Harley Davidson: Sustaining a Competitive Position in the Market
Abstract
Harley Davidson’s net profit in 2010 was 146.55 million versus a net loss of 55.12 million in 2009 (Global Data, 2011). There are three key elements in which the company has to improve to continue making profit. First, resolve the Unfunded Employee Post-retirement Benefit plan to keep employees producing a good product and maintain a top level company/employee relationship. Secondly, intense competition in the motorcycle market has to be addressed if Harley Davidson plans to increase sales and profit, finally, competition is strong and the brand name alone will not increase its profitability. Strategic Global Branding is the main key to Harley Davidson’s continued rise, and without it the company will stagnate and be reduced to a minor player in the motorcycle industry.
Issue #1: Unfunded Employee Post-retirement Benefits
Causes: Poor stock market performance depleted the plan 's assets. Harley Davidson losses profits due to “Federal regulations that require that when a pension plan, or defined benefit plan, is underfunded by 15 percent or more, the employer must contribute to the fund to bring it back to more than 85 percent in funding” (Rovito, 2003). The Pension Protection Act of 2006 required the company to contribute to its pension plan when profits are minimal due to a lagging economy (Harley Davidson 10-K, 2011).
Impacts: Harley Davidson could continue paying contributions to benefit plans, but the slow economy and stocks continuing to fall could hinder benefits paid to employees (Global Data, 2011). Harley has unionized employees and if the potential retiring class gets delayed a strike is inevitable. A strike will slow production and cause significant profit loss.
Recommendations: To keep from mounting up more retirement benefits the company should consider using more temporary labor. This would save the company from additional employee benefits being tacked on to an already challenging problem.
Harley Davidson’s net profit in 2010 was 146.55 million versus a net loss of 55.12 million in 2009 (Global Data, 2011). There are three key elements in which the company has to improve to continue making profit. First, resolve the Unfunded Employee Post-retirement Benefit plan to keep employees producing a good product and maintain a top level company/employee relationship. Secondly, intense competition in the motorcycle market has to be addressed if Harley Davidson plans to increase sales and profit, finally, competition is strong and the brand name alone will not increase its profitability. Strategic Global Branding is the main key to Harley Davidson’s continued rise, and without it the company will stagnate and be reduced to a minor player in the motorcycle industry.
Issue #1: Unfunded Employee Post-retirement Benefits
Causes: Poor stock market performance depleted the plan 's assets. Harley Davidson losses profits due to “Federal regulations that require that when a pension plan, or defined benefit plan, is underfunded by 15 percent or more, the employer must contribute to the fund to bring it back to more than 85 percent in funding” (Rovito, 2003). The Pension Protection Act of 2006 required the company to contribute to its pension plan when profits are minimal due to a lagging economy (Harley Davidson 10-K, 2011).
Impacts: Harley Davidson could continue paying contributions to benefit plans, but the slow economy and stocks continuing to fall could hinder benefits paid to employees (Global Data, 2011). Harley has unionized employees and if the potential retiring class gets delayed a strike is inevitable. A strike will slow production and cause significant profit loss.
Recommendations: To keep from mounting up more retirement benefits the company should consider using more temporary labor. This would save the company from additional employee benefits being tacked on to an already challenging problem.
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