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Harley Daivison

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Submitted By darlic
Words 325
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REV: APRIL 5, 2007

RICHARD L. NOLAN SURESH KOTHA

Harley-Davidson: Preparing for the Next Century
There are very few products that are so exciting that people will tattoo your logo on their body. — Richard Teerlink, Retired CEO, Harley-Davidson In 2003 Harley-Davidson, under the leadership of Jeffery Bluestein, celebrated its 100 birthday. The company, which almost went bankrupt in 1970, had successfully shed its product and marketing doldrums and was once again the market leader of the U.S. heavyweight motorcycle industry. For the last 18 years the company had led the industry in retail sales with a commanding lead of 50% market share in the United States and 32% globally. Noted Fortune: “Harley . . . ranks among America’s top growth stocks since its 1989 IPO [initial public offering]. Its 37% average annual gain runs just behind the 42% pace of another ‘86 debutante: Microsoft.”1 While the company’s successful history was in his thoughts, Bluestein was aware of the formidable issues facing him and his top management team. The company’s customer base had grayed considerably since the early 1990s, and the average age of Harley riders rose from 35 to 47 years in the past decade. Younger Americans (25- to 34-year-old men) seemed to prefer the light sports bikes offered by Suzuki, Honda, Yamaha, and Kawasaki. Bluestein recognized these concerns by noting: “The only thing that can stop us is if we get complacent. Even though we’ve been successful, we can’t stand still.” On April 25, 2005, the company’s stock price declined 17%, despite an increase in first-quarter profits and company sales. The steep decline was in response to the company’s revised estimates for planned 2005 sales; the company lowered its sales estimate by 10,000 units and noted that it planned to make 329,000 units for the year. The need to reexamine or change strategy became more

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...concern into a global brand; a fast motorcycle into a symbol of Italian design and tradition, extreme performance, and technical excellence. Under Minoli, Ducati had enjoyed explosive growth and profitability. Revenues had quadrupled since 1996; EBITDA had grown from 33.4 million Euros in 1997 to around 60.0 million Euros in 2000; the market share had gone from 5.1% in the sport bikes segment in 1997 to 6.7% in 2000 (see Exhibit 1). Despite this success, Minoli was concerned with the future of the company. He knew that Ducati could not grow indefinitely, and was struggling with what strategy might overtake these bounds. Minoli and the rest of Ducati’s top management team were considering different alternatives. One alternative was to attack Harley Davidson’s niche with a Ducati interpretation of a cruiser. Was this broadening of Ducati’s traditional niche the right move to sustain the profitable growth of the company? The Market for Motorcycles in 2001 The roots of the motorcycle industry date back to 1868, when Louis Perraux installed a steam engine on a rudimentary bicycle. In 1894, the Hildebrand brothers and Alois Wolfmüller produced the first motorcycle with an internal-combustion, two-cylinder gasoline engine. The motorcycle quickly became a cultural icon. As T. Krens, the curator of “The Art of the Motorcycle” exhibition at the Guggenheim Museum in New York, observed: The motorcycle is a perfect metaphor for the twentieth century. Invented at the beginning of the industrial...

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Premium Essay

Harley Davidson Global Competition

...international business environment Harley faces? What types of risk does the firm face? The nature of international business environment Harley faces is domestic and international with complexly and risk involve. This is clearly shown in the variation of sales in its two major markets, one at home in the U.S and the other in Europe. As shown in the in the graph chart in 2006, Custom models accounted for 47.4% in the U.S while only 13.4% in the European market. Other sales based on style of bikes are in the U.S performance 15.1%, touring 35.5%, and standard 2.1% while its other market sales in Europe were performance 41.4%, touring 26.1%, and standard 19.2%. The reason Harley faces such diversification is clearly due to consumer preferences. The European markets desires performance bikes made for the open roads and high speed demands. The four main risk which are cross-cultural risk, country risk, currency risk, and commercial risk. 2. How can Harley benefit from expanding abroad? What type of advantages can the firm obtain? What advantages acquired abroad can help Harley improve in its home market? Harley’s can benefit from expanding abroad because it will allow them to separate their business from domestic economic slumps, but also diversifying their product to adjust with the demands of the consumers. The advantages of expanding international sales include maintaining a more sensible business archetype. By increasing internationally Harley can widen its international appeal...

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