1.Company Background.

Founded in 1903, Harley-Davidson has come to symbolize individuality, freedom and rebellion. The om!any !roduces thirty-five Harley-Davidson" motorcycle models. The Harley-Davidson motorcyclin# e$!erience is realized throu#h authorized dealers in more than %0 countries and the Harley &'ners (rou!" 'hich has over one million members 'orld'ide. Harley-Davidson delivers the ultimate motorcyclin# e$!erience throu#h a variety of !roducts and services.

2.Current Situation.
2.1. Mission Statement says: )*e fulfill dreams throu#h the e$!eriences of

motorcyclin#, by !rovidin# to motorcyclists and to the #eneral !ublic an e$!andin# line of motorcycles, branded !roducts and services in selected mar+et se#ments, 2.2. Vision Statement says:

)Harley-Davidson im!rove -its.

is

an

action-oriented, beneficial

international 'ith

com!any, a leader in its commitment to continuously mutually relationshi!s sta+eholders /customers, su!!liers, em!loyees,

shareholders, (overnment, and society0. Harley-Davidson believes the +ey to success is to balance sta+eholders1

interests throu#h the em!o'erment of all em!loyees to focus on value-added activities.

3.External environment).

Scanning

(External

3.1. Societal Environment (PEST analysis). Harley-Davidson is one of the most admired and reco#nized com!anies in the 'orld today. 2esistance to 'omen riders in some countries as Third *orld ountries.

onfidence in economy is directly !ro!ortional to the !urchasin# of consumer items.

&!!ortunities in emer#in# economies -3ndia, but uncertain o!eratin# situations.

hina.

4 ne' assembly facility o!ens in 5anaus, 6razil, the first o!erations outside of the 7.8, reduces ta$es, ma+e them more affordable to a lar#er #rou! of 6razilian customers. Harley-Davidson is facin# some le#al !roblems in 4sian countries, in 3ndia there is 90: tariff and various other ta$es 'ill cause the !rice of the bi+e to double.

 <oise !ollution and some emission standards of Harley-Davidson bi+e is not u! to the level of some countries across the #lobe.

3.2. SWOT analysis Strengths 1. ustomer retention ;. <umber of domestic dealers 3. 3nternational mar+et share =. >roduct selection of ?1000 cc motorcycles @. Financial !osition !pportunities 1. 3ncrease !ros!ect se#ment /Aouth0 ;. 8tron# mar+et attractiveness 3. 3ncreasin# mar+et acce!tance =. Bery re!utable in its Cuality @. Decline in substitution consum!tion. eaknesses 1. <umber of international dealers ;. >roduct selection in other se#ments 3. Dealer inventory system =. >roduct cost

"hreats 1. 3nstability in economic situations /Financial crisis/ ;. om!etitors are more diversified 3. 7nion relations. =. Declinin# Duro!ean #ro'th. @. 4vailability of substitute !roducts.

3.3. Task environment (Porters Mo el). 10 Threat of ne' entrantsE Dntry barrier is very hi#h is this se#ment, because this se#mentE
3

1. <eeds a lot of ca!ital investment and the industry is on a maturity sta#e, so that there is only four main com!etitors. ;. The economies of scale are lo' in this se#ment, 'hich is the reason 'hy there are only four maFor !layers. ;0 2ivalry amon# com!etin# firms is fairly hi#h in the motorcycle industryG due to the follo'in# factorsE 1. >otential entry of ne' com!etitors is some'hat lo' in motorcycle manufacturin# because of start-u! costs and loyalty already ;. Four maFor com!etitors are mainly concentrated on these heavy'ei#ht motorcycle se#mentsE in addition to Harley- Davidson the other three are Aamaha, 8uzu+i, Honda all are Ha!anese com!anies. 30 Threat of substitute !roductsE >otential develo!ment of substitute !roducts is a threat to the motorcycle industry. 1. 2e!lacement !roducts for motorcycles include boats, sno'mobiles, and 2Bs because these are all lu$ury recreational items. ;. >assen#er cars, s!orts bi+es, scooter bi+es are the main substitutes of Harley-Davidson motorcycles.

=0 6ar#ainin# !o'er of buyersG the bar#ainin# !o'er of consumers is also a moderate threat to motorcycle com!anies. 1. onsumers of Harley-Davidson motorcycles are

individual customers, so that they can1t seriously affect Harley1s financial !osition. ;. The numbers of dealers around the #lobe are also less and they are also de!endent to the individual customers, that can1t affect Harley-Davidson1s financial !osition. @0 6ar#ainin# !o'er of su!!liersG the bar#ainin# !o'er of su!!liers is a relatively small threat as there are more su!!liers than manufacturers. 1. 8teel, basic electrical eCui!ments and shi!!in# of final motorcycles are the main thin#s Harley-Davidson see+s from su!!liers. ;. Harley-Davidson has a 'ide s!an of su!!liers, so that if one su!!lier attem!ted to increase the !rice, they can easily s'itch to the alternate su!!liers 'ithout any !roblem in !roduction. 3.!. Strate"ic #ro$%s 3t is a set of business units or firms that !ursue similar strate#ies 'ith similar resources. &ur dia#ram belo' illustrates sho's 'here Harley Davidson is in the com!etitive environmentE
@

>rices

Harley Davids on

#onda $amah a

Io' Hi#h

<umber of stores

Honda and Aamaha have lar#e number of stores 'ith lo' !rices, com!ared to Harley Davidson 'ho has hi#her !rices 'ith limited number of stores and models. 3.&. 'n $stry S$ccess Matri(. 4!!endi$ no /10 ustomer loyalty is Harley-Davidson1s stron#est

com!etitive advanta#e. 3n !roduct Cuality and financial !osition, Harley is also stron#. Ho'ever, Harley is not as stron# as its com!etitors in some critical areas. Harley falls far behind Honda and Aamaha in #lobal mar+et share of motorcycle !roducts. 3n addition, Harley motorcycles
9

are not as com!etitively !riced as other brands. >roduct selection is another area of 'ea+ness at Harley. 3.). Porter #eneric Strate"ies. >orterJs (eneric 8trate#ies / om!etitive 4dvanta#e0, has three dimensionsE This strate#y a!!lied by Harley Davidson, as they differentiate their !roductsJ ima#e, desi#n, brand name, and consumersJ !ersonality than other !roducts. 3.*. Val$e +,ain
3.%.1. &rimary 'ctivities

'n-o$n

.o"istics inbound lo#istics revolve around

Harley-Davidson1s

Cuality, cost, timin# and technolo#y /8taff, ;0030. To actively !ursue each of these #oals, Harley-Davidson has develo!ed a su!!ly mana#ement strate#y that !rovides roadma! #uidelines and obFectives for or#anizin# its inbound materials. 8!ecifically focusin# on !urchasin# and the acCuirin# of ra' materials and !re-manufactured items such as tires, Harley-Davidson has or#anized its inbound lo#istics into four main cate#ories that allo' it to focus on s!ecific areas 'hich add value to the inbound lo#istics se#ment of the value stream. 4lon# 'ith inte#rated in!ut, HD creates value for the customer throu#h inbound lo#istics by usin# Cuality
%

materials that arrive 'hen neededG 'hich lo'ers carryin# costs and increases flo'. They have develo!ed a barcode system to com!lement the tri##er system in order to +ee! trac+ of inventory. O%erations For HD, !rocess drives Cuality. This means that HD 'or+s in all sta#es )K to desi#n -and manufacture. Cuality into the !roducts 'e develo!., /Limdars, ;0000. *hen a customer orders a Harley, the order tri##ers the Fust-intime flo' !rocess 'hich HD uses to !roduce its motorcycles. 3n order to have a continuously u!datin#, real-time manufacturin# schedule HD uses use bar codes and electronic tri##er systems for re!lenishin# materials and orderin# the inbound ra' materials it needs to +ee! continuous flo'. Marketin" an Sales

HD #ives its customers a reason to belon#. 3ts !roducts are sold for their lifestyle im!lications, their Cuality and their merits. *ith the use of almost no advertisin#, HD relies on its stron# brand reco#nition to mar+et its !roduct. HD has follo'ed a non-traditional route throu#h history and focused on its !roduct and the lifestyle that comes 'ith o'nin# a Harley, as o!!osed to forcin# the !roduct on consumers. *hen someone enters a dealershi! to buy a Harley, they are offered multi!le o!tions and variations !er !roduct, and can customize their order to
M

be a one-of-a-+ind. &nce HD has the attention of a consumer, they +ee! that !erson enthralled 'ith the brand throu#h com!lementary !roduct sales and aim to +ee! them a Ho# 2ider for life. HD sells its !roduct at more than 1,300 Harley-Davidson dealershi!s in 90 countries 'orld'ide, and each is more than Fust a !lace to buy motorcycles. Service HD Dealer 8ystems deals 'ith most service needs for customers and dealershi!s. The 'holly-o'ned subsidiary )!rovides soft'are, hard'are, trainin# and customer su!!ort to meet the needs of domestic Harley-Davidson dealers /HD 784, ;0090., They also !rovide )dedicated technical and soft'are !hone su!!ort for customers, includin# after-hours su!!ort for hi#h-severity issues. HD continues their online su!!ort system in the service as!ect of their value chain. )The HDD8 Dealer 5ana#ement 8ystem /D580 !rovides functionalities in !oint-of-sale, accountin#, service schedulin#, inventory mana#ement, and vehicle re#istration and vehicle 'arranties, amon# others. -4lso,. the ne' T4I&<es system uses the latest 5icrosoft technolo#y to levera#e efficiency and future #ro'th. /3bid.0,
3.%.2. Secondary 'ctivities

/irm 'n0rastr$ct$re
9

HD is mainly a decentralized, flat or#anization that encoura#es em!o'erin# its customers, em!loyees and su!!liers. 3ts circles of leadershi! structure and o!en door !olicy encoura#e direct in!ut from everyone involved in the ma+in# of their !roduct. HD1s 3nvestor 6ac+#round !ac+et describes the firm1s infrastructure as ma$imizin# involvementE )3n order to ma$imize em!loyee involvement, traditional hierarchy the and layers of mana#ement have been minimized, and an )o!en door, !olicy e$tends throu#hout om!any, all the 'ay to the .D.&.1s office. Dasy access to senior mana#ement s!ea+s volumes about our belief that every em!loyee is e$!ected to communicate and contribute his or her thou#hts. Dm!loyees aren1t allo'ed to chec+ their brains at the door or avoid res!onsibility or accountability. 3n fact they are e$!ected to ta+e the initiative to identify !roblems and solve them. HD uses circles of leadershi! to or#anize mana#ement activities. ) ircle leaders Fointly mana#e their res!ective circle business and develo! strate#y. <o sin#le individual is the circle leader. 2ather, the leadershi! role of each circle moves to different members based on the issue bein# addressed. 1$man 2eso$rces Mana"ement )4t Harley, the or#anization chart is a circle -- three overla!!in# circles, to be more accurateE a
10

reate

Demand

ircle, a >roduce >roducts

ircle, a 8u!!ort

ircle, and in the center 'here the three circles intersect, a Ieadershi! and 8trate#y activities. 4s for com!ensation, HD has a Human 2esources ommittee, 'hose !ur!ose is to revie' harter overall ouncil. /3m!erato, ;00%0, This circle #uides, or#anizes and mana#es all subseCuent H2

com!ensation !lans, both for e$ecutives and em!loyees in the com!any and all of its subsidiaries and affiliates. This committee also )revie's in conFunction 'ith the for the the D& the career develo!ment and mana#ement succession !lans om!any K -and. ma+es recommendations to the o., ;00M0., 6oard re#ardin# the selection and retention of officers of om!any /Harley-Davidson

2esearc, an HD does

Tec,nolo"ical 3evelo%ment conduct e$tensive research and

not

develo!ment. The com!any mainly relies on its em!loyees and su!!liers to !roduces ideas and develo! !roducts /5illi#an, ;0000. urrently, there are no dedicated research centers currently in e$istence that focus on motorcycle im!rovements etcK only ones that focus on ne' !roduct develo!ment. Ho'ever, there is a !ossibility that HD 'ill )add a research and develo!ment center in a nei#hborhood sho!!in# center ne$t to the motorcycle com!anyJs 5il'au+ee headCuarters /4lvin, ;00M0.,

11

Proc$rement HD1s stron#est secondary activity is !rocurement. The com!any1s stron# relationshi!s 'ith su!!liers and e$cellent 8u!!ly 5ana#ement 8trate#ies allo' them to efficiently and effectively attract ne' su!!liers and build u!on e$istin# su!!lier relationshi!s. 4s !reviously discussed, HD1s 858 system has four cate#ories of su!!ort mana#ement circles 'ith 'hom su!!liers and other vendors deal 'ithE (eneral 5erchandise, 5aintenance, 2e!air N &!eration, &ri#inal DCui!ment, and >arts N 4ccessories. Dach of these circles adds value and detailed or#anization to the !rocurement of ra' materials and other in!uts. These four cate#ories allo' HD to inte#rate its shi!!in#, orderin#, demand mana#ement and !lannin# across the com!any and its su!!liers. >urchasin# and en#ineerin# are combined in a streamlined flo' that 'or+s its 'ay u!stream. They add si#nificant value to HD1s su!!ly chain because they allo' HD1s Fust-in-time inventory in!ut and !rocessin# system to flo' smoothly and move the materials continuously. Throu#h this inte#ration, it can be estimated that Harley-Davidson has reduced costs of inbound !urchased #oods and services by about O3% million from 1999 throu#h today /5illi#an, ;0000. Their su!!ly mana#ement of !rocurement activities not only creates value throu#h the smooth flo' but, in 'or+in# 'ith su!!liers, has also removed 'aste by heavily
1;

inte#ratin# su!!liers and their ideas into all of the com!anyJs !roduct develo!ment !rocess /8taff, ;0030.

3.4. 1arley 3avi son str$ct$re. Harley-Davidson /<A8DE H&(, formerly HD30 often

abbreviated H-D or Harley, is an 4merican motorcycle manufacturer. Founded in 5il'au+ee, *isconsin, durin# the first decade of the ;0th century, it 'as one of t'o maFor 4merican motorcycle manufacturers to survive the (reat De!ression. Harley-Davidson also survived a !eriod of !oor Cuality control and com!etition from Ha!anese manufacturers.

(.Strategy )ormulation.
!.1. +or%orate 5 6+# Matri(. om!anies should formulate a 6 ( matri$ as it hel!s the mana#ers to develo! effective strate#ies. 5ore over it hel!s the com!any in analyzin# its business units in addition it hel!s the mana#ers to allocate the resources effectively and efficiently. Star* Harley Davidson motorcycles for youth are considered as a star as they have hi#h mar+et share and the rate of industry #ro'th is relatively hi#h.

13

StrategyE

5ana#ers

should

develo!

strate#ies

that

include hi#h investment on these !roducts in order to stren#then their !osition or at least maintain this !osition. +uestion mark* Harley Davidson a!!arel brands for men, 'omen, collections, and #ift cards are considered as a Cuestion mar+ as they have lo' mar+et share and hi#h #ro'th rate. StrategyE The Cash Co,* Harley Davidson courses for ne' riders, s+illed rider, #rou! riders are considered as a cash co' as they have hi#h mar+et share and lo' #ro'th rate StrategyE 5ana#ers should develo! strate#ies that enable the com!any to maintain their !osition as lon# as !ossible. Harley should ma+e hu#e investment on the trainin# courses in order to maintain their !osition as it #enerates hi#h !rofit for the or#anization. -og* Harley Davidson accessories are considered as a do# as they have lo' mar+et share and lo' #ro'th rate. Harley Davidson mana#ers should develo! a strate#y that eliminates this !roduct line and ma+e use of this e$!enditure to im!rove other !roduct lines or distribute them as com!lementary !roducts for Harley Davidson om!any could use !roduct develo!ment strate#y in order to ma+e use of the hi#h #ro'th rate.

1=

consumers, !rofitable.

mi#ht

be

on

lon#

term

achieve

more

StrategyE 3nvolves eliminatin# this !roduct line and usin# the cash to develo! other !roduct lines that have a hi#her #ro'th rate. &ther strate#ies include e$chan#in# the !roduct by other !roducts more over the com!any could use lo' cost strate#y that may lead to !rice reduction 'hich 'ill increase the com!anyJs mar+et share.

!.2. /$nctional Strate"y: - ." department* 6y usin#, the 3T in Harley Davidson ma+e use of the ne' technolo#y them in a by sellin# !roducts online decrease and costs offer for customization throu#h /HD1 customization0, this could !ut hi#her com!etition, 'arehouses, and increase their sales. - /anu0acturing department* Harley Davidson could start a!!lyin# ne' innovative model that a!!eal more to the tar#et mar+et relyin# on their stron# brand ima#e, 'hich 'ill increase their mar+et share by offerin# a hi#her number of !roducts and varieties thou#h. 4!!lyin# the ne' technolo#y in the machines or in the system they are follo'in#, they 'ill achieve hi#her accessibility and easily be reachable for their customers. - )inancial department*
1@

Harley ma+e use of the online #ro'th by sellin# throu#h the internet 'hich 'ill hel! in minimizin# costs and increased cash flo', sellin# thro' the internet 'ill decrease the cost of 'arehouses, and sho'rooms, 'hich 'ill finally reflect on the com!anyJs financial !osition. - /arketing department* Harley Davidson should conductin# mar+etin# research on re#ular basis to +no' the customersJ needs and be u! to date. They ma+e use of the ne' #ro'in# mar+ets in mer#in# 'ith other forei#n com!anies, by been u!dated and 'ell a'are of the chan#es of the mar+et, and their com!etitors. - #uman 1esources department* Harley Davidson ma+e use of their hi#hly trained staff in dealin# 'ith the latest technolo#ies, the 'ell trained em!loyees effect on the com!any sometimes much more better that a hi#her !ositioned ones because they are someho' close to everyone 'or+in# on the or#anization from the D& to the salesmen, and they are close to the influences and reality. - 'dvertising and promotion* Harley Davidson need to increase their ads and !romotions on the internet, billboards, TB, radio, and even ma#azines to increase sales and to al'ays be in customers mind.
19

They can increase their street banners and billboards in cro'ded areas 'here the rate of e$!osure is hi#h. 4lso they can advertise in more TB channels to reach more customers.

2.1e0erences*

'''.harley-davidson.com >rotection 4#ency, Phtt!EQQ'''.e!a.#ovR, accessed on 4!ril 1%, ;00%.

Dnvironmental Federal 2eserve,

Phtt!EQQfederalreserve.#ovR, 3nvestor 2elations,

accessed on 4!ril 1%, ;00%. Harley-Davidson 5arch 13, ;00%. 6alo#un, H., and Hailey, B. H., D$!lorin# 8trate#ic Hohnson, or!orate Dn#land han#e (. and 8choles, 9th S., /;00;0 D$!lorin# Hall, or!orate Phtt!EQQinvestor.harley-davidson.comR, accessed on

8trate#y,

edition,

>rentice

1%

3.'ppendix
14 .ndustry Success /atrix
#arley -avidson Critical )actors Success
eig ht 1atin g eight ed Scor e 1ating eight ed Scor e 1ating eight ed

#onda

$amaha

5ar+et share Financial !osition >rice com!etitiveness ustomer loyalty (lobal e$!ansion >roduct Cuality >roduct selection 5ana#ement
1M

0.1@ 0.0@ 0.10

3 = 1

0.=@ 0.;0 0.10

3 3 3

0.=@ 0.1@ 0.30

3 3 3

0.=@ 0.1@ 0.30

0.;0 0.;0 0.10 0.1@ 0.0@

= ; 3 3 =

0.M0 0.=0 0.30 0.30 0.;0

; = = = =

0.=0 0.M0 0.=0 0.90 0.;0

; = 3 = =

0.=0 0.M0 0.30 0.90 0.;0

"otal

1.00

;.%@

3.30

3.;0

27 E(ternal /actor 8nalysis S$mmary (E/8S) 5ey External )actors eig 1atin ht !pportunities 1. 3ncrease !ros!ect se#ment 6.26 /Aouth0 ;. 8tron# mar+et 6.26 ( 6.76 ( 6.76 g eighted Score

attractiveness 3. 3ncreasin# mar+et 6.16 2 6.26

acce!tance =. Bery re!utable in its 6.63 1 6.63

Cuality @. Decline in substitution 6.63 1 6.63

consum!tion "hreats 9. 3nstability in economic 6.6( 2 6.67

situations /Financial crisis0 %. om!etitors are more 6.16 1 6.16

diversified M. 7nion relations. 9. Declinin# 6.62 Duro!ean 6.62 2 2 6.16 6.16

#ro'th.
19

10. 4vailability of substitute 6.26 !roducts. Total 1.66

6.26

2.((

37 'nternal /actor 8nalysis S$mmary ('/8S) 5ey External )actors eig 1atin ht g eighted Score

Strengths ustomer retention ;. <umber dealers of 6.26 domestic 6.12 ( ( 6.76 6.36

3. 3nternational mar+et share

6.12

( (

6.36 6.(6

=. >roduct selection of ?1000 6.16 cc motorcycles @. Financial !osition eaknesses 9. <umber of international 6.62 dealers %. >roduct selection in other 6.16 se#ments M. Dealer inventory system 9. >roduct cost
;0

6.16

6.26

6.12

6.36

6.62 6.16

2 2

6.16 6.26

Total

1.66

3.32

;1