Harley Davidson case study

Topics: Financial ratio, Harley-Davidson, Motorcycle Pages: 13 (2425 words) Published: July 27, 2004
OVERVIEW/PROBLEM STATEMENT

The following are the problems of Harley Davidson

1. Declining market

2. Poor economic climate

3. Competition from Japanese manufacturers

4. Poor quality of products

5. Young Generation not buying the product

COMPANY PROFILE

The Davidson brothers, William D., William S., Walter and Arthur founded Harley Davidson, Inc. in 1903. In the first year, only three motor cycles were produced. In 1904 production increased to eight motorcycles. Company present office is located at Juneau Avenue in Milwaukee, USA. In 1907 the company was incorporated.

In 1965, Harley-Davidson ended family ownership with a public stock offering and then in 1969, merged with American Machine and Foundry Company (AMF). In 1981, 13 members of the Harley-Davidson management team purchased the company from AMF through a leveraged buy-out. In the early 1980s, Japanese competitors' heavyweight motorcycles created a real threat for the Harley-Davidson organization. The heavy Japanese imports to the U.S. were stopped by President Reagan's increase of imports tariff. By 1986, Harley-Davidson regained the top spot in the U.S. heavyweight motorcycle market.

Today Harley-Davidson operates in domestic and international markets. The U.S. competitors' current production and sales volumes are much lower than Harley-Davidson and do not hold a significant market share. The company's major competitors: Honda, Suzuki, Kawasaki, and Yamaha are based outside the United States. Competitor's financial and marketing resources for the international marketplace are substantially greater than those of Harley-Davidson. They also have larger worldwide revenue and are more diversified than Harley-Davidson.

Harley-Davidson products include Heavyweight Street, custom, touring and sport motorcycles, as well as motorcycle parts, accessories, apparel, and general merchandise. Harley-Davidson's two main business segments are Motorcycles/ Related Products, and Financial services. With the purpose to expand its international market, the company acquired the Buell Motorcycle Company in 2000. Buell markets and distributes Harley-Davidson products through independent dealerships in Italy. The company's financial services unit (HDFS) provides wholesale and retail financing and insurance programs to Harley-Davidson dealers and customers.

STRAGETY

Differentiation Strategy

Due to heavy competition Harley Davidson has to adopt a focused differentiation strategy to targets a segment or limited number of segments in the market with a unique product, or service features, which persuades customers that it is superior to competitor's offerings.

Prior to the management buyout in 1981, Harley was plague by quality issues, which tarnished the brand image and resulted in the company losing its position as market leader in the heavy weight motorcycle market. Post buy our, the management of Harley implemented a continuous improvement process, which increased quality dramatically, while at the same time reducing costs.

Another diversification strategy that proved to be very successful for Harley Davidson was the licensing of the Harley Davidson brand name for use on a clothing range, to be sold exclusively through the Harley dealerships. This strategy has also worked very well for Harley. It was enabled Harley Davidson to leverage their hugely successful brand and reach consumers who previously would never be thought of as consumers.

Growth Strategy

Growth strategy model provides some useful insights into the various growth strategies employed by Harley-Davidson over time, Harley-Davidson adopted a market penetration strategy that was centered on its core and somewhat narrow, range of heavy weight motorcycles. The market for this range of Harley's product had reached maturity and sales were declining

Vertical Strategy

Harley Davidson follows vertical strategy, because they manufacture their own products and market them by...
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