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CASE ANALYSIS
CASE:
Analyzes by,
HARI PRAKASH.N.V
Harley Davidson, Inc
Mission Statement says:
segments”
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
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
Price
Competitiveness 0.1 1 0.1 3 0.3 3 0.3
LIQUIDITY RATIOS
LEVERAGE RATIOS
Long Term Debt Equity Ratio = Long term Debt / Total stock holders
equity
=670/2958
= 0.23
STRENGTHS
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
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
Opportunity Threat
SO Strategy: ST Strategy
WO Strategy WT Strategy
Weakness
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
Strategies:
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