Harley Davidson was started in 1903 by two young entrepreneurs viz.

William Harley and Arthur Davidson During its initial years only Davidson bikes were huge success a point that could be understood by the fact that during First World War and Second World War these bikes were used by military people

Though Harley Davidson could easily manage competition from other US motorcycle manufacturers, and maintain its leadership position, but when Japanese players entered the US market in 1960s, they gave set back to leadership position of Harley.

In a friendly takeover, Harley Davidson was sold to AMF. However, not much could be added to performance of Harley after this takeover as a result of which later in 1985, company was bought out by management of Harley Davidson through management buyout procedure.

Heavy Motorcycle industry can be categorized into three segments viz. cruiser motorcycles, touring bikes and performance models. Cruiser Motorcycles: These are big, noisy and with V-twin engine and upright riding position. These motorcycles are mainly positioned as communicators of style, though some male and female in metropolitan cities of USA like New York

Touring bikes: These bikes are meant for longer distances. They are also symbol of style but have more luxuries offerings like heater, audio system and intercom facility. In terms of technological advancement the engine is shaft system based with multi-cylinder and advanced suspension system.

Performance models: These are racing bikes with high speed and accelerator. They use to make 60% of the market. However, Harley was a late entrant in this segment; it entered with Buell motorcycle in this segment, which it acquired in 1998. Harley Davidsons core competency lies in manufacturing of super heavy motor cycles.

Harley Davidsons strategy was built around brand community building which consequently led to formation of cult brand. Harley Davidson invested in brand community building as fundamental of business strategy rather than marketing strategy. Community building programs were not relegated merely to marketing function

For example brotherhood of riders was one of the themes of Harley Davidson to reposition itself. To reinforce this theme Harley Davidson made many changes within the organization and made employees from various departments of organization to join the brotherhood program. For example, many employees became riders along with customers. This regular contact between employees and organization enhanced the impact of community program.

Similarly, functional silos were replaced with flatter organizational structure to give more autonomy and decision making power to employees to deal with customers. Further, to reinforce the stylish image of riders of Davidson, it diversified to style affiliated fields like manufacturing of jackets, caps, lighters, colognes etc.

Even distribution strategy was in alignment with overall community building strategy. Dealers are the most crucial and important point of contact between company and customers. Thus, to train them in customer and related services especial training programs were conducted and to maintain premium image dealership was maintained as exclusive dealership i.e. dealers of Davidson sold only bikes of Davidson.

Even financial strategy was in alignment with overall differentiation (cult making strategy) as financing was mainly through equity rather than debt. This is so because firms which follow differentiation strategy are often overvalued by stock market compared to those on the lines of cost leadership.

Appropriate investment in branding, Human resource, distribution, strategic finance and fit of functional strategies with grand strategy

Overall strategy of Harley Davidson relied on community development and cult brand formation. To create a brand community and to sell lifestyle to customer, it is important to understand aspirational needs of the customer. In other words organization has to become customer centric. Customer centric organization requires more flexibility and more autonomy for lower level employees and that is what Harley Davidson did.

Basic requirement of building customer centric organization is to first treat employees as internal customers. Once company starts believing in customerorganization relationship philosophy, it automatically starts following practices which results in customer satisfaction

Thus in case of organization and employee relationship, focus would be on internal customer hence employee satisfaction Theory suggests that employee satisfaction results from certain best human resource practices like empowerment, delegation, job enlargement etc. just like Harley wanted to sell lifestyle and not motorcycle to external customers; they sold lifestyle and not jobs to internal customers.

Just like transparency is required to deal with customers and their cannot be any wall between employee and external customer, on similar lines wall between management and workers was eliminated glassed office was created rather than office with cabinets and doors.

Just like organization focus on customer loyalty, same implications were made for internal customers as a result of which Harley followed no lay off policy for internal customers so that they could retain maximum number of employees

To further remove bureaucracy and vertical layers in organization team based organization structure was followed. These work groups were titled as natural work groups, process operating groups, plant leadership group

Natural work group consist of workers, with 8-10 workers in the group. Process operating group consisted of representatives and plant leadership group consisted of plant manager and presidents of union

Work group culture was not only followed in the plant, it was also followed in headquarters where the groups were named as circles. Three types of circles exist in Harley Davidson. One is create demand circle, second is produce product circle, third is support circle and in centre is strategy council which overlaps with all the circles

The basic principle of work groups and circles is to work in collaboration with each other and to ensure participation in decision making from all. This kind of participative management allowed fluid circles to take joint decisions on certain strategic issues

Dealers are prime source of contact between customers and respective firm. Davidson realized this aspect and as a result of which it initiated dealer development program. For this special university programs were launched by Harley to impart proper training to dealers. Training programs included not only customer management but also inventory management and service proficiency

This customer oriented company launched completely new set of services for its upper middle income segment customers like free test rides, motorcycle rentals, customization of bikes through dealer centers and chrome centers, availability of whole line of replaceable spare parts and insurance policies

Since premium and exclusive service had to be provided to Harleys customers, dealers appointed for Harley worked exclusively for Harley Around 81% of showrooms of Harley were exclusive showrooms.

Cult brands thrive on the basis of brand loyalty Main theme behind cult brand creation is that customers should associate themselves with the brand. This happens when brand fulfills one of the aspirational needs of the customer. In this case Harley Davidson could fulfill lifestyle need of its customers

Because the customers associated themselves with the brand, repeat purchase of same motorcycle was quite expected. Though bikes are meant for younger generation, impact of successful establishment of cult brand by Harley Davidson was reflected in increasing median age of customers of Harley Davidson. Median age increased from 34 to 46 i.e. almost increase of 10 years

Also out of the total sales of Harley Davidson, approximately 45% of sales was coming from repeat sales, indicating that its customers were high on their brand loyalty towards Davidsons Bikes

Davidson took many steps to create brand loyalty of this stature. Creation of customercompany relation was one of the most important factors responsible for successful cult brand creation

One of the crucial things that company did was to create Harley Davidson group. Prime objective of this group was to enhance relationship between customers, dealers and employees. For examples in the rallies sponsored by Davidson employees and customer riders ride the bike together which gave to the customer a family like feeling.

Apart from this several other benefits were provided to customers which further brought customers closer to company. Some of these were insurance, emergency road side service, membership in riding groups, subscription to magazines of motorcycle etc

Since Harley Davidson was differentiating on brand and lifestyle, it possessed huge amount of assets in terms of its brand value and trademarks. Differentiation strategy calls for more leverage of equity rather than debt. This is because the intangible assets which a differentiator and innovator possess can-not be valued by lenders and bankers appropriately thus making debt expensive in terms of high interest rate

Also firms following differentiation strategy are generally overvalued by stock market thus making equity otherwise also more attractive.

All the efforts of positioning through life style and mystic image would have faltered if Haley bikes would have faulted on aspects of quality. Thus, to assure utmost quality of its bike it went for best practice approach when it came to operations management. For example, Davidson benchmarked its operations against Honda. It learnt JIT techniques at Honda

Harley realized that only 5% of Honda bikes failed the quality control test where as only 50% of Harley bikes could pass QC test in one go. Not only this, productivity per employee also almost three times higher for Honda compared to Harley. To overcome these problems, Harley implemented triad productivity solution with focus on three key areas i.e. employee empowerment, JIT techniques and statistical operator control

Apart from adopting these best practices for productivity and quality purpose, Davidson also kept an intentional gap between demand and supply. Loyal customers had to wait sometimes for a year to get possession of their selected bike. Apart from this Harley also offered customized bikes to its customers where customers could get bikes built of their choice

Thus we see that overall, strategic fit of all the activities and formation of cult brand/ community brand as a organizational strategy and not mere marketing strategy led to overall success of Harley Davidson