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Harley-davison aims to be the leading motorcycle company. U.s. Motorcycle market is worth $14. Billion (2007) and is expected to reach $21 billion as a whole by 2011. The lack of confidence in the current housing market is a key detriment to the industry.
Harley-davison aims to be the leading motorcycle company. U.s. Motorcycle market is worth $14. Billion (2007) and is expected to reach $21 billion as a whole by 2011. The lack of confidence in the current housing market is a key detriment to the industry.
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Harley-davison aims to be the leading motorcycle company. U.s. Motorcycle market is worth $14. Billion (2007) and is expected to reach $21 billion as a whole by 2011. The lack of confidence in the current housing market is a key detriment to the industry.
Droits d'auteur :
Attribution Non-Commercial (BY-NC)
Formats disponibles
Téléchargez comme DOCX, PDF, TXT ou lisez en ligne sur Scribd
Professor DonaId Looney BIack HiIIs State University
November 25, 2011 VISION STATEMENT At Harley-Davison we wish to be the leading motorcycle company that best understands and satisfies our customers, while offering great customer service and quality products. MISSION STATEMENT Harley-Davidson is dedicated to developing and distributing a wide variety of motorcycles and accessories to all our customers who wish to experience the thrill of motorcycling. Our company stays competitive in the motorcycle industry by using state of the art technology to enhance performance, comfort, and quality. We strive to capitalize our success on a global scale in an effort to maximize our stakeholders' wealth and financial growth. t is of great importance that we operate and grow at a profitable rate through sound economic decisions. Our employees are skilled, well compensated, rewarded, and offered fringe benefits to help create and maintain an experienced and qualified taskforce.
EXTERNAL ASSESSMENT ExternaI Audit The purpose of an external audit is to assess the industry that Harley-Davidson operates in and to list the opportunities that the firm could benefit from and be knowledgeable about the threats that should be avoided. The recreational vehicle industry is particularly fragile and companies in this industry are sensitive to intense competition. The three main obstacles to the motorcycle industry are the economic recession and its worldwide inflation, the rising bike prices, and the troubled housing industry, which is a key connection to bike buyers. The U.S. motorcycle market is worth $14.6 billion (2007) and is expected to reach $21 billion as a whole by 2011. 1 The U.S. market accounts for 25% of the global motorcycle market. arket value is expected to grow 7.1% from 2005 2010 with market volume expected to grow 7.5% in the same timeframe. nternational sales represented 33% of Harley's revenues in 2010. The market value of motorcycles in Europe has declined .8% from 2001 2005 with market volume also decreasing 1.6% in that timeframe. 2
The economic factors affecting the motorcycle industry are many. As listed above, the economic recession with the addition of worldwide inflation being a key detriment to the industry at this time. The lack of confidence in the current economy is directly proportional to the purchasing of any consumer items, especially those that are purchased with discretionary income. The unemployment rate in the U.S. was 9.0% in October of 2011, down .1% from September. Productivity in the U.S was 3.1% in October 2011, up 3.2 from September 2011. 3
Personal income rose 0.4 percent in October, exceeding private-sector forecasts of a 0.3 percent increase. Wages and salaries, the largest part of income, rose 0.5 percent. Real consumer spending edged up 0.1 percent, compared to expectations of a 0.3 percent rise. This followed a pickup of 0.5 percent in September. 4 f the upward trend in the U.S. continues, the motorcycle industry may begin to experience an increase in sales. There are also many social, cultural, demographic, and environmental factors that influence the industry. Social factors are one of the most important non-economic factors affecting the recreational vehicle industry. The average Harley-Davidson owner is a married, 47 year old male with an annual income of $85,000 per year. Over two thirds of Harley-Davidson's sales are to buyers with at least one year of education beyond high school. Only 10% of Harley owners are women, leaving a huge untapped segment that could be focused on. 31% of Harley owners have at least 30 or more years of riding experience. 5
Cultural and demographic forces also play a role in Harley-Davidson's external assessment. Americans 65 and over will increase from 12.6% in 2000 to over 20.0% by the year 2050. 23% of Harley owners are between the ages of 51 60, with an additional 7% being aged 61 70. The baby boom generation has driven the increase in consumer spending, and as this group ages, their spending could shift to more retirement-type of purchases. This could be a sign of market segment growth if Harley-Davidson is able to shift their focus to the younger generations. Political, legal, and governmental forces are also at play within the industry. Worldwide, governmental forces may be the hardest that Harley-Davidson will have to contend with. any cities in Asia and Europe have massive restrictions on motorcycles, including banning them from elevated highways to curb noise and thefts. n China, motorcycles have been blamed for many thefts by people on motorcycles driving by individuals and lifting their purses. This has caused a decline in the allure of owning a motorcycle. The EPA regulates noise and emissions of both automobiles and motorcycles, which is an important consideration for many purchasers. Harley-Davidson's bikes are not up to the regulations of many European and Asian nations across the globe, causing consumers in these areas to shy away from purchasing them. There are also many taxes and tariffs in Asian countries that are causing the price of the bikes to nearly double, causing many consumers to not be able to afford them. ey InternaI Assessment Key nternal Forces The Harley-Davidson Company was founded by William Harley and Arthur Davidson in a small wood shed in 1903. Since then, the company has become one of the most successful motorcycle dealers in the world because they were able to capitalize on their strengths and minimize their weaknesses. Harley-Davidson is a financially sound and expanding company. The company specializes in, and is one of the global leaders for manufacturing and distributing heavyweight motorcycles. The Harley-Davidson name has grown to be acknowledged as a brand name producer whose products are associated with good quality. The company is recognized as the world's largest producer of heavy weight motorcycles by market share. With continued expansion the company now offers 35 different models, and has more than 650 stores in the U.S. n 2006 it was reported that 80% of Harley sales were in the U.S. Recent numbers show that sales are increasing in other countries, making the U.S. only accountable for only 60% of total sales. At the end of the first quarter in 2011 Harley's international sales had increased by 11.3%, with sales in Europe alone increasing by 22.7%. Sales overall were up 2.5%. anagement The management for Harley-Davidson has clearly defined positions in which each of the company's employee duties are clearly laid out. This helps the company to function properly and in an organized manner. Harley also capitalizes on management strengths by trying to incorporate employees in decision making and company involvement in an attempt to keep employee morale at its highest. Although Harley management has done a good job on capitalizing on their strengths, there are a few weaknesses that the company could improve upon. The recent recession has forced management into a tough position in which they could not find a profitable solution for. anagement closed many dealerships and laid off thousands of workers. anagement has also been slow and unsuccessful while expanding into ndia's markets, which is one of the company's recent expansion goals. Overall, Harley is a financially strong company, in part due to their effective management. arketing Harley Davidson's marketing strategy has definitely benefitted the company. Certain marketing slogans that the company uses to promote their products and deter the competition have increased the company's success. These slogans include "Until you've been on a Harley- Davidson, you haven't been on a motorcycle and "The Legend Rolls On. Harley's products have grown to represent an American icon, and accounts for a large portion of Harley's advertising in the U.S. The company also tries to promote the Harley lifestyle to its customers which has been successful thus far. The biggest and most successful advertising technique in the U.S. has been promoting that the product is American made, and has evolved from among the first motorcycles created. The brand image that Harley has built in the United States helps to increase product awareness and also develop repeat customers. Weaknesses in Harley's marketing technique would include a lack of emphasis on the younger generation. Harley's prime customers are from the baby boomer generation and are starting to decrease due to age. The majority of Harley's business comes from married males in their late forties. Targeting youth could expand sales and offer a more sound future for the company. Women are also becoming potential customers that the company should advertise to as well. Women currently only represent 10% of Harley buyers, but that rate is expected to rise over the next few years. Harley-Davidson does not spend a great deal of money in advertising due to the fact that they have such an established brand image. The implication here is that Harley is not directly marketing towards women or the younger generation, which are areas they will have to focus on in order to expand their market share. As the customers of the baby boomer generation begin to decrease their recreational buying, it will be up to Harley to grab the attention of the younger generations. Finance/Accounting Despite the recent recession and rough financial times for Harley Davidson they seem to be getting back on the right track financially. Gross profit margin went from 20.3% in the fourth quarter of 2009 to 29.6% in the fourth quarter of 2010. Harley also announced a 73.5% increase in income from the first quarter of 2010 to the first quarter of 2011. A weakening U.S. dollar has also helped increase international sales. Harley's total revenue from sales increased by 2.5% in 2011. The recession hit Harley-Davidson quite hard financially, making many of the company's financial weaknesses apparent. The recession's effects are still impacting the company. arket share was down 1.9% in the first quarter of 2011. Total debt/equity ratios are higher in 2011 as compared with the current 5 year average. Harley also finances about half of the bikes which they sell. With the current recession still lingering around many of these customers are unable to continue paying on their loans. This seems to be taking a toll on the company financially. Production/Operations When it comes to motorcycles Harley-Davidson takes great pride in being one of the country's only all American made products. any of Harley's customers stay loyal to the business for this reason, especially United States military veterans. The company also has several production plants around the U.S. which produce new models, custom bikes, and replacement parts. These plants use up to date technology and are set up to keep up with the current market demand. Harley-Davidson has a reputation for producing products that are of reliable quality. Production weaknesses for the company include the fact that all productions are union based in the U.S. This makes for expensive labor costs and potential strikes. Production of these bikes cost more than competitors making the products more expensive for customers. This turns many potential customers to cheaper competitors. Harley will need to focus on the upcoming labor collective bargaining agreements to ensure that there is no relocation of production facilities, work stoppage, or other labor disputes adversely affect the company's business. Research and Development Harley-Davidson has two research and development factories. These facilities are constantly improving their models making them more reliable and up to date. Harley takes great pride in producing quality products through continuous improvement. The company is always modifying and updating models, or even producing new ones to keep a competitive advantage. Harley capitalizes on strengths such as creating new models to attract new customers. Just in the past few years the company began producing trikes to retain and even attract new customers. Harley has recently introduced new exhausts to reduce emissions, fuel injection, and water cooled engines. Harley-Davidson has failed in their attempts to enter certain new motorcycle markets such as the light weight market and the sport bike market. n the sport bike market Harley distributed their Buell models until production was ended in October of 2009. Competitive research and development for the company is quite costly. Development of new models may require new facilities or renovations of the existing ones, causing expenses to rise.
anagement nformation Systems anagement information systems are an important tool when it comes to quality and consistency for Harley-Davidson. With S, Harley can stay more organized and keep clear and accessible records for its company. These may track sales habits, rising or falling demands, and even productivity rates. S gives the company a better understanding of what is going on in their business. Weaknesses of the systems include high purchase and maintenance costs. System failures can also lead to data loss. Financial Ratio Analysis Ratio HarIey- Davidson 2010 HarIey- Davidson 2009 HarIey- Davidson 2008 Ducati Motor Co.- 5 year avg. Industry Average Liquidity Ratios
Current Ratio 2.02 1.9 2.07 5.09 1.31 Quick Ratio 1.86 1.78 1.9 1.07 1.14 Leverage Ratios
Debt to Total-Assets Ratio 0.61 0.62 0.5 0 NA Debt to Equity Ratio 2.61 2.67 1.86 0 115.83 Long Term Debt to Equity Ratio 2.05 1.95 1.03
1. Additional job cuts have helped improve profit margin from 2.98 in 2009 to .36 in 2010. 1. Not generating enough of bikes for its demand
2. arket Leader - commands 50% of the industry of heavyweight motorcycles in the US . 2. Bad Acquisitions Hurt Harley Davison
3. ncrease in production by 8,452 units over last year's third quarter. 3. Weak Online presence
4. Company has cut supplier base by 80% since 1996 to manage increase production internally and cut costs 4. Weak R&D
5. Strong brand recognition and customer loyalty 5. 308,000 recalls cost company 10 to 12 million dollars
6. n terms of non-US distribution, Harley - Davidson has 71 full service dealerships in Canada, 383 in Europe, 201 in Asia Pacific and 32 in Latin America 6. ust rely on a network of independent dealers and distributors to manage retail distribution of products to meet financial growth in revenues.
7. Financial Leverage - Harley Davison's total assets increased by over 30,000,000 from 2009 to 2010 7. Dependent on Unionized labor and collective bargaining agreements expires arch 2012.
8. Operates in two segments - Financial services and motorcycles with related products. 8. Financial services operations rely on external sources to finance a significant portion of its operations.
9. Technology Helps Harley Davison - Company is aggressive in standardizing its T systems to streamline operations and reduce expense of multiple products 9. Operations dependent attracting and retaining skilled employees and management.
10. Strong anagement Helps Harley Davison
11. nternational retail sales are increasing
Opportunities SO Strategies WO Strategies 1. Fragmented arket Provides Opportunities 1. Develop lower priced/ light weight bike. Efficient in fuel consumption for individuals who are interested in riding a bike but cannot afford or ride the current models. 1. Negotiate with unions based on economic status (recession) to eliminate increases. 2. Online arketplace Could Provide Opportunities for Hogs 2. Create another line for female riders 2. ncrease R & D by 10% 3. ore Financial Leverage Could Help Earnings 3. Create an environmentally friendly powerful bike with less fuel emissions. 3. Research how Financial Services can be self-reliant 4. New arkets and Services arket products to women and lower ages. 4. ncrease quality control by 10% 5. nnovation Could Help Harley Davison
6. Emerging arket Have Potential
7. nternational arkets Provide Opportunities
8. Fuel Prices 9. Appealing to multi- generational and multi-cultural customers worldwide
10. Women purchasing motorcycles have increased 52% from 2003 to 2008 and still increasing.
11. ncreasing Technology in Research and Development
12. Develop a environmentally friendly powerful motorcycle
HarIey-Davidson Threats ST Strategies WT Strategies 1. Bad Economy Could Hurt Earnings at Harley Davison 1. ncrease current promotional campaign (product placement, advertising, online newsgroup/press releases, media ads) both in the US and abroad. 1. Look for skilled workers outside of the US. 2. Change in Consumer Tastes Could Hurt Bike Sales 2. ncrease production by 10% 2. Perform a market analysis of wants and tastes of today's young bikers 3. Government Regulation is Always a Threat 3. ncrease marketing targeting women and ages 24 - 45
4. Substitute Products Could Hurt Harley Davison
5. Volatile Currencies Could Hurt ntl Sales
6. Volatile Revenue for Bike Sales
7. nternational and US Competition with greater financial resources.
8. neffective collaboration and agreements with Union
9. Absence of material issues associated with workforce reductions
10. Availability of and effective use of third party service providers
11. anufactures products that create exposure to product liability claims and litigation
12. Tightening credit with banks due to credit risks.
13. Failure to adjust to production rate, inventory levels and manage costs associated with a more aggressive retail sales pattern.
14. Honda, Yamaha and Suzuki are more Diversified than Harley in terms of Product
15. Average edium income for Harley Davidson buyers was $85,000
Space atrix inanciaI position Rating Cash and equivalents dropped from $1.5 billion in 2010 to $1.4 billion in 2011. 2 Experienced a 95.9% rise in profits for the third quarter of 2011. 7 Restructuring expenditures reduced 81.6%. 6 Harley is recalling 308000 motorcycles, which will cost the company 10 to 12 million dollars. 1 By 2014 it is expected that more than 40% of revenues will come from international markets. 5 Debt to assets ratio has been steadily improving. 4 Stock price has soared 240% since 2009. 6 Total 31 Industry position ExternaI World recession is currently in effect. 2 Plenty of potential for continued world expansion. 4 The market is large and lucrative with a cap of $8.09 billion. 5 The industry is becoming increasingly competitive. 2 Total 13 StabiIity position ExternaI Current inflation rates are up. -5 The markets demographic continue to get older. -6 Younger generation is becoming more interested in lightweight imported motorcycles. -6 There is an increasing demand for diversified products. -2 Disposable income is on the rise. -1 Total -20 Competitive position Harley has a large base of repetitive customers. -1 Harley Davidson commands roughly 50% of the US market. -2 The company is the market leader in producing and distributing heavy weight motorcycles. -2 About 60% of all motorcycle sales are in North America. -3 Harley's products are associated with high quality and durability. -2 Harley's products are also viewed as expensive. -6 Total -16 ConcIusion SP Average is -20/5 = -5 P Average is 13/4 =3.25 CP Average is -16/6 =-2.67 FP Average is 31/7 = 4.45 Directional Vertical Coordinates: x-axis -2.67+3.25 = .58 y-axis -5+4.45 = -.55
Based on this space matrix Harley Davidson is in a position in which it should pursue competitive strategies. The firm is considered to have major competitive advantages in an industry that has a high growth potential. t would be wise for Harley to attempt to gain control of its competitors by using horizontal integration tactics. Because Harley is strongest in their competitive strategies they should also continue in market development to maintain their competitive advantage. t would also be wise for the company to continue with related diversification. Long Term Objectives Long term objectives