Harley Davidson: Preparing for the Next Century
BUSI 615 40
Professor David Houghton
Since the founding of Harley-Davidson in 1903 by Arthur and Walter Davidson and William Harley, the company has a rich heritage and a loyal following. The company has proven to be resilient and innovative throughout the years. They have made their fair share of mistakes, especially while under the ownership of AMF, whose decisions almost destroyed Harley-Davidson. They have also made an inspiring come back, recapturing their share of the market and more. Harley-Davidson has managed to attract all sorts of riders including motorcycle “rebels”, women and blue and white color workers. In fact, in our church small group there are two Harley enthusiasts. All of the history, resolve and innovation that has made Harley a house hold name will be needed to get then through the challenges they now face. Harley-Davidson faces two main interrelated problems in their future. One is slowing sales, according to John Morgan, from Ryan Beck & Co “. . . heavyweight motorcycle registrations exhibited robust growth from 1996 to 2000. However, growth in the touring and cruising market slowed considerably in the second half of 2002 and throughout 2003 and 2004” (Nolan & Kotha, 2007). This suggests that Harley-Davidson’s market may be maturing. That is, the market had essentially reached a state of equilibrium marked by the absence of significant growth or innovation. The second is the aging of the baby boomers that made up a large portion of Harley customers. “The median age of the Harley customer, which was 35 in 1987, was now closer to 47” (Nolan & Kotha, 2007) External Environmental Factors affecting Harley-Davidson
The world in the year 2007 would not be recognized by the founders of Harley-Davidson. Technology is advancing at a quicker pace than ever before, changing the decision making dynamic for managers. They have to decide to be a market leader, embracing or creating cutting edge technology or use more tried and true technology. Economics will also play a large role the future. In 2007, msnbc.com reports that the growth rate was only 2.2 percent for all of 2007; this is the worst growth rate in the past five years. They explained “the economy has been subject to something of the perfect storm here. It has been hit by the housing slump the credit squeeze, the subprime slime and stock price declines on Wall Street” (Economy nearly stalled, 2008). Of particular interest to Harley would be that consumer spending had only increased 2.9 %, the smallest rise since 2003. The sale of goods abroad also slowed down to a rate of 7.9%, the smallest increase since 2005. Despite this concerning news, White House officials assure producers that we are not heading for a recession only a slowing period. The ethic responsibility to reduce or remove our footprint on the earth, now known as green initiatives, has also changed drastically over recent years. There are corporate incentives as well as increased legislation to encourage or ensure companies to think green. Harley will have to consider these as the move to the future. Internal Environmental Factors affecting Harley-Davidson
Harley-Davidson’s mission statement is: We ride with our customers and apply this deep connection in every market we serve to create superior value for all of our stakeholders. From their mission statement it is clear that they value ownership, the first part “we ride with our customers” portrays am image of not just Harley builders but of Harley owners. This has been the case since taking the company back from AMF. Between 1970 and 1980, under AMF’s leadership, “Harley-Davidson’s share declined by over 80%” (Nolan & Kotha, 2007). The buyout by Harley CEO and managers put control back into those who value the heritage of the company and what it can offer. I believe the first part of the mission statement says we will never sell out again. The...
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