Harley-Davidson
employees is devoted to fulfilling dreams of customers and we believe
that there is not a motorcycle riding experience like a Harley-
Davidson’s
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 our motto and the Harley-Davidson
customers can experience the taste of reality of motorcycle dreams by
relaying their satisfaction on us. Harley-Davidson is dedicated to use
the advanced technology to produce the most superior motorcycle in
domestic and international markets. Stay competitive and continue
growth worldwide remain profitable and survive is our philosophy.
Employees of Harley-Davidson are the foundation of the company and
they are the driving force behind the Harley-Davidson name. The total
team effort of Harley-Davidson employees is devoted to fulfilling
dreams of customers and we believe that there is not a motorcycle
riding experience like a Harley-Davidson’s. Excellence is our push
though our Harley-Davidson bar and shield logo that says superior
quality. Honesty and customer loyalty and these morals are the
heartbeat of Harley-Davidson organization. Harley-Davidson do our part
in supporting all environmental laws in every country we do business.
Determination and commitment is the place where Harley-Davidson
intends to stay.
EXTERNAL ANALYSIS
PESTLE
POLITICAL
• U.S Government and People are considering Harley-Davidson as
an American icon.
• Opportunities in emerging economies [India, China] but uncertain
operating situations. The governments are not deducting the
taxes and levies, they consider Harley-Davidson as an American
idol so that they are not welcoming Harley-Davidson into their
soil. More and more talks are required for this sanction, even
between the nations.
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.
SOCIAL
• Academy of Motorcycling for those interested in learning to ride a
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.
• Average purchaser of a U.S Harley-Davidson motorcycle is a
married male in his mid-forties.
• Average purchasers of a U.S Harley-Davidson have a household
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.
TECHNOLOGICAL
• This segment needs more and more technological advancements
because customers are going for more and more energy efficient
and technologically advanced bikes now a day.
• Harley-Davidson is one of the main manufacturer and user of V-
ENGINE configuration.
• Harley-Davidson’s have a wide variety of products according to
Standard, Performance, Touring & custom.
ENVIRONMENTAL
• This industry is the first attacked by environmental activists, the
environmental laws varies from country to country. In Europe its
Euro, in India its BS.
• Harley-Davidson’s one of the main problem is this environmental
problems.
LEGAL
• A new assembly facility opens in Manaus, Brazil, the first
operations outside of the U.S, reduces taxes, make them more
affordable to a larger group of Brazilian customers.
• Harley-Davidson is facing some legal problems in Asian countries,
in India there is 60% tariff and various other taxes will cause the
price of the bike to double.
• Noise pollution and some emission standards of Harley-Davidson
bike is not up to the level of some countries across the globe.
Five Forces

 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).
• Polaris (American snowmobile/ATV manufacturer) producer of
“Victory” motorcycles priced its motorcycles below the Harley-
Davidson motorcycles.
• Strategic alliance between Suzuki and Kawazaki 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.
 Potential entrants: [Medium]
• Entry barrier is very high is this segment, because this
segment needs a lot of capital investment and the industry is
on a maturity stage, so that there is only four main
competitors.
• The economies of scale are low in this segment, which is the
reason why there are only four major players.
• Train and installing machinery for this type of heavy weight
segment is highly capital required.
• There is some small scale producers, who are making these
custom made motor cycles but the amount of their production
is not at all a threat for Harley-Davidson, and they are
increasing the interest of motorcycles among the general
public.
 Substitute products: [Medium]
• Harley-Davidson motorcycles are a luxury vehicle, so that
there is only a few close substitutes for heavy weight
motorcycles that could seriously affect the market.
• Passenger cars, sports bikes, scooter bikes are the main
substitutes of Harley-Davidson motorcycles. Even cycle is a
substitute for this industry. Most of the buyers of this heavy
weight motorcycle are travelers, so even rail and airways can
be substitute for this product.
• The people who are thinking of buying a heavy weight
motorcycle are not seriously considering one of these options,
scooter, and sports bike.
• In India Enfield can pose as a small substitute.
 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 high
so 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
switch to the alternate suppliers without any problem in
production.
 Bargaining Power of Customers: [Medium]
• Consumers of Harley-Davidson motorcycles are individual
customers, so that they can’t seriously affect Harley’s 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-Davidson’s financial position.
OPPORTUNITIES
 The European demand for Harley Davidson is the highest in the
international market and represents the single largest motorcycle
market in the world. Harley-Davidson can exploit this situation by
introducing more products into European soil (Harley-Davidson
and Buell products).
 Women and younger riders are increasingly becoming interested
in bikes. The major buyer of Harley-Davidson for now are male in
their mid forties, so by getting more women and young riders will
make Harley-Davidson flourish it’s revenues.
 The international heavy weight market is growing and is now
larger than the U. S. heavyweight market. Harley-Davidson is now
concentrated on U.S market 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 two years.
Increase Harley-Davidson’s presence there will increase its
revenue. Making use of their Buell division they can get into joint
venture with Asian and European vehicle manufacturers. Even if
they can’t introduce their heavy weight models in India they can
introduce their Buell small and sports bikes in India with these
types of joint ventures.
 Increasing demand in US markets for bikes. 92% of its motorcycle
customers intend to repurchase.
 Customers value quality parts. Harley-Davidson have a good
brand value among its customers and in U.S people, so they can
exploit this situation, 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 will help in a market
penetration.
THREAT
 Harley’s ongoing capacity restraints caused a shortage supply
and a loss in domestic market share in recent years.
 High rise in the Oil prices. Harley-Davidson vehicles are heavy
weight motorcycles and this is one of the major threats they are
facing, because their vehicles are more oil consuming.
 Harley’s average buying age is 42 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 stand
 Some competitors of Harley Davidson have larger financial and
marketing resources and they are more diversified
 Environmental protection laws
 Buell division needs to continue to produce a quality motorcycle
under Harley’s brand name.
EFE MATRIX

Weighted
Key external factors Weight Rating score
OPPORTUNITIES
The European demand for Harley Davidson is the
highest in the international market and
represents the single largest motorcycle market
in the world 0.15 4 0.6
The international heavy weight market is growing
and is now larger than the U. S. heavyweight
market 0.15 4 0.6
Women and younger riders are increasing
becoming interested in bikes 0.1 3 0.3
Market share increasing in Europe & Asia for last
2 yrs 0.1 3 0.3
Increasing demand in US markets for bikes, 92%
of its motorcycle customers intend to repurchase 0.1 2 0.2
Customers value quality parts 0.025 1 0.025
THREAT
Harleys ongoing capacity restraints caused a
shortage supply and a loss in domestic market
share in recent yrs 0.15 2 0.3
High rise in the Oil prices 0.14 2 0.28
Harleys average buying age is 42 years old and
increasing 0.1 2 0.2

The European Union’s motorcycles noise


standards are more stringent than those of
Environmental Protection Agencies in the U.S and
increased environmental stand 0.025 2 0.05

Some competitors of Harley Davidson have larger


financial and marketing resources and they are
more diversified 0.025 2 0.05
Environmental protection laws 0.025 2 0.05

Buell division needs to continue to produce a


quality motorcycle under Harley’s brand name 0.05 3 0.15
TOTAL 1.14 3.105
Competitive Profile Matrix
CPM HARLEY HONDA YAMAHA

CRITICAL SUCCESS Weighted Weighted Weighted


FACTORS Weight Rating Score Rating Score Rating Score
Advertising 0.15 4 0.6 3 0.45 4 0.6

Product Quality 0.15 4 0.6 3 0.45 3 0.45

Price
Competitiveness 0.1 1 0.1 3 0.3 3 0.3

Management 0.025 3 0.075 4 0.1 2 0.05


Financial
Position 0.1 2 0.2 4 0.4 3 0.3
Customer
Loyalty 0.15 4 0.6 3 0.45 3 0.45
Global
Expansion 0.025 2 0.05 4 0.1 3 0.075

Market Share 0.3 2 0.6 4 1.2 3 0.9


TOTAL 1 2.83 3.45 3.13
INTERNAL ANALYSIS
FINANCIAL RATIOS

LIQUIDITY RATIOS

Current Ratio = Current Assets / Current Liabilities


= 2729/956
= 2.85

Quick Ratio = (Current Assets – Inventory) / Current Liabilities


= (2729-208)/956
= 2521/956 = 2.63

LEVERAGE RATIOS

Debt to Total Assets Ratio = Total Debt / Total Assets


=994/4923
=0.20

Debt to Equity Ratio = Total debt / Total stock holders equity


=994/2958 =0.34

Long Term Debt Equity Ratio = Long term Debt / Total stock holders
equity
=670/2958
= 0.23

Times Interest Earned Ratio = Profits before interests and taxes /


Total Interest charges
=1149/0
ACTIVITY RATIOS
Inventory Turnover = Sales / Inventory of finished goods
=4624/208
=22.23

Fixed Assets Turnover = Sales / Fixed Assets


=4624/2194
=2.10

Total Assets Turnover = Sales / Total Assets


=4624/4923 =0.93

Accounts Receivables Turnover = Annual Credit Sales / Accounts


receivable
=4624/1114
=4.15
Average Collection Period = Accounts Receivables / (Total credit
sales/365)
=1114/(4624/365)
=1114/12.66
=87.99
PROFITABILITY RATIOS

Gross Profit Margin = (Sales – COGS) / Sales


=(4624-3070)/4624
=1554/4624=0.34
Operating Profit Margin = EBIT / Sales
=1149/4624
=0.25

Net Profit Margin = Net Income / Sales


=761/4624
= 0.16

Return on Total Assets (ROA) = Net Income / Total Assets


= 761 / 4923
= 0.15
Return on Equity (ROE) = Net income / Total Stock holders equity
= 761 / 2958
= 0.26
Earnings Per share (EPS) = Net income / Total stock holders
equity = 761 / 302
= 2.519
Price Earning ratio =Market price per share/Earning
per share
=39.11/2.519
=15.526
Growth ratio
Sales =Annual % growth in total sales
= (4624-4091)*100/4091=13.029
Net income =Annual % growth in profits
=(760-580)*100/580=31.034
Financial strength of the company is good, but there is a
decline in the sales in 2003 as compared to the previous year
2002. Net income has increased.
YEAR BY YEAR FINANCIAL ANALYSIS OF Harley-Davidson

STRENGTHS

FINANCIAL ANALYSIS 2003 2002 2001

LIQUIDITY RATIOS
Current Ratio 2.86 2.09 2.33
Quick Ratio 2.64 1.87 2.07
The current ratio is high, its bad for the company

LEVERAGE RATIO
Debt to Total Assets 0.20 0.20 0.19
Debt Equity ratio 0.34 0.34 0.34
Long term DE ratio 0.23 0.17 0.22
Less Debt, good. What percentage of total funds is provided by creditors? Although creditors
tend to prefer a lower ratio, management may prefer to lever operations, producing a higher
ratio. A low ratio, on the other hand, indicates a wider safety cushion (i.e., creditors feel the
owner's funds can help absorb possible losses of income and capital).

ACTIVITY RATIO

Inventory Turnover 18.79 19.72 19.81


Fixed Asset Turnover 1.78 2.40 2.47
Total Asset Turnover 0.79 1.11 1.15
It’s almost flat over the period, but the turnover ratio is declining that’s not good for a
company.

PROFITABILITY RATIO
Gross Profit margin 0.21 0.35 0.34
Operating profit margin 0.29 0.21 0.18
Net Profit Margin 0.19 0.13 0.12
ROA 0.15 0.15 0.14
ROE 0.26 0.26 0.25
EPS 2.52 1.92 1.45
Gross profit margin is declining that’s not good for the company, but net profit is increasing.
Return.

GROWTH RATIO

Sales -9.27 19.90


Net Income 31.14 32.56
EPS 31.16 32.62
The sales has been declined in a huge percentage as compared to the previous year (2002).
The other two are almost steady.
 Net income of 2003 was $760mn; it’s more than 30% as
compared to the previous year 2002.
 The standard and performance segments of Harley Davidson
make up 70% of the European heavy weight motorcycle market
 Harley-Davidson operates in two segments: Harley-Davidson
motorcycles & related products and HDFS (Harley-Davidson
Financial Services).
 Harley-Davidson is the only major American heavyweight
motorcycle manufacturer.
 Strong brand name, one of the main things which are required for
all companies in this industry.
 The HOG (Harley Owners Group), which have a 7, 50,000
members world wide, is the industry’s largest company
sponsored motorcycle enthusiast organization.
 Buell Riders Adventure Group (BRAG) was also formed recent
 Customization of the bikes, this is Harley-Davidson’s major
revenue maker.
 Harley-Davidson has a good marketing division and it’s divided as
dealer promotions, customer events, magazine and direct-mail
advertising, and public relations.
WEAKNESS
 High price, Harley-Davidson bikes are the costly bikes in this
category. They just started making some bikes in the low cost
category.
 Harley-Davidson has problems in gaining more market share in
some European countries (That’s one of the main markets for
Heavyweight motorcycles outside U.S).
 They didn’t yet start its sales in India, one of the biggest markets.
 Required production is not met, analyzing the future of
Heavyweight motorcycle market
IFE MATRIX
WEIGHTED
KEY EXTERNAL FACTORS WEIGHT RATING SCORE
STRENGTHS
Net income of 2003 was $760mn, its more
than 30% as compared to the previous
year 2002 0.15 3 0.45

The standard and performance segments


of Harley Davidson make up 70% of the
European heavy weight motorcycle market 0.09 3 0.27
Harley-Davidson operates in two segments:
Harley-Davidson motorcycles & related
products and HDFS (Harley-Davidson
Financial Services) 0.025 4 0.1
Harley-Davidson is the only major
American heavyweight motorcycle
manufacturer 0.1 4 0.4
Strong brand name 0.15 4 0.6

The HOG (Harley Owners Group), which


have a 7,50,000 members world wide is
the industry’s largest company sponsored
motorcycle enthusiast organization 0.05 4 0.2

Buell Riders Adventure Group (BRAG) was


also formed recent 0.025 4 0.1

Customization of the bikes, this is Harley-


Davidson’s major revenue maker 0.025 4 0.1

Harley-Davidson have a good marketing


division and its divided as dealer
promotions, customer events, magazine
and direct-mail advertising, and public
relations 0.025 4 0.1
WEAKNESS
High price 0.15 2 0.3

Harley-Davidson has problems in gaining


more market share in some European
countries (That’s one of the main markets
for Heavyweight motorcycles outside U.S). 0.06 1 0.06

They didn’t yet start its sales in India, one


of the biggest markets 0.1 1 0.1
Required production is not met, analyzing
the future of Heavyweight motorcycle
market 0.05 1 0.05
TOTAL 1 2.83
SWOT matrix

Opportunity Threat
SO Strategy: ST Strategy

SALE OF HARLEY DAVIDSON IN


EUROPEAN MARKET IS OF 70% AND
THEY CAN IMPROVE THIS BY
INTRODUCING MORE PRODUCTS INTO
THE MARKET AND THROUGH ADVT AND
Strength

ALL. BECAUSE THIS MARKET IS


GROWING HIGHLY.

EXPAND PRODUCTION TO EUROPE INCREASE STRONG BRAND NAME

INCREASE MARKET TO YOUNGER


EXPAND PRODUCTION TO ASIA CUSTOMER

HARLEY DAVIDSON CAN MAKE USE OF


ITS GOOD BRAND NAME, BECAUSE NOW
A DAY PEOPLE ARE MORE
CONCENTRATING ON QUALITY
PRODUCTS

WO Strategy WT Strategy
Weakness

IMPROVE EMPLOYEE RELATIONSHIP


GRAND STRATEGY MATRIX
Buell Motorcycles a division of Harley-Davidson. This was purchased
by Harley-Davidson; this division still uses Harley-Davidson to
improve its sales.

STRATEGY: MARKET DEVELOPMENT, MARKET PENETRATION,


PRODUCT DEVELOPMENT, HORIZONTAL INTEGRATION,
DIVESTITURE, LIQUIDATION.
SPACE Matrix

Environmental Stability
Financial Strength (FS) (ES)
Return on Investment 2 Technological changes -2
Leverage 3 Rate of Inflation -3
Liquidity 4 Demand variability -6
2 Price range of competing
Working Capital products -2
5 Barriers to entry into
Cash Flow market -6
Inventory Turnover 3 Competitive pressure -4
Earnings per Share 3 Ease of exit from market -3
Price Earnings Ratio 2 Price elasticity of demand -2
Risk involved in business -2
Total 24 Total -30
Competitive Advantage (CA) Industry Strength (IS)
Market share -1 Growth potential 3
Product quality -1 Financial stability 3
Product life cycle -3 Technological know how 5
Customer Loyalty -1 Resource utilization 4
Competition's capacity utilization -4 Ease of entry into market 6
-1 Productivity, capacity
Technological know-how utilization 4
Control over suppliers & distributors -2
Total -13 Total 25
Average value for FS = 3
Average value for CA = -1.85
Average value for IS = 4.17
Average value for ES = -3.33

Point on X axis = (-1.85+4.17)/2 = 1.16


Point on Y axis = (3-3.33)/2 = -0.165

Strategies:

STRATEGY: BACKWARD INTEGRATION, FORWARD


INTEGRATION, HORIZONTAL INTEGRATION, MARKET
PENETRATION, MARKET DEVELOPMENT, PRODUCT
DEVELOPMENT.
I.E MATRIX
Harley-Davidson U.S MARKET SHARE: 49%
Harley-Davidson EUROPEAN MARKET SHARE: 07%
Harley-Davidson ASIAN MARKET SHARE: 22%

STRATEGY: BACKWARD INTEGRATION, FORWARD


INTEGRATION, HORIZONTAL INTEGRATION, MARKET
PENETRATION, MARKET DEVELOPMENT, PRODUCT
DEVELOPMENT
BCG MATRIX
Harley-Davidson RELATIVE MARKET SHARE: 48%
GROWTH RATE: 13.029

STRATEGY: MARKET PENETRATION, MARKET DEVELOPMENT,


PRODUCT DEVELOPMENT, DIVESTITURE.
QSPM
J.V EUROPE J.V ASIA
STRENGTH WEIGHT AS TAS AS TAS

Net income of 2003 was $760mn, its more than 30%


as compared to the previous year 2002 0.075 3 0.225 3 0.225

The standard and performance segments of Harley


Davidson make up 70% of the European heavy
weight motorcycle market 0.045 3 0.135 2 0.09
Harley-Davidson operates in two segments: Harley-
Davidson motorcycles & related products and HDFS
(Harley-Davidson Financial Services) 0.0125 4 0.05 3 0.0375

Harley-Davidson is the only major American


heavyweight motorcycle manufacturer 0.05 4 0.2 4 0.2

Strong brand name 0.075 4 0.3 2 0.15


The HOG (Harley Owners Group), which have a
7,50,000 members world wide is the industry’s
largest company sponsored motorcycle enthusiast
organization 0.025 2 0.05 3 0.075
Buell Riders Adventure Group (BRAG) was also
formed recent 0.0125 2 0.025 4 0.05

Customization of the bikes, this is Harley-Davidson’s


major revenue maker 0.0125 3 0.0375 3 0.0375
Harley-Davidson have a good marketing division and
its divided as dealer promotions, customer events,
magazine and direct-mail advertising, and public
relations 0.0125 2 0.025 2 0.025
WEAKNESS 0
High price 0.075 2 0.15 2 0.15

Harley-Davidson has problems in gaining market


share in some European countries (one of the main
markets for Heavyweight motorcycles outside U.S). 0.03 3 0.09 3 0.09
They didn’t yet start its sales in India, one of the
biggest markets 0.05 3 0.15 3 0.15

Required production is not met, analyzing the future


of Heavyweight motorcycle market 0.025 4 0.1 4 0.1
OPPORTUNITIES 0

The European demand for Harley Davidson is the


highest in the international market and represents
the single largest motorcycle market in the world 0.075 4 0.3 2 0.15
The international heavy weight market is growing
and is now larger than the U. S. heavyweight market 0.075 4 0.3 3 0.225
Women and younger riders are increasing becoming
interested in bikes 0.05 3 0.15 4 0.2

Market share increasing in Europe and Asia for the


last two years 0.025 3 0.075 4 0.1
Increasing demand in US markets for bikes 0.1 2 0.2 3 0.3
Customers value quality parts 0.0125 1 0.0125 2 0.025
THREAT
Harleys ongoing capacity restraints caused a
shortage supply and a loss in domestic market share
in recent years 0.075 4 0.3 3 0.225
Harleys average buying age is 42 years old and
increasing 0.025 3 0.075 2 0.05
The European Union’s motorcycles noise standards
are more stringent than those of Environmental
Protection Agencies in the U.S and increased
environmental stand 0.0125 3 0.0375 2 0.025
Some competitors of Harley Davidson have larger
financial and marketing resources and they are more
diversified 0.0125 2 0.025 3 0.0375
Environmental protection laws 0.0125 4 0.05 2 0.025

Buell division needs to continue to produce a quality


motorcycle under Harley’s brand name 0.025 1 0.025 2 0.05
1 3.0875 2.7925
STRATEGY RECOMMENDATION & IMPLEMENTATION:
 MARKET PENETRATION
 Get some more market share from the existing market, like U.S,
U.K, and Japan etc through more marketing techniques like
advertising. Harley-Davidson has a good brand name so it’s easy
for them to eat up the competitor market share if they can
provide some more customer benefit.
 Competition is high in this segment mostly in U.S so market
penetration 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 are
providing to the U.S customers to the Asian customers they can
increase the sales.
 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 Buell’s market share
by introducing 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.
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 India is so
much difficult because there are so much environmental laws are
there which won’t allow that type of vehicles to come to India,
and its difficult that taxes and levis are high in India so starting
new plant in India can solve this problem. Negotiations with the
Government can solve these problems.
 DIVERSIFICATION
 Bring in new vehicles to new markets like India and China is a
good choice, but it’s too costly.
 Bringing new types of recreational vehicles is a best choice.
RECOMMENDATION
 Expand European and Asian market.
 Increase the sales of Buell sport bike and Harley-Davidson to
younger customers and females.
 Horizontal diversification: acquires or develops new products that
could appeal to its current customer groups even though those
new products may be technologically unrelated to the existing
product lines.
 Concentric diversification: Bring in new recreational vehicles.
EVALUATION
 REVIEW UNDERLYING BASES OF STRATEGY
 Once again prepare all the internal and external analysis (eg: EFE
& IFE)
 Compare the already prepared analysis with the one which will be
prepared after the new strategy implementation.
 MEASURING ORGANIZATION PREFERENCES
 Analyze all financial ratios (current and the future).
 If any advantage, then implement the new strategy, otherwise
continue with the present one.

 Reference:
 Strategic Management Concepts and Cases; Fred R. David, 10th & 12th Edition.
 www.wikianswers.com
 www.yahoo.com (yahoo finance)
 www.harley-davidson.com
 www.google.com
 http://www.fool.com/investing/value/2006/08/02/calculating-return-on-assets.aspx
 http://www.va-interactive.com/inbusiness/editorial/finance/ibt/ratio_analysis.html