Group 1

Devendra Patel
Stephanie Barrett
Brian Lux

Harley Davidson, Inc.: The 100th Anniversary

Harley Davidson has recently made a good turnaround from a failing company to

what they are today. In the early 1980’s, Harley was owned by AMF. Management

proceeded to do a leveraged buyout. At the time the company was not doing well in

operations. They were having quality issues and leaking bikes, which was turning into

unhappy customers

The company instituted a new policy to turn the company around. The company

used new tariffs and modern production techniques to their advantage. In order to

diversify, the company purchased Holiday Rambler, an RV manufacturer. This company

would later be sold so the company could continue to concentrate on their core assets, the

motorcycle division.

Later in the late 1990’s, the company was producing fewer bikes than their total

customer base. Demand was enormous, and supply was well behind demand. To

combat this problem, the company stepped up production. This resulted in some dealers

satisfying their customers, but many were left with overstocks in inventory. During this

phase the market share of Harley-Davidson dropped from 48.8% in 1998 to 45% in 2001.

Even though the market share dropped, the demand for the bikes was expected to stay

strong for several years.

They are now a company that produces and sells sturdy motorcycles in over 15

countries. They produce well respected motorcycles, and have numerous gear items that
are sold around the world. Every year, thousands of Harley owners congregate in

Sturgis, South Dakota.

Today, the company has created itself strong brand equity. To own a Harley is

prestigious. Many people opt for the famous Harley Hog if they intend to buy a

motorcycle. The company is known as a strong brand now, and people love to ride cross

country on their motorcycles. They have become an American symbol. The strategy that

the company instituted in the late 1980’s has been a success over the last 20 years.

The stock has risen from around $2.00 at the IPO to $50 today, with 5 splits along

the way. Recently, most analysts downgraded the stock from outperform to perform or

hold grade stock. This could be due to the fact that it is a company in an industry that is

not a necessity, and the bikes do not get great gas mileage compared to the really small

motorcycles that are produced overseas. With recent oil prices skyrocketing, this could

hurt sales.

The have centralized themselves around the brand known as Harley Davidson.

They are no longer a motorcycle company. People will buy motorcycles from the

company, and all types of accessories including leather jackets, bag, hats, and pants.

They have all manners of clothing available, bags for the bikes and many other items that

people will buy from the company. The Harley name is extremely well respected now,

and will continue to be for a long time to come. The only thing that will hurt the

company in the long run will be the explosive surge in fuel costs that is affecting

everyone in America, and around the world.

 Below is a list of External and Internal factors that are affecting the company:

Internal and External Factors Affecting Harley Davidson

Internal Factors: External Factors

Strengths Opportunities
1. Brand Equity 1. Growing International Markets
2. 45% Market Share 2. The New V-Rod
3. Eaglemark 3. Manufacturing Investment
4. Turnaround Strategy 4. Demand >> Supply
5. Custom Bikes 5. Canada

Weaknesses Threats
1. Manufacturing Problems 1. Big Dog Motor
2. Falling Market Share 2. Polaris
3. Unhappy Customers 3. Custom Bike Companies
4. Slow Moving Inventory 4. Pricing
5. Unhappy Dealers 5. Rising Fuel Costs
 TOWS MATRIX:

S-O Strategies W-O Strategies

1. Make Eaglemark International (S3,O1)
2. Utilize the New V-Rod to Regrow Market Share
3. Try to sell custom bikes overseas (S5, O1)
4. Use the turnaround and market share to grow
the Canada base (S2,S4, O5)
1. Use Manufacturing investment to overcome
the weaknesses in the manufacturing (W1, 03)
2. Advertise the V-Rod to the younger crows
and try to slow or stop market share (W2, O2)
3. Sell inventory at reduced price to help with
demand issues (W4,W3, O4)

S-T Strategies W-T Stratgies

1. Use brand equity to over come competition
(s1,T1,T2) 1. Protect customers to prevent them from
2. Use turnaround strategy and custom bikes to going to competition (W2, T1,T2)
compete with growing popularity of small custom 2
bike shops (S4, S5, T3)
3. Use Brand equity and the Turnaround strategy
to justify pricing differences. (S1, S4, T4)

BCG Matrix of Harley Davidson

Harley has 77% sales growth
Harley also has 45% market share
Relative Market Share

100%
0%

80%
Industry Sales Growth

0% Stars II

-80% Cash Cows III Dogs IV

NEW STRATEGY

The company has many problems to overcome. First the have some competition

that has entered in the last few years. This has been a group of Custom Bike makers that

produce some high-end bikes. Some of these could be seen as a substitute to the

company’s Custom built bikes.

Continued growth into international markets would serve the company well. The

overseas markets were identified as larger places to sell, with Europe having a larger

market than the United States. Canada was also identified as a place to expand

Eaglemark. This large growth opportunity could help provide needed cash to grow

market share in the United States. This would help the company to become a star,

according to the BCG Matrix.

Finally, the company should continue to grow the brand equity it now enjoys.

This has helped the company achieve increased growth. It has also helped the company

have strong brand recognition.