Harley-Davidson was founded in 1903 in Milwaukee, Wisconsin by William Davidson, Walter Davidson, Arthur Davidson and William Harley. It began as the Harley-Davidson Motor Company and produced its first motorcycle with a small engine for a regular pedal bike. Since then, Harley-Davidson has grown to become the largest motorcycle manufacturer in the world. It faces challenges attracting new demographics and expanding globally but utilizes strategies like international expansion, new product development, and a focus on its strong brand and culture to maintain its competitive advantage.

2. Andre de Mezerville
Craig Domagala
Sonya Frederick
Eddie Stanislawski
Darrick Wesson
James Wood
GROUP TWO

3. Corporate History
Strategic Overview
Internal Analysis
External Analysis
Strategic Recommendations
Sustainable Competitive Advantage

4. William Davidson Walter Davidson Arthur Davidson William Harley
American Motorcycle Company Founded in 1903
Milwaukee,Wisconsin

5. Designed Small Engine for Use with a
Regular Pedal Bike

6. Evolution of H-D Factory
1906—Produced 50 Motorcycles
Today—Produce Over 260,000
Motorcycles
1914—
Produced
16,284
Motorcycles

7.  1907
 The Harley-Davidson Motor Company Incorporated
 1909
 Developed FirstV-Twin Powered Motorcycle
 1910
 Introduced Bar & Shield Logo
 Dealer Network of 200+ in United States
 1920’s
 Officially Largest Motorcycle Manufacturer inWorld
 2,000 Dealers in 67 Countries

8.  1953
 H-D Sole American Manufacturer of Heavyweight
Motorcycles When Indian Motorcycle Company
Went out of Business
 Late 1950’s
 Japanese Motorcycle Manufacturers Entered US
Market
 Late 1960’s
 Japanese Motorcycles Grew to 85% of Market
Share

9.  1970’s
 Purchased by American Machine & Foundry (AMF)
 Labor Strike=Lower Quality bikes
 Changed Marketing Strategy to Focus on Non-
traditional Market AlienatingTraditional
Customers
 Market share plummeted from 77.5% to 23.3%
 1981
 Purchased by Group of Senior H-D Executives

10.  1980’s
 RemarkableTurnaround of the Company
 Adopted Japanese Production Methods
 ProductivityTriad—Employee Involvement
 JIT Inventory Practices
 Statistical Operator Control (SOC)
 Marketing Strategy on Idea of Not Just Selling
Bikes, but a Lifestyle

11.  1983 Harley Owners Group (HOG) Established
 1986
 Launched Line of Motor Clothes
 Licensed Popular Brand Logo
 IPO
 1993
 Adopted Circle-based Organizational Structure

13.  1988-1995
 Annual Shipments MoreThan Doubled
 1993
 Purchased 40% Interest in Buell Motorcycle Co.
 1998 Purchased Remaining Interest in Buell
 2003 100YearAnniversary
 2008 Purchased MV Agusta Group
 Italian Motorcycle Company to Expand Presence in
Europe

14.  2008 Harley Davidson Museum Opened
 History
 Culture
 Vehicles

15.  2009 {FinancialCrisis}
 Current CEO Keith Wandell Hired
 Introduced “Delivering ResultsThrough Focus”
Long-term Business Strategy
▪ Improve Manufacturing, Product Development, Business
Operations
 Discontinued Buell
 2010
 Divested MV Agusta
 Entered India Market

16.  2013
 110th Anniversary Celebration
 Biggest Launch of New Motorcycle Models in H-D
History
 260,839 Motorcycles Sold
 Revenue $5.9 Billion ($5.6 Billion 2012)
 2014
 Stock Price (NYSE: HOG) $69.21 ($10.10 in 2009)
 Market Share 54.9%

17. 2013 2012 2011 2010 2009 2008 2007 2006
USA 696 695 706 729 758 787 788 679
Canada 69 73 74 74 74 74 76 75
Europe Region 371 371 370 364 369 381 370 354
Asia Pacific Region 271 281 274 272 254 200 194 178
Latin America Region 51 47 44 40 40 45 49 31
TOTALS 1458 1467 1468 1479 1495 1487 1477 1317

18. Defining Harley Davidson
Corporate Mission
Today
Future
Corporate Culture
Key Result Objectives
Strategic Issues

19. Abell’s
Framework
(AE #1)
Starting
Point of
Strategic
Planning

20. Who is Being Satisfied?
(Customer Group)
What is Being Satisfied?
(Customer Needs)
How are they Doing It?
(Distinctive Competencies)
Caucasian Male 25-35 Low Maintenance,
Affordable & Modern
Styling
Blackline Softail Line, Largest
Release of New Models in
2014
Caucasian Male 35+ Freedom & Raw Power,
Individualization
Heavyweight Bikes that are
HighlyCustomizable
Women Need lighter weight bikes,
Instruction about riding
New models that are easier
to handle by women-special
educational seminars
Hispanic Very Social Culture New rider group formed
called “Harlistas”
Asian Practical, Reliable, Low
Cost, Low Pollution, Low
Maintenance , Retail
Financing
Harley Financial Arm,
Watching costs more closely
(Tariffs increase prices),
Electric Bikes

21. Fulfilling dreams of personal freedom is more
than a phrase. It’s our purpose and our
passion. We bring a commitment of
exceptional customer experiences to
everything we do—from the innovation of our
products to the precision of our
manufacturing—culminating with our strong
supplier and dealer networks.
We are Harley Davidson.

22.  At Harley Davidson, we strive to create the
most comprehensive line of motorcycles that
appeal to all motorcycle enthusiasts,
positioning our products as the first choice of
every motorcycle buyer regardless of gender,
nationality or age to help us become the best
motorcycle company in the world and allow
us to maintain the largest global market
share.

23. OrganizationalValues/Norms
Technical (Difference) Social (Integration)
Organization’s Orientation
Achievement
(Open System)
Performance
(Controlled
System)
Quality Culture Creative Culture
Supportive Culture
Productive Culture

24.  The Harley-Davidson culture reflects the bold, rebellious
attitude of our products while providing opportunities for
professional growth and leadership development. We
demonstrate behaviors throughout our organization that
exemplify integrity, accountability, diversity, teamwork
and creativity. We also recognize that great companies
require great leaders to ensure a sustainable future and
strive to build leadership at every level of the company.
 Our culture includes a strong customer influence,
reminding us that our work is informed by our loyal
customers throughout the world – fulfilling their dreams
of personal freedom every minute of every day.

25.  Glassdoor.com Employee Reviews
 187 Reviews
 3.1/5 Stars
 54% of EmployeesWould Recommend
 60% Approve of CEO
 “Harley is a great brand, but the current
corporate culture is dominated by fear with
very low employee morale.” ~August 2011

26.  Independent Party Evaluation in 2012
 H-D Placed in 6th Percentile
 Needed to Change Leadership Behaviors
▪ Tied it to Compensation

27. KEY AREA OBJECTIVE MEASURE OF
PERFORMANCE
Marketing Multi-generational
Multi-cultural
Sales Data
Innovation Product Development Release of New Products
Quality Reviews
Profit EPS of $1.25 in 2015 Profit & Share Data
Human Organization Improve Employee Morale Employee Surveys
Reviews on Glassdoor.com
Financial Resources Increase Cash Reserves Liquidity Ratios
Productivity Improve Worker Productivity Meet Customer Demand
Social Responsibility Use CSR to connect with all
stakeholders
CSR Report
Physical Resources Continue Streamlining
Plants
Project Completion
Reports

28.  How to continue to get social premium $$$?
 How to satisfy the needs of the aging core
customer segment—Baby Boomers?
 How to attract new market segments?
 Younger Riders
 Women
 How to expand globally?
 How to use innovation to stave off the
competition?

29. Company Capability Profile:
Managerial Factors
Competitive Factors
Financial Factors
Technical Factors
Strengths
Weaknesses
Risks

30. MANAGERIAL FACTORS
Corporate Image
Strategic Plans & Analysis
Speed of response to Changes
Mgmt Communication & Control
Aggressiveness in Meeting
Competition
COMPETITIVE FACTORS
Product Quality & Uniqueness
Market Share
Invest. in Product Development
High Barriers for Competitors
AdvantageTaken of Market
Growth Potential
FINANCIAL FACTORS
Profitability, ROI
Capacity to Meet Demand
Price Elasticity of Demand
Stability of Costs
Degree of Leverage, Financial
Stability
TECHNICAL FACTORS
Technical & Manufacturing Skills
Economies of Scale
Newness of Plant and Equipment
Level ofTechnology Used in Prod.
Production Effectiveness and
Delivery Schedules

31.  Corporate Image
 Cult status
▪ Adventure, tradition and power
 American Icon
▪ Symbol of free-spiritedness and a verve for living life
intensely.
 High Quality
▪ Responsibility of upholding the qualities that customers
identify as the essence of Harley
 Social responsibility
▪ Focused on reducing energy use and associated
greenhouse gas emissions in its plants

32.  Use of Strategic Plans and StrategicAnalysis
 Business strategy was focus on:
▪ New product development
▪ Global expansion
▪ Demographic outreach
▪ Commitment to core customers
 Basic pillars:
▪ growth, continuous improvement, leadership development
and sustainability
 Objetive:
▪ Increase sales and expand the company's strength as one of
the most customer-centered brands in the world.

33. 65%
13%
22%
Total Market Share in the US
(Nov-2010)
Harley Davidson
Honda Motors
Others
 Market Share
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Market Share for 651+CC Motorcycle
US EuropeSource: Harley Davidson Case study

34.  Market Share
 Aging customer base
▪ Baby boomers generation (60%)
 Young riders have different preferences
▪ Heavy Models → Sports bikes and others
▪ Strong Japanese competitors produces sports bikes

35.  Investment in New-Product Development
 Focus on the needs of riders
 Think global, act local
 Improve speed to market
Grow its
customer base
Strengthen its
leadership in the
heavyweight
motorcycle
segments
Develop modern
bikes to attract
customers in
new
demographic
segments

36.  AdvantageTaken of Market Growth Potential
 Expand its presence in the international markets
▪ Europe, Latin America, Japan, China and India
▪ Markets which with rapid growth in disposable incomes and
increase in demand for luxury and foreign brands
 Strengthen its worldwide dealer network
▪ Improve communication with retail customers
▪ Provide a premium retail experience
▪ Strengthen dealer profitability

37.  Profitability
(in thousands)
Source: Annual report on form 10K (http://investor.harley-davidson.com)

38.  Price Elasticity of Demand
 Motorcycles are luxury items
 High impact during economic recessions

39.  Technical and Manufacturing Skills
 Implemented common standards through “Best
Practice Circles”
 Cost savings
 Flexibility (customer led)
 Fluent communication between R&D and
Production

40. ETOP Chart
Industry Trends
Environment
Government
External Threats
External Opportunities

41. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

42. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

43. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

44. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

45. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

46. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

47. Factors Impact of Factors X Importance of Factor = Environmental Results
Economic -6 8 -48
Political -1 1 -1
Social 10 10 100
Technological 3 3 9
Competitive -1 1 -1
Geographic 5 5 25
Note: Impact-on the relevant industry, from +10 (opportunity) to -10 (threat)
Importance-to the specific analyzation of HD, from 0 (unimportant) to 10 (very important)

49. Growing International Markets
Electric motorcycle
Global Marketing

50. Waste Reduction and Recycling
Water Reduction
Energy Consumption Reduction

52. Competition
External Changes (government, taxes)
International tariffs and duties
Lower cost competitors or imports
Product substitution

54. Porter Analysis & Business
Strategy
Miles and Snow
International Strategies
Growth Vector Analysis

55.  Differentiation of product/service
 High quality
 High customization
▪ Unique product
 Brand loyalty
▪ Harley lifestyle
 High demand

56.  Focus of market/product
 Narrow, well-defined market
 Market expansion
 Expansion through acquisition
 Expansion of product line

57.  Defender
 Domain: Narrow and pretty stable
 Growth: Slow and incremental, market extension
 CSF Metric: Sales and market share
 Success
▪ Stable pocket
▪ No R&D
▪ Advertising, create “Harley Lifestyle”

58.  Grow globally by:
 expanding into more
international markets
 Apply customer-led ideas
as well as local market
perspective into the
development of their
products
 Regional operation centers

60.  Added 118 new dealer points internationally
since 2009 – goal of 150 by this year
 2013: 36% of new motorcycles were shipped
internationally – goal of 40% by this year

61.  Regional HQ:
 U.S (Wisconsin)
 Latin America (Florida)
 Europe, Middle East and
Africa (England)
 Asia-Pacific (Singapore).
 International countries:
 experiencing growth in
disposable income.

62.  Maintain dominant
U.S market share
(50%+); look to
capture market share
in international
markets.
 Continue aiming for
“non-core
customers”

63. Existing
Market
Market penetration
Sportster
Custom
Touring
Product variants;
imitations
Customization
Value-added Parts
Product line extension
Project Livewire
Bike Accessories
Clothing Line
(Market
Choices)
Expanded
Market
Aggressive
promotion
Project Rushmore
Mrkt seg, prod
differentiation
Strong, loyal
customers, cult-like
brand
Vertical diversification
Castalloy (Wheel
supplier)
Assembly
Paint
New
Market
Market development
Female-fit
Motorcycles
Market extension
Trike
Conglomerate
diversification
Harley Davidson
Financial Services
Present products Improved products New products
(Product Choices)

64.  Continue to increase their
presence in international
markets and adapt to
consumer tastes
 Focus on the brand; improve
manufacturing and speed to
market
 Continue to invest in more
innovative products –
Project Livewire
 Target more towards “non
core” customers

66.  Resource/Capabilities-Based Model
Perspective
 VRIO Framework
▪ Value
▪ Rarity
▪ Imitation
▪ Organization

67.  Resources
 Market Share
 Brand
 Dealer network
 Capabilities
 Technological advancements
 New Market penetration

68.  Multiple Models to reach specific buyers
 Customization
 High level of Interaction between buyer and seller
 Leader inTechnology
 Large national and international bike events
dominated by Harley Davidson

69.  Strength
 “Cult status”
 Weakness
 Outsourcing parts to reduce cost
 Reemergence of Indian Motorcycles

70.  Strength
 Buyer experience
 Brand recognition
 Weakness
 Manufacturing capabilities and parts are readily
available
 Similar styling

71.  Strength
 Managements interactions with customers
 Employee dedication

72. QUESTIONS?