Harley davidson

11/29/16 ISTANBUL UNIVERSITY-
EXECUTIVE MBA
1
Ulker
Aliyeva

11/29/16 2
Overview
• Important dates
• Vision and Mission
•
• External Analysis
• Internal Analysis
• Company ‘s Structure
• General Environment
• HD Faced Problems
• Supplier Strategy
ISTANBUL UNIVERSITY-
EXECUTIVE MBA

What comes to mind when you
hear Harley Davidson ?
11/29/16 3ISTANBUL UNIVERSITY-
EXECUTIVE MBA

• https://www.youtube.com/watch?v=X1NYIYd54JQ
• Harley Davidson has a loyal fan base that interacts via clubs,
events and a museum.
• For their 105th
anniversary, in 2008, Harley Davidson had
125,000 preregistrations for the event.
• Here in Vegas they offer learn-to-ride classes, motorcycle
rentals and other events such as Street Vibrations Rally in
Reno, Nevada.
EXECUTIVE MBA

11/29/16 5
History
• 1903 21-year old William S. Harley and 20-year old Arthur Davidson make
available to the public the first production Harley-Davidson motorcycle. The bike
was built to be a racer, with a 3-1/8 inch bore and 3-1/2 inch stroke. The factory in
which they worked was a 10 x 15-foot wooden shed with the words "Harley-
Davidson Motor Company" crudely scrawled on the door.
EXECUTIVE MBA

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History
• 1906 A new factory, measuring 28 x 80 feet, is built on the Chestnut St. site,
later renamed Juneau Avenue. Staff size is increased to six full-time employees.
Also, the first motorcycle catalog is produced by the Company and the nickname
"Silent Gray Fellow" is used for the first time.
EXECUTIVE MBA

History
• 1953 Harley-Davidson celebrates its
50th Anniversary in style. An attractive
logo is created, depicting a "V" in honor
of the engine which had brought the
Company so far, with a bar overlaid
reading "Harley-Davidson"
• 1957 The motorcycling public met
a new motorcycle called the Sportster.
It premiers as a 55 cubic inch overhead
valve engine, and within one year of its
debut, becomes known as the first of
the "Superbikes." Another Harley-
Davidson tradition and legend is born.
EXECUTIVE MBA

11/29/16 8
History
• 1960 Harley-Davidson purchases a half interest in Aeronatica-Macchi, forming
Aermacchi Harley-Davidson, a European division that will produce small, single
cylinder motorcycles.
• 1969 Harley-Davidson merges with the American Machine and Foundry
Company (AMF), a longtime producer of leisure products.
• 1971 In response to the customizing craze, Harley-Davidson introduces the FX
1200 Super Glide, which combined a sporty front end (similar to that of the XL
series) with the frame and powertrain of the FL series. A new class of motorcycle,
the cruiser, is born.
• First year of Harley-Davidson snowmobile production.
EXECUTIVE MBA

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History
• 1973 Motorcycle production is upgraded when all assembly operations are
moved to a modern 400,000 square foot plant in York, Penn. All other production
operations remain in Milwaukee and Tomahawk. The Capitol Drive plant in
Milwaukee begins production of engines.
• 1991 Installation of a $31 million state of the art paint facility begins at the York,
Penn., factory. It becomes fully operational in 1992.
• 1996 A new, state-of-the-art Parts and Accessories Distribution Center opens
in Franklin, Wis. By the beginning of 1997, all inventory is moved from the original
warehouse at Juneau Avenue to the new 250,000-sq.-ft. facility.
EXECUTIVE MBA

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History
• 1997 A new 217,000-sq.-ft. Product Development Center opens next to the
Capitol Drive plant in Milwaukee. The building is dedicated to Willie G. Davidson.
• 1998 A new assembly facility opens in Manaus, Brazil, the first operations
outside of the U.S. Harley-Davidson buys a remaining 49% interest in Buell
Motorcycle Company. Erik Buell is named Chairman of Buell operations.
• 2001 The VRSCA V-Rod® is introduced for the 2002 model year. Inspired by
the VR-1000 racing motorcycle, the V-Rod is Harley-Davidson's first motorcycle
to combine fuel injection, overhead cams and liquid cooling, and delivers 115
horsepower.
EXECUTIVE MBA

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History
• 2002 The Open Road Tour debuts in Atlanta, GA, in July to celebrate the
upcoming Harley-Davidson 100th Anniversary.
• 2007 Eddie Krawiec joins the Screamin’ Eagle/Vance & Hines Harley-
Davidson NHRA Pro Stock Team.Kenny Coolbeth wins his second consecutive
AMA Flat Track Twins Championship.
• 2008 The all new Harley-Davidson Museum opens in Milwaukee on July 12.
Located at 6th and Canal streets, the Museum showcases hundreds of classic and
custom motorcycles, interactive exhibits and never-before-seen films and
photographs.
• 2009 Harley-Davidson announces expansion into India.
EXECUTIVE MBA

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Vision
Harley-Davidson, Inc. is an action-oriented, international
company, a leader in its commitment to continuously improve
our mutually beneficial relationships with stakeholders
(customers, suppliers, employees, shareholders, governments
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.
EXECUTIVE MBA

11/29/16 13
Mission
We fulfill dreams thorough the experience
of motorcycling, by providing to motorcyclists
and to the general public an expanding line of
motorcycles, branded products and services in
selected market segments.
EXECUTIVE MBA

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HD Values
• HD values are the heart of how HD runs business.
These values guide all actions and are served as the
framework for the decisions and contributions HD’s
employees make at every step of the Company.
• Tell the Truth.
• Be Fair.
• Keep Your Promises.
• Respect the Individual.
• Encourage Intellectual Curiosity.
EXECUTIVE MBA

11/29/16 15
Proposed Vision
To be recognized as the best
motorcycle company in the world.
EXECUTIVE MBA

Understanding Company
Structure
What is unique about
Harley’s Organizational
Structure?
• Create Demand (CDC)
•Produce Products Group (PPG)
•Provide Support (PSC)
•Circles of Leadership
•Information Technology Circle
(ITC)
EXECUTIVE MBA

General Environment
Economic
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.
Revenue from sales outside the using increased 7% from 2006 to 2007
Technological
As technology changes, customers’ expectations increase.
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
Politics
U.S Government and People are considering Harley-Davidson as an American icon. Federal,
state, local authorities have control requirements relating to air, water, noise, and pollution.
EXECUTIVE MBA

Legal
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.
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.
Socio-cultural
Traditionally targeted to upper middle class males. Increased demand by women for motorcycles.
EXECUTIVE MBA

11/29/16 19
External Analysis
Opportunities
• The international heavy weight market is growing and is now larger than 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.
• Interest rates are at historical lows.
• Women and younger riders are increasing becoming interested in bikes.
• Alliances with Ford Motor Company or other automobile manufacturers are
possible.
• Industry registrations of domestic heavyweight motorcycles are increasing.
• Market share increasing in Europe and Asia for the last two years.
• Increasing demand in US markets for bikes.
• Customers value quality parts.
EXECUTIVE MBA

11/29/16 20
External Analysis
Threats
• Harleys ongoing capacity restraints caused a shortage supply and a
loss in domestic market share in recent years.
• Harleys 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.
• Shifts in buyers needs and tastes.
• Customer loyalty in European and Asian Countries.
• Costs could become expensive from international importing.
• The Buell division needs to continue to produce a quality motorcycle
under Harley’s brand name.
EXECUTIVE MBA

11/29/16 21
Internal Analysis
Strengths
• Net income in 2003 was $760 million, which was 31 percent higher than in 2002.
• Strong relationships built on trust and respect with suppliers and dealers.
• The standard and performance segments of Harley Davidson make up 70% of the
European heavy weight motorcycle market.
• Harley Davidson operates in two principal business segments: Motorcycles and Related
Products, and Financial Services.
• Harley Davidson is the only major American motorcycle manufacturer.
• Strong brand name.
• The company has continued to focus its capital expenditures on capacity expansion at its
new and previously existing facilities.
• The Harley Owners Group (HOG) is the industry’s largest company sponsored
motorcycle enthusiast organization, which currently has approximately 430,000 members
worldwide.
• Harley Davidson offer’s a custom segment that allows owners the opportunity to
customize their bikes, this division makes up the highest number of Harley Davidson’s
sold.
• Harley Davidson has a strong marketing department, which sponsors and participates in
all major motorcycle consumer shows and rallies.
EXECUTIVE MBA

11/29/16 22
Internal Analysis
Weaknesses
• Harley Davidson does not emphasize price in its product.
• Harley Davidson has had difficulty gaining market share in some
European countries.
• Registrations for the Asia/Pacific market are decreasing.
• Facing ongoing capacity constraints.
• Only a small portion of the company's annual capital expenditures
relate to equipment, which has the sole purpose of meeting
environmental compliance obligations.
• The top Board of Directors for Harley-Davidson are all men.
• The leadership strategy council is comprised completely of vice
presidents.
• Difficult to attract and retain talented employee.
• Lack of opportunity for advancement.
• Loss of benefits.
EXECUTIVE MBA

Problems Harley Davidson Was
Facing?
• Strong Japanese competition (Honda, Yamaha, Suzuki)
• Capacity constraints led to decreased international market
share
• Due to rapid expansion, quality control suffered
• Nearly went bankrupt in the 1980s
• What are some ways that Harley Davidson could recover from
this?
• Harley Davidson created a team to improve the supply chain,
focus on quality assurance, standardize systems and processes,
and integrate directly with suppliers.
EXECUTIVE MBA

Harley Davidson’s Business Integration
Model (BI)
• People, Processes, and Technology
– People
• Restructured from decentralized organization to a
hybrid organization
– Processes
• Critical step is defining project scope
• Focused on managing expectations
• Team-led updates on project status
– Technology
• Technology decisions had to be deferred to Harley’s Architecture
Integration Group (AI)
EXECUTIVE MBA

Supply Management Strategy (SMS)
• Garry Berryman (VP of Materials Management) led initiative
• Goal was to make purchasing organization a common
enterprise-wide point of contact
• SMS intended to move the company from a site-specific,
transactional mentality to a long-term focus on supplier
relationships
• What is your view of a Vendor vs. Supplier?
• Berryman felt that a supplier had a vested interest in your
company while a vendor merely provided goods for sale and
could care less about your success.
EXECUTIVE MBA

Harley Davidson’s Suppliers
• Garry Berryman optimized Harley’s supply chain by reducing their 3,000
maintenance, repair, and operating (MRO) suppliers to three primary ones.
• The direct suppliers that provide the parts that go into making motorcycles
and accessories were consolidated from 1,000 to 350.
• Why did Harley reduce the number of suppliers when they just
implemented a system to help manage this kind of purchasing?
• By reducing the number of suppliers, Harley could focus on developing a
deeper relationship with these key suppliers by inviting them to get
involved in product design and manufacturing processes.
EXECUTIVE MBA

Supplier Information Link (SiL’K)
• Forming the team
• Mapping “as is” Processes
• Stakeholder Survey
• Mapping “to be” (future)
Processes
85% of time spent on non-strategic activities
(reviewing inventory, data entry, etc.)
EXECUTIVE MBA

Identification of strategic issues
1st strategy is customer focus: Harley-Devidson offers a wide range
of products and services, from children’s tricycles, clothing accessories and
affordable motorcycles to more higher- ended luxury motorcycles targeting
customers in all age groups.
2nd is brand loyalty: By allowing their customers to personalize and
customize their motorcycles, this strategy helps build their second strategy.
3rd Their value is: “Tell the truth. Be fair, keep your promises. Respect
the individual. Encourage intellectual curiosity.’’
4th Policies: Harley- Davidson minimized the traditional approach in
management and encouaged the “Open Door” policy throughout the company
in order to maximize and encourage overall the employee involvement. Hence,
they allow their employees to participate in the company’s key business
decisions.
EXECUTIVE MBA

Strategic Alternatives and
Recommended Strategy
Alternative 1: Reinforce strategic alliance engagement with Asian
distribution channels. (Lack of marketing experience leads to few
opportunities).
Pros: 1. Increase sales, 2. Extend international market presence enhancing brand image.
Cons: 1.Significantly huge effort and investment capital, 2. Long payback which might impact
the financial position.
Alternative2: Create more attractive capitalizing on low interest rate. (Weak
performance in US)
Pros : 1. Increase sales, 2. Sustain positive cash flow (current/ liquidity ratio), 3. Targeting
lower income market segment.
Cons: 1. Complication of reaching short/ mid-term agreement with financial institutes, 2.
Considerable marketing and media expenses.
Alternative 3: Direct the R and D optimizing the oil consuming engines.
(High rise of oil and environmental compliance).
Pros: 1. Lower environmental emissions, 2. going green initiative.
Cons: 1. Huge resources for R and D, 2. Higher cost of manufacturing.
EXECUTIVE MBA

Which one is best?
EXECUTIVE MBA

11/29/16 31
Questions
?
EXECUTIVE MBA

Harley davidson

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