STRATEGIC MANAGEMENT

CASE ANALYSIS

CASE:

HARLEY DAVIDSON, Inc. -2004

By RICHARD.A.COX FRANCIS MARION UNIVERSITY

Analyzes by, HARI PRAKASH.N.V

Harley Davidson, Inc Mission Statement says: We

fulfill dreams through the experiences of motorcycling, by

providing to motorcyclists and to the general public an expanding line of motorcycles, branded products and services in selected market segments

Vision Statement says:

Harley-Davidson is an action-oriented, international company, a leader in its commitment to continuously improve [its] mutually beneficial relationships with stakeholders (customers, suppliers, employees, shareholders, Government, and society). Harley-Davidson believes the key to success is to balance stakeholders interests through the empowerment of all employees to focus on value-added activities.

MISSION statement analysis

COMPONENTS CUSTOMERS PRODUCTS & SERVICES MARKETS CONCERN FOR SURVIVAL TECHNOLOGY PHILOSOPHY SELF CONCEPT CONCERN FOR PUBLIC IMAGE CONCERN FOR EMPLOYEES
MISSION STATEMENT EVALUATION MATRIX

YES / NO YES YES NO YES NO YES YES YES NO

PROPOSED MISSION STATEMENT: We fulfill dreams through the experiences of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products and services in selected market segments. To be branded as the best motorcycle available in the world through innovations. The total team effort of Harley-Davidson employees is devoted to fulfilling dreams of customers and we believe that there is not a motorcycle riding experience like a HarleyDavidsons

PROPOSED VISION STATEMENT: The best quality motorcycle, motorcycle products and financial services will be provided world wide is the commitment of HarleyDavidson. Customer satisfaction is our motto and the Harley-Davidson customers can experience the taste of reality of motorcycle dreams by relaying their satisfaction on us. Harley-Davidson is dedicated to use the advanced technology to produce the most superior motorcycle in domestic and international markets. Stay competitive and continue growth worldwide remain profitable and survive is our philosophy. Employees of Harley-Davidson are the foundation of the company and they are the driving force behind the Harley-Davidson name. The total team effort of Harley-Davidson employees is devoted to fulfilling dreams of customers and we believe that there is not a motorcycle riding experience like a Harley-Davidsons. Excellence is our push though our Harley-Davidson bar and shield logo that says superior quality. Honesty and customer loyalty and these morals are the heartbeat of Harley-Davidson organization. Harley-Davidson do our part in supporting all environmental laws in every country we do business. Determination and commitment is the place where HarleyDavidson intends to stay.

EXTERNAL ANALYSIS

PESTLE
POLITICAL U.S Government and People are considering Harley-Davidson as an American icon. Opportunities uncertain in emerging economies The [India, China] are but not operating situations. governments

deducting the taxes and levies, they consider Harley-Davidson as an American idol so that they are not welcoming HarleyDavidson into their soil. More and more talks are required for this sanction, even between the nations. ECONOMICAL Confidence in economy is directly proportional to the purchasing of consumer items. The economic crisis will hit this segment very much. Currency fluctuation is also a big problem in this industry.

SOCIAL Academy of Motorcycling for those interested in learning to ride a motorcycle. In U.S the number of motorcycle users is less so that by introducing this type of academy will encourage more and more public to come to motorcycling. This shows their social responsibility by teaching and educating the public how to ride bikes responsibly. Riders-Edge the motorcycling academy of Harley-Davidson introduced more than 1000 aspiring motorcyclists to the sport in 2000. Number of accidental death in U.S is increasing so that this shows their social responsibility. Average purchaser of a U.S Harley-Davidson motorcycle is a married male in his mid-forties. Average purchasers of a U.S Harley-Davidson have a household income of $78,600.

Over two thirds of the sales of Harley-Davidson motorcycles are to buyers with at least one year of education beyond high school. 30% of the Harley-Davidson buyers have college degrees. The customers of Harley-Davidson motorcycles are creditworthy persons who are well educated and having a social responsible life.

Only about 9% of Harley-Davidson U.S retail motorcycles are to women, this shows not only men but also women are interested in Harley-Davidson.

TECHNOLOGICAL This segment needs more and more technological advancements because customers are going for more and more energy efficient and technologically advanced bikes now a day. Harley-Davidson is one of the main manufacturer and user of VENGINE configuration. Harley-Davidsons have a wide variety of products according to Standard, Performance, Touring & custom. ENVIRONMENTAL This industry is the first attacked by environmental activists, the environmental laws varies from country to country. In Europe its Euro, in India its BS. Harley-Davidsons one of the main problem is this environmental problems. LEGAL A new assembly facility opens in Manaus, Brazil, the first operations outside of the U.S, reduces taxes, make them more affordable to a larger group of Brazilian customers. Harley-Davidson is facing some legal problems in Asian countries, in India there is 60% tariff and various other taxes will cause the price of the bike to double.

Noise pollution and some emission standards of Harley-Davidson bike is not up to the level of some countries across the globe.

Five Forces
Internal Rivalry: [High] Four major competitors are mainly concentrated on these heavyweight motorcycle segments: in addition to HarleyDavidson the other three are Yamaha, Suzuki, Honda all are Japanese companies. Some of the major competitors of Harley-Davidson have larger financial and marketing resources and are more diversified (Example: Yamaha, half of its revenue is only from motorcycles). Polaris (American snowmobile/ATV manufacturer) producer of Victory motorcycles priced its motorcycles below the Harley-Davidson motorcycles. Strategic alliance between Suzuki and Kawazaki in the areas of product development, design, engineering, and manufacturing of motorcycles, this alliance strengthened both companies global motorcycle businesses. Honda, the main competitor of Harley-Davidson in U.S eats up some market share of Harley-Davidson.

 Potential entrants: [Medium] Entry barrier is very high is this segment, because this segment needs a lot of capital investment and the industry is on a maturity stage, so that there is only four main competitors. The economies of scale are low in this segment, which is the reason why there are only four major players. Train and installing machinery for this type of heavy weight segment is highly capital required. There is some small scale producers, who are making these custom made motor cycles but the amount of their production is not at all a threat for Harley-Davidson, and they are increasing the interest of motorcycles among the general public. Substitute products: [Medium] Harley-Davidson motorcycles are a luxury vehicle, so that there is only a few close substitutes for heavy weight motorcycles that could seriously affect the market. Passenger cars, sports bikes, scooter bikes are the main substitutes of Harley-Davidson motorcycles. Even cycle is a substitute for this industry. Most of the buyers of this heavy weight motorcycle are travelers, so even rail and airways can be substitute for this product. The people who are thinking of buying a heavy weight motorcycle are not seriously considering one of these options, scooter, and sports bike. In India Enfield can pose as a small substitute.

Bargaining Power of suppliers: [Low] Steel, basic electrical equipments and shipping of final motorcycles are the main things Harley-Davidson seeks from

suppliers. For these items the number of suppliers is also high so the bargaining power is low. Harley-Davidson has a wide span of suppliers, so that if one supplier attempted to increase the price, they can easily switch to the alternate suppliers without any problem in production. Bargaining Power of Customers: [Medium] Consumers of Harley-Davidson motorcycles are individual customers, so that they cant seriously affect Harleys financial position. The numbers of dealers around the globe are also less and they are also dependent to the individual customers, that cant affect Harley-Davidsons financial position.

OPPORTUNITIES
The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world. Harley-Davidson can exploit this situation by introducing more products into European soil (Harley-Davidson and Buell products). Women and younger riders are increasingly becoming interested in bikes. The major buyer of Harley-Davidson for now are male in their mid forties, so by getting more women and young riders will make Harley-Davidson flourish its revenues. The international heavy weight market is growing and is now larger than the U. S. heavyweight market. Harley-Davidson is now concentrated on U.S market but the global market is growing and Harley-Davidson can exploit this by going into more and more global markets like Asian and European countries. Market share increasing in Europe and Asia for the last two years. Increase Harley-Davidsons presence there will increase its revenue. Making use of their Buell division they can get into joint venture with Asian and European vehicle manufacturers. Even if they cant introduce their heavy weight models in India they can introduce their Buell small and sports bikes in India with these types of joint ventures. Increasing demand in US markets for bikes. 92% of its motorcycle customers intend to repurchase. Customers value quality parts. Harley-Davidson have a good brand value among its customers and in U.S people, so they can exploit this situation, by teaching and educating the customers what is considered as a quality product and what are the things they are using for manufacturing their bikes. This will increase the customer loyalty to this brand and this will help in a market penetration.

THREAT
Harleys ongoing capacity restraints caused a shortage supply and a loss in domestic market share in recent years. High rise in the Oil prices. Harley-Davidson vehicles are heavy weight motorcycles and this is one of the major threats they are facing, because their vehicles are more oil consuming. Harleys average buying age is 42 years old and increasing. The European Unions motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U.S and increased environmental stand Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified Environmental protection laws Buell division needs to continue to produce a quality motorcycle under Harleys brand name.

EFE MATRIX
Weighted score

Key external factors OPPORTUNITIES

Weight

Rating

The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world The international heavy weight market is growing and is now larger than the U. S. heavyweight market Women and younger riders are increasing becoming interested in bikes Market share increasing in Europe & Asia for last 2 yrs Increasing demand in US markets for bikes, 92% of its motorcycle customers intend to repurchase Customers value quality parts
THREAT

0.15

0.6

0.15 0.1 0.1 0.1 0.025

4 3 3 2 1

0.6 0.3 0.3 0.2 0.025

Harleys ongoing capacity restraints caused a shortage supply and a loss in domestic market share in recent yrs High rise in the Oil prices Harleys average buying age is 42 years old and increasing The European Unions motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U.S and increased environmental stand Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified Environmental protection laws Buell division needs to continue to produce a quality motorcycle under Harleys brand name
TOTAL

0.15 0.14 0.1

2 2 2

0.3 0.28 0.2

0.025

0.05

0.025 0.025

2 2

0.05 0.05

0.05 1.14

0.15 3.105

Competitive Profile Matrix

CPM CRITICAL SUCCESS FACTORS Weight HARLEY Rating Weighted Score HONDA Rating Weighted Score YAMAHA Rating Weighted Score

Advertising Product Quality Price Competitiveness Management Financial Position Customer Loyalty Global Expansion Market Share
TOTAL

0.15 0.15

4 4

0.6 0.6

3 3

0.45 0.45

4 3

0.6 0.45

0.1 0.025 0.1 0.15 0.025 0.3 1

1 3 2 4 2 2

0.1 0.075 0.2 0.6 0.05 0.6 2.83

3 4 4 3 4 4

0.3 0.1 0.4 0.45 0.1 1.2 3.45

3 2 3 3 3 3

0.3 0.05 0.3 0.45 0.075 0.9 3.13

INTERNAL ANALYSIS
FINANCIAL RATIOS LIQUIDITY RATIOS Current Ratio = Current Assets / Current Liabilities = 2729/956 = 2.85 Quick Ratio = (Current Assets Inventory) / Current Liabilities = (2729-208)/956 = 2521/956 = 2.63 LEVERAGE RATIOS Debt to Total Assets Ratio = Total Debt / Total Assets =994/4923 =0.20 Debt to Equity Ratio = Total debt / Total stock holders equity =994/2958 =0.34

Long Term Debt Equity Ratio = Long term Debt / Total stock holders equity =670/2958 = 0.23 Times Interest Earned Ratio = Profits before interests and taxes / Total Interest charges =1149/0 ACTIVITY RATIOS

Inventory Turnover = Sales / Inventory of finished goods =4624/208 =22.23 Fixed Assets Turnover = Sales / Fixed Assets =4624/2194 =2.10 Total Assets Turnover = Sales / Total Assets =4624/4923 =0.93

Accounts Receivables Turnover = Annual Credit Sales / Accounts receivable =4624/1114 =4.15 Average Collection Period = Accounts Receivables / (Total credit sales/365) =1114/(4624/365) =1114/12.66 =87.99 PROFITABILITY RATIOS Gross Profit Margin = (Sales COGS) / Sales =(4624-3070)/4624 =1554/4624=0.34 Operating Profit Margin = EBIT / Sales =1149/4624 =0.25 Net Profit Margin = Net Income / Sales =761/4624

= 0.16 Return on Total Assets (ROA) = Net Income / Total Assets = 761 / 4923 = 0.15 Return on Equity (ROE) equity Earnings Per share (EPS) equity Price Earning ratio per share =39.11/2.519 =15.526 Growth ratio Sales Net income =Annual % growth in total sales = (4624-4091)*100/4091=13.029 =Annual % growth in profits =(760-580)*100/580=31.034 Financial strength of the company is good, but there is a decline in the sales in 2003 as compared to the previous year 2002. Net income has increased. = Net income / Total Stock holders = 761 / 2958 = 0.26 = Net income / Total stock holders = 761 / 302 = 2.519 =Market price per share/Earning

YEAR BY YEAR FINANCIAL ANALYSIS OF Harley-Davidson STRENGTHS

FINANCIAL ANALYSIS
LIQUIDITY RATIOS

2003

2002

2001

Current Ratio Quick Ratio The current ratio is high, its bad for the company

2.86 2.64

2.09 1.87

2.33 2.07

LEVERAGE RATIO
Debt to Total Assets 0.20 0.20 0.19 Debt Equity ratio 0.34 0.34 0.34 Long term DE ratio 0.23 0.17 0.22 Less Debt, good. What percentage of total funds is provided by creditors? Although creditors tend to prefer a lower ratio, management may prefer to lever operations, producing a higher ratio. A low ratio, on the other hand, indicates a wider safety cushion (i.e., creditors feel the owner's funds can help absorb possible losses of income and capital).

ACTIVITY RATIO
Inventory Turnover 18.79 19.72 Fixed Asset Turnover 1.78 2.40 Total Asset Turnover 0.79 1.11 Its almost flat over the period, but the turnover ratio is declining thats not good for a company. 19.81 2.47 1.15

PROFITABILITY RATIO
Gross Profit margin 0.21 0.35 0.34 Operating profit margin 0.29 0.21 0.18 Net Profit Margin 0.19 0.13 0.12 ROA 0.15 0.15 0.14 ROE 0.26 0.26 0.25 EPS 2.52 1.92 1.45 Gross profit margin is declining thats not good for the company, but net profit is increasing. Return.

GROWTH RATIO
Sales -9.27 19.90 Net Income 31.14 32.56 EPS 31.16 32.62 The sales has been declined in a huge percentage as compared to the previous year (2002). The other two are almost steady.

 Net income of 2003 was $760mn; its more than 30% as compared to the previous year 2002. The standard and performance segments of Harley Davidson make up 70% of the European heavy weight motorcycle market Harley-Davidson operates in two segments: Harley-Davidson motorcycles & related products and HDFS (Harley-Davidson Financial Services). Harley-Davidson is the only major American heavyweight motorcycle manufacturer. Strong brand name, one of the main things which are required for all companies in this industry. The HOG (Harley Owners Group), which have a 7, 50,000 members world wide, is the industrys largest company sponsored motorcycle enthusiast organization. Buell Riders Adventure Group (BRAG) was also formed recent Customization of the bikes, this is Harley-Davidsons major revenue maker. Harley-Davidson has a good marketing division and its divided as dealer promotions, customer events, magazine and directmail advertising, and public relations. WEAKNESS High price, Harley-Davidson bikes are the costly bikes in this category. They just started making some bikes in the low cost category. Harley-Davidson has problems in gaining more market share in some European countries (Thats one of the main markets for Heavyweight motorcycles outside U.S). They didnt yet start its sales in India, one of the biggest markets. Required production is not met, analyzing the future of Heavyweight motorcycle market

IFE MATRIX
KEY EXTERNAL FACTORS STRENGTHS WEIGHT RATING WEIGHTED SCORE

Net income of 2003 was $760mn, its more than 30% as compared to the previous year 2002 The standard and performance segments of Harley Davidson make up 70% of the European heavy weight motorcycle market Harley-Davidson operates in two segments: Harley-Davidson motorcycles & related products and HDFS (Harley-Davidson Financial Services) Harley-Davidson is the only major American heavyweight motorcycle manufacturer Strong brand name The HOG (Harley Owners Group), which have a 7,50,000 members world wide is the industrys largest company sponsored motorcycle enthusiast organization Buell Riders Adventure Group (BRAG) was also formed recent Customization of the bikes, this is HarleyDavidsons major revenue maker Harley-Davidson have a good marketing division and its divided as dealer promotions, customer events, magazine and direct-mail advertising, and public relations
WEAKNESS

0.15

0.45

0.09

0.27

0.025

0.1

0.1 0.15

4 4

0.4 0.6

0.05

0.2

0.025

0.1

0.025

0.1

0.025 0.15

4 2

0.1 0.3

High price Harley-Davidson has problems in gaining more market share in some European countries (Thats one of the main markets for Heavyweight motorcycles outside U.S). They didnt yet start its sales in India, one of the biggest markets

0.06

0.06

0.1

0.1

Required production is not met, analyzing the future of Heavyweight motorcycle market
TOTAL

0.05 1

0.05 2.83

SWOT matrix

Opportunity
SO Strategy: SALE OF HARLEY DAVIDSON IN EUROPEAN MARKET IS OF 70% AND THEY CAN IMPROVE THIS BY INTRODUCING MORE PRODUCTS INTO THE MARKET AND THROUGH ADVT AND ALL. BECAUSE THIS MARKET IS GROWING HIGHLY. EXPAND PRODUCTION TO EUROPE EXPAND PRODUCTION TO ASIA HARLEY DAVIDSON CAN MAKE USE OF ITS GOOD BRAND NAME, BECAUSE NOW A DAY PEOPLE ARE MORE CONCENTRATING ON QUALITY PRODUCTS WO Strategy

Threat
ST Strategy

Strength

INCREASE STRONG BRAND NAME INCREASE MARKET TO YOUNGER CUSTOMER

WT Strategy

Weakness

IMPROVE EMPLOYEE RELATIONSHIP

GRAND STRATEGY MATRIX Buell Motorcycles a division of Harley-Davidson. This was purchased by Harley-Davidson; this division still uses Harley-Davidson to improve its sales.

STRATEGY: MARKET DEVELOPMENT, MARKET PENETRATION, PRODUCT DEVELOPMENT, HORIZONTAL INTEGRATION, DIVESTITURE, LIQUIDATION.

SPACE Matrix
Environmental
Financial Strength (FS) Return on Investment Leverage Liquidity Working Capital

Stability
-2 -3 -6 -2

2 3 4 2 5

(ES) Technological changes Rate of Inflation Demand variability Price range of competing products Barriers to entry into

Cash Flow Inventory Turnover Earnings per Share Price Earnings Ratio Total Competitive Advantage (CA) Market share Product quality Product life cycle Customer Loyalty Competition's capacity utilization Technological know-how Control over suppliers & distributors Total

3 3 2 24 -1 -1 -3 -1 -4 -1 -2 -13

market Competitive pressure Ease of exit from market Price elasticity of demand Risk involved in business Total Industry Strength (IS) Growth potential Financial stability Technological know how Resource utilization Ease of entry into market Productivity, capacity utilization Total

-6 -4 -3 -2 -2 -30 3 3 5 4 6 4 25

Average value for FS = 3 Average value for CA = -1.85 Average value for IS = 4.17 Average value for ES = -3.33 Point on X axis = (-1.85+4.17)/2 = 1.16 Point on Y axis = (3-3.33)/2 = -0.165 Strategies:

STRATEGY: BACKWARD INTEGRATION, FORWARD INTEGRATION, HORIZONTAL INTEGRATION, MARKET PENETRATION, MARKET DEVELOPMENT, PRODUCT DEVELOPMENT.

I.E MATRIX Harley-Davidson U.S MARKET SHARE: 49% Harley-Davidson EUROPEAN MARKET SHARE: 07% Harley-Davidson ASIAN MARKET SHARE: 22%

STRATEGY: BACKWARD INTEGRATION, FORWARD INTEGRATION, HORIZONTAL INTEGRATION, MARKET PENETRATION, MARKET DEVELOPMENT, PRODUCT DEVELOPMENT

BCG MATRIX Harley-Davidson RELATIVE MARKET SHARE: 48% GROWTH RATE: 13.029

STRATEGY: MARKET PENETRATION, MARKET DEVELOPMENT, PRODUCT DEVELOPMENT, DIVESTITURE.

QSPM
STRENGTH WEIGHT 0.075 J.V EUROPE AS TAS 3 0.225 J.V ASIA AS TAS 3 0.225

Net income of 2003 was $760mn, its more than 30% as compared to the previous year 2002 The standard and performance segments of Harley Davidson make up 70% of the European heavy weight motorcycle market Harley-Davidson operates in two segments: HarleyDavidson motorcycles & related products and HDFS (Harley-Davidson Financial Services) Harley-Davidson is the only major American heavyweight motorcycle manufacturer Strong brand name The HOG (Harley Owners Group), which have a 7,50,000 members world wide is the industrys largest company sponsored motorcycle enthusiast organization Buell Riders Adventure Group (BRAG) was also formed recent Customization of the bikes, this is Harley-Davidsons major revenue maker Harley-Davidson have a good marketing division and its divided as dealer promotions, customer events, magazine and direct-mail advertising, and public relations
WEAKNESS

0.045

0.135

0.09

0.0125 0.05 0.075

4 4 4

0.05 0.2 0.3

3 4 2

0.0375 0.2 0.15

0.025 0.0125

2 2

0.05 0.025

3 4

0.075 0.05

0.0125

0.0375

0.0375

0.0125 0.075

2 2

0.025 0.15

2 2

0.025 0 0.15

High price Harley-Davidson has problems in gaining market share in some European countries (one of the main markets for Heavyweight motorcycles outside U.S). They didnt yet start its sales in India, one of the biggest markets Required production is not met, analyzing the future of Heavyweight motorcycle market
OPPORTUNITIES

0.03 0.05 0.025

3 3 4

0.09 0.15 0.1

3 3 4

0.09 0.15 0.1 0

The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world

0.075

0.3

0.15

The international heavy weight market is growing and is now larger than the U. S. heavyweight market Women and younger riders are increasing becoming interested in bikes Market share increasing in Europe and Asia for the last two years Increasing demand in US markets for bikes Customers value quality parts
THREAT

0.075 0.05

4 3

0.3 0.15

3 4

0.225 0.2

0.025 0.1 0.0125

3 2 1

0.075 0.2 0.0125

4 3 2

0.1 0.3 0.025

Harleys ongoing capacity restraints caused a shortage supply and a loss in domestic market share in recent years Harleys average buying age is 42 years old and increasing The European Unions motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U.S and increased environmental stand Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified Environmental protection laws Buell division needs to continue to produce a quality motorcycle under Harleys brand name

0.075 0.025

4 3

0.3 0.075

3 2

0.225 0.05

0.0125

0.0375

0.025

0.0125 0.0125 0.025 1

2 4 1

0.025 0.05 0.025 3.0875

3 2 2

0.0375 0.025 0.05 2.7925

STRATEGY RECOMMENDATION & IMPLEMENTATION: MARKET PENETRATION Get some more market share from the existing market, like U.S, U.K, and Japan etc through more marketing techniques like advertising. Harley-Davidson has a good brand name so its easy for them to eat up the competitor market share if they can provide some more customer benefit. Competition is high in this segment mostly in U.S so market penetration can be a good choice for the company. Expand the HOG (Harley Owners Group) to Asian countries, if the company can provide the customer satisfaction that they are providing to the U.S customers to the Asian customers they can increase the sales. PRODUCT DEVELOPMENT Younger generation and female are now coming to this segment so expand the motor cycle segments to younger generation and females. In Europe they can increase or expand the Buells market share by introducing new motorcycles. New hybrid bikes, low cost street bikes, Energy efficient bikes for the developing countries and new environmental friendly bikes will help Harley-Davidson to get more market share.

MARKET DEVELOPMENT Harley-Davidson can bring in their vehicle to Asian countries like India and China, because these countries have a high population and the market potential is also high. The cost to bring in the old vehicles (old product) to India is so much difficult because there are so much environmental laws are there which wont allow that type of vehicles to come to India, and its difficult that taxes and levis are high in India so starting new plant in India can solve this problem. Negotiations with the Government can solve these problems. DIVERSIFICATION Bring in new vehicles to new markets like India and China is a good choice, but its too costly. Bringing new types of recreational vehicles is a best choice. RECOMMENDATION Expand European and Asian market. Increase the sales of Buell sport bike and Harley-Davidson to younger customers and females. Horizontal diversification: acquires or develops new products that could appeal to its current customer groups even though those new products may be technologically unrelated to the existing product lines. Concentric diversification: Bring in new recreational vehicles. EVALUATION REVIEW UNDERLYING BASES OF STRATEGY Once again prepare all the internal and external analysis (eg: EFE & IFE) Compare the already prepared analysis with the one which will be prepared after the new strategy implementation. MEASURING ORGANIZATION PREFERENCES Analyze all financial ratios (current and the future).

 If any advantage, then implement the new strategy, otherwise continue with the present one.

Reference: Strategic Management Concepts and Cases; Fred R. David, 10th & 12th Edition. www.wikianswers.com www.yahoo.com (yahoo finance) www.harley-davidson.com www.google.com http://www.fool.com/investing/value/2006/08/02/calculating-return-onassets.aspx http://www.va-interactive.com/inbusiness/editorial/finance/ibt/ratio_analysis.html