I.

Time context:

2009

II. Viewpoint:

Marketing Department

III. Statement of the problem

A. Major problem:

Harley Davidson’s product line is relatively out of the

consumer’s preference in their domestic market.

B. Minor problem:

1.) Decrease in annual domestic sales.

2.) Existence of foreign competitors in their local operation.

3.) Limited market segment.

IV. Objectives

A. Must/Short Range Objectives

[1]
 1. To identify the customers preference for a particular product.

2. To satisfy the target market demands and provide product line

based on their preference.

B. Want/Long Range Objectives

1. Dominate the industry despite of the high competition.

2. To have a clear strategic direction of continuing its product
improvement for the benefit of the company and
meeting customers demand.
3. To be able to capture majority of domestic market share.

V. Areas of Consideration

A. SWOT Analysis

Strengths

1. Powerful brand image

Because the firm established in the mind of customer that
riding a Harley- Davidson motorcycle is the fulfillment of
their dreams.

2. Strong relationship with employees

Because it is one of their resources which made them
successful

3. The sole American motorcycle manufacturer

[2]
 This is their key factor to dominate the industry for
decades

4. Established Academy of Motorcycling

Which provide both new and expert riders with a deeper
engagement in motorcycling and to experience Harley
Davidson style.

5. Product customization
Which enable the customers to be more creative in the
styles they want.

6. Customer loyalty
Because they established on the mind of the consumer
that they belong to the family of Harley when they own a unit.

Weaknesses

1. Products are more expensive

That’s why only those rich people can purchase the Harley
motors.

2. People also feared of being called as ”hooligans ” in the

society when they ride a Harley Davison bike.
3. American pride is the main basis of their product
development.
4. Offers only a single product line in the industry.
5. Slow growth in the international market share.
6. Cultural diversity product designs are for big people like
American and Europeans.

[3]
 Opportunities

1. Strong growth in the motorcycle industry in Asia and Mexico.

2. Increasing numbers of women riders.
3. Increasing number of aging population which is considered
as their largest market segment.
4. Technological advancement is useful in the product
development and innovation.
5. Expansion in the global market due to increase in economic
growth.

Threats

1. HD’s competitors offer a more diversified product line that’s

why they are vulnerable in the industry changes.
2. Substitute Products potential development becomes a factor
in purchase decision making.
3. European motorcycle industry is suffering from declining of
growth.

4. Extinguishment of their largest market segment which is the

aging population because they are unable to operate a
motorcycle.
5. Developing car industry.
6. Changing preference of the customers.

[4]
 7. Potential entries of more players with lower prices.

SWOT MATRIX

Strength Weaknesses
Opportunities Having an academy of Technological
motorcycles expand advancement that
the motorcycles puts Harley-Davison
industry in Asia and product more
Mexico expensive compare to
(S4,O1) its competitors
(O4,W1)
The costumers loyalty Harley-Davidson
helps in the expansion pursuing the American
in the global market pride due to
(S6,O5) increasing no. of aging
population which their
target market
(O3,W3)
Increasing no. of
women riders cause of
powerful brand image
of Harley-Davidson
(S1,O2)
Threats Harley-Davidson is the Harley-Davidson must
only one motorcycle provide substitute
manufacturer in products because its
America but its only offer single
competitors offer product line
more diversified (T2,W7)
product line

[5]
 (S3,T1)
Product customization Due to changing
that Harley-Davidson preferences of the
offer grow in the costumer makes slow
European motorcycle growth in the
industry international market
(S5,T3); shares
(T6,W5)

PESTEL ANALYSIS

POLITICAL

1. The United States military and police used the product of

Harley Davidson.

2. Harley-Davidson faced is the import/export rates on their

products.

3. Harley-Davidson have ambitions to enter the Chinese

market, however currently face Chinese political issues as
motorcycles are prohibited in 170 of its cities and
obtaining a motorcycle license costs time and money.

4. Smoke Emission.

ECONOMICAL

[6]
 1. Confidence in economy is directly proportional to the
purchasing of consumer items

2. Opportunities in emerging economies [India and china] but

uncertain operating situations.

3. In York, PA the employees strike happened due to failed to

agree on wages and health benefits.

4. Rising fuel prices will affect both Harley-Davidson their

suppliers and Harley-Davidson's competitors.

5. Consumers are less inclined to spend their money.

SOCIAL

1. The firm support BCNS (Breast Cancer Network of

Strength) and (Muscular Dystrophy Association)

2. The unforgettable experience.

3. Government reports state that motorcyclists are more

likely to be injured. Keeping this social issue in mind,
buyers may choose a company that focuses on the safety
of its products.

TECHNOLOGICAL

1. Harley-Davidson have a wide variety of products according

to standard, performing, touring and custom

2. The advancement of Harley-Davidson in the parts of

motorcycles.

[7]
 3. Anti-lock breaking systems and ‘clutchless'' transmissions
are beginning to be developed by Harley-Davidson and
other competitors.

4. Harley-Davidson has prided them on having a “distinctive

sound”.

ENVIRONMENT

1. Noise pollution and some emission standards of Harley-

Davidson bike is not up to level of some countries across
the globe

2. First Corporation to voluntarily enroll in the one clean-up

program, this program is design for the clean-up of the
affected soil and ground water at the former york naval
ordinance plant.

3. Produce an environmental warranty their warranty ensures

each owner that the vehicles is design and built free of any
defect in materials and workmanship that would cause the
vehicles to meet EPA standards

4. Motorcycles are primarily used during warmer months,

from mid-march to august.

LEGAL

1. In India and China, delayed for several years due to high

tariffs and emissions regulations

[8]
 2. The pollution regulations have recently changed, but the
tariff problem is yet unresolved

3. The import duty held up by 60% and taxes of 30% which

effectively double the sales price.

4. The age restriction on riders is 17, coupled with the legal

requirement for a motorcycle license. Additionally, the
motorcycle must be maintained; have an MOT, tax and the
rider must wear a helmet.

Industry Analysis

Harley-Davidson is an American motorcycle manufacturer

company that founded in Milwaukee, Wisconsin and with the
headquarters in Juneau Avenue. It is one of the two major American
motorcycle manufacturers that survived in the Great Depression. It is
named after the late William S. Harley and his friend Arthur Davidson,
Harley-Davidson started in a small engine but soon variegate.

1. What is the product/service?

Harley-Davidson sells different classes of heavyweight

motorcycles are designed for cruising on highways. They also have
parts, different kinds of apparel and accessories for different ages.
Harley-Davidson allows you to customize your own motorcycle for the
convenience and to show out your passion.

They also have a financial service that includes the group of

companies doing business with Harley-Davidson which provides
wholesale and retail financing and as an agent, provides insurance and

[9]
insurance related programs primarily to Harley-Davison and Buell
dealers and their retail customers.

A. What function does it serve?

Harley-Davidson serves as a provider of motorcyclists and to the

general public an expanding line of motorcycles and branded products
and services in selected market segments.

Financial services programs to dealers and retail customers.

B. What are the channels of distribution?

The channel distribution uses is e-commerce and web design.

2. What is the industry size in units and dollars?

Harley Davidson is increasingly reliant on international sales,

especially in Europe. In 2004, only 18% of the company’s sales were
international. This figure had moved to 32.5% by 2010, helped by a
heavily weakening dollar. Because Harley incurs its production costs in
the United States, it benefits when the dollar weakens against the Euro
and the Yen.

People tend to buy dollars to buy U.S. goods, or to hedge against

the fluctuation of global currency (the U.S. Dollar is the world's most
trusted currency). When people buy dollars, the dollar goes up.

A. How fast is it growing?

Harley- Davidson is increasingly reliant on international sales,

especially in Europe. In 2004, only 18% of the company’s sales were
come from international account, figure had move to 32.5% by 2010

[10]
helped by a heavily weak dollar. Because Harley incurs its production
costs in the U.S it benefits when the dollar weaken against the Euro
and Yen.

B. Are product differentiated?

From the above mentioned products and services, we can derive

that Harley-Davidson’s products and services are differentiated.

C. Are there high exit barriers?

There is a low exit barrier because the market is stable so the

profit margins do not oscillate along time and also because of many
players in the market industry.

[11]
D. Are there high fixed cost?

Yes, worldwide independent dealer retail sales of Harley-

Davidson motorcycles. Retail sales continue to be impacted on a global
basis by difficult economic conditions.

E. Are there some of the forces that determine the strength

of competition among existing competitors?

In its market industry, the company had these following factors:

Consumer Loyalty, Brand Awareness, Financial Position, Price
Competitiveness, Market Positioning, Product and Service Quality,
Global Expansion, Organizational Structures and Product Diversity.

3. Who are the major competitors?

Harley-Davidson’s direct existing competitors are the powerful

Japanese makers Honda, Yamaha, Kawasaki and Suzuki. Germany's
BMW also competes in this segment, Polaris the snow bikes maker and
the other minor European makers such as Ducati and Guzzi by Britain’s
Norton.

A. What are their market shares?

Harley-Davidson increased market share in the U.S., its biggest

market, for the quarter and year, while sales slipped a modest .02%.
The Motor Company stated that U.S. 651+cc sales were down 14.6%
for the year, while Harley sales were down only 11.7% for the year.

[12]
Their U.S. market share in that segment increased to 54.9% from
53.3% a year earlier and 45.4% in 2008.

Worldwide, H-D sales were down 8.5% from 2009 to 2010,

though sales increased in Europe and Latin America. And overall
international sales were down only 1.9% from a year earlier. And the
world market share is 31.9%.

Harley-Davidson Motorcycles

[13]
[14]
B. Is the industry consolidated or fragmented?

The industry is fragmented because there are many players

in the industry and operates, not only in their respective domestic area
but also operates in the global market.

4. Who are the major customers of the industry?

The average Harley customer is an upper-class 47-year-old white male,

and has been getting older at a rate of 6 months every year for the last 20
years.

A. Are they powerful?

-No, because most of the customers came from specific

individuals.

B. What gives them power?

[15]
 -Consumers of Harley Davidson motorcycles are individual
customers, that’s why they can’t seriously affect Harley’s financial
position.

-The number of dealers around the globe is also less and they
are also dependent to the individual customers that cannot affect
Harley-Davidson financial position.

5. Who are the major suppliers of the industry?

-Faria

A. Are they powerful?

-No

B. What gives them power?

- Steel is the basic electrical requirement and shipping of final

motorcycles is the main thing Harley-Davidson seeks from the
suppliers.

-Harley-Davidson has wide span of suppliers, so that if one

supplier attempted to increase the price they can easily switch to the
alternative suppliers without any problem in production.

6. Do significant entry barriers exist?

Barriers to entry, the motorbikes market are characterized by the

high technology, mass production and low prices in the lightweight
segment.

A. What are they?

Japanese makers own the biggest market share against other strong
European competitors
[16]
* Chezk’s Husquaena and the Spanish Derby they manufacture and
customized bikes

* Customer loyalty and strong image is a barrier for the makers than
the classic Harley-Davidson Inc. and BMW just as for the super car
segment Ferrari and Porsche.

* Product differentiation

* Switching costs on the cost that buyer has to absorb to switch from
one supplier to another.

* Capital requirements for entry, the investment of large Capital and

the significant risk to enter.

B. Are they effective in protecting existing competitors thus

enhancing profits?

Yes, because of the brand loyalty that continuing in the mind set
of an individual that if you say Harley-Davidson it’s has a good quality
and an adventure experience to have this kind of product and services
that HD offered. The real power of Harley-Davidson is the power to
market to consumers who love the product

7. A. Are they any close substitutes for industry product and

services?

Natural substitutes of heavy and super heavyweight motorbikes

are medium and lightweight motorcycles, mopeds scooters and as a
meaning of transportation cars, trucks, SUV's, public transportation
and bikes. Both suppliers and distributors have low impact in this

[17]
market because of the atomized of the number of suppliers and the
brand loyalty of distributors/dealers.

7 B. Do they provide pressure on prices change in the

industry?

No, because they choose to be traditionally different in their

competitors offering lower prices compare to them. All they want is to
satisfy their customers and give the best experience in motorcycling.
Factors differentiated HD from competitors: it has always been strongly
market focused unlike its more technology focused competitors.
Coherently, it offers highly customized motorcycles that imply higher
production costs, yet provide customers with extra value thus
increasing their loyalty.

8 A. What are the basic strategies of competitors?

• Sales-Marketing method that involve high advertisements

• Distribution method

• Operational Excellence-strategy is predicated on the production

and delivery of products and services. The objective is to lead the
industry in terms of price and convenience.

• Product Leadership-strategy is predicated on producing a

continuous stream of state-of-the-art products and services. The
objective is the quick commercialization of new ideas.

8 B. How successful they are?

[18]
 Different competitors have different market strategy to advertise
and effectively introduce their certain products.

9 A. To what extent is the industry global?

They are in the international market segment that includes

America, Europe and Asia. Harley-Davidson is one of those excellent
companies whom had challenged traditional ideas.

9 B. Are there any apparent advantages to being involved in

more than one (1) nation?

Yes, because if a business is engaging in more than one (1)

nation you can have some of the following benefits:

• increase level of demand

• Brand recognition-the product will be easily known to other

regions

• The customer can easily have access to business in terms of

product maintenance

• Increase of income

• Improvement of quantity and quality of the products

10 A. Is the industry regulated?

With regards to the exportation and importation of the products

the laws of each country applies in order for them to monitor the goods
which enter into their territory.

[19]
10 B. What influence do regulations have on industry
competitiveness?

It has a major influence to the industry because they cannot

operate beyond the rules and regulations that are being implemented
in each area of operation. Another thing is they can also use the fact of
being regulated specially by the government to be their competitive
advantage if they follow the laws that is being implemented to
establish a strong foundation in their respective market.

VI. Alternative Courses of Action

ACA#1: To introduce new and enticing product based on local market

preference of the target market while maintaining the brand name.

ADVANTAGES:
- Innovation can create new growth segment
- Gain new valuable costumer
- It would be difficult for rivals imitate
- Create more awareness of the product existence

DISADVANTAGES:
- Introducing new product would be costly and expensive.
- Risk for the new product not to be successful.
- Their limited edition product can be replaced in the market.

[20]
ACA#2: Strengthen Harley’s product advertisement.

ADVANTAGES:
- Increase the firm sales.
- Raises customers’ product awareness.
- Serves as a catalyst to re-establish he firm as the prime
dealer of motorcycles.
- Enhance their market competitiveness.

DISADVANTAGES:
- A stand-out advertisement is costly and expensive.
- Unique and effective advertising ideas are difficult to produce.
- It may not be effective to attract local customers.

ACA#3: Differentiation of the product they are offering in terms of its

features and quality.

ADVANTAGES:
- Products that have distinction provide more value for
customers.
- Expansion of market segment.
- Unique products are difficult for competitors to imitate.
- Core competence will be enhanced.
- Brand loyalty is increased.

DISADVANTAGES:
- Implementation is costly and expensive.

[21]
 - Risk of the product not to be successful.
- It is difficult to come up with advantageous and unique idea.
- Harley Davidson not to be able to sustain their brand image.

Alternative Courses of Action Evaluation

Weight

Weig
ht
1 The criterion that would have this weight is not the main
focus or consideration for the company as of the current time
frame.
2 The factor to be spotted in this particular weight would have
the company’s moderate consideration that will affect their
decision making.
3 This weight means that the company puts a lot of focus and
consideration in this criterion. They think that it will be the
company’s best need at the current time context.

Rubrics

Criterion 5 3 1
Potential impact There is a great The company is The company
on company’s positive impact seeing an have low impact
performance. on company’s average impact on the
performance. on this performance of

[22]
 alternative and this alternative.
will not
adversely affect
the company’s
performance.
Ease of The decision of The decision of The decision of
Implementation the company to the company to the company to
implement the implement the implement the
actions needed actions related action is
is not is not that hard complex.
complicated. to implement.
Benefit/Cost The benefit that The benefit that The benefit that
Relationship will be gained will be gained will be gained in
would exceed will or won’t the future will
the cost to be exceed the cost be for a short
incurred in a to be incurred. period time
very significant only.
percentage.
Speed of The The The
Implementation implementation implementation implementation
can be done will be done will be done in a
within a short beyond a very long period
period of time. reasonable of time.
duration.

Decision Matrix

[23]
 Alternative Course of Action Number One
Criterion Weight Rating Score
Potential impact 3 5 15
on Company’s
performance
Ease of 1 5 5
Implementation
Benefit/Cost 2 5 10
relationship
Speed of 2 3 6
Implementation
Total Rating 36

Alternative Course of Action Number Two

Criterion Weight Rating Score
Potential impact 3 5 15
on Company’s
performance
Ease of 1 3 3
Implementation
Benefit/Cost 2 3 6
relationship
Speed of 2 3 6
Implementation
Total Rating 30

Alternative Course of Action Number Three

Criterion Weight Rating Score
Potential impact 3 5 15
on Company’s

[24]
 performance

Ease of 1 3 3
Implementation
Benefit/Cost 2 3 6
relationship
Speed of 2 3 6
Implementation
Total Rating 30

VII. Recommendation

Harley Davidson’s problem on its product line with respect to the

competitiveness can be resolved using ACA#1. This only means that
the company must introduce a new yet enticing product while using
the preference of their target local market as a basis for innovation, at
the same time, HD must maintain their brand image. Another thing is
they will satisfy the customers demand in line of motorcycle especially
today’s consumers preference are rapidly changing. Lastly, it will
become a competitive edge over its competitors offering a consumer
preferred unit having a Harley Davidson quality and style.

VIII. Conclusion

Thus, with all the given arguments and considerations mentioned

above, introducing new and enticing product based on the local
preference of their target market while maintaining the brand image.

[25]
This gives HD a competitive edge over its competitors; it will also serve
as a catalyst for their eventual dominance of the motorcycle industry.

IX. Detailed Action Plan

Time Frame Person Activities Budget

Responsible/Depar
tment Concerned
1 day Keith Wandell, Scheduling a
Secretary meeting together
with the
marketing
department to
discuss their
chosen solution in
the problem
which is
introducing a new
product of Harley
Davidson
1-2 days Secretary Preparation of the
documents
needed for the
meeting
1 day Marketing Meeting with the
Department top and lower
management
especially with
the product

[26]
 development
team for the R&D
plan on
identifying the
local market
preference
1-6 months Marketing Start and
Department finalization of the
together with the gathered data on
Product the research and
Development development
Team
1 week Keith Wandell, Discussion of the
Product new product to be
Development introduce in the
Team market and
forecasting of
product
development cost
that will be
possibly incurred
by the company
1-2 days Strategic Business Finalization of the $40,000,00
Unit needed capital for 0
the proposed
product
development
1-4 months Product Research and $1,000,000
Development Development that
Team will be done by
the team to start
the formulation of

[27]
 plans for the
propose product
Keith Wandell, Meeting to
1-2 days Product discuss the
Development proposal done by
Team, Marketing the team and its
Department approval
3 days Keith Wandell and Dissemination of
the Department information of the
head propose product
development
1 month Chief Finance Meeting with
Officer possible investor
and other
Financing services
firm
1 week Production Head Discussion of the
materials needed
and the its
incremental cost
1 day Production Head Submission of the
report for the
projected cost of
production
1-2 days Keith Wandell Approval of the
projected
production and
development cost
1-2 months Production Commencement $35,000,00
Department of the production 0
of the newly
develop product

[28]
1-2 months Quality Control Testing, $2,000,000
Department monitoring,
evaluating of the
newly develop
product
2 months Keith Wandell, Meeting for the
Marketing launch and
Department continues
advertisement of
the product
3 months Marketing Start of product $1,000,000
Department launch and
advertisement
Quarterly Keith Wandell and Sales and Product
Semi-annually Top Management performance
Annually Evaluation

X. Financial Analysis

Debt Ratio
2009
7047400 / 9155518 = 76.97%

2008
3914887 / 7828625 = .5 or 50%

2007
2099955 / 5656606 = 37.12%

[29]
Current Ratio
2009
4341949/2268224 = 1.914

2008
5377881 / 2603757 = 2.06 times

2007
3467314 / 1905079 = 1.82 times

Acid Test Ratio

2009
1899804/4341949 = 0.4375

2008
(593558 + 400908) / 2603757 = .38 times

2007
(402854 + 349697) / 1905079 = .40 times

ROA (Return on Investment in Assets)

2008
654718 / [(7828625 + 5656606) / 2]
654718 / 6742615.5 = 9.7%

2007
933843[(5656606 + 5532150) / 2]
933843 / 5594378 = 16.69%

ROE (Return on Investment on Equity)

[30]
2008
654718[(2115603 + 2375491) / 2]
654718 / 2245547 = 29.16%

2007
933843[(2375491 + 2756737) / 2]
933843 / 2566114 = 36.4%

Equity Ratio
2009
2108118/9155518 = 0.2302
2008
2115603 / 7828625 = 27.02%

2007
2375491 / 5656606 = 42%

[31]
Technological Institute of the Philippines
938 Aurora Boulevard Cubao Quezon City

(CASE ANALYSIS)

Presented and Submitted by:

Diamante, Cheryl

[32]
 Dinglasan, Paolo T.
Llorca, Hazeline L.
Manuguid, Lorilyn C.
Mendoza, Jay-Ar V.
Nadal, Rachel Anne V.
Tirana, Raymart C

Submitted to:
Prof. Paul Ma. Pesito

[33]