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Strategic Audit Of Harley Davidson

This print version free essay Strategic Audit Of Harley Davidson.

Harley Davidson

We have decided to address problems and causes within the Harley Davidson Company by usinga strategic audit which will explain past, present and future trends within this organization.

I. Current Situation

A. Current Situation

Excellent financials, low debt load, 2001 was the 16th consecutive year with record performance.Price/earnings ratio is positive.

World wide retail for 4th quarter 12.9% growth over year 2000.

Forbes named Harley-Davidson its "Company of the Year" for 2001.

Selected by Business Week as on of the nation's "Most Admired Companies."

Projected sales figures for 2003 look strong.

B. Strategic Posture

1. Mission

The mission of this company is to "fulfill dreams through the experiences of

motorcycling, by providing to motorcyclists and to the general public an expanding line ofmotorcycles, branded products and services in selected market segments." Harley-Davidsonwants to have happy customers that will continue to buy this brand for life. Their vision statesthat they are an "action oriented international company," and that they are committed toimproving its relationships with stakeholders. They believe that through balancing theirstockholder's interests and the "empowerment" of employees to concentrate on valued activitiesthey will find success and continue to be successful. Buell mission statement "is to develop andemploy innovative technology to enhance the ride and give Buell owners a motorcycle

experience that no other brand can provide."

2. Objectives

Buell motorcycle products emphasize innovative design, responsive handling, and overall

performance.

Design, manufacture, and sell premium motorcycles for the heavyweight market.

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Emphasized traditional styling, design simplicity, durability, ease of service, andevolutionary change.

Straddle class boundaries.

Market targets four segments, standard, which emphasized simplicity and cost;performance, which emphasized handling and acceleration; touring, which emphasized comfortand amenities for long-distance travel; and custom, which emphasized styling and individualowner customization.

"It is a legacy forged by generations of people with a passion for motorcycling, a

commitment to honor land build on the past, and determinations to seek out new opportunitiesfor the future."

View research and development as significant in its ability to lead the market definition of

touring and custom motorcycling and to develop product for the performance segment.

Manufacturing strategy was designed to increase capacity, improve product quality,reduce cost, and increase flexibility to respond to changes in the marketplace.

Harley-Davidson Financial Services, Inc. has a competitive advantage which offerswholesale and retail financial services, which has little or no competition.

3. Strategies

With the acquisition of Buell Harley-Davidson will enter the European sport/performancemarket which is four times larger than the U.S.

In 1996 H-D announced it will discontinue the operations of the Transportation Vehiclessegment in order to concentrate its financial and human resources on its core motorcyclebusiness.

Use web based information technology to streamline its supply-chain management.

Research and development unveiled in 2001 the V-rod in order to appeal to the younger,affluent rider, and international markets.

4. Policies

Emphasize innovative design, responsive handling, and overall performance.

Providing to motorcyclists and to the general public an expanding line of motorcycle,branded products and services in selected market segments.

Design, manufacture, and sell premium motorcycles for the heavyweight market.

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Offer traditional styling, design simplicity, durability, ease of service, and evolutionarychange.

Management provides a variety of services to its dealers and retail customers, including servicetraining schools, customized dealer software packages, delivery of its motorcycles, and owners'

club membership, a motorcycle rental program, and a rider training program.

II. Strategic Managers

A. Board of Directors

1. Presently nine members who will be reduced to eight-there are seven outsiders.

2. Well-respected Americans, elected to board from 1982 through

1997.

3. Divers backgrounds from marketing, sales, finances, telecommunications, engineering,manufacturing, distribution, and International experience.

4. By 2005 a number of the directors will not be eligible for reelection.

B. Top Management

1. Was one of 13 managers who bought out Harley-Davidson from AMF in 1981?

2. Very experienced in the industry, with AMF since 1970.

3. Chairman and CEO since 1997.

4. Vastly responsible for current situation.

III. External Environment (EFAS Table; see Exhibit 1)

A. Societal Environment

1. Economic

a. Despite the global economic downturn, H-D achieved its 16th consecutive year of recordrevenue and earnings.

b. Licensing the H-D brand name has enhanced the corporate image with customers.

c. International sales have increased since 1999.

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d. H-D has begun selling parts and accessories and general merchandise through non-traditionalretail outlets, known as SRL's or secondary retail locations.

2. Technological

a. In 1997 an internal makeover created a WEB to cut back on communication times andadministrative trivia, like invoice tracking.

b. Expansion of research and development of motorcycles that would appeal to the youngercrowd and the European market.

c. Introduced a new liquid-cooled performance motorcycle.

d. Introduced an e-commerce capability that connected buyers with dealers.

e. Improvement of its operation designed to control costs and maintain quality.

f. Introduction of just-in-time inventory principles, which allows for quicker reaction toengineering design changes, quality improvements, and market demands.

g. Mutual relationships with its suppliers which has improved product technical integrity,application of new features and innovations, lead times for product development, andsmoother/faster manufacturing ramp-up of new vehicle introductions.

3. Political Legal

a. Federal, state, and local authorities had various environmental control requirements, relating to

air, water, and noise pollution.

b. Stricter emissions standards in 2004 and 2008.

c. The European Union is considering enforcing stricter emission standards.

d. Emissions standards and noise control becoming more stringent in Japan.

e. Must comply with all applicable federal motor vehicle safety standards and related regulations.

f. In last three years H-D has initiated 24 voluntary recalls.

g. H-D is involved with government agencies regarding environmental matters, such as soil andgroundwater contamination.

h. HDFS is subject to state, federal, and various foreign governmental authorities and variouslaws, and judicial and administrative decisions.

I. Steel tariffs could affect market in Europe.

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4. Sociocultural

a. Customers are white-collar workers and executives.

b. Competitive market.

c. An aging customer base.

d. The possibility of a lasting recession.

B. Task Environment

1. H-D is the best-selling heavyweight motorcycle in Japan.

2. New line of motorcycle to attract the younger, affluent riders.

3. Has 381 independent H-D dealerships serving 32 country markets.

4. Has an established infrastructure in Europe, based in the UK.

5. Has market distributors and subsidiaries in France, Germany, Italy, and the Netherlands.

6. Continue to support its objectives of maintaining and growing its business in Southeast Asia,where markets had continued to stabilize over recent years.

7. Latin American markets consist of 15 countries' to include Brazil and Mexico being the twobiggest.

8. Canada has 75 H-D dealerships and 26 Buell dealerships.

9. Rivalry among existing firms: High. The Japan and European markets are expanding.

10. Bargaining Power of Buyers: Low. Technology and materials can be sourced worldwide.

11. Power of Other Stakeholders: Low. Quality, safety, environmental regulations increasing.

12. Bargaining Power of Supplying Distributors' Power: Low. H-D log and bar and shield meansquality and prestige.

13. Threat of Substitutes: Low. Manufactures cannot compete with 100 year tradition andquality.

14. Threat of New Entrants: High. A new entrant in heavyweight market appears unlikely.

EFAS Table Exhibit 1.

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A B C D E

1 External Factor Analysis Summary (EFAS)

2 External Strategic Factors Weight Rating Weighted

Score Comments

4 1 2 3 4 5

5 Opportunities

6 Internationalizing its operations 0.1 4 0.4 There is a huge future growth especially in countrieslike China, UK Japan, and Europe.

7 Using Internet as a virtual online store 0.1 3 0.30 Servicing customers who prefer to shop

through the web; now have the opportunity to view motorcycles and products and then areconnected directly to a dealership or retailer.

8 Differentiating its customers and customizing its offerings 0.1 4 0.4 Based on new abilities totailor offerings under Customer Relationship Management (CRM) theory such offeringfinancing.

9 0.2 3 0.60

10 Threats 0

11 increased competition from unexpected sources 0.1 2.5 0.25 Major competitors are basedoutside the US and generally have more financial and marketing resources. They are morediversified and have larger worldwide sales volumes.

12 Technological changes 0.05 3 0.15 The growing number of younger riders is placing moreemphasis on light weight, faster motorcycles.

13 strong regional competition 0.05 2 0.1 Within the US competition is limited.

14 Foreign governments trade hindrances on future investments 0.1 3.5 0.35 Import export tariffson steel

15 Culture diversities in foreign countries 0.1 3.5 0.35 Different cultures have different taste

16 lower priced competition 0.1 4 0.4 Foreign made motorcycles are lighter and made with lessconventional material than the H-D which allows them to sell at a lower cost. Consumers valuedlower price more than American symbol.

17 Total Scores 1 3.3

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18

19

20 Internal Factor Analysis Summary (EFAS)

21 Internal Strategic Factors Weight Rating Weighted Comments

22 Score

23 1 2 3 4 5

24 Strengths

25 Employee training and Loyalty 0.15 5 0.75 Employees are the foundation of companysuccess; participation of employee is an essential component of the company success

26 Customer Satisfaction 0.1 5 0.5 Quality statement provides that the purchaser is getting thebest quality motorcycle available with a 100 year tradition of excellence. Most customers returnfor additional purchases

27 Product Quality 0.15 5 0.75 Best quality and design heavyweight motorcycle manufactured.

28 largest sponsored bike organization 0.1 5 0.5 HOG has 750,000 members

29 Weaknesses 0

30 Lack of effective online model 0.05 3 0.15

31 Cost inefficient 0.05 1.5 0.075

32 Weak Finances 0.2 2 0.4

33 Expanded product line 0.2 2.5 0.5

34 Total Scores 1 3.625

IV. Internal Environment (IFAS Table; see Exhibit 2)

A. Corporate Structure

1. Divisional structure: combine supply with design and planning process. Narrow the gapbetween supply and demand in order to curb selling bikes at a premium.

2. Licensing the name "Harley-Davidson" and numerous related trademarks.

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3. Created Harley Owners Group and Buell Riders Adventure Group, to encourage riders tobecome more involved in the sport.

4. E-commerce established to unite customer to dealership.

5. Strong relationship with suppliers has improved product technical integrity, application of newfeatures and innovations.

6. Moving production plants to more fully utilize their assets and increase capacity over time.

B. Corporate Culture

1. Provide to motorcyclist and to the general public and expanding line of motorcycles, brandedproducts and services.

2. Design, manufacture, and sell premium motorcycles for the heavyweight market.

3. Emphasized traditional styling, design simplicity, durability, ease of service, and evolutionarychange.

4. Buell motorcycle products emphasize innovative design, responsive handling, and overallperformance.

5. Bluestein stated "It is a legacy forged by generations of people with a passion formotorcycling, a commitment to honor and build on the past, and the determinations to seek outnew opportunities for the future.

6. H-D needs to attract new and younger customers while keeping faith with its fanatical oldones.

C. Corporate Resources

1. Marketing

a. Bar and shield logo.

b. Dealer promotions, customer events, magazine and direct-mail advertising, public relations,cooperative programs with H-D/Buell dealers, television advertising.

c. Alliance with Ford Motor Company to combine resources.

d. Sponsored racing activities and special promotional events, and major motorcycle consumershows and rallies.

e. Establish motorcycle organizations such as HOG and BRAG.

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2. Finance

a. Revenues continually rise while operating income is stable.

b. Managements focus on trimming costs, also with increased sales of parts and accessories,

resulted in an improved operating margin.

c. H-D stock remains strong, while general market has weakened.

d. In 2001 despite the global economic downturn, H-D achieved its 16th consecutive year ofrecord revenue and earnings of $3.36 billion.

3. Research and Development

a. Increased production to meet supply and demand.

b. Strong utilization of e-commerce capabilities.

c. Incorporated manufacturing techniques focused on the continuous improvement of itsoperations designed to control costs and maintain quality.

d. Employee involvement, just-in-time inventory principles, partnering agreements with the localunions, high performance work organizations, and statistical process control, were designed toimprove product quality, productivity, and asset utilization.

4. Operations

a. Continual expansion and up-grading of existing facilities.

b. Locate product development staff in close proximity with production facilities.

c. Employee involvement with an emphasis on a highly flexible and participative workforce.

d. Assembly operations overseas to reduce duties and taxes.

e. Emphasize full utilization of assets and increase capacity over time.

5. Human Resources

a. Exceptional relations with unions and employees and in 2001 were named by Fortune as oneof the top 100 companies to work for.

6. Information Systems

a. Strong utilization of e-commerce capabilities.

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b. Strong employee involvement

c. Locate product development staff in close proximity with production facilities.

IFAS Table Exhibit 2.

A B C D E

1 Internal Factor Analysis Summary (EFAS)

2 Internal Strategic Factors Weight Rating Weighted

Score Comments

3 1 2 3 4 5

4 Strengths

5

6

7

8

9

10

11 Weaknesses

12

13

14

15

16

17

18

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19 Total Scores

V. Analysis of Strategic Factors (See SFAS Matrix in Exhibit 3)

A B C D E F G H

1 Strategic Factor Analysis Summary (SFAS)

2 1 2 3 4 5 6

3 Duration

4 Strategic Factors Weight Rating Weighted Score short Intermediate Long Comments

5 Customer Satisfaction (S) 0.15 5 0.75 X Employees are the foundation of company success;participation of employee is an essential component of the company success

6 Product line Limitation (W) 0.2 2.5 0.5 X The V-Rod is the newest product

7 competition from foreign companies (T) 0.1 4 0.4 X lower priced, high qualities bikes

8

9

10

11

12 Weaknesses

13

14

15

16

17

18

19

20 Total Scores

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A. Situational Analysis

INTERNAL FACTORS EXTERNAL FORCES

Strengths Opportunities

What does your practice do best?

Financial strength

Reputation

Brand

Customerloyalty

Total customer experience

Diversified product range

High product differentiation

High level product customization

First to market

Community culture built around product

Employee affinity to product and workplace

Personal connection to customers

Relationships with suppliers and distributors

Operational structure

Sales structure

Collaborative organizational culture

Knowledge sharing

Focus on continuous learning and innovation

Strong penetration in North American markets

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Established infrastructure and networks on buy and sell sides (supplier and dealer)

Established operations for manufacturing, R&D High inventory turnover

Limited market penetration outside US

Fall in industry share in Europe

Product differentiation less understood or valued in non US markets

Customer relationship model may be US centric, Europeans or Japanese may not respond

to this model, HD relies on this model for marketing and product development, may need toapply different models to different markets

HD relies strongly on proximity to customer to build knowledge and may not connect as

strongly with customers in non US markets

HOG has largest sponsored bike organization with 750,000 members Where are theopportunities in your area?

Has a faithful following.

Has an established quality product.

Has patents and trade marks established and protected.

Has established organizations that support tradition such as HOG and BRAG.

Has an easily recognizable logo.

Expansion of company in foreign market segments. While Harley-Davidson has marketshare in Canada, Europe, Japan, and Australia, further investments can be made in other growingeconomies.

Purchasing other competitors or suppliers. By acquiring other competitors as well as

suppliers, substantial decreases in expenses could be realized and could generate savings directlyto consumers. Additionally, increased sales and market share may occur.

Trade agreements with foreign markets. Due to the fact that countries such as Japan andothers in Europe have their own motorcycle manufacturers, tariffs are placed on Harley-Davidson's products. By obtaining trade agreements and easier entry within these markets, salescan considerably increase.

High demand in European Market

High demand in US Market

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Interest rates for financing have become lower

High gas prices are making more people buy bikes

Alliances with automobile manufactures are possible

Women

Weaknesses Threats

What part of your practice needs improvement?

Aging factories that are not in compliance with EPA rules and regulations could increase

expenditures and raise overhead.

Decreased return on investments. Harley-Davidson's return on equity decreased from

29.32% in fiscal year 2003 to 28.81% in fiscal year 2004. Furthermore, return on assetsdecreased from 17.32% in fiscal year 2003 to 17.10% in 2004.

Increased total debt equity. Harley-Davidson's debt ratio remained the same in fiscal year2002 and 2003 at 34%. However, their debt ratio increased dramatically in fiscal year 2004 to40%. This constitutes increasing financial risk and may affect their borrowing and/or bondratings.

Low annual dividend yield. For investors who enjoy high dividend yields, they may

purchase Polaris stock prior to purchasing Harley-Davidson stock. With a dividend yield of1.30%, it will be difficult to reach to Polaris's dividend yield of 2.50% in the near future.

What is happening in your area that could threaten your practice?

There are a number of Asian competitors trying to enter the heavyweight market with

strong financial and marketing resources.

EPA along with federal legislation and local ordinances could affect market regarding air

pollution and sound pollution of heavyweight market.

Steel tariffs and international trade rules could affect market value of needed, material.

Steadily losing market share to Japanese rivals such as Honda Motor Co.

Extend the HD experience in North American and Asia Pacific markets by penetrating

further into lifestyle products

Build market share in Europe

Increase penetration of existing HD customers

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Technological changes 0.05 3 0.15 The growing number of younger riders is placing moreemphasis on light weight, faster motorcycles.

strong regional competition 0.05 2 0.1 Within the US competition is limited.

Foreign governments trade hindrances on future investments 0.1 3.5 0.35 Import export tariffs onsteel

Culture diversities in foreign countries 0.1 3.5 0.35 Different cultures have different taste

lower priced competition 0.1 4 0.4 Foreign made motorcycles are lighter and made with lessconventional material than the H-D which allows them to sell at a lower cost. Consumers valuedlower price more than American symbol.

Total Scores 1 3.3

Internal Factor Analysis Summary:

Internal Factor Analysis Summary (EFAS)

Internal Strategic Factors Weight Rating Weighted

Score Comments

1 2 3 4 5

Strengths

Employee training and Loyalty 0.15 5 0.75 8000 employees, Salaried and unionized employeesare fully participated in many key business decision, Empowered workforce to take initiative toidentify problem and solve problem, Employees are considered as foundation of companysuccess and are the engine to drive company to success, Diversity background, Employeeinvolvement is "strong culture" of Harley Davidson, Participation of employee is an essentialcomponent of the company success

Customer intimacy 0.1 5 0.5 Quality statement provides that the purchaser is getting the bestquality motorcycle available with a 100 year tradition of excellence.

Product Quality 0.15 5 0.75 Best quality and design heavyweight motorcycle manufactured.

largest sponsored bike organization 0.1 5 0.5 HOG has 750,000 members

Weaknesses 0

Lack of effective online model 0.05 3 0.15

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Cost inefficient 0.05 1.5 0.075

Weak Finances 0.2 2 0.4

Expanded product line 0.2 2.5 0.5

Total Scores 1 3.625

B. Review of Current Mission and Objectives

1. Current mission appears to be focused and channeling resources in the right direction.

2. The H-D/Buell objectives are excellent and laid out for the future, and the interest groups thatthey wish to influence.

VI. Strategic Alternatives and Recommended Strategy

A. Strategic Alternatives

1. Growth through concentric diversification: H-D acquired the Buell manufacture in Europe tohelp open up new markets and attract a younger generation of riders.

2. Pause Strategy: Combining financial, and supply and demand to meet future trends.

a. (Pros) H-D appears to be making all the right moves in order to open up new marketpossibilities with younger riders, expanding its operation to meet global strategy, and combiningfinancial needs with purchasing power.

b. (Cons) H-D fears that it's ageing faithful riders in the heavyweight division will fade outwithout attracting younger generations.

3. Retrenchment: On January 22, 1996, the company announced its strategic decision todiscontinue the operations of the Transportation Vehicles segment in order to concentrate itsfinancial and human resources on its core motorcycle business.

a. (Pros) Sound move by consolidating it resources and concentrating on what it does best, whichis building motorcycles.

b. (Cons) Seems that H-D is placing all its eggs in one basket.

B. Recommended Strategy

1. The strategy that H-D has already placed into affect by purchasing Buell for a younger andEuropean market seems sound, also by shipping parts instead of completed units into countriesand allowing their labor to assemble them in order to reduce taxes and tariffs is sound businessstrategy of keeping market value down.

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2. H-D quality must be maintained, the promotion of the H-D bar and shield logo must be utmostimportant in its image, and the continual merger into the European market with the Buell willhelp reduce the aging faithful market.

3. The Asian market with its known competition and stabilizing market should be a main

objective.

4. H-D is the main leader in the heavyweight segment and should continue to support andpromote their need for excellence, styling, and performance in this area.

VII. Implementation

A. To continue to increase their reputation and market shares in Europe and Asia H-D needs tocontinue its line of Buell motorcycles geared towards the younger generation in order to competewith the lighter and faster competitive market of Asia and Europe.

B. When existing board member terms expire H-D needs to continue to attract business likeminds in a large diversified field of global, communication, marketing, leadership in Asia,European, and African markets, technological change, advertising, finances, and legalrestrictions.

C. Research and development has already made major changes in order to increase efficiencyand streamline the increase in supply and demand.

VIII. Evaluation and Control

Strategic evaluation involves three major activities, which are: (1) examining the underlying

bases of a firm's strategy; (2) comparing expected results with actual performance; and (3) takingcorrective actions to ensure that performance conforms to plans. Examining the underlying basesof a firm's strategy includes continuous monitoring of external opportunities and threats andinternal strengths and weaknesses. Measuring organizational performance entails comparingexpected results to actual results, looking into deviations from plans, assessing individualperformance, and watching the developments toward meeting the stated objectives. Theapplication of corrective measures requires the implementation of changes to reposition a firmcompetitively for the future

A. Although H-D is making headway in leaps and bounds towards increasing their market valuein countries like Asia, Japan, Germany, Italy, and the UK. It appears that they need to increase

their presence in South America and other Asian countries such as China, Korea, etc. Also thestrategy that the company has pursued for the last generation will, in all likelihood, become lessand less useful in the coming years as the generation of buyers that has supported it since the1980s begins to move beyond the point at which it will purchase motorcycles. As this happensthe company must find a way to attract younger buyers as well as women. To do this it willprobably have to adopt some of the same features that make its competitors attractive today tojust those buyers: Smaller engines (including two-stroke engines), lighter, sleeker design andenvironmental safeguards in both the building of the machines and in their use.

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B. Among the key resources of the firm are the established manufacturing facilities and the goodfinancial performance. The intangible resources are the goodwill of the company and its widemarket awareness. Davidson is the synonymous of ultimate motorcycle and this is the capabilityof the company to provide this feeling of being "special" Though it is not clear from the papers,the providing the life style experience is the core competence of the company It appears that the

Buell mission statement towards excellence and performance is very compatible with the H-Dcore beliefs.

C. H-D's factories should be reevaluated due to their aging condition and proximity to supplysources. A future shift of factories may enhance their production capabilities, while reducingoverhead in shipping of needed supplies. At the same time reduce possible tariffs or fines inregards to compliance with EPA restrictions. Given the above SWOT analysis, it could beobserved that Harley-Davidson have in the past been focusing on the internal improvements ofthe company at the expense of losing market share from 77.5% to 23.3% (Bruce 2004). For thisreason there has been a great need for refocusing on the marketing plans adopted by the companyto increase future sales. It is recommended that for the next three years the company should

focus on sales growth strategies. For the first year, Harley-Davidson should focus on developingconsumer base in developing countries around the world such as Malaysia, India, HongKong/China and Brazil as these are destinations that both have good infrastructure for bikeproduction as well as newly acquired taste for luxury goods. The customer base could begenerated by appealing to their aesthetic taste and emotional ties with owning goods that reflectthe liberation attitude and the free spirit. This is the essence of the Harley-Davidson missionstatement which should not be omitted from the future marketing plans (Official Website 2004).In the second year, the company should focus on the acquisition of customers from secondarycircle, namely through the Harley club, the employees participation, the suppliers and the generalpublic. A referral system has been established through Harley-Davidson's reputation. This shouldbe capitalized to generate more sales by taking a survey, yet once again of the preference of theAmerican consumer as well as the foreign consumers. This way the company could gauge thenew customer profile in order to cater to their needs (Official Website 2004). Third year of thecompany should capitalize on the innovation by introducing less power bikes that could cater tothe preference of the lower class of customers who cannot afford the high price of Harley-Davidson. Reduction in cost of production could be achieved through outsourcing to othercountries like China and Malaysia. This would also enable the company to achieve higher salesgrowth target.

D. The Company's ability to meet the targets and expectations noted depends upon, among otherfactors, the Company's ability to (i) continue to realize production efficiencies at its productionfacilities and effectively manage operating costs including materials, labor and overhead, (ii)successfully manage production capacity and production changes, (iii) avoid unexpected supplychain issues, (iv) provide products, services and experiences that are successful in themarketplace, (v) develop and implement sales and marketing plans that retain existing customersand attract new customers in an increasingly competitive marketplace, (vi) sell all of itsmotorcycles and related products and services to its independent dealers and distributors, (vii)continue to develop the capacity of its distributor and dealer network, (viii) avoid unexpectedchanges and prepare for known requirements in legislative and regulatory environments for itsproducts and operations, (ix) successfully adjust to fluctuations in foreign currency exchange

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rates, interest rates and commodity prices, (x) adjust to worldwide economic and politicalconditions, including changes in fuel prices and interest rates, (xi) successfully manage the creditquality and recovery rates of HDFS's loan portfolio, (xii) retain and attract talented employeesand (xiii) detect any defects in our motorcycles to minimize delays in new model launches, recallcampaigns, increased warranty costs or litigation. In addition, the Company could experience

delays in the operation of manufacturing facilities as a result of work stoppages, natural causes,terrorism or other factors.

Conclusion

The definition of HD market and business stayed pretty much the same: the strong accent on lifeexperience provided to the motorcyclists, the quality product and accessories. There is much tobe done in order to crystallize the vision and make it consistent with the declared wish to satisfythe interests of stakeholders. The stress on the unique lifestyle and philosophy could be a betteruniting point here.

The generic competitive advantage has been shifted from "differentiation focus" to"differentiation" through the last 9 years. The company operates in two segments, Motorcyclesand Related Products (Motorcycles), and Financial Services. In comparison to 1996 now the"intangible" aspect is more prominent in the vision but still not in the market definition. HD hasperformed wonderfully over the past hundred years, and has not forgotten their mission or wherethey came from but this mission statement addresses only two components: the customers andproducts or services. In today's market, this mission statement needs to be re-done so that it mayaddress more then just two of the components of a mission statement.

Harley-Davidson is the largest motorcycle retailer in the United States, but could be overthrownby competitors. Industries such as domestic automobile manufacturers have experienced

financial difficulty within the past few months and had to cut jobs and downsized as a result.However, foreign made vehicles continue to sell strong. As other motorcycle manufacturers mayexpand in this country, Harley-Davidson could have a potential threat.

References

NetMBA Business Knowledge Center, SWOT Analysis, Internet Center for Management andBusiness Administration, Inc. Copyright 2002-2005. Retrieved January 4, 2006.

http://www.netmba.com/strategy/swot/

Wheelen, T. Hunger, J. (2006). Strategic Management and Business Policy; Tenth Edition.Upper Saddle River, New Jersey: Prentice-Hall, Inc.

Official Harley-Davidson website. Retrieved January 14, 2005.

http://www.harleydavidson.com/CO/NEW/en/PressRelease_Date.asp?locale=en_US&bmLocale=en_US&HDCWPSession=DhhJQNCvW0gtyyr0TlP4yyXctbzmXZyJvWYvwx7tFclwl1vgyK3M!976980882!262704913&id_in=781&dspmm=4&dspyy=2005

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