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Harley-Davidson, Inc.

CASE STUDY

In Partial Fulfilment of the Requirements

In Strategic Financial Management

Submitted to:
PROF. LIWANAG, WINLIND G.

Submitted by:
Toquero, Kaye CylinA.
Yap, Anjanette M.
Jardinel, JanethS.
Reyes, Kimberly Shane C.
Cubelo, Jomar C.
 "Screw it, let's ride."

OVERVIEW

Harley-Davidson is a major US motorcycle manufacturer that sells its bikes worldwide

through a network of more than 1,500 dealers. The company offers heavyweight cruiser
and touring models, standard, sportbikes, and dual models that can be used on- and
off-road. Its six families of motorcycles include Touring, Trike, Softail, H-D Street,
Sportster, and its Customer Vehicle Operations (CVO) models. Harley-Davidson also
sells attitude with its brand-name products, which include a line of riding gear and
apparel (MotorClothes). Harley-Davidson Financial Services (HDFS) offers financing to
dealers and consumers in the US and Canada. The US generates almost 70% of
Harley's revenue.
Harley-Davidson, Inc., H-D, or Harley, is an American motorcycle manufacturerfounded
in 1903 in Milwaukee, Wisconsin. It was one of only two major American motorcycle
manufacturers to survive the Great Depression, along with Indian. To become oneof
the world’s largest motorcycle manufacturers and an iconic brand renowned for its loyal
following, the company has survived various ownership deals, subsidiary arrangements,
periods of poor economic health and product quality, and intense globalcompetition.

Harley-Davidson's products are marketed to customers worldwide through digital

channels, traditional promotions, and advertising, and by experiential activities with
independent distributors. To attract customers, the company participates in motorcycle
rallies, special motorcycle events, races, music festivals, and sporting events. It also
sponsors events and rides through Harley Owners Group (H.O.G.) where it promotes
Harley-Davidson products.

1.0 TIME FRAME:2009

2.0 VIEWPOINT:

The core of Harley-Davidson's strategy and operations is to have a best quality

motorcycle worldwide; to meet customer satisfaction and to stay competitive and
continues growth worldwide.

3.0 STATEMENT OF THEPROBLEM:

Harley Davidson’s product range is relatively out of customer preference in their

domestic resulting in a decrease in annual domestic revenue.
4.0 STATEMENT OF THEOBJECTIVE:

1. To identify the customers preference for a particularproduct.

2. To satisfy the target market demands and provide product line based ontheir
preference.
3. To have a clear strategic direction of continuing its product improvement forthe
benefit of the company and meeting customer’sdemand.

5.0 AREAS OFCONSIDERATION:

5.1 InternalEnvironment

Internal factors evaluation matrix helps to evaluate the major strengths and
weaknesses in the functional areas of a business.

5.1.1 Strengths

 One of major strengths of Harley-Davidson is its brand image and

customer loyalty. Harley-Davidson’s HOG allowed for Harley Davidson to
connect with its customers through events and charities, allowing them to
promote loyalty, and it gives Harley-Davidson riders a sense of community
that buildscomradery.
 Harley-Davidson has high quality of products. They have a good product
range where customers can use service consultants to help customize
bikes.
 The company has enough cash flow to use to generate additional revenue
through services infinancing.
 Harley-Davidson is forward-thinking with plans to continue to move into
the electric motorcycle and bicycle markets left vulnerable by techgiants
likeTesla.
 Harley-Davidson’s usage of social media has allowed it to begin appealing
to younger generations, attempting to solve the age issue of itscustomers.
5.1.2 Weaknesses

 The major weakness of Harley-Davidson’s is its high-quality products.

Because of high-quality products, the price ishigh.
 Presence in international markets. Harley-Davidson has contributed much
of its success from the US because it has a large amount of market share
compared to internationalmarkets.
 Harley-Davidson has a limited customer base because its dominancehas
been within the US with the brand bringing an American styleexperience.
 Limited supply chain strategy for supporting globalexpansion.

5.2 ExternalEnvironment

The purpose of an external factor analysis is to find out the list of opportunities
that could benefit a firm and threats that should be avoided.

5.2.1 Opportunities

 International expansion to help increase production outside theUnited

States and avoid import tariffs in internationalmarkets.
 Demographic expansions, appealing to a broaderaudience.
 Diversifying target clients by appealing to youngermarkets.
 Sales and demand in foreign markets areramping.
 Direct sale to the public to decrease production price and reduce retailer
risk.

5.2.2 Threats

 Competitors offer a more diversified productline.

 The demand for electric motorcycles can be threatening if Harley-
Davidson cannot meet thedemand.
 Tariffs and other changes in international policy can have an adverse
effect on thecompany.
  Other companies and competitors exploit market vacuums left by Harley-
Davidson.
 Competitors offer better price points with first-class qualityproducts.

6.0 ASSUMPTION

Harley-Davidson’s current market is slowly declining due to the aging of their target
market, baby boomers, and failure to appeal to younger market segments is going to
cause adverse effects on the company. The company’s limited and expensive product
line also causes the current market to buy from competitors who offer high-quality yet
more affordable products.

7.0 ALTERNATIVE COURSES OFACTION

Alternative Course of Action

1. Introduce a new and attractive product based on local market desire of thetarget
market while maintain the brandname.

Advantages of the first ACA

- Innovation can create a new growthcomponent.

- Acquire a new valuablecostumer.

- It would be difficult to imitate by thecompetitors.

- Create more awareness of the productexistence.

Disadvantages of the first ACA

- Creating a new product would be costly andexpensive.

- Risk for the new product can be restore in themarket.

 2. Boost Harley’s productadvertisement.

Advantages of the second ACA

- Growth in the firmsales.

- Increase costumers’ productawareness.

- Serves as a catalyst to re-establish the firm as the prime dealer ofmotorcycles.

- Strengthen their marketcompetitiveness.

Disadvantages of the second ACA

- A stand-out advertisement is costly andexpensive.

- Unique and effective advertising ideas are hard toproduce.

- It may not be effective to attract local costumers.

3. Dissimilarity of the product they are offering in terms of its features andquality.

Advantage of the third ACA

- Products that have distinction provide more precious for thecostumers.

- Growth in marketsegment.

- Unique products are hard to imitate by thecompetitors.

- Core competence will beenhanced.

- Brand loyalty will be increased.

Disadvantages of the third ACA

- Implementation is costly andexpensive.

 - Risk of the product not to besuccessful.

- It is hard to come up with the advantageous and uniqueidea.

Harley Davidson is not able to sustain their brand image.

8.0 ANALYSIS OF ACA

Weight

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.

Criterion 5 3 1

Potential impact on There is a great The company’s The company have

company’s positive impact on seeing an average low impact on the
performance the Company’s impact on this performance of this
performance alternative and will alternative
not adversely affect
the company’s
performance
 Ease of Not complicated Not that hard to Complex
Implementation implement

Benefit/Cost Exceed the cost to Won't exceed the The benefit that will
Relationship be incurred in a cost to be incurred be gained in the
very significant future will be for a
percentage short period of time
only

Speed of Short period of time Beyond reasonable Very long period of

Implementation duration time

Decision Matrix

Alternative Course of Action 1

Criterion Weight Rating Score

Potential impact on 3 5 15
company’s
performance
Ease of 1 5 5
Implementation
Benefit/Cost 2 5 10
Relationship
Speed of 2 3 6
Implementation
TOTAL36
 Alternative Course of Action 2
Criterion Weight Rating Score

Potential impact on 3 5 15
company’s
performance
Ease of 1 3 3
Implementation
Benefit/Cost 2 3 6
Relationship
Speed of 2 3 6
Implementation
TOTAL30

Alternative Course of Action 3

Criterion Weight Rating Score
Potential impact on 3 5 15
company’s
performance
Ease of 1 3 3
Implementation
Benefit/Cost 2 3 6
Relationship
Speed of 2 3 6
Implementation
TOTAL 30
9.0 CONCLUSION

With the given data that has been shown above, introducing new product and making
innovation based on the local preference on their target market, while maintaining their
image popularity, can gives HD a competitive advantage over on their competitors, this
can also prove how they dominate the motorcycle industry.

ACA Selection

Harley-Davidson’s problem can be solved using the ACA#1 where a new and attractive
product will be introduced based on the local market trend of the target market while
maintaining the brand name. Nowadays innovation is a big part of company’s success
due to the rapid change that is happening in our world, thus innovating your product and
involving your consumer’s preference on that innovation can guarantee you a
competitive advantage over your competitors.

This can give customer satisfaction that can help increase the HD’s reviews and
feedback that can be a plus point to their brand name.

10.0 ACTION PLAN

Conduct a meeting and discuss the chosen action with marketing department,then
prepare the document that will be needed. Discussing the product with the top and
lower management especially the research and developmentteam.

Identify the local market preferences and start the gathered data together with the R&D
team. Explain the product launch in the market and forecast the possible budget that the
company will spend.

Finalizing the product budget that will be needed in the project, conducting researchand
development to start a plan on formulating the proposed product. Then another meeting
will be held to discuss the approval of theproposal.
Conduct a meeting with potential investors and other companies, a detailedexplanation
will be made along with the incrementalcost.

Report of the forecasted cost of production, then the approved proposal and the
forecasted cost. Starts the production of the proposed innovated product. This willbe
test and monitor, then execute anevaluation.

Product launch and continuous advertisement, monitor sales and product evaluations.