Harley Davidson Case Study
Harley Davidson
Introduction
Harley-Davidson’s history began in 1903 when Arthur Davidson, his brothers Walter and William, and William Harvey produced three motorcycles in a shed built in the Davidson’s backyard. Their reputation in motorcycle racing grew in the early 1900’s and elevated even higher with the production of the “V-twin engine” a Harley-Davison trademark. The new engine allowed the company to thrive throughout World War I by producing 17,000 motorcycles for military use. The company produced its eagle emblem and developed signature models like the Hydra-Glide(1949), K-model(1952), Sportster(1957), and the Duo-Glide(1958) for the 1930’s to the 1950’s. Harley-Davidson was the last remaining motorcycle manufacturing company by 1953. The company’s reputation began to spiral downhill after it was taken over by the American Machine and Foundry(AMF) in 1969. Due to a gross decline in sales during the 1970’s, AMF decided to put the company up for sale. In 1981, thirteen members of the Harley-Davidson management team engineered a leveraged buyout of the company. The company would struggle shortly after due to decreased sales and a heavy debt load. Richard Teerlink (CEO) convinced lenders to accept a newly structured plan within hours away from bankruptcy. Teerlink’s new plan that included new marketing techniques and manufacturing strategies plus tariffs placed on Japanese motorcycles aided in Harley-Davidson’s long battle to regain market share.
Competitive strategy
Harley-Davidson began to rebuild its competitive advantage primarily by focusing on customer relations. Management teams began to reach out to the community in order to find how the company was perceived(c-369). Their findings derived from focus groups, interviews, and survey’s concluded that customers felt cheated by the company’s lack of quality customer service and product quality(c-369). Management countered with improving product quality through adopting Japanese practices, providing
Introduction
Harley-Davidson’s history began in 1903 when Arthur Davidson, his brothers Walter and William, and William Harvey produced three motorcycles in a shed built in the Davidson’s backyard. Their reputation in motorcycle racing grew in the early 1900’s and elevated even higher with the production of the “V-twin engine” a Harley-Davison trademark. The new engine allowed the company to thrive throughout World War I by producing 17,000 motorcycles for military use. The company produced its eagle emblem and developed signature models like the Hydra-Glide(1949), K-model(1952), Sportster(1957), and the Duo-Glide(1958) for the 1930’s to the 1950’s. Harley-Davidson was the last remaining motorcycle manufacturing company by 1953. The company’s reputation began to spiral downhill after it was taken over by the American Machine and Foundry(AMF) in 1969. Due to a gross decline in sales during the 1970’s, AMF decided to put the company up for sale. In 1981, thirteen members of the Harley-Davidson management team engineered a leveraged buyout of the company. The company would struggle shortly after due to decreased sales and a heavy debt load. Richard Teerlink (CEO) convinced lenders to accept a newly structured plan within hours away from bankruptcy. Teerlink’s new plan that included new marketing techniques and manufacturing strategies plus tariffs placed on Japanese motorcycles aided in Harley-Davidson’s long battle to regain market share.
Competitive strategy
Harley-Davidson began to rebuild its competitive advantage primarily by focusing on customer relations. Management teams began to reach out to the community in order to find how the company was perceived(c-369). Their findings derived from focus groups, interviews, and survey’s concluded that customers felt cheated by the company’s lack of quality customer service and product quality(c-369). Management countered with improving product quality through adopting Japanese practices, providing
References: Liber, Sheldon. “Chasing Value: Harley-Davidson (HOG) tough market—tougher stock.” Bloggingstocks. 8 November 2007. Retrieved 6 April 2008 <hog.bloggingstocks.com/> Farrell, Andrew. “Consumers Hop Off Harley Davidson.” Forbes.com. 7 August 2007. Retrieved 6 April 2008 www.forbes.com/markets/2007/09/07/harley-sales-earnings-markets-equity-ex_af_0907markets10.html?feed=rss_markets Ong, H. “The competition Between Japanese Manufacturers And The Harley-Davidson Motorcycle.” Whybike.com. Retrieved 6 April 2008 www.whybike.com/motorcycle255.htm Smith, Aaron. “Story Stock-Harley-Davidson Inc. (hog).” 7 September 2007. Retrieved 6 April 2008. www.growyourfunds.com/2007/09/story_stock_harleydavidson_inc.html Thompson Jr., Arthur A, Strickland III, A.J., Gamble, John E. Crafting & Executing Strategy: The Quest for competitive Advantage Concepts and cases. 15th Edition. New York, NY: McGraw-Hill/Irwin 2007 “Harley-Davidson Inc. and U.S. Bancorp Announce Strategic Alliance.” The Auto Channel. 20 January 2000. Retrieved 6 April 2008 www.theautochannel.com/news/press/date/20000120/press006279.html. “Harley Davidson Edition F 150.” Pickuptruck.com. Retrieved 6 April 2008