Harley davidson

05/02/23 ISTANBUL UNIVERSITY- EXECUTIVE MBA

1

Ulker Aliyeva

05/02/23 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 ?

05/02/23 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.


https://www.youtube.com/watch?v=X1NYIYd54JQ

05/02/23 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.


05/02/23 6

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.


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.


05/02/23 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.


05/02/23 9

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.


05/02/23 10

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.


05/02/23 11

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.


05/02/23 12

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.


05/02/23 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.


05/02/23 14

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.


05/02/23 15

Proposed Vision

To be recognized as the best motorcycle company in the world.


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)


General Environment

EconomicConfidence 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

TechnologicalAs 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.


LegalHarley-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.

EnvironmentalThis 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-culturalTraditionally targeted to upper middle class males. Increased demand by women for motorcycles.


05/02/23 19

External AnalysisOpportunities

• 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.


05/02/23 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.


05/02/23 21

Internal AnalysisStrengths

• 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.


05/02/23 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.


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.


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)


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.


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.


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.)


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.


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.


Which one is best?


05/02/23 31

Questions

?


Harley davidson

Business

Transcript of Harley davidson