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Strategic Report For Harley Davidson

4378 words - 18 pages

Strategic Report for
Harley Davidson

April 4, 2006


Table of Contents
Executive Summary ………………………………………………………… 3
Company History ……………………………………………………………. 4
Five Forces Analysis
Internal Rivalry ………………………………………………………. 8
Entry …………………………………………………………………….. 9
Substitutes and Complements …………………………………. 9
Supplier and Buyer Power ………………………………………. 10
Financial Analysis ………………………………………………………….. 11
Strategic Issues and Recommendations ………………………….. 17


Executive Summary
Harley Davidson remains a financially strong and stable company. During 2005 the
company reported the 19th consecutive year of record revenues and record earnings.
While Harley Davidson’s growth has ...view middle of the document...

Another reason for analysts’ pessimism about Harley Davidson is that recently the
company seems to be resting on its laurels, content with its current market position and
doing little to attract new, younger customers or to offer new motorcycle designs to
appeal to previous customers. One sign of this is that Harley Davidson’s dollar amount
spent on advertising and research and development has actually been decreasing over

the past couple of years. To some it might seem that management is sacrificing the
future of the company by not attracting new riders in order to boost financial
performance today.

Company History
In 1903 William Harley and Arthur Davidson made the first Harley-Davidson
motorcycle available to the public. It was built in a small wooden shed with the words
“Harley-Davidson Motor Company” scrawled on the door. The next year, in 1904, C.H.
Lang opened the first Harley-Davidson dealership in Chicago, selling one of the first 3
Harley’s ever made. In 1906 the company opened a new factory, measuring only 28x80
feet in Milwaukee, Wisconsin. The next year, in 1907 the company doubled its factory
space. Also in 1907 the Harley Davidson Motor Company was incorporated, with the
stock being split between the 4 owners, including William and Walter Davidson
(Arthur’s brothers). By 1920 Harley Davidson is recognized as the largest motorcycle
manufacturer in the world, supported by over 2,000 dealers in 67 countries. In 1953,
one of Harley Davidson’s competitors, Hendee Manufacturing (makers of the Indian
motorcycle line), goes out of business. For the next 46 years Harley Davidson is the
only American manufacturer of heavyweight motorcycles.

In 1912 Harley Davidson built a six story building on Juneau Avenue in downtown
Milwaukee, Wisconsin. This building would become the main offices and factory for
Harley Davidson. In 1947, to supplement existing manufacturing facilities Harley
Davidson purchased the old A.O. Propeller plant, which the company subsequent
converted from wartime manufacturing into a large machine shop. In 1962, in response
to a growing trend of including fiberglass in motorcycle production Harley Davidson
purchases a 60% equity share in the Tomahawk Boat manufacturing company. Harley

uses the companies existing equipment to manufacture its own fiberglass parts,
beginning in 1963 with the official opening of the Tomahawk division of the company.

In 1973 Harley Davidson upgraded its production facilities with the opening of a new
400,000 square foot plant in York, Pennsylvania. The companies manufacturing
operations are now located in York, Tomahawk, and Milwaukee, where the new
Capitol Drive factory begins to manufacture engines that same year. Harley Davidson’s
expansion into York continued in 1992, with the opening a new $31 million paint facility
to complement the manufacturing facilities already located in the town.

Today Harley Davidson’s manufacturing base...

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