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Harley Davidson Case Study Report

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Course: MNGT-6000 Integrated studies in management

Student: Stella(Hongmiao) Li

Professor: Dr. Schuler

June 12 2016  

Harley-Davidson Case Study Report

key words: mission, stakeholders, global economy, strategic management, core competency, core value

     Harley-Davidson was founded in 1903 by William S. Harley and Arthur Davidson, it is an iconic American motorcycle company. Harley-Davidson has been a publicly traded firm since 1987. It has two primary divisions: Motorcycles and Related Products and Financial Services. The financial services Davidson provides credit to motorcycle buyer and dealerships as well as the risk management and insurance services for all parts of the firm. The motorcycles and Related Products Division currently operates through eight primary segments:

  • Parts & Accessories (17.5 percent of net revenue in 2011)
  • General Merchandise (5.9 percent of net revenue in 2011)
  • Licensing ($43.2 million of net revenue in 2011)
  • International Sales (32 percent of net motorcycle revenue in 2011)
  • Patents and Trademarks
  • Others Services
  • Marketing  

 The company has been survived for over 100 years, it focused on its product and business strategy, their Mission is to create value for customer and to serve Stakeholders’ (customers, suppliers, employees, shareholders, government, and society) needs. Although the company has following external and internal environment threats.

Harley-Davidson products are considered as leisure items, it means that in many consumers’ eyes, purchasing motorcycles, performance parts, and high- dollar apparel is a luxury rather than a necessity. Because of this, Harley Davidson’s products must compete for funds and consumer’s budgets. When the global economic conditions are changing, the motorcycle market tends to experience different in terms of generating adequate sales. While Harley- Davidson’s revenue streams originate from several sources, very few of them appeal to a cost-sensitive consumer base. Harley-Davidson managed the firm’s target market is changing, the demand for the products is changing. Individually and collectively these issues pose a real challenge to the company’s long term success.

Harley-Davidson changed their Strategic Management to its target market as first step to appropriately serving the market needs. Historically, the firm’s target market has been males between the age of 29 and 55, in the last ten years, Harley-Davidson has pursued younger riders and women as a means of expanding its target customer’s segments.

Through 1920s, Harley Davidson continued to focus on design improvement and racing. It took of decade fighting for market share with multiple medium and small competitors. During that time, firm producing automobiles, airplanes, bicycles, and industrial machinery also tired their hand at building motorcycles.

The 1930s, s special time for motorcycles industry, the public was looking for inexpensive, simple transportation. At the same time, unemployment and inflation shrunk the potential customer purchasing power. During those time, most of the smaller motorcycles manufactures drop out of business.

With the onset of Ward War II, Harley-Davidson is a major supplier for the Allied war effort. War vaulted Harley-Davidson into a position of higher volume, improved reputation, and deeper loyalty with owners and soldiers.

When the only one of Harley Davidson’s competitor motorcycles has declined bankruptcy and stopped their business. Harley-Davidson enjoyed great success as the sole U.S. based motorcycles power.

Harley Davidson began branching out to the other leisure and motorized products such as off-road motorcycles, ski boats, and golf carts. At the same time, the bulk of Harley Davidson’s revenue stream was still coming from the sales of its heavy motorcycles. The acquisition in deep trouble when Harley-Davidson purchased them, as they did not fit well with its Core Competencies. (Core Competencies are capabilities that serve as a source of competitive advantage for a firm over its rivals.)

 Harley-Davidson core competency is their products, heavy motorcycles, high performance parts, customer experience, brand name assets, quality consistence, loyalty customers and specific production management, it is more than a brand. It’s a culture, it is American dream of freedom.

In 1969, the American Machine and Foundry company (AMF) purchased Harley-Davidson, it was a threats pose greatest short-term risks for the company.

AMF operated Harley-Davidson as a profit center, reducing allocations to the unit’s marketing and research and development (R&D) functions as a result. For 13 years, Harley-Davidson aging product line remained essentially the same. When Honda and Kawasaki’s entrance into the U.S. market, Harley-Davidson stale product line was even more disappointing.

1981, Japanese motorcycles were established in the U.S. market, it threats Harley-Davidson’s market and narrowed its market segment tremendously.

At this time, the greatest strategy way took by employees and management of Harley-Davidson, they managed buyout of the company from AMF. The new owners immediately took stock of firm’s strengths and vulnerabilities and increased its R&D and marketing budget significantly.

1987, Harley-Davidson become a publicly trading company, had revamped product line into four motorcycle style that were united by introduction of new engine. This was the turning point for Harley-Davidson. Since then the quality control was more effective. In addition, Harley-Davidson focused more on efforts to operate efficiently and effectively. Following the concept of just-in-time techniques and enhancement to the logistics function were critical to the firm’s attempts to enhance efficiency and effectiveness. At the same time, Harley-Davidson shifted to three major initiatives:

  1. Improved manufacturing process, leveraging technology, robotics, and employee involvement
  2. Restructuring business management to a modern system
  3. Aggressive management of its brand name through dealership has changed, Harley-Davidson’s Core Value is always quality oriented, create values for customer, promotion and market focus

After Harley-Davidson focuses on sunset of its brand image. Harley-Davidson’s market focus is primary males between the age of 29 and 55, this has been changing recently by the new CEO, it has targeted female customers.

Harley-Davidson’s strategy of management is effectively managing its brand name, production or manufacturing simplicity, and a delicate product following are the key sources if the firm’s competitive strength.

   In 2010, Harley-Davidson internationally expanding their business in India, it was not very successful, it required a delicate balance in order to maintain the ethos of Harley-Davidson while simultaneously adapting to local customers and customer preferences.

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