Institute of Social Sciences/ Bahçeşehir University, Executive MBA
Bahçeşehir University, Executive MBA
Harley-Davidson-Creating an Enduring Mystique
Course Instructor: Pınar KILIÇ
Prepared by: Bayar MOHAMMED
Invitation to Make Your Own Analysis & Conclusions:
Do you think Beal’s rejuvenation efforts could have been better handled? Support your conclusions.
My answer will takes 3 tiers:
-Detailing the history of the tough competition between Harley-Davidson Motor Co. & Japanese rivals. -Evaluating the keen & innovative approaches & efforts made by Vaughan Beals for Harley. -Final evaluation of the conditions as a whole subject.
Now before we begin evaluating the rejuvenation efforts of Vaughan Beals, we must have a look at the competition history of Harley Davidson Motor Co. with Japanese rivals before he took over.
The Japanese entered US market in 1959 with Honda being the pioneer. Honda has made deep inroads into the American motorcycle market. Honda entrenched firmly in the market of motorcycles & it has been called (Honda-Phenomenon) Honda focused mainly on the lightweight motorcycle segment as a new segment that has been went unnoticed well by Harley-Davidson. Other Japanese firms such as Yamaha, Suzuki and Kawasaki soon followed & entered to this growing market. Following the entrance of Japanese firms into the market, the demand for motorcycles grew rapidly day-by-day (Less than 400,000 motorcycles were registered in USA in 1960 & it became 960,000 in 1964 & 4 Millions by 1971) Japanese competitors offered more elegant, less noisy, better handling motorcycles with good motor-power power at lower prices. Prices were set to increase market share without regard to short-term profits Japanese firms were allocating serious amount of money on Advertising approaches. Harley executives saw no thread in the expansion of Japanese made motorcycles & they thought that these lightweight motorcycles are just (SUPPLEMENTAL) & didn’t think about a new factor in this competitive-market. In contrary Harley executives believed that they were going to bring new riders to Harley Davidson when these prospects were ready to step up to larger and more powerful motorcycles Market flooded by high quality Japanese motorcycles as a result. In 1965 as the aftermath of the Honda invasion, Harley-Davidson the company went public for the first time to raise capital after 60 years of private ownership. The company was acquired by AMF shortly after going public in 1969 After the acquisition AMF targeted Quantity against Quality! Harley-Davidson was falling down in Quality (e.g.50-60% motorcycles produced failed in Quality Control inspections, this is compared to as low as 5% of Japanese motorcycles checked) Japanese productivity was around %30 greater than Harley Davidson. By the late 1970’s the motorcycle boom was a faded memory with all manufacturers for competing for market share in a stagnant market. Harley Davidson’s market share declined by over 80 percent between 1970 and 1980.
Now we will come to the rejuvenation efforts made by Vaughan Beals for Harley-Davidson as follows:
1- He introduced the term Productivity Triad. This new approach involved:
A-Quality Circles (QCs) to increase Employee-Involvement in quality goals & improve communication between management & employees (or workers) B-Use of JIT (Just-in-Time) inventory practices – MAN (Materials-As-Needed) C-Statistical Operator Control (SOC) programs for every worker to check their own work products.
After visiting the Honda production facilities in Japan & assembly plant in Marysville, Ohio, Beals was impressed by the business-culture & the sophisticated programs devoted by them for their own management teams & workers too. He concluded that Japanese had a lot...
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