Harley-Davidson Inc. Case Study

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Table of Contents
1.0 INTRODUCTION2

2.0 LITERATURE REVIEW3

3.0 CASE ANALYSIS5

4.0 PORTER’S FIVE FORCES7

4.1 Internal Rivalry7

4.2 Potential or new entrants7

4.3 Substitute products7

4.4 Power of suppliers8

4.5 Power of Customers8

5.0 SWOT ANALYSIS9

5.1 Strengths9

5.2 Weaknesses10

5.3 Opportunities10

5.4 Threats10

6.0 CONCLUSION12

7.0 RECOMMENDATION14

8.0 REFERENCES15

1.0 INTRODUCTION

In year 1901, Harley-Davidson Motorcycle Company was established by William Harley and Walter, William, and Arthur Davidson, who built their first motorcycle in the Davidson family’s backyard in Milwaukee, Wisconsin. Two years later, they success built and sold out three motorcycles and substantial increased to eight units in 1904. Then, they moved their company to Juneau Avenue, which is the site of the company’s present offices. In 1907, the company was incorporated and they introduced its trademark bike; a 2 cylinder, V-twin engine (the fastest motorcycle at that time), able to reach speeds of 60 mph in year 1909. During World War I, the demand for United States motorcycles was grew tremendously in overseas. Therefore, Harley-Davidson became a leader in innovative engineering in the 1920’s. Thus, during the World War II, Harley-Davidson were built over 90,000 cycles for the military which elevated their production to record levels and earned them the coveted Army-Navy “E” award for excellence in war time production. By 1953, Harley-Davidson was the last remaining major motorcycle manufacturer in the USA.

In 1969, Harley-Davidson was taken over by the American Machine and Foundry (AMF). AMF put the company up for sale in the late 1970’s due to a gross reduction in sales. The reduction in sales was representative of a poor level of quality in the Harley bike compared to their Japanese counterpart. Minutes away from bankruptcy in 1985, CEO Richard Teerlink convinced lenders to accept a restructuring plan. Using management principles adopted from the Japanese, new marketing strategies, and manufacturing techniques, Harley improved quality and began the long battle to regain its market share. In 1987, one year before the tariffs on Japanese heavyweight motorcycles were scheduled to end, Harley announced they no longer needed special tariffs to compete with the Japanese motorcycle giants; showing confidence in the new system.

Today Harley-Davidson Inc., an employer of 4,694 workers, consists of Harley-Davidson Motor Company based in Milwaukee and Eagelmark Financial Services Inc. based in Chicago, Illinois. In addition, there are nearly 600 dealerships throughout the United States. However, Harley-Davidson Inc. was thriving through an economic recession in 2008. Thus, we will look further about what happened during the economic recession.

2.0 LITERATURE REVIEW

According to Dirk Willem te Velde, the global financial crisis is already causing a considerable slowdown in most developed countries. Governments around the word are trying to contain the crisis, but many suggest the worst is not yet over. Stock markets are down more than 40% from their recent highs. Investment banks have collapsed, rescue packages are drawn up involving more than a trillion US dollars, and interest rates have been cut around the world in what looks like a coordinated response. Leading indicators of global economic activity, such as shipping rates, are declining at alarming rates. He also said that with a recession already underway in the UK, Germany, France, the USA and other developed countries, it is quite startling to hear the Malawian finance minister argue that Malawi’s economy is projected to grow by more than 8% this year. Yet this is today’s stark reality. The USA is going through the greatest financial crisis since the 1930s, but, as the Financial Times has reported, Lagos is not Lehman. Nigeria, held back by decades of economic...
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