Case Study 5
California Southern University
September 19, 2014
Harley-Davidson: Style and Strategy Have Global Reach
In the case of Harley-Davidson, Style and Strategy Have Global Reach, a question of survival in an economic storm is raised – given a new CEO and a revised vision, can Harley-Davidson weather trouble times (Schermerhorn, 2011). Historically, Harley-Davidson was founded by William S. Harley and Arthur Davidson in 1903. They built their first three motorcycles in a shed in Milwaukee. By 1909, they introduced their trademark bike. It had 2-cylinder, v-twin engine which was also the faster bike at the time coming in at 60mph. ...view middle of the document...
com (Harley-Davidson, 2014), Harley started focusing on a massive restructuring plan which included layoffs of almost half of the 4000 employees. In addition, new marketing strategies targeting their traditional strength of heavy weight bikes, and new manufacturing techniques focusing on quality were implemented. In 1983, the government International Trade Commission (ITC) stepped in to grant a tariff for five years to help the failing motorcycle industry compete with Japanese manufacturers. By 1987, the restructuring plan had worked and Harley requested for the tariff to be lifted (Schermerhorn, 2011). The company had turned a financially profitable corner.
Fast forwarding, to 2013, Harley-Davidson net income was $734.0 million, compared to 2012 net income of $623.9 million. 2013 shares were $3.28, up 20.6% from 2012 (Harley-Davidson Financial News, 2014). In terms of market share, Harley has almost 55% of the US 601+cc market according to the Minneapolis/St.Paul Business Journal (Indian still in Harley Davidson's rearview, 2014). Harley’s was back on top of the market.
Graph 1: Harley share of US 601+cc Retail Market
In addition, according to a US motorcycle industry bench market study, Harley is the number one brand per the satisfaction index (Retail news: U.S. Harley-Davidson Dealers Ranked Highest by 2013 Pied Piper PSI, 2013). Not only did Harley recapture market shares of its glory days, Harley also solidified its customer brand loyalty.
Graph 2: 2013 Pied Piper Prospect Satisfaction Index
No doubt Harley is a true turnaround story for other companies to admire; however, their challenge is in their current demographic of predominately Caucasian middle age males (Harley-Davidson Demographics, 2014). Furthermore, the segment is in decline over the next decade (Sizemore, C., 2013). Hence, Harley will face an aging and declining demographics dilemma.
Graph 3: Harley’s Customer Demographics and Its Population Decline
Given the rise, fall and rise again of Harley’s centurion history, they are continued to be challenged by what may be their toughest issue yet – their own demographic strength. This case study will look at Harley’s management approach and to determine if the new CEO and his revised vision will help Harley weather through the current economic storm – The Great Recession.
Harley’s success has been largely attributed to three key areas: manufacturing, marketing and growth strategy. To start, a key differentiation was in Harley’s approach to understanding the role of continuous improvement. They have been interested in manufacturing improvements early on, but traction to implement across product plants was a challenge until 2010, they wanted to implement an XPS continuous process across all their manufacturing plants. XPS stands for “Company-specific Production System”, and describes a corporate-wide system that aims to improve and maintain a competitive operations system (Netland, T. 2011).