1. 1

2. GRUP MEMBERS
HANİFE GÜNEŞ 070207020
A.SELİN SANDAL 070207015
NİLÜFER ALTIN 070207036
YASEMİN ŞİRİN 070207007
MÜMİNE ÇİN 070207043
KÜBRA UYSAL 070207042
RAŞİT ŞENOCAK 070207053
HASAN CELAL KÖK 070207029
OSMAN BAŞ 070207038
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3. CONTEXT
1 History of HarleyDavidson………………………………………………………………………………..
2 Products of Harley Davidson ……………………………………………………………………………..
2.a Tomahawk Boat………………………………………………………………………………………
2.b Men’s Roadway Leather Jacket……………………………………………………………………..
2.c Helmet…………………………………………………………………………………………………..
2.d Harley Davidson Zippo Brand Lighters……………………………………………………………
3 Vision of Harley Davidson …………………………………………………………………………………
4 Mission of Harley Davidson ……………………………………………………………………………….
4.a Mission Analaysis…………………………………………………………………………………….
5 Proposed Vision and Mission……………………………………………………………………………….
6 Intensive Strategies……………………………………………………………………………………………
6.a Market Penetration……………………………………………………………………………………..
6.b Product Development…………………………………………………………………………………
6.c Market Development………………………………………………………………………………….
7 Current Integration Strategies……………………………………………………………………………….
7.a Vertical Integration……………………………………………………………………………………….
7.b Horizantal Integration……………………………………………………………………………………
7.c Focus-Differentiation…………………………………………………………………………………….
8 Organizational Chart …………………………………………………………………………………………
9 Management……………………………………………………………………………………………………
10 Marketing………………………………………………………………………………………………………
10.a Customer Relations……………………………………………………………………………………….
10.b Promotion…………………………………………………………………………………………………
10.c Product……………………………………………………………………………………………………….
10.d Price…………………………………………………………………………………………………………
10.e Distribution…………………………………………………………………………………………………
10.f Market Share…………………………………………………………………………………………………
11 Market Segmentation…………………………………………………………………………………………….
11.a Strategic Direction in Market Segment…………………………………………………………………….
11.b Industry Environment………………………………………………………………………………………
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4. 11.c Macro Economic Environment……………………………………………………………………………….
11.d Internal Environment…………………………………………………………………………………………
12 Research and Development………………………………………………………………………………………
13.A Human Resources………………………………………………………………………………………………….
13.a Motorcycle Segment………………………………………………………………………………………………
13.b Transportation Vehicle Segment………………………………………………………………………………….
13.B Operation and Logistics……………………………………………………………………………………………
13.a Motorcycle Segment……………………………………………………………………………………………
13.b Transportation Vehicle Segment……………………………………………………………………………
14 Value Chain Analaysis………………………………………………………………………………………………
14.A Support Activities…………………………………………………………………………………………….
14.a Firms Infrastructure………………………………………………………………………………………
14.b Humen Resources Management……………………………………………………………………….
14.c Technology Development……………………………………………………………………………….
14.d Harley Davidson Technical Training……………………………………………………………….
14.e Procurument………………………………………………………………………………………………
14.B Primary Activities……………………………………………………………………………………………
14.B.a Inbound Logistics……………………………………………………………………………………..
14.B.b Outband Logistics…………………………………………………………………………………….
14.B.c Operation………………………………………………………………………………………………
15 Finacial Analaysis………………………………………………………………………………………………….
15.a Balance Sheet…………………………………………………………………………………………………
15.b Cash Flow…………………………………………………………………………………………………….
15.c Financial Ratio………………………………………………………………………………………………..
15.d Liquidity Ratio…………………………………………………………………………………………….....
15.e Growth Sales…………………………………………………………………………………………………
15.f Improving Deliquency Rates………………………………………………………………………………
15.g Stock Analaysis………………………………………………………………………………………………
15.h Recent Performance……………………………………………………………………………………………
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5. 16 External Opportunities……………………………………………………………………………………………..
17 External Threats……………………………………………………………………………………………………….
18 Competitors of Harley Davidson……………………………………………………………………………………
18.a Honda……………………………………………………………………………………………………………..
18.b Yamaha……………………………………………………………………………………………………………
18.c Bmw……………………………………………………………………………………………………………….
19 Competitive Profile (CPM) Matrix………………………………………………………………………………….
20 Key External Forces…………………………………………………………………………………………………..
20.a Economical Forces……………………………………………………………………………………………..
20.b Technological Forces…………………………………………………………………………………………
20.c Social , Culturel, Demographic and Natural Environment Forces………………………………………
20.d Political, Governmental and Legal Forces…………………………………………………………………
20.e Competitive Forces……………………………………………………………………………………………
21 External Factor Evaluation (EFE) Matrix…………………………………………………………………………
22 Internal Strenghts……………………………………………………………………………………………………
23 Internal Weaknesses…………………………………………………………………………………………………
24 Internal Factor Evaluation (IFE) Matrix……………………………………………………………………………
25 Internal Assessment/ Key Intrnal Forces…………………………………………………………………………
26 Michiel Porter’s Five Forces Analaysis………………………………………………………………………........
26.a Internal Competition…………………………………………………………………………………………..
26.b Entry………………………………………………………………………………………………………………
26.c Substitutes and Complements………………………………………………………………………………….
26.d Buyer and Supplier Power……………………………………………………………………………………..
27 SWOT Matrix…………………………………………………………………………………………………………
28 The Strategic Position and Action Evaluation (SPACE) Matrix………………………………………………..
29 Boston Consulting Group (BCG) Matrix…………………………………………………………………………..
30 Internal-External (IE) Matrix…………………………………………………………………………………………
31 Grand Strategy Matrix………………………………………………………………………………………………..
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6. 32 The Quantitive Strategic Planning (QSPM) Matrix……………………………………………………………..
33 Recommendations and Strategy Implementation…………………………………………………………………..
34 Conclusion……………………………………………………………………………………………………………..
35 Bibliography…………………………………………………………………………………………………………...
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7. EXECUTİVE SUMMARY
In this report , strategic position of Harley Davidson Inc. is analyzed .Harley
Davidson was established in 1903 and has developed year by year. Today, Harley
Davidson is the largest motorcycle manufacturing in the U.S. The company has
licensed the production and sale of T-shirts, jewelry, small leather goods, toys and
other products.
Harley Davidson’s mission and vision is explained and mission and vision of the
company is developed. The intensive strategies which the company uses are market
penetration, product development and product development. The current
integration strategies of the company are vertical integration, horizantal integration
and focus-differentation. Also, market position, market segmentation, research and
development sitiation, operation and logistics.human resources and value chain of
the company is introduced. When we look at the financial situation of the company,
revenues and income have increased every year and the company has about $1
billion in cash available and has Access to another $1 billion in credit.
Harley Davidson has strong competitors such as Honda and Yamaha. Competitive
Profile Matrix (CPM), External Factor Evaluation(EFE) Matrix, Internal Factor
Evaluation (IFE) Matrix, Strenghts-Weaknesses-Opportunities-Threats (SWOT)
Matrix, Strategic Position and Action Evaluation (SPACE) Matrix, Boston Consulting
Group (BCG) Matrix, Internal-External (IE) Matrix, Grand Strategy Matrix and
Quantitative Strategic Planning Matrix (QSPM) are shown and explained in the
report.
Harley Davidson strategies especially expand in the European and increasing their
market share and their most important strenght is customer loyalty among their
strenghties.Apart from these strategies, we believe that enter the car market which
can succeed in this markets
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8. History of Harley Davidson
1903–1981: From Birth to Maturity
1901 William S. Harley, age 21, completes a blueprint drawing of an engine
designed to fit into a bicycle.
1903 William S. Harley and 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. Arthur's brother Walter later joins their efforts. Henry Meyer of
Milwaukee, a schoolyard pal of William S. Harley and Arthur Davidson, buys one of the
1903 models directly from the founders.
1909 The six-year-old Harley-Davidson Motor Company introduces its first V-twin
powered motorcycle. With a displacement of 49.5 cubic inches, the bike produces seven
horsepower. The image of two cylinders in a 45-degree configuration would fast become
one of the most enduring icons of Harley-Davidson history. Also available for the first
time from the Motor Company are spare parts for motorcycles.
1910 The famed "Bar & Shield" logo is used for the first time. It is trademarked at the
U.S. Patent office one year later. At least seven different first place finishes are captured at
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9. races, endurance contests and hillclimbs across America. All seven winners are riding
Harley-Davidson® motorcycles.
1912 Construction begins on what will become the six story headquarters and main
factory building at Juneau Ave. in Milwaukee. A separate Parts and Accessories
Department is formed.
1914 Sidecars are made available to Harley-Davidson buyers. Clutch and brake pedals
now available on F-head singles and twins. The Motor Company formally enters
motorcycle racing this year. The first Racing Engineer is William S. Harley. Within a few
short years, team Harley-Davidson is referred to informally as the "Wrecking Crew"
because of their incredible dominance of the sport.
1915 Harley-Davidson motorcycles are now available with three speed sliding-gear
transmissions with final and primary drive on the same side.
1917 During this year, roughly one-third of all Harley-Davidson motorcycles
produced are sold to the U.S. military. The Quartermasters School, a department of
Harley-Davidson devoted to training military mechanics on Harley-Davidson
motorcycles, opens for business in July. It will later become the Service School.
1918 Almost half of all Harley-Davidson motorcycles produced are sold for use by the
U.S. military in World War I. At War's end, it is estimated that the Army used some 20,000
motorcycles in their efforts, most of which were Harley-Davidsons. One day after the
signing of the Armistice, Corporal Roy Holtz of Chippewa Falls, Wis., is the first American
to enter Germany. He is riding a Harley-Davidson.
1920 By 1920, Harley-Davidson is the largest motorcycle manufacturer in the world.
New Harley-Davidson® motorcycles can be purchased from over 2,000 dealers in 67
countries worldwide.
1928 The first Harley-Davidson two cam engine is made available to the public on the
JD series motorcycles. The bike is capable of top speeds between 85 - 100 mph.
1930 Bill Davidson, Jr. wins the Jack Pine endurance contest with 997 points of 1,000.
All individual class winners are riding Harley-Davidson® motorcycles.
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10. 1936 Harley-Davidson introduces the EL, an overhead valve, 61 cubic inch powered
bike. With increased horsepower and bold styling changes, the motorcycle quickly earns
the nickname of "Knucklehead," due to the shape of its rocker boxes. The same year, the
Motor Company introduces a 80 cubic inch side valve engine.
1943 Harley-Davidson receives the first of its four Army-Navy "E" Awards for
excellence in wartime production. Overseas, many American servicemen get their first
exposure to Harley-Davidson motorcycles, something they would not forget when they
would return stateside.
1947 Harley-Davidson begins selling what will become the classic black leather
motorcycle jacket.
1955 Harley-Davidson produces almost 60,000 WLA models during the war for
military use. World War II ends. Wasting no time, production of civilian motorcycles
resumes in November.
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.
1960 The Harley-Davidson Topper motor scooter is introduced and is the only
scooter platform the Motor Company ever produced.
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.
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11. 1981–2003: Rebirth
1981 On February 26, thirteen Harley-Davidson senior executives sign a letter of
intent to purchase Harley-Davidson Motor Company from AMF. By mid-June, the
buyback is official, and the phrase "The Eagle Soars Alone" becomes a rallying cry.
1987 Harley-Davidson is listed on the New York Stock Exchange.
Harley-Davidson makes both business and American history. H-D petitions the
International Trade Commission for early termination of the five-year tariffs on
heavyweight motorcycles. In effect, the move demonstrated confidence in H-D's ability to
compete in the marketplace.
1996 A new, state-of-the-art Parts and Accessories Distribution Center opens in
Franklin, WI. By the beginning of 1997, all inventory is moved from the original warehouse
at Juneau Avenue to the new 250,000-sq.-ft. facility.
1998 A new assembly facility opens in Manaus, Brazil, the first operations outside of
the U.S.
2001 Harley-Davidson announces expansions at the Product Development Center
(Milwaukee), as well as Tomahawk, WI, and York, PA, facilities.
2009 Harley-Davidson announces expansion into India.
2010 The XL Forty-Eight is introduced, recalling the raw, custom Sportsters of earlier
days.
Seth Enslow on a Harley-Davidson XR1200 breaks the world record for a long distance
motorcycle jump on a Harley-Davidson at 183.7 feet. Previously, the record was proudly
held by Bubba Blackwell (1999) and Evel Kneivel (1975).
11

12. History
12

13. Today
13

14. 2) PRODUCTS OF HARLEY DAVIDSON:
a)Tomahawk Boat
In 1963, Harley-Davidson purchased the Tomahawk Boat Manufacturing
Corporation to gain access to a fiberglass manufacturing source for motorcycle
components. Just two years later Tomahawk Operations became the sole supplier of
the fiberglass parts including sidecar bodies, saddlebags and windshields.
Tomahawk Operations now consists of 192,000 square feet on 96 acres.The Kaphaem
Road facility produces windshields, both assembled and non-assembled. Diversified
Products, also located at the Kaphaem Road facility, includes sidecar production,
Genuine Motor Parts & Accessories production and custom painting. Tomahawk’s
Somo Avenue facility paints, assembles and ships plastic and fiberglass components
to the York Vehicle Operations facility for assembly on Original Equipment (OE)
motorcycles. The facility is managed by the Tomahawk Leadership Group (TLG)
which consists of joint management and bargaining committee leaders. It is governed
not only by the negotiated labor agreements, but encompasses “Partnering” (shared
decision-making) principles as we.
b)Men's Roadway Leather Jacket
Midweight leather jacket with poly-mesh lining. Two front intake vents, two vertical
back exit vents, and shoulder venting. Body armor pockets at elbows and shoulders.
Mandarin collar with two-way zipper front and action back. Pre-curved sleeves with
two-way zipper cuff vents and two zipper hand-warmer pockets. Interior pocket
system with one horizontal pocket, one vertical pocket, and MP3 player pocket.
Embroidered and leather applique graphics on front and back.
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15. c)HELMET: WHEN IT COMES TO SAFETY BEAUTY CANT BE ONLY SKIN DEEP
A motorcycle helmet is not a novelty. Your helmet is a serious piece of
safety gear, and should be carefully selected. While we strive to make
Harley-Davidson helmets great looking, our primary concern is the
protection they provide our riders. Whether you’ve always worn a helmet
or wearing one is new to you, here are some basics you need to know in
order to optimize your safety and comfort on the road
d)Harley Davidson Zippo Brand Lighters
Harley Davidson Zippo Lighters are almost as popular as the motorcycle! These lighters
are not only popular with bikers but with collectors as well. Harley Davidson has been
producing top quality motorcycles and merchandise for many years. The motorcycles are
known for all the fine details put onto each one making them unique!
The Harley Davidson Zippo Lighters have that same detail engraved on them! That's
why in the 1990's Harley Davidson Zippos became a licensed product. Harley Davidson
Zippo Lighters are available for women too! That's right ladies there are a wide variety of
15

16. Zippos for you to choose from too! Harley Davidson is a company based on integrity and
design! These Harley Davidson Zippo Lighters are no exception. Harley Davidson Zippo
Lighters.
3)VISION OF HARLEY DAVIDSON
“We build strong, skilled and sustainable communities where we work. With our
employees and dealers, we help fulfill dreams through partnerships with charitable
organizations.”
“We fullfill dreams inspired by the many roads of the world by providing remarkable
motorcycles and exraordinary customer experiences .We fuel the passion for freedom in
our customers to Express their own identity.”
4)MISSION STATEMENT
Our diversity mission is to foster a culture that integrates diversity and inclusion into all
aspects of the business in order to further fullfill dreams through the experiences of
motorcycling.
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17. a) Mission Analysis
COMPONENTS YES/NO
CUSTOMERS YES
PRODUCTS AND YES
SERVICES
MARKETS YES
CONCERN FOR YES
SURVIVAL
TECHNOLOGY NO
PHILOSOPHY YES
SELF CONCEPT YES
CONCERN FOR PUBLIC YES
IMAGE
CONCERN FOR YES
EMPLOYEES
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18. 5)Proposed Vision
“Always be competitive and continuously improving our customer
satisfaction,increasing dynamic, diverse and global market.”The best quality
motorcycle,motorcycle products and financial services will be provided world wide is
the commitment of Harley Davidson.The total team effort of Harley Davidson
employees is devoted to fullfilling dreams of customers and we believe there is not a
motorcycle riding experience like Harley Davidson.
5)Proposed Mission
“Constantly renewing ourselves and offer our customers the best motorcycle experience
without compromising the quality.To be branded as the best motorcycle available in
the world.”
6) INTENSIVE STRATEGIES
a) MARKET PENETRATION
Get some more market share from the existing market, like U.S,U.K, and Japan etc through
more marketing techniques likeadvertising. Harley-Davidson has a good brand
name so it’s easyfor them to eat up the competitor market share if they canprovide
some more customer benefit.
Competition is high in this segment mostly in U.S so marketpenetration can be a
good choice for the company.
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19. Expand the HOG (Harley Owners Group) to Asian countries, if thecompany can
provide the customer satisfaction that they areproviding to the U.S customers to the
Asian customers they canincrease the sales.
b) PRODUCT DEVELOPMENT
Younger generation and female are now coming to this segmentso expand the
motor cycle segments to younger generation andfemales.
In Europe they can increase or expand the Buell’s market shareby introducing new
motorcycles.
c) MARKET DEVELOPMENT
Harley-Davidson can bring in their vehicle to Asian countries likeIndia and
China, because these countries have a high populationand the market potential is
also high.
The cost to bring in the old vehicles (old product) to India is somuch difficult
because there are so much environmental laws arethere which won’t allow that type
of vehicles to come to India,and its difficult that taxes and levis are high in India so
startingnew plant in India can solve this problem. Negotiations with theGovernment
can solve these problems
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20. 7)Harley Davidson’s Current Integration Strategies
a)Vertical Integration
Harley-Davidson uses both backward and forward integration. More than 750
suppliers of goods and services are used in the design and manufacture of
motorcycles, parts and accessories. The control of inputs is a necessary part of just-in-
time manufacturing and is why Harley-Davidson has been backward integrating to
maintain control over the quality of suppliers.
The channels of distribution are also an important part of any manufacturing
company and it is for this reason that Harley owns most of its distributors. In
addition to distributing completed motorcycles throughout the world, Harley-
Davidson is responsible for the delivery of parts and accessories.
b) Horizontal Diversification
Harley-Davidson has acquired Buell Motorcycles and Eaglemark Financial
Services, inc. in order to provide new product lines for their customers. Buell was
acquired in order to be able to provide customers with a V-twin powered Sport
motorcycle. This type of motorcycle has become increasingly popular with the
younger and European riders.
Harley-Davidson also owns Eaglemark Financing. Eaglemark provides
motorcycle financing, motorcycle casualty insurance and extended service contracts
for Harley-Davidson and Buell motorcycles. They also issue the Harley-Davidson
Chrome VISA Card, allowing riders and customers to show their brand loyalty.
c) Focus/Differentiation
Harley-Davidson s business level strategy is Focus/Differentiation. They focus on
heavyweight motorcycles and differentiate on the basis of quality and brand
recognition.
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21. ORGANIZATIONAL CHART
CEO
Jeffrey
Bleustein
Directors
Directors
George Miles
Judson Green
Director
Directors
Director Richard Beattie
Directors Norman
Lineanber Jochen Zeits
James Norling
CFO Marketing Manufactiring Legal Strategy Human Reource Motor
John Olin MHG Donal James John Anderson Barry Allen Martha Brooks
Tresurer Communication
DT JB
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22. 9)MANAGEMENT
Excellent Corporate Governance has been a long standing business practice at Harley-
Davidson, because it makes good business sense. The Harley-Davidson Management and
Board of Directors is composed of accomplished leaders from a range of industries who
meet regularly to review Company objectives and plan for future growth. These
individuals draw on their diverse backgrounds and experiences. They are proud Harley-
Davidson enthusiasts, and they work to ensure that the decisions made by Harley-
Davidson promote fairness, financial transparency and accountability to all our
shareholders.
Jeffrey Bleustein
(Chairman and CEO)
In December 1998, Mr. Bleustein was elected Chairman of the Board of the Harley
Davidson, Inc. He has served as President and Chief Executive Officer of the Company
and Chief Executive Officer of the Motor Company since June 1997. Mr. Bleustein served
as President and Chief Operating Officer of the Motor Company from 1993 to May 2001.
He was Executive Vice President of the Company from 1991 to June 1997. He is also a
director of Brunswick Corporation.
John Hevey
(President and COO of Buell Motorcycle Company )
Mr. Hevey became the President and Chief Operating Officer of Buell Motorcycle
Company in January 2001 prior to that he served as Vice President, General Manager
Asia/Pacific and Latin America Regions of the Motor Company since January 1998. 6
From June 1997 to December 1997, Mr. Hevey served as General Manager Asia/Pacific and
Latin America of the Motor Company.
Donna Zarcone
(President and COO, Harley-Davidson Financial Services, Inc. )
Ms. Zarcone has served as President and Chief Operating Officer of Harley Davidson
Financial Service since August 1998. From June 1994 to August 1998, Ms. Zarcone served
as Vice President and Chief Financial Officer of Harley Davidson Financial Service.
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23. James McCaslin
President and COO, Harley-Davidson Motor Company.
Mr. McCaslin joined Harley-Davidson Motor Company in 1992 as Vice President and
General Manager, York Operations. He was appointed Vice President, Continuous
Improvement in 1997. In 1999, he became Vice President, Dealer Services and in 2001 he
was named President and COO of Harley-Davidson Motor Company. He has a Bachelor
of Science degree in Industrial Engineering from General Motors Institute and a Master of
Science in Industrial Engineering from Virginia Polytech. He also attended the Advanced
Management program at Harvard University.
Major Holders
The Major insider and institutional holders of Harley Davidson Inc. is depicted in the table
below:
BREAKDOWN
% of Shares Held by All Insider and 5% Owners: 0%
% of Shares Held by Institutional & Mutual Fund Owners: 72%
% of Float Held by Institutional & Mutual Fund Owners: 72%
Number of Institutions Holding Shares: 10
23

24. 10)MARKETING
Brand loyalty for Harley-Davidson is emotional for management and the customers.
Harley promotes a mystique appearance, individualism, the feeling of riding free, and
the pride of owning a legend. With Harley, you can live out your fantasies, as well as
experience camaraderie with fellow bikers (the thing from Scott). Harley-Davidson has
been trying to increase brand recognition among the non-riding public and provide a
wide range of products by licensing its trademark "Harley-Davidson-Registered
Trademark"(Wheelen). Harley-Davidson currently has licensed the production and sale
of a broad range of items, including clothing, jewelry, small leather goods and
numerous other products, and is expanding its licensing activity in the toy category.
Licensing has also been an effective means of enhancing Harley-Davidson's image.
Harley-Davidson s motorcycles are sold through a network of 1,065 dealers
worldwide. Harley-Davidson's basic channel of domestic distribution consists of
approximately 600 independently owned full-service dealerships. Approximately 75%
of the dealerships sell Harley-Davidson motorcycles exclusively. All dealerships carry
Harley-Davidson replacement parts, after market accessories, and perform servicing of
Harley-Davidson motorcycle products. Marketing efforts are divided among dealer
promotions, customer events, magazine, public relations, and cooperative programs
with Harley-Davidson dealers (Financial Web). They own 54 percent of the market share
in the USA, 16 percent in Japan, 10 percent in Europe, and 38 percent in Australia. The
foreign markets could be larger, but the company has an agreement with American
dealers not to sell more than 30 percent of the bikes overseas, if the domestic demand is
not met. The dealers are considered to be business partners and the headquarters plays
an active role in developing programs, financing improvements, implementing support
and management consultants. Harley has developed a very effective marketing strategy,
but it is the responsibility of manufacturing to produce high quality and reliable
motorcycles.
When a person buys a Harley-Davidson motorcycle, they receive a free 1-year
membership to the Harley Owners Group (HOG), which was developed in 1983 as a
program to keep people active with their Harley. HOG also keeps the company close to
its customers. HOG has 295,000 worldwide members, 900 local chapters and is the
largest company-sponsored motorcycle enthusiast group. They conduct four US
national rallies, two touring rallies and 44 state rallies. These rallies are the primary
24

25. promotional tool for Harley-Davidson by improving customer relations and are an
excellent way to showcase and demonstrate new products.
Harley-Davidson is not able to compete with the foreign competitors in the area of
price. Harley-Davidson has developed a strategy of value over price. Harley-Davidson
was careful not to exceed demand in production of their motorcycles. Sometimes,
people must wait six to eighteen months for a new motorcycle. By not being able to meet
demand, a must-have attitude has developed by many of the customers, and in fact the
price for a year-old Harley is 25% to 30% higher than a new one.
Harley-Davidson uses the Internet and their website to provide complete
information on the company, the products, and on regional and national events. During
1996, 1995, and 1994, Harley-Davidson had domestic marketing, selling, and advertising
expenses of approximately $75.4 million, $71.5 million, and $65.6 million, respectively .
a)Customer Relations
When a person buys a Harley-Davidson motorcycle, they receive a free 1-year
membership to the Harley Owners Group (HOG), which was developed in 1983
as a program to keep people active with their Harley. Simultaneously, it keeps
the company close to its customer. HOG has 295,000 worldwide members, 900
local chapters and is the largest company-sponsored motorcycle enthusiast
group. They conduct four US national rallies, two touring rallies and 44 state
rallies. These rallies encourage people to use their motorcycles and to share in
the excitement of riding. The people are given demonstration rides, have the
opportunity to ask questions, register their bikes and buy merchandise.
According to Michael D. Keefe, director of HOG, these rallies are considered
"more like customer bonding. If people use the motorcycle, they'll stay involved"
(Berry, 104 ). " What the Harley management crew, who are masters of marketing, do
well is listen to their customers. The result is that Harley cannot keep up with demand at
current production levels" (Croghan 31). Company executives learn from their
customers by maintaining a database to track consumer desires. Company
officers spend almost every weekend from April through October at motorcycle
events and dealerships accumulating this information.
25

26. b)Promotion
The primary promotional tool for Harley-Davidson motorcycles are the HOG
activities. Not only does it serves as a customer relations device, but as a way to
showcase and demonstrate new products. As discussed in the image section,
Harley develops a strong impression within consumers. In 1983, the company
developed a trademark licensing program which provides income for dealers
and the factory while expanding the total Harley experience. The company
program put a stop to bootlegged Harley Davidson merchandise and offered
priceless advertising.
Harley has capitalized on the fact its product/image is chic. There are
numerous examples of fashion models draped over the bikes and wearing
company T-shirts. The company is starting to advertise in magazines geared to
the general public. Twice a year, a Fashions and Collectibles catalog is produced
with various Harley merchandise. Clothes sold in stores such as Bloomingdales
and J.C. Penny exposes Harley-Davidson to people who may not have thought
about visiting a dealership. Another marketing strategy, Harley-Davidson Cafes,
have been opened in or near many dealerships to lure people into the
showroom. In fact, the Harley-Davidson Cafe in New York City won one of the
Restaurant and Institutions Interior Design Awards for its American appearance.
Also, Harley-Davidson's advertising techniques are so successful they were one
of the finalists of the Kelly Award for advertising. The company is able to
promote the sale of its motorcycles by the financial services offered by
Eagelmark, a wholly owned subsidiary. The dealerships are becoming a one stop
shop for bikes, accessories, clothing and financing.
c)Product
Harley found its strength was in the heavyweight division. They also
identified and exploited mini niches, such as customized, touring, sport/touring
and sport/26treet motorcycles, in the heavyweight end of the market. When
Harley-Davidson was formed, it only offered one color of motorcycle – gray and
three basic styles. The company learned it needed to give the customers a choice
and now offers a variety of models, including Sportsters, Super Glides, Low
Riders, Softails, Sport Glides, Tour Glides and Electra Glides, in numerous vivid
colors. Many of these models and changes were developed when Harley realized
their customers were customizing the bikes and none of the revenue from the
work was going to the company. When a style is changed or developed, Harley
always develops it around their signature image to make sure that the product is
not only a high quality piece of equipment but is also charismatic.
26

27. d)Price
Harley-Davidson quickly learned it could not compete with the foreign
manufacturers on cost. Not only did Honda have a low priced product, it was
able to defeat Harley in advertising 40-1. Therefore, Harley developed a strategy
of value over price. This was created through the development of mini-niches
and the heavy construction of the parts. Japanese manufacturers used plastic
while Harley used steel, which is able to be rebuilt and rebore. Harley was
careful not to exceed demand in production of their motorcycles. Currently,
people must wait six to eighteen months for a new motorcycle and the price for a
year-old Harley is 25% to 30% higher than a new one. By not being able to meet
demands, an attitude of must-have has developed. Therefore, Harley has plans to
double capacity to 200,000 motorcycles.
e)Distribution
Harley-Davidson motorcycles are sold by 1,065 dealers worldwide. The
company owns 54 percent of the market share in the USA, 16 percent in Japan, 10
percent in Europe, and 38 percent in Australia. The foreign markets could be
larger, but the company has an agreement with American dealers not to sell
more than 30 percent of the bikes overseas, if the domestic demand is not met.
The company implemented a program to concentrate on helping its dealers
develop the up-to-date business skills they need to sell motorcycles more
effectively. The headquarters sponsored training programs are dubbed "Harley-
Davidson University". The dealers are considered to be business partners and
the headquarters plays an active role in developing programs, financing
improvements, implementing support and management consultants. The dealers
also invest their own money into these programs which allows them to feel like
apart of the company. Harley-Davidson treats the dealers not only as partners,
but also as customers. Harley has developed a very effective marketing strategy,
but it is the responsibility of manufacturing to produce high quality and reliable
motorcycles.
27

28. f) Market share
For the last 15 years, the Company has led the industry in domestic (United
States) unit sales of heavyweight motorcycles. Competition in the motorcycle industry
consists of only a handful of producers worldwide. The Japanese producers Honda,
Yamaha, Kawasaki, and Suzuki are producing a full line of motorcycles ranging from
scooters to heavyweights, and together control the largest share of the market. Their wide
product line though has also created some customer complaints to them (especially true
for Honda and Kawasaki) for low quality service. This significantly decreased their
market shares. Japanese companies' success began with copying other products, but
evolved to depend on innovative designs and technology. Harley Davidson is producing
heavyweight motorcycles emphasizing good quality product and after sales service,
thereby building up brand loyalty. Honda is the largest company in terms of size,
financial backing, and reputation. It is offering the widest selection of styles, classes and
sizes within the heavyweight category. This wide product line hurts Honda since
salespeople have limited knowledge of each product. Kawasaki's products include a full
line of motorcycles, all terrain vehicles, jet skis and other. It is the leader in super bikes
manufacturing but US legislation is limiting the number of sports bikes to be imported
because of safety reasons. Yamaha produces Harley clones but lacks Harley's image.
Being a market follower, Yamaha is to face many problems. BMW is famous of producing
quality products but its high prices hold it from expanding sales. Although motorcycles
are sold internationally, 3 main geographic markets comprise the bulk of motorcycle sales
North America, Asia, and Europe. The largest is the NorthAmerican Market (USA and
Canada account for about 60% of this market) accounting for 60% of worldwide
motorcycle sales. With the baby generation aging, opportunities exist for the penetration
of new markets. The Japanese market accounting for a great chunk of the Asian Market is
an untapped one for foreign manufacturers. Government regulations and trade policies
make it difficult for foreign manufacturers to enter though. Most Asians consider
motorcycles as a basic means of transportation. Major target areas include China, Korea,
Taiwan and Vietnam. The European Market is another market with great potentials since
Europeans have a higher disposable income and enjoy a higher standard of living. Eastern
Europe is not offering a good deal mainly because of its unstable political and economic
environment. To succeed in these markets, firms are to modify products to meet local
needs, provide after sales service, expand distribution networks, create strong customer.
28

29. 11) MARKET SEGMENTETION
“We fulfill dreams through the experience of motorcycling, by providing to
motorcyclists and to the general public an expanding line of motorcycles and
branded products and services in selected market segments”, Harley-Davidson Inc.
mission states. Harley-Davidson Inc. is a company that has survived through the
years having to face different problems such as internationalization, foreign
competence and financial problems. But during the 90's Harley-Davidson Inc. has
been able to use its outstanding products and strong brand name to rebuild itself as a
flexible and modern company able to compete against bigger makers and succeed.
Harley-Davidson Inc. proudly produces high quality, unique style heavyweight
motorbikes and is the reference point in its segment. Harley-Davidson Inc. also
commercializes parts, accessories and financial services to complement its main
production line: Motorcycles.
a)STRATEGIC DIRECTION ING MARKET SEGMENT
Harley-Davidson Inc. designs, manufactures and markets heavyweight motorcycles
(engine displacement of 851 c.c. and above), parts, accessories, collectibles and riding
apparel. Harley-Davidson Inc. also provides through Harley-Davidson Financial
Services, named Eaglemark Financial Services, financing services programs to
dealers and retail customers. Harley-Davidson Inc. mission statement says, “We
fulfill dreams through the experience of motorcycling, by providing to motorcyclists
and to the general public an expanding line of motorcycles and branded products
and services in selected market segments”. The objectives are; keeping and
increasing demand with a goal of over 200,000 motorbikes per year by 2003,
continuing the level of high quality products Harley-Davidson Inc. makes, improve
the information system network, be a high performance company financially and
establishing Harley-Davidson Inc. as a pioneer in co-determination practices.
Harley-Davidson Inc. will try to achieve this goals by paying “ vigorous attention to
the fundamentals: product development, innovative marketing, and state-of-the-art
manufacturing strategies” (Jeffrey L. Bleustein, Harley-Davidson Inc. CEO)
29

30. b)INDUSTRY ENVIRONMENT
Harley-Davidson Inc. enjoys a current market share of 48.3% of the super
heavyweight motorcycle segment in the U.S. in 1997. In 1999 Harley-Davidson Inc.
grew a 14.3 % against a 13.8% of the worldwide growth in heavyweight registrations.
The existing competitors are the powerful Japanese makers Honda, Yamaha,
Kawasaki and Suzuki. Germany's BMW also competes in this segment. In the last
years another American company entered the market; Polaris, the snow bikes maker,
has recently entered the market. While the Japanese makers cover all the motorbikes
segments, BMW, Polaris and Harley-Davidson Inc. among with some other minor
European makers such as Italy's Ducati and Guzzi and Britain's Norton compete
exclusively in the heavyweight segment.
Barriers to entry the motorbikes market are characterized by the high technology,
mass production and low prices in the lightweight segment. That is an atomized
market where the Japanese makers own the biggest market share against other
strong European competitors, especially Italians, such as Aprilia, Piaggio. Other
competitors are the Chezk's Husqvarna and the Spanish Derby. The heavyweight
and super-heavyweight segments are characterized by state of the art manufacturing
and customized bikes, where brand loyalty and strong image is a barrier for other
makers than the classic Harley-Davidson Inc. and BMW, just as for the super car
segment Ferrari and Porsche are the reference in the market. On the other hand the
high price/ high margin of this segment makes it likely to the powerful Japanese
brands.
Natural substitutes of heavy and super heavyweight motorbikes are medium and
lightweight motorcycles, mopeds scooters and as a meaning of transportation cars,
trucks, SUV's, public transportation and bikes. Both suppliers and distributors have
low impact in this market because of the atomized of the number of suppliers and
the brand loyalty of distributors/dealers.
c)MACROECONOMIC ENVIRONMENT
Harley-Davidson Inc. is currently licensing its name worldwide as a mean of
advertise and to create a sense of strong brand name even in markets where it has no
presence getting and income from about $ 27 million in 1997 to $ 114 million in 1999
on licensed merchandise. This show the effort Harley-Davidson Inc. is making in
finding new incomes and new promoting ways of creating a strong brand name,
worldwide recognize.
30

31. There are some advantages motorbikes have over cars that have to be considering as
a macroeconomic advantage. Motorbikes are cheaper to buy and maintain, consume
less gas and are highly miserable on heavy traffic. On the other hand riders can only
carry one passenger, less luggage and are very weather sensitive. That is why
motorbikes tends to be a recreational vehicle and that is why it is subjected to
decreasing demand during recession periods. We have to add government
regulations (such as the mandatory use of helmets) that are subject to reduce the
demand of motorbikes.
d)INTERNAL ENVIRONMENT
Harley-Davidson Inc. financial strengths are various. First of all shareholders equity,
which has grow from $ 662,720 in 1996 to $ 1,029,911 in 1998. The earning per
common share have been growing since 1995: .74 in 1995, 1.09 in 96, 1.13 in 97 and
1.38 in 98. That shows that Harley-Davidson Inc. is an attractive company to invest
in. Operating margin has grown from 15.1% of revenue in '97 to 15.7 % in '98. Net
sales are growing from $1,350,466 in 1995 to 2,063,956 in 1998, with an increase in
every year. Finance debt has remained constant in '97 and '98 with $280,00.
Marketing objectives are continuing offering diverse services, giving Harley-
Davidson Inc. a unique style, trying to attract the new generations. Its main strategy
is to show to potential customers that Harley-Davidson Inc. image is no longer
associated to “hell's Angels” but to liberal workers as lawyers and doctors. The
strong brand loyalty and the HOG's, Harley Owners Groups make Harley-Davidson
Inc. a company that try to keep their current customers by showing them how
enjoyable owing a Harley is and providing all kind of services to the to keep them
within the Harley Family.
The “Outlaw” image of the Harley-Davidson still exists and there are people who are
reluctant to acquire a Harley-Davidson because of that. The limited niche in which
Harley-Davidson Inc. competes is also a problem. Women and people who looks for
smaller bikes are not part of Harley-Davidson Inc. customers.
31

32. 12)Research and Development
Motorcycle manufactures must utilize technology in developing their product as
well as in the process of manufacturing them. More powerful motors and lighter,
stronger structural components led to an increase in performance, while new brake
and suspension systems help to make riding safer. Technology also plays an
important part in the manufacture and distribution of motorcycles. Computer
programs allow designs to be tested in a virtual environment without having to pay
for expensive prototypes. Computers are also used in manufacturing, distribution
and delivery systems. Motorcycle manufactures must use all available technology
resources to be successful.
Technology has been put to use throughout Harley-Davidson in order to design
and produce the finest motorcycle possible. The Willie G. Davidson Product
Development Center (PDC) was opened to provide research and development
facilities for product development. Employees from various functional units within
the organization meet regularly with material suppliers to come up with new designs
and processes. The PDC has been responsible for the successful launch of many new
product innovations. The research and development teams are constantly working to
find ways to make new motors with more power and durability. Harley-Davidson
has several upgrade performance packages that were designed, tested, and perfected
at PDC.
Harley-Davidson technology is also being incorporated into Buell motorcycles.
These motorcycles combine cutting-edge performance with the sport motorcycle
design that has become so popular with the young riders throughout the world.
32

33. 13.A) HUMAN RESOURCES
a) Motorcycle Segment
In order to survive in the competitive motorcycle industry and to continue to
strive toward their commitment to quality improvement and production efficiencies,
Harley-Davidson s management realized they needed to foster a perpetual learning
and improving organization. The management believes that open communication
between all levels of employees is essential to the success of the organization. In
order to foster an organizational environment made up of employees who share the
same vision and values as the company, Harley saw that it was necessary to
communicate the company s high moral values, and educate the employees about
the whole business environment. This quest for incorporating the company s vision
and high moral values into the organizational structure and expecting the employees
to believe in and carryout this same vision and moral values, could have been
extremely difficult since Harley s workers are unionized. However, Harley s
relationship with the unions is excellent. Both the company and the unions have
stuck by each other during good and bad times. Because of this, the unions trust
Harley s management and realize that their efforts toward continuous improvement
and quality consciousness are in the best interest of the employees (Vroom, Vroom).
Collective bargaining agreements between the company and the unions are expected
to expire , but company and union relations are strong and there are no concerns
about future agreements.
b)Transportation Vehicles Segment
Discussion of human resources and employee relations, within the transportation
vehicle segment is limited. The segment employs approximately 2,400 people. The
employees have no union representation and there is no discussion of any future
efforts to unionize. The Holiday Rambler segment is committed to the continuous
training and skills improvement of its current workforce, as is evident by the
company s requirement that manufacturing employees maintain the flexibility to
work on the production of any of its line of vehicles. Part of each employee s
compensation package consists of production group incentives. These incentives
allow an employee to increase their total compensation by meeting production goals
and quality standards.
33

34. 13.B)OPERATION and LOGISTICS
a)Motorcycle Segment
Since Harley-Davidson s dramatic turn around in 1985, the company has been
continuously committed to achieving low cost efficiencies without sacrificing quality,
and maintaining close relations with suppliers, customers, and distributors. Further
evidence of this commitment exists in Harley s formal written operating policy,
which is as follows:
1. Foster a retail customer satisfaction culture throughout the organization.
2. Enhance two-way customer communications.
3. Offer choices of higher quality, lower complexity products.
4. Improve control and support of distribution channels by strengthening
partnerships with dealers.
Demand for Harley-Davidson motorcycles has been so great, that the company is
unable to keep up with customer orders through its existing manufacturing facilities.
Because of this, the company recently adopted a comprehensive motorcycle
manufacturing strategy, that is designed for, among other things, to increase their
production rate to 100,000-units-per-year by 1996. This strategy called was designed
to reach the new production rate goal without expanding existing manufacturing
facilities. Harley implemented a number of key operating strategies in order to meet
this new production goal and further their commitment to satisfying customers
through quality products.
Harley-Davidson realized that in order to increase production efficiencies,
improve quality, and meet their production goal, their workforce needed some
additional training. A tremendous amount of time, effort, and resources were
expended to train the manufacturing workforces in analytical problem solving
techniques, and statistical quality control methods in order to enhance the quality of
their motorcycles and increase efficiencies.
Furthermore, the company adopted just-in-time inventory principles to minimize
inventories of raw materials and work in process. By forming close partnership like
alliances with a few quality conscious suppliers, Harley has been able to successfully
implement the just-in-time inventory system. Harley frequently holds in-house
training sessions, and plant evaluations with its key suppliers to ensure that
suppliers share the same commitment to quality and production efficiencies. Overall,
the new system has allowed Harley to react quicker to engineering design changes,
quality improvements, and marketing demands within its existing manufacturing
34

35. facilities. Although the close relationships with suppliers, and reliance with only a
few key suppliers has been successful so far, there is a risk of significant
interruptions in production if a particular supplier failed to provide the needed
materials, or ceased operations. This gives the suppliers a relatively large amount of
bargaining power, and is something Harley should be keenly aware of.
Harley began implementing the aforementioned strategies and estimated that
they would be able to reach their production goal , a full year ahead of schedule. Not
only did they beat their estimated time for the new production goal, they went on to
exceed the previous goal by producing 115,000 units-per-year .
b)Transportation Vehicle Segment
Harley-Davidson s transportation vehicles segment, Holiday Rambler, principally
manufacturers recreational vehicles such as motor homes, travel trailers, and
specialized commercial vehicles. These products are built using an assembly line
process utilizing specialized fabricating and assembly equipment designed and built
by Holiday Rambler. The company believes that its commitment to efficient
manufacturing systems and utilization of the latest technological advancements
enable it to produce high quality products.
A number of the secondary plastic component parts, used in the production of
motor homes and travel trailers are actually produced by Holiday Rambler.
However, principle raw materials such as, aluminum, plywood, fiberglass, and
chassis are purchased from third party suppliers. Automobile and truck
manufacturers such as Ford and Chevrolet provide the chassis.
The assembly lines, manufacturing processes, and equipment used to make the
recreational vehicles are all interchangeable. This allows the company to utilize the
same facilities to produce its complete line of motor homes, travel trailers, and
specialty commercial vehicles. Employee skills are applicable to the production of
either type of vehicle. This allows a smooth transition from one process to the next
35

36. 14)VALUE CHAIN ANALYSIS
A-)SUPPORT ACTIVITIES:
a-)Firms Infrastructure:
Seeking to standardize on a single virtualization platform as it migrated resources
into its new datacenter, Harley-Davidson recently upgraded its virtualization
environment to VMwarev Sphere 4 Enterprise Plus within six weeks. By doing so,
Harley-Davidson has increased the overall efficiency of its virtual infrastructure,
enabling the IT organization to redeploy more than one-third of its resources to other
high-value projects.
During the upgrade, Harley-Davidson relied heavily on VMware Storage vMotion
to perform live migration of virtual machine disk files across storage arrays with no
interruption in service or disruption to the company’s business. The company also
used VMware Host Profiles to standardize and simplify the way it configures and
manages VMware ESX hosts throughout the company.
Today, Harley-Davidson has virtualized 67 percent of its global technology
infrastructure,running 660 virtual machines on 45 ESX hosts worldwide. More than
60 percent of these virtual machines are used in production, and 20 percent of those
are runningbusiness-critical applications, including SAP and PeopleSoft solutions for
financialservices. Even the Harley-Davidson.com Web site runs entirely on virtual
machines. Harley-Davidson’s IT team is helping to control costs by deploying
resources more conservatively and then increasing allocation on the fly using
VMware Hot Add. Similarly, Harley-Davidson employs VMware vStorage Thin
Provisioning to over-allocate its 65 terabytes of storage, further reducing hardware
costs. Harley-Davidson aims to save even more money by using VMware vSphere
capabilities such as VMware Distributed Power Management (DPM) and VMware
Distributed Resource Scheduler (DRS) to save power consumed by ESX hosts when
they are not operating at maximum capacity.
36

37. b-)Human Resource Management:
Harley-Davidson , often abbreviated H-D or Harley, is an American motorcycle
manufacturer. Founded in Milwaukee, Wisconsin, during the first decade of the 20th
century, it was one of two major American motorcycle manufacturers to survive the
Great Depression.Harley-Davidson also survived a period of poor quality control
and competition from Japanese manufacturers.
The company sells heavyweight motorcycles designed for cruising on the
highway. Harley-Davidson motorcycles (popularly known as "Harleys") have a
distinctive design and exhaust note. They are especially noted for the tradition of
heavy customization that gave rise to the chopper style of motorcycle. Except for the
modern VRSC model family, current Harley-Davidson motorcycles reflect the styles
of classic Harley designs. Harley-Davidson's attempts to establish itself in the light
motorcycle market have met with limited success and have largely been abandoned s
sale of its Italian Aermacchi subsidiary.
Harley-Davidson sustains a loyal brand community which keeps active through
clubs, events, and a museum. Licensing of the Harley-Davidson logo accounts for
almost 5% of the company's net revenue.
By means of effectively managing HRM, organizations can gain a competitive
advantage over their competitors. Competitive advantage, in brief, is the superior
marketplace position relative to its competition through cost leadership and product
differentiation , Cost leadership is achieved when organizations provides same
service or product as its competitors at a lower cost perhaps through the use of
technology, more efficient methods and cut overhead costs. When this service or
product is preferred by the consumers to bur, then occurs product differentiation.
HRM practices can be an important source of competitive advantage by means of the
creation of both cost leadership and product differentiation. There are two paths into
which HRM is linked with competitive advantage. On the one hand, the direct path
wherein HRM-related costs comprise a significant portion of organizational expenses
and doing best in this area provides financial advantage.
On the other, the indirect path wherein in between HRM practices and
competitive advantage there is employee- and organization-centered outcomes.
HRM practices are centered on achieving high levels of competence, motivation and
work-related attitudes resulting to output, employee retention, legal compliance and
37

38. company reputation or image. The premise is that HRM practices are less susceptible
to imitation and thus the competitive advantage gained through this is more
sustainable. To wit, organizations are very particularly and are increasingly aware of
the importance of protecting knowledge and intelligence. Even if such practices have
been pirated, the impact would not be very acceptable.
Where the organization does its own printed advertising it is useful if it has some
identifying logo as its trade mark for rapid attraction and it must take care not to
offend the sex, race, etc. antidiscrimination legislation either directly or indirectly.
The form on which the applicant is to apply (personal appearance, letter of
application, completion of a form) will vary according to the posts vacant and
numbers to be recruited.
It is very desirable in many jobs that claim about experience and statements about
qualifications are thoroughly checked and that applicants unfailingly complete a
health questionnaire (the latter is not necessarily injurious to the applicant’s chance
of being appointed as firms are required to employ a percentage of disabled people).
Before letters of appointment are sent any doubts about medical fitness or capacity
(in employments where hygiene considerations are dominant) should be resolved by
requiring applicants to attend a medical examination. This is especially so where, as
for example in the case of apprentices, the recruitment is for a contractual period or
involves the firm in training costs.
Interviewing can be carried out by individuals (e.g. supervisor or departmental
manager), by panels of interviewers or in the form of sequential interviews by
different experts and can vary from a five minute 'chat' to a process of several days.
Ultimately personal skills in judgment are probably the most important, but
techniques to aid judgment include selection testing for:
-Atitudes(particularly useful for school leavers)
-Attainments
-General intelligence
(All of these need skilled testing and assessment.)
In more senior posts other techniques are:
- Leaderless groups
-Command exercises
-Group problem solving
(These are some common techniques - professional selection organizations often use
other techniques to aid in selection.)
38

39. Training in interviewing and in appraising candidates is clearly essential to good
recruitment. Largely the former consists of teaching interviewers how to draw out
the interviewee and the latter how to xratex the candidates. For consistency (and as
an aid to checking that) rating often consists of scoring candidates for experience,
knowledge, physical/mental capabilities, intellectual levels, motivation, prospective
potential, leadership abilities etc. (according to the needs of the post). Application of
the normal curve of distribution to scoring eliminates freak judgments
c-)Technology development:
Motorcycle Mechanics Institute's Harley-Davidson Motorcycle Technology Program
The Motorcycle Mechanics Institute (MMI) is a division of Universal Technical
Institute, a for-profit school providing technical training in automobile, marine and
motorcycle technology. These accredited programs are offered at nine campuses
located in eight states. MMI's nearest location is in Phoenix, AZ, situated roughly
340 miles from Rancho Cucamonga, CA.
d-)Harley-Davidson Technician Training
The first 30 weeks of this training program focuses on the theories and
technologies of all brands of motorcycles. Once this prerequisite is complete,
students move on to a series of lab-based courses where they concentrate on the
repair and maintenance of specific systems. Finally, students have the option to
enter into the brand-specific motorcycle technology phase of the training, which
deals with Harley-Davidson. During this time, they can elect to learn about the
parts, service and maintenance of Hogs from all eras of the brand's history.
Established in 1949, Lake Washington Technical College in Kirkland, WA is a
public college located about 1,100 miles from Rancho Cucamonga, CA. The school
began as a vocational institute and became a technical college in 1991. In 2008, it
enrolled around 5,500 students in certificate, associate's and bachelor's degree
programs. The college is one of four that partners with Harley-Davidson to provide
diploma and degree programs in motorcycle technology with training options
focusing on that manufacturer's products.
39

40. e-)Procurement:
Harley-Davidson.s purchasing activities are guided by the Supply Management
Strategy (SMS).The SMS provides a supply management roadmap that enables
stakeholders to effectively andefficiently meet the long-term goals of the Harley-
Davidson organization. The major objectivesof the SMS are:
● Position purchasing employees as value-added experts driving growth and
improvement.
● Establish mutually beneficial relationships with suppliers that leverage the
growthopportunities to meet Harley-Davidson.s strategic revenue and pricing
targets.
● Meet smart capacity objectives; strong supplier relationships will ensure access to
technology and components to differentiate Harley-Davidson.s products.
●Contribute to Harley-Davidson.s financial success by optimizing the stakeholder
concept, thus providing Harley-Davidson with a model for collaborative interaction
with allstakeholders.In implementing the SMS, Harley-Davidson Purchasing follows
several guiding principles.Some of those guiding principles that apply directly to
suppliers are:
● Harley-Davidson will not progress without a high degree of confidence in their
supply base.
● Strategic suppliers will have comfortable access to Harley-Davidson leadership.
● Harley-Davidson will provide information and communicate expectations to
suppliers enabling them to meet the goals of the SMS.
● The SMS is clearly connected to Harley-Davidson.s values, objectives, and primary
business strategies.
●All of the policies and guidelines contained in the .Doing Business With Harley-
Davidson.Manual support the SMS objectives and its guiding principles. It is critical
that suppliers understand their role to support the objectives of the SMS that will
allow Harley-Davidson to meet its long-term goals and objectives. This manual will
assist suppliers in understanding the objectives that Harley-Davidson has of them.
40

41. Harley-Davidson Purchasing is organized into four major areas:
● General Merchandise (GM)
● Maintenance, Repair, and Operating (MRO)
● Original Equipment (OE)
● Parts and Accessories (P&A)
The interaction between Harley-Davidson and their suppliers is largely dependent
upon the area of purchasing involved. The rest of this section of the manual will
briefly discuss the interaction that suppliers can expect to encounter within each of
the areas of Harley-Davidson Purchasing.
B-)PRIMARY ACTIVITIES:
a-)Inbound Logistics:
Magnet, Digital Sounder and Raw Material Suppliers provide sub-components
and raw material for the Honk Factory in Viet Nam in order to produce klaxons for
motorbikes and motorcycles.
When the Honk Factory receives the orders from Harley–Davidson, USA (its
requirement: ‘different honk classified different motorcycle models by different
sounds’), the Honk Factory begins producing customized klaxons. After finishing the
components, they will be transported to the Harley-Davidson warehouse in
Milwaukee, Wisconsin by the third party logistics company.
Next, finish klaxons in Harley-Davidson Warehouse will be delivered to
Manufacturer of Harley-Davidson in US, All these components will be checked for
right quantity as well as quality ( ensure there is no room errors) and then assemble
different klaxons to their different motorcycle models. Finished motorcycles will be
sent to Motorcycle Testing Departments in US before shipping to markets.
41

42. b-)Outbound Logistics:
USA, Europe and Japan are three strong markets of Harley-Davidson. The
finished goods will be stored in warehouses in US, Europe and Japan. From
warehouses, motorcycles will be shipped to the American, European and Japanese
Distribution Centers in order to package and continuous improvement engineering,
then delivering complete products to the retails. Finally, from retailers, Harley-
Davidson motorcycles models with unique klaxons are sold to end-users
Maintenance, Repair and Operating Centers are located in three main markets:
US, Europe and Japan. These centers provide services for Harley-Davidson’s
customers. They maintain or repair motorcycles and sell spare parts such as klaxons,
wheel and other motor accessories.
c-)Operation:
York, Pennsylvania is also known as the "Factory Tour Capital" of the world for its
rich manufacturing heritage and abundance of factory tours (including Harley-
Davidson's York Vehicle Operations factory tour). Steeped in history and holding the
key to our future, York remains the lynchpin of Harley-Davidson's production
workforce. Established as an assembly facility in 1973, Harley-Davidson's York
Vehicle Operations is the largest Harley-Davidson manufacturing facility, employing
roughly half the company's production workforce. The York facility covers more
than 230 acres and has over 1.5 million square feet under roof.
Employees here work around the clock assembling Touring and Softail® models,
as well as limited production, factory-custom motorcycles. They perform a variety of
manufacturing operations - from machining, polishing and chrome plating, to
forming, welding and painting. York employees also produce a wide range of
current and replacement parts for various models.
42

43. 15)FINANCIAL ANALYSIS
a) BALANCE SHEET
43

44. Harley’s cash position has improved, making it only a bit less likely that they’ll need
another emergency cash infusion if sales crater again. The company has about $1 billion in
cash available and has access to another $1 billion in credit. Capital investment, R&D, and
an expensive restructuring process have been the main drivers keeping cash balances
down. With the restructuring scheduled to conclude in the next year with another $80
million or so in charges, cash balance should start improving again in 2012.
44

45. b)CASH FLOWS
45

46. 46

47. 47

48. 48

49. c)FINANCIAL RATIOS
(2011/12)
Latest Full Context Quarter Ending Date
Gross Profit Margin 46.6%
EBIT Margin 20.1%
EBITDA Margin 26.3%
Pre-Tax Profit Margin 14.9%
Interest Coverage 3.9
Current Ratio 1.7
Quick Ratio 1.4
Leverage Ratio 4.0
Receivables Turnover 2.6
49

50. Inventory Turnover 7.6
Asset Turnover 0.6
Revenue to Assets 0.5
ROE from Total Operations 24.8%
Return on Invested Capital 9.6%
Return on Assets 6.2%
Debt/Common Equity Ratio 1.59
Price/Book Ratio (Price/Equity) 4.46
Book Value per Share $10.50
Total Debt/ Equity 2.36
Long-Term Debt to Total Capital 0.61
SG&A as % of Revenue 20.3%
50

51. R&D as % of Revenue 0.0%
Receivables per Day Sales $134.16
Days CGS in Inventory 47
Working Capital per Share $8.00
Cash per Share $6.62
Cash Flow per Share $3.77
Free Cash Flow per Share $2.54
Tangible Book Value per Share $10.37
Price/Cash Flow Ratio 12.4
Price/Free Cash Flow Ratio 18.5
4.52
Price/Tangible Book Ratio
51

52. Year Averages
Return on Equity 20.3%
Return on Assets 5.5%
Return on Invested Capital 8.5%
44.0%
Gross Profit Margin
Pre-Tax Profit Margin 14.6%
Post-Tax Profit Margin 9.4%
Net Profit Margin (Total Operations) 8.7%
R&D as a % of Sales 0.0%
52

53. SG&A as a % of Sales 19.9%
1.39
Debt/Equity Ratio
Total Debt/Equity Ratio 2.06
Price Earnings Ratios
Current P/E Ratio 18.4
P/E Ratio 1 Month Ago 18.3
P/E Ratio 26 Weeks Ago 23.1
P/E Ratio 52 Weeks Ago 65.0
P/E as % of 2 Digit MG Group P/E 123%
P/E as % of 3 Digit MG Group P/E 41%
12 Month Normalized P/E Ratio 17.9
53

54. e)GROWTH SALES
For the first time in 17 quarters, Harley reported selling more motorcycles than in the
year-ago quarter. Growth in the U.S was the most impressive, while international growth
contributed too. Thanks to relatively surging sales in the U.S., the mix of domestic to
international sales has dropped from 42% last year to just 36% now.
f)Improving deliquency rates
The next biggest contributor to Harley’s impressive profitability rebound has been at
the company’s financial services division, called HDFS. Harley provides financing to
many of it’s customers. That made HDFS a net liability over the past two years or so
as delinquencies and debt write-offs sprung leaks all through HOG’s balance sheet.
But lately, thanks in part to some better credit standards, those underperforming
loans have largely disappeared from Harley’s books and HDFS contributed a solid
$82 million to the income statement this quarter. Delinquency rates have now
improved to their best position since well before the crisis.
54

55. g)STOCK ANALYSIS
After billionaire investor Warren Buffett made his $300 million loan to Harley Davidson
(at a hefty 15 percent rate) in the middle of the financial crisis, he joked that Berkshire
Hathaway (BRK.A, BRK.B) liked the kinds of companies “where your customers tattoo
your brand on their chests.” How’s that for a visual example of brand power? As Buffett
probably knew, a rabid fan base can buy a company precious time to recover from
setbacks (see Apple circa 2002).
The Harley Davidson company (and the stock) has come a long way from those 2009
lows. HOG has finally reached the point where sales are growing and the balance sheet
isn’t bleeding cash. But Harley hasn’t made a complete turnaround – yet.
55

56. h)Recent Performance
Harley recently reported revenue up 15% to $1.5 billion, behind a 13% increase in
shipments of motorcycles. Income was up 36.8%, leading to reported earnings $0.81 per
share, up from the year-ago quarter, which was $0.59 per share. The company boosted
guidance for the year and stated that dealer inventory levels were lower than they
forecast, suggesting strong demand.
16) EXTERNAL OPPORTUNITIES
• The demand for Harley Davidson is the highest in Europe on the international
market.
• It must market their products more competitive, especially in the European market.
• India is a large untapped market for motorcycle too.
• Women and young people are more inclined to ride a bike.
• International market for bicycles is much larger than the U.S. market.
• Customer value parts in the international market.
• Even in regions where the economy is at a low level, Harley may take the
opportunity by the thought of customers in that situation, a bicycle is a cheaper way
to travel, which would be favorable for the Harley.
56

57. 17)EXTERNAL THREATS
• Capacity constraints and supply shortages have anticipated the loss in recent years.
• The average age of purchase according to an investigation of 42 years old and
growing.
• Increased environmental regulations.
• Increased standards in the European market.
• Some of the competitors of the company is using more resources in marketing their
product line (bicycles) and is a threat because it can change your risk factor for
having diversified product line.
• Buell Division should continue under the umbrella of Harley.
• Because of the low cost of making a bike and the higher profit margin, it is clear
that more competition can participate, especially those already in the car
manufacturing market.
Harley-Davidson, enlisted in the New York Stock Exchange as HOG (Harley Owners
Group), is well-known for its motorcycles that also represent the American spirit and
image. It was founded at the time of beginning of the 20th century. It is also known
for surviving the Great Depression. The firm provides heavyweight motorcycles
especially designed for cruising
57

58. 18)COMPETITORS OF HARLEY DAVIDSON
■a-)HONDA ■
Honda Motor Co. has been manufacturing motorcycles since 1947 as a second tier
player in an expansion cycle of the Japanese motorcycle industry given the need for
cheap transportation means after World War II. The company entered the US market in
1959, first with cheaper, lightweight bikes, before quickly moving into the higher-priced
segments such as performance and touring bikes. The company leveraged the experience
obtained in its domestic market in advertising and distribution in its entrance to the US.
Given its initial dependency on an exclusive dealership network in Japan, it decided to go
directly to retailers. Moreover, it invested heavily in advertising directly to consumers,
which gave Honda excellent results in its domestic market.28 It achieved an
extraordinary growth in the US market, increasing sales from $500 million in 1960 to $77
million in 1965 and shared with Yamaha and Suzuki 85 percent of the US market by
1966.29 Honda has been the world’s largest motorcycle manufacturer since 1959, with
5,190,000 bikes produced in 2000 (vs. 54,000 made by BMW and 204,592 made by
Harley).30 The company holds 26.5 percent of the total US motorcycle market, and enjoys
the number one market share position. The firm’s motorcycle sales have grown by 20
percent in 1999, reached 296,479 American Honda units sold in the US in 1999 (20 percent
increase) compared to 158,817 sold by Harley, and 174,376 motorcycles in year 2000 (a
record 34.5 percent increase) in an industry in which sales grew 27.3 percent. Honda
Motor’s worldwide sales reached 5.16 million motorcycles in year 2000 and the company
has the objective of achieving the 7 million mark by March 2004.31 Worldwide sales have
increased by approximately 20 percent and the decline in unit sales in Japan and Europe
has been more than offset by the volume growth in Asian countries (specially India,
Indonesia, and Thailand), as well as in North America.32 Honda is the Japanese car and
motorcycle manufacturer most dependent on the US market. Above 50 percent of its
consolidated revenues in year 1999 derived from its US operations. Honda is a superior
engineering company and its motorcycles have traditionally been “on the leading edge of
technology.”33 “Honda is, above all, an engine company,”34 and the world’s leader in
four-stroke technology. The firm was capable of transferring these capabilities into a
broad product offering (motorcycle, automobiles, and power products). Its performance
bikes have dominated motorcycle racing for decades and are associated with the world’s
greatest racers. The innovations achieved from racing were adapted to its motorcycle
products. In the early 1970s the company also had great success with street and touring
bikes with the introduction of the style-setting CB750K0 in 1969 and the Goldwing, the
world’s first long-distance touring bike, in 1975.35 Honda’s capabilities of product
innovation together with heavy investment in R&D, economies of scale, and efficient
distribution enable it to develop technical superiority at a lower price. The firm has also
58

59. committed the largest advertising budget in the industry and established, from early on,
the largest dealership network in the US.36 Its scale advantage together with high growth
rates resulted in superior productivity that was translated into lower prices. Honda has
experienced step learning curves of 75–87 percent that enable the company to achieve
real price reductions of around 50 percent or more over time.
■b-)YAMAHA ■
Yamaha Motor Company was established in 1955. Its first product was a 125cc two-
stroke motorcycle. By 2003 it was producing 2.6 million motorcycles a year—with
scooters forming a major portion of its sales. Motorcycles made up about 55% of sales
revenue, Yamaha other products were watercraft, power products (including all-terrain
vehicles and marine engines), and swimming pools. Yamaha’s biggest market was south-
east Asia where it owned motorcycle manufacturing plants in China, Indonesia, Vietnam,
Thailand, and India. Yamaha has a log history of designing and manufacturing V-twin
heavyweight cruisers. It’s Virago 750cc V-twin was introduced into the US in 1981 and
was a leading seller for almost 20 years. Model. The Yamaha Road Star is designed to
compete directly with Harley’s retro-look cruisers. The Road Star 1600 with its 1600cc V-
twin engine has the biggest engine in this category of motorcycles. Yamaha is known for
its advanced motorcycle technologies. It introduced the first 5-valves per cylinder
motorcycle engine, the first 4-stroke mass-production motocross bike, and the Yamaha
Induction Control System for increased fuel efficiency.
■c-)BMW ■
Even though motorcycles made only about 2.6 percent of total BMW sales income in
2000,21 the company is committed to supporting and developing its line of bikes. With
annual 2000 sales of 74,614 bikes, the company exported 69 percent of its motorcycles
abroad, comparing to the 66 percent in 1999. BMW Motorcycles celebrated its 75th
anniversary in 1998 and its bikes have led the way to technical innovation, pioneering
such things as advanced suspension systems, anti-lock brakes, and fuel injection.22
Because of these technological innovations, BMW motorcycles have lower operating costs
than thecompetition. In a comparison of Kawasaki and BMW touring bikes, the
California Police Department estimated an operating cost of 1.9 cents per mile for the
Kawasaki model tested, compared to an operatingcost of 1.7 cents per mile for the BMW
model tested.23 The company has always been associated with a high technical and
quality standard, and its motorcycles are also known for reliability, safety, and comfort.
BMW offers a full line of performance, touring, and cruiser bikes.
59

60. Recently it has introduced its new concept model C1, which is designed to unite the
mobility of the bike with safety of the car. The first cruiser, BMW R1200C, was
introduced in 1997 as part of the latest James Bond movie, Tomorrow Never Dies,24 and
became BMW’s best-selling bike in its first model year.25 R1200C includes the latest
technological innovations and safety features; however, it departs from the retro look
favored by other producers. In creating the bike, BMW assumed that in the future “high
performance cruisers will replace retro-look customs with a sportier look and feel.”26 The
R1200C was the first in this category. At a price of $14,500, the cruiser is priced about
$1,000 below the range of comparable Harley models providing superior features such as
anti-lock disk brakes, superior acceleration technology, and liquid-cooled engine.27 Half
of R1200C buyers are those who already own a Harley, and the other half are those who
own a Japanese motorcycle. BMW introduced the new luxury touring model K1200LT in
1999. This model also represents the “new” design concept of the modern look.
Comparing to the competing models it offers superior comfort and user friendliness.
BMW motorcycles are positioned as a source of “undeniable pleasure and excitement of
riding”. The underlying idea is that BMW should provide the functionality of the bike
with improved comfort and reliability features. In order to achieve this goal the company
leverages the innovative car-building technologies of its 70,000 sq. feet R&D campus in
Munich. As a result, BMW motorbikes have anti-block braking system (ABS), close-to-car
comfort seats as well as enhanced cooling and battery systems to increase reliability of
the engine during various riding conditions. Most of the BMW motorcycles are
manufactured in the single plant located in the vicinity of Berlin. During the last year the
plant was expanded to 2,400 workers (additional 320) to achieve the capacity of 400 items
per day. A new C1 model is currently being built in the Carrozzeria Bertone factory.
60

61. 19)COMPETITIVE PROFILE MATRIX
Harley davidson honda yamaha
Critical succes weight Rating Weighed score rating Weighted rating Weighed
factor score score
Product 0.15 2 0.30 4 0.60 4 0.60
selection
Product quality 0.10 3 0.30 4 0.40 3 0.30
Price 0.10 1 0.10 3 0.30 4 0.30
competıtıveness
Market share 0.15 3 0.45 3 0.45 3 0.45
Management 0.05 4 0.20 4 0.20 4 0.20
Financial 0.05 4 0.20 3 0.15 3 0.15
position
Customer 0.20 4 0.80 2 0.40 2 0.40
loyalty
0.20 2 0.40 4 0.80 4 0.80
Global
expansion
Total 1.00 2.75 3.30 3.20
61

62. Customer loyalty is Harley-Davidson’s strongest competitive advantage. Inproduct
quality and financial position, Harley is also strong. However, Harley is not asstrong
as its competitors in some critical areas. Harley falls far behind Honda andYamaha in
global market share of motorcycle products. In addition, Harley motorcyclesare not
as competitively priced as other brands. Product selection is another area of
weakness at Harley. While offering many products in the 1000cc+ category of
motorcycles, Harley lacks an array of smaller bikes. Also, Harley is not diversified
intoother recreational lines such as watercraft and ATVs as many of its competitors
are and isthus more susceptible to fluctuations in the motorcycle market.
20)KEY EXTERNAL FORCES
a)ECONOMIC FORCES
Harley-Davidson is the largest manufacturer of heavyweight motorcycles in the world by
market share, capturing half the U.S. market and a third of the global market.[1] As a luxury
good, Harley competes primarily on design and quality, rather than price, which keeps
margins high; gross margin in 2011 is projected to be approximately 34%.Harley Davidson
announces a 73.5% increase in income in year-ago comparisons, totaling $119.3 million for
the first quarter of 2011 Increases in income were driven by a 1.5% increase in revenue,
totaling $1.22 billion for 2011. Similarly, retail sales increased by 3.5% for the quarter when
compared to the previous year, with the majority of increased sales coming from Europe.
International sales overall increased by 11.3% with European sales increasing by 22.7%.]
Harley Davidson's market share decreased by 1.9% to 53.4% for the quarter Total revenue
from motorcycle sales increased by 2.5%, totaling $1.1 billion.
Harley Davidson announced a 1 percent decrease in retail sales of Harley motorcycles for the
fourth quarter of 2010 when compared to the fourth quarter of 2009. Sales in the U.S.
decreased by 0.2 percent for the quarter whereas international sales decreased by 2.1 percent.
Retail sales decreased by 8.5% for 2010 when compared to retail sales in 2009. Decreased U.S.
sales drove these figures, with retail sales in the united states decreasing by 11.7 percent and
international sales decreasing by 1.9 percent. Revenue for the fourth quarter, however,
increased to $697.8 million, 26.4 percent increase from the fourth quarter of 2009. Shipments
of Harley-Davidson motorcycles increased to 44,481 from 35,938 in year ago results.
Similarly, gross margin was 29.6 percent for this past quarter as compared to 20.3 percent in
the fourth quarter of 2009. For the full year, revenue decreased by 1.2 percent to $3.14 billion.
Shipments also decreased by 5.6% for the 2010 fiscal year.
62