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”

Vision Statement
“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

RECOMMENDED MISSION
To be branded as the best motorcycle available in the world.

RECOMMENDED VISION
To provide the best quality motorcycle, motorcycle products and financial
services world wide is the commitment of Harley-Davidson. Customer satisfaction is our
motto and the Harley-Davidson customers can realize their dreams by relaying their
satisfaction on us. Harley-Davidson is dedicated to the use of 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. Harley-Davidson is devoted to
fulfilling dreams of customers and we believe that the Harley-Davidson’s riding
experience is unique. Harley-Davidson believes in excellence and superior quality.
Harley-Davidson does its part in supporting all environmental laws in every country we
do business.

External Analysis
Opportunities
1. Sharp rise in fuel prices provide an opportunity for Harley-Davidson as bikes are
more fuel efficient than cars and SUVs.
2. The European demand for Harley-Davidson is the highest in the international
market and represents the single largest motorcycle market in the world.
3. Women and younger riders are increasingly becoming interested in bikes.
4. The international heavy weight motorcycle market in countries like India and
China is growing and is now larger than the U. S. heavyweight market.
5. Domestic and international customers value quality motorcycle and parts.
Threats
1. Increased competition from less expensive Japanese motorcycles manufacturers
such as Honda, Yamaha, Kawasaki and Suzuki.
2. Consumer’s confidence in the economy is very low. Motorcycles are considered
nonessentials and the performance outlook of this industry is tied to consumer
confidence, income growth and other economic indicators.
3. Harley-Davidson’s ongoing capacity restraints caused a shortage supply and a
loss in domestic market share in recent years.
4. Harley-Davidson’s average buying age is 42 years old and increasing.
5. The European Union’s motorcycles noise standards are more stringent than those
of Environmental Protection Agencies in the U.S.
6. Some competitors of Harley Davidson have larger financial and marketing
resources and they are more diversified.
7. Buell division needs to continue to produce a quality motorcycle under Harley’s
brand name.

Competitive Profile Matrix

Harley Davidson Honda Yamaha
Critical success Weight Rating Score Rating Score Rating Score
factors
Service Quality 0.1 4 0.4 4 0.4 4 0.4
Diversity of Product 0.2 2 0.4 2 0.4 4 0.8
Customer Experience 0.1 4 0.4 4 0.4 3 0.3

Financial Position 0.15 3 0.45 4 0.6 4 0.6

Marketing 0.1 3 0.3 4 0.4 3 0.3

Price competitiveness 0.1 2 0.2 2 0.2 3 0.3

Global Expansion 0.15 3 0.45 3 0.45 2 0.3

Brand loyalty 0.1 4 0.4 4 0.4 4 0.4
Total 1 3 3.25 3.4

External Factors Evaluation Matrix

# Key External Factors Weight Rating Weighted
score
 Opportunities
1 Sharp rise in fuel prices provide an opportunity 0.15 2 0.3
for Harley-Davidson as bikes are more fuel
efficient than cars and SUVs
2 Increasing demand for bikes in the European 0.05 2 0.1
countries
3 Women and younger riders are increasingly 0.15 3 0.45
becoming interested in bikes.

4 The international heavy weight motorcycle 0.1 4 0.4

market is growing and is now larger than the
U. S. heavyweight market.
5 Domestic and international customers value 0.05 3 0.15
quality motorcycle and parts
Threats
6 Increased competition from less expensive 0.05 3 0.15
Japanese motorcycles such as Honda, Yamaha,
Kawasaki and Suzuki
7 Consumer’s confidence in the economy and 0.15 2 0.3
buying power is very low
8 Harley-Davidson’s average buying age is 42 0.1 2 0.2
years old and increasing.
9 The European Union’s motorcycles noise 0.1 2 0.2
standards are more stringent than those of
Environmental Protection Agencies in the U.S.
10 Competitors of Harley Davidson have larger 0.1 3 0.3
financial and marketing resources and are more
diversified.
TOTAL 1 2.55

Internal Analysis

Financial Analysis

1. Current Ratio
Numbers in thousands
Current Assets 5,377,881
Current Liabilities 2,603,757
Current Ratio 2.07
Harley-Davidson’s current ratio is greater than 1. Hence, it is in a good position to pay its
short-term liabilities. The higher the current ratio, the more capable the company is of
paying its obligations.

2. Debt Ratio
Numbers in thousands
Total Liabilities 5,713,022
Total Assets 7,828,625
Debt Ratio 0.730

Harley-Davidson’s debt ratio of greater than 1 indicates that a company has more assets
than debt. Therefore, the company is in pretty good financial health and its level of risk is
minimal.

3. Acid Test ratio

Numbers in thousands
Cash 593,558
Accounts Receivable 419,585
Short Term Investments 3,822,426
Current Liabilities 2,603,757
Acid-test Ratio 1.857

Harley-Davison’s Acid-test ratio is greater than 1 which shows that the company is in
good financial health. The acid-test ratio is lower than the current ratio, which means
current assets are dependent on inventory which is true to retail business.

Strengths
1. International market revenue increased from $1.52 to $1.74 Billion in 2008.
2. The company has a strong brand name. Harley’s heritage is symbolic of American
dream and its image is one of rugged individualism, American iron and passion.
3. The HOG (Harley Owners Group), which have a 7, 50,000 members worldwide is
the industry’s largest company sponsored motorcycle enthusiast organization.
4. Harley creates a “family” concept for its owners. It allows owners to meet, share
experiences and adventures together through its website.
5. Harley-Davidson motorcycles have a unique body styling and has a unique sound
created by its popular V-twin engine. This has enhanced its cult following.
 6. Harley-Davidson’s Custom vehicle Operation (CVO) program allows customer to
customize their bikes. This major revenue maker for the company.
7. The Harley-Davidson museum is a good marketing strategy. It delivers a unique
experience and promotes the brand among the public
8. The company believes in giving back to the community as parts of its corporate
social responsibility. Harley-Davidson Foundation supports education,
community, arts, health initiatives and environment.
9. Harley-Davidson has a competitive advantage with its financial services division
(HDFS) by providing financing options to its customers.
10. Harley-Davidson is the only major American heavyweight motorcycle
manufacturer. It is a leader in the heavy weight market and has 45.5% of the US
market share.
11. Buell Riders Adventure Group (BRAG) was also formed recent.
12. Harley-Davidson has a good marketing division and it’s divided as dealer
promotions, customer events, magazine and direct-mail advertising, and public
relations.

Weakness
1. Harley-Davidson’s domestic revenue decreased from $4.2 billion to 3.85 in 2008.
2. Harley-Davidson’s net income decreased from $933.8 to $654.7 million in 2008
3. In recent years, the company has faced quality problems in its production.
4. It has limitations in its manufacturing processes where it is not able to meet its
required production.
5. Harley-Davidson relies heavily on its heavy weight segment.
6. The motorcycles have a higher price than its competitors.
7. Harley-Davidson has problems in gaining more market share in some European
countries which is one of the main markets for heavyweight motorcycles outside
U.S.
8. It has been late getting into India which one of the biggest markets for bikes with
its 1.2 billion population and crowded cities.

Internal Factors Evaluation Matrix

# Key Internal Factors Weight Rating Weighted

score

Strengths
1 International market revenue increased from $1.52 to $1.74 0.04 3 0.12
Billion in 2008.
2The company has a strong brand name. Harley’s heritage is 0.02 3 0.06
symbolic of American dream and its image is one of rugged
individualism, American iron and passion.
 3The HOG (Harley Owners Group), which have a 7, 50,000 0.04 4 0.16
members worldwide is the industry’s largest company
sponsored motorcycle enthusiast organization.
4Harley creates a “family” concept for its owners. It allows 0.04 3 0.12
owners to meet, share experiences and adventures together
through its website.
5Harley-Davidson motorcycles have a unique body styling and 0.01 3 0.03
has a unique sound created by its popular V-twin engine. This
has enhanced its cult following.
6Harley-Davidson’s Custom vehicle Operation (CVO) program 0.06 3 0.18
allows customer to customize their bikes. This major revenue
maker for the company.
7The Harley-Davidson museum is a good marketing strategy. It 0.04 4 0.16
delivers a unique experience and promotes the brand among
the public
8The company believes in giving back to the community as 0.06 3 0.18
parts of its corporate social responsibility. Harley-Davidson
Foundation supports education, community, arts, health
initiatives and environment.
9Harley-Davidson has a competitive advantage with its 0.04 4 0.16
financial services division (HDFS) by providing financing
options to its customers.
10Harley-Davidson is the only major American heavyweight 0.06 3 0.18
motorcycle manufacturer. It is a leader in the heavy weight
market and has 45.5% of the US market share.
11Harley-Davidson has a good marketing division and it’s 0.07 3 0.21
divided as dealer promotions, customer events, magazine and
direct-mail advertising, and public relations.
Weakness
12Harley-Davidson’s domestic revenue decreased from $4.2 0.1 1 0.1
billion to 3.85 in 2008.
13Harley-Davidson’s net income decreased from $933.8 to 0.08 2 0.16
$654.7 million in 2008
14In recent years, the company has faced quality problems in its 0.06 2 0.12
production.
15Inability to meet its required production. 0.08 2 0.16
16Harley-Davidson relies heavily on its heavy weight segment. 0.06 2 0.12
17The motorcycles have a higher price than its competitors. 0.04 2 0.08
18Harley-Davidson has problems in gaining more market share 0.06 2 0.12
in some European countries which is one of the main markets
for heavyweight motorcycles outside U.S.
19Late getting into India which one of the biggest markets for 0.04 2 0.08
bikes with its 1.2 billion population and crowded cities.
TOTAL 1 2.5
STRATEGY RECOMMENDATION & IMPLEMENTATION
Increase market penetration by 5% by 2011 through increased
marketing and promotional efforts
The average retail purchaser of a Harley-Davidson bike is a married man between the age
group 35 and 54 with a median household income of $87000. The company should set an
appropriate marketing mix to expand its potential customer base to younger generation
(ages < 35) and women.
1. Harley-Davidson should expand the HOG to Asian countries such as India and
China. This would allow customers in these countries to share similar experiences
like that of customers in the US. In addition, this will strengthen its brand image
and thus increase the sales.
2. Harley-Davidson should target its advertisements and commercials towards
women. Surveys show that 93% of bikers are males and there’s huge potential in
encouraging women to take up motorcycles. Through advertising and its website
Harley-Davidson should focus on educating women on biking concepts and
promote the ease of riding Harley-Davidson bikes.
3. The company should also enhance its website (www.harleydavidson.com) by
making it more interactive. The website gives the company the chance to expand
its operations online and its e-commerce to reach potential customers who don’t
have access to Harley-Davidson stores.
4. Through its HDFS, it should offer 0% APR for first time buyers. In addition, it
should offer 1 year membership to the HOG. It should offer its new HOG
members free maintenance checkups up to 12000 miles. This will encourage the
younger generation (ages < 35) to buy its motorcycles as it will lessen the
financial burden on them.

Increase product quality by 5% and increase production capacity by

10% by 2011
In recent years, the company has faced quality problems in its production. Moreover, due
its inefficiencies in supply chain process it has not been able to meet its required
production demands.
1. Harley-Davidson should make additional investments to overcome the weaknesses in its
manufacturing processes. It should implement six sigma process to improve the quality of
process outputs by identifying and removing the causes of defects and minimizing
variability in its manufacturing and business processes. It needs to implement
additional quality controls to ensure high quality of products. It can utilize statistical process
controls and customer feedback as a means to measure and improve its quality of motorcycles.
2. Harley-Davidson should standardize its manufacturing process across all its plants to ensure
product quality. Moreover, it should invest in training its workforce in standard
manufacturing processes. This is clearly a cost to the firm, but the cost will be
offset in the long term by improvements in the workers productivity levels.
3. Harley-Davidson should also invest in new, high-tech machinery such as
computer-controlled robots as they can increase speed of production with
increased accuracy and less wastage.
 Implementation and Evaluation strategy
Harley-Davidson should bring consultants to implement six sigma, TQM and TPC
processes in 2 of its domestic manufacturing plants. The company should also replace 5%
of its assembly line work force with computer-controlled robots. These new processes
can be evaluated by measuring production targets and product defects.

Product Development and Diversification to increase market share and

revenue by 5% by 2011
Harley-Davidson has so far been content with continuing its existing models with minor
tweaks. With increased competition from Japanese competitors and other small custom
bike shops it needs to rethink its strategy. It needs to be proactive and cannot be
complacent. Otherwise it is in putting itself at risk of losing its market share. The
following are the recommendations for Harley-Davidson to recreate its image and
eliminate the stereotype that “Harley’s are slow motorcycles for old men”.

1. The engine is the heart of Harley-Davidson motorcycle and it has employed the V-Twins for a
long time, but they are completely out dated. Harley-Davidson should make additional
investments as part of its strategic initiative to improve its core product technology. It can follow the
percent to sales strategy to invest in R&D to come up with a new engine for its touring and custom line
of bikes.
2. Two-third of Harley-Davidson’s customers are between the age group of 35 and 54.
Most of these motorcycle enthusiasts already own a bike and this target demography is
saturated. Harley-Davidson needs to expand its potential customer base to include
enthusiasts under age of 35. It should introduce 2 new sport models with a performance
engine to target the younger customers. In addition, it should use a low end approach, to
attract a young audience (many of them are just starting their careers) to a brand name
product with a low price tag similar to what Jaguar and BMW have done.
3. Harley-Davidson should focus on an exclusive, fully customizable women’s line with
3 models. The design should be lighter and sleeker to better suit women but still maintain
the rugged image that Harley-Davidson is known for. It should use an engine that is
1000cc or smaller in these models to make them lighter.
4. Europe they can increase or expand the Buell’s market share by introducing new
motorcycles.

Implementation and Evaluation strategy

Harley-Davidson should employ market research analysts in cities like Austin, Chicago,
New York and Charlotte where there’s a high concentration of young adults to research
their lifestyle, trends, preferences and earning power. In addition, gathering statistical
data on competitors and examining prices, sales, and methods of marketing and
distribution would be beneficial for Harley-Davidson in designing its new line of
motorcycles.

New market development to Increase international market share by

10% by 2013
Harley-Davidson should concentrate its efforts on expanding in Asia especially countries
like India, China, Singapore and Malaysia as they have high population and their market
potential is also very high. The following are the recommendations for Harley-Davidson
to develop its international market.
1. Harley-Davidson should open a manufacturing plant in Chennai (Madras) to
overcome the barriers it has faced in gaining a foothold and tapping into this high
potential market. Harley-Davidson has had problems establishing in India due to
its high import tariffs on motorcycles. Establishing a plant in Chennai would
create at least 5000 jobs for the local community and this can be used as an
advantage in negotiations with the Indian Government to receive tax and other
benefits. Moreover, Chennai is one of the 4 major cities in India and is also a
major port. Harley-Davidson can use India as base to venture into other Asian
countries such as Singapore, Indonesia and Malaysia.
2. In addition, it should open dealership in major cities in India like Delhi, Bombay,
Chennai, Bangalore and Hyderabad.
3. partner with dealers to enter China,
Implementation and Evaluation strategy
Harley-Davidson should reorganize itself into a more divisional structure based on
geographic areas. There should be a division for US, Europe, Asia and one for emerging
markets comprising of Africa and South America. Each division should be self-containing
and should also have its own sales, engineering and marketing departments. This will
help to better position itself in these markets.