Harley Davidson Essay Example for Free

Harley Davidson Essay We fulfill dreams through the experiences of motorcycling, byproviding to motorcyclists and to the general public an expanding lineof motorcycles, branded products and services in selected marketsegments †Vision Statement says: â€Å"Harley-Davidson is an action-oriented, international company, a leaderin its commitment to continuously improve [its] mutually beneficialrelationships with stakeholders (customers, suppliers, employees,shareholders, Government, and society). Harley-Davidson believes thekey to success is to balance stakeholders’ interests through theempowerment of all employees to focus on value-added activities. PROPOSED MISSION To be branded as the best motorcycle available in the world. PROPOSED VISION The best quality motorcycle, motorcycle products and financialservices will be provided world wide is the commitment of Harley-Davidson. Customer satisfaction is our motto and the Harley-Davidson customers can experiencethe taste of reality of motorcycle dreams by relaying their satisfaction on us. Harley-Davidson is dedicated to use the advanced technology to produce the most superior motorcycle in domestic and international markets. Stay competitive and continuegrowth worldwide remain profitable and survive is our philosophy. Employees of Harley-Davidson are the foundation of the company and they are the driving force behind the Harley-Davidson name. The total team effort of Harley-Davidsonemployees is devoted to fulfilling dreams of customers and we believe that there is nota motorcycle riding experience like a Harley-Davidson’s. Excellence is our pushthough our Harley-Davidson bar and shield logo that says superior quality. Honestyand customer loyalty and these morals are the heartbeat of Harley-Davidsonorganization. Harley-Davidson do our part in supporting all environmental laws in every country we do business. Determination and commitment is the place whereHarley-Davidson intends to stay EXTERNAL ANALYSIS PESTLE   Harley-Davidson is one of the most admired and recognizedcompanies in the world today. Academy of Motorcycling for those interested in learning to ride amotorcycle. â€Å"Riders-Edge† the motorcycling academy of Harley-Davidsonintroduced more than 1000 aspiring motorcyclists to the sport in2000. Average purchaser of a U. S Harley-Davidson motorcycle is amarried male in his mid-forties. Average purchasers of a U. S Harley-Davidson have a householdincome of $78,600.   Over two thirds of the sales of Harley-Davidson motorcycles areto buyers with at least one year of education beyond high school.   30% of the Harley-Davidson buyers have college degrees.   Only about 9% of Harley-Davidson U. S retail motorcycles are towomen. Confidence in economy is directly proportional to the purchasingof consumer items.   Repeat business is strong as about 42% of motorcycle purchasershave owned a Harley-Davidson previously. U. S Government and People are considering Harley-Davidson asan American icon.   Opportunities in emerging economies [India, China] but uncertainoperating situations. A new assembly facility opens in Manaus, Brazil, the firstoperations outside of the U. S, reduces taxes, make them moreaffordable to a larger group of Brazilian customers Harley-Davidson is one of the main manufacturer and user of V-ENGINE configuration. Harley-Davidson’s have a wide variety of products according toStandard, Performance, Touring custom. Harley-Davidson is facing some legal problems in Asian countries,in India there is 60% tariff and various other taxes will cause theprice of the bike to double.   Noise pollution and some emission standards of Harley-Davidsonbike is not up to the level of some countries across the globe. Five Forces ? Internal Rivalry. Four major competitors are mainly concentrated on theseheavyweight motorcycle segments: in addition to Harley-Davidson the other three are Yamaha, Suzuki, Honda all are Japanese companies. Some of the major competitors of Harley-Davidson have largerfinancial and marketing resources and are more diversified(Example: Yamaha, half of its revenue is only from motorcycles).   Polaris (American snowmobile/ATV manufacturer) producer of â€Å"Victory† motorcycles priced its motorcycles below the Harley-Davidson motorcycles.   Strategic alliance between Suzuki and Kawazaki in the areas of product development, design, engineering, and manufacturing of motorcycles, this alliance strengthened both companies’ globalmotorcycle businesses.   Honda, the main competitor of Harley-Davidson in U. S eat upsome market share of Harley-Davidson. ? Potential entrants   Entry barrier is very high is this segment, because this segmentneeds a lot of capital investment and the industry is on amaturity stage, so that there is only four main competitors. The economies of scale are low in this segment, which is thereason why there are only four major players.   There is some small scale producers, who are making thesecustom made motor cycles but the amount of their production isnot at all a threat for Harley-Davidson, and they are increasingthe interest of motorcycles among the general public. Substitute products. Harley-Davidson has a wide span of suppliers, so that if onesupplier attempted to increase the price, they can easily switchto the alternate suppliers without any problem in production.. ? Power of Customers   Consumers of Harley-Davidson motorcycles are individualcustomers, so that they can’t seriously affect Harley’s financialposition.   The numbers of dealers around the globe are also less and theyare also dependent to the individual customers, that can’t affectHarley-Davidson’s financial position. OPPORTUNITIES ? The European demand for Harley Davidson is the highest in theinternational market and represents the single largest motorcyclemarket in the world. Women and younger riders are increasing becoming interested inbikes ? The international heavy weight market is growing and is nowlarger than the U. S. heavyweight market ? Market share increasing in Europe and Asia for the last two years ? Increasing demand in US markets for bikes ? Customers value quality parts THREAT ? Harleys ongoing capacity restraints caused a shortage supply anda loss in domestic market share in recent years ? Harleys average buying age is 42 years old and increasing? The European Union’s motorcycles noise standards are morestringent than those of Environmental Protection Agencies in theU. S and increased environmental stand ? Some competitors of Harley Davidson have larger financial andmarketing resources and they are more diversified ? Environmental protection laws ? Buell division needs to continue to produce a quality motorcycleunder Harley’s brand name. EFE MATRIX Key external factorsWeightRatingWeightedscoreOPPORTUNITIES The European demand for Harley Davidson is the highestin the international market and represents the singlelargest motorcycle market in the world 0. 1540. 6 The international heavy weight market is growing and isnow larger than the U. S. heavyweight market 0. 1540. 6 Women and younger riders are increasing becominginterested in bikes 0. 130. 3 Market share increasing in Europe and Asia for the last twoyears 0. 130. 3 Increasing demand in US markets for bikes 0. 120. 2 Customers value quality parts 0. 02510. 025 THREAT Harleys ongoing capacity restraints caused a shortagesupply and a loss in domestic market share in recentyears 0. 1540. 6 Harleys average buying age is 42 years old and increasing 0. 130. 3 The European Union’s motorcycles noise standards aremore stringent than those of Environmental ProtectionAgencies in the U. S and increased environmental stand 0. 02530. 075 Some competitors of Harley Davidson have larger financialand marketing resources and they are more diversified 0. 02520. 05 Environmental protection laws 0. 02540. 1 Buell division needs to continue to produce a qualitymotorcycle under Harley’s brand name 0. 0510. 05 TOTAL 1 3. 2 CPM HARLEYHONDAYAMAHACRITICALSUCCESSFACTORSWeightRatingWeightedScoreWeightRatingWeightedScoreWeightRatingWeightedScore Advertising 0. 1540. 60. 230. 60. 1540. 6 Product Quality 0. 1540. 60. 0530. 150. 02530. 075 PriceCompetitiveness 0. 110. 10. 1530. 450. 2530. 75 Management 0. 02530. 0750. 0340. 120. 0520. 1 FinancialPosition 0. 120. 20. 1440. 560. 33531. 005 Customer Loyalty 0. 1540. 60. 0620. 120. 1520. 3 GlobalExpansion 0. 02530. 0750. 0540. 20. 0230. 06 Market Share 0. 320. 60. 3230. 960. 0220. 04 TOTAL1 2. 851 3. 161 2. 9 Inventory Turnover = Sales / Inventory of finished goods=4624/208=22. 23Fixed Assets Turnover = Sales / Fixed Assets=4624/2194=2. 10 Total Assets Turnover = Sales / Total Assets=4624/4923 =0. 93Accounts Receivables Turnover = Annual Credit Sales / Accountsreceivable=4624/1114=4. 15Average Collection Period = Accounts Receivables / (Total creditsales/365)=1114/(4624/365)=1114/12. 66=87. 99 PROFITABILITY RATIOS Gross Profit Margin = (Sales – COGS) / Sales=(4624-3070)/4624=1554/4624=0. 34Operating Profit Margin = EBIT / Sales=1149/4624=0. 25Net Profit Margin = Net Income / Sales =761/4624= 0. 16Return on Total Assets ( ROA ) = Net Income / Total Assets= 761 / 4923= 0. 15Return on Equity ( ROE ) = Net income / Total Stock holdersequity = 761 / 2958= 0. 26Earnings Per share (EPS) = Net income / Total stock holdersequity = 761 / 302= 2. 519Price Earning ratio =Market price per share/Earningper share=39. 11/2. 519=15. 526Growth ratioSales=Annual % growth in total sales=(4624-4091)*100/4091=13. 029Net income=Annual % growth in profits=(760-580)*100/580=31. 034 STRENGTHS ? Net income of 2003 was $760mn, its more than 30% ascompared to the previous year 2002. ? The standard and performance segments of Harley Davidsonmake up 70% of the European heavy weight motorcycle market ? Harley-Davidson operates in two segments: Harley-Davidsonmotorcycles related products and HDFS (Harley-DavidsonFinancial Services). ? Harley-Davidson is the only major American heavyweightmotorcycle manufacturer. ? Strong brand name. ? The HOG (Harley Owners Group), which have a 7,50,000members world wide is the industry’s largest company sponsoredmotorcycle enthusiast organization. ? Buell Riders Adventure Group (BRAG) was also formed recent ? Customization of the bikes, this is Harley-Davidson’s majorrevenue maker. ? Harley-Davidson have a good marketing division and its dividedas dealer promotions, customer events, magazine and direct-mailadvertising, and public relations. WEAKNESS ? High price ? Harley-Davidson has problems in gaining more market share insome European countries (That’s one of the main markets forHeavyweight motorcycles outside U. S). ? They didn’t yet start its sales in India, one of the biggest markets. ? Required production is not met, analyzing the future of Heavyweight motorcycle market IFE MATRIX STRATEGY RECOMMENDATION IMPLEMENTATION: ? MARKET PENETRATION ? Get some more market share from the existing market, like U. S,U. K, and Japan etc through more marketing techniques likeadvertising. Harley-Davidson has a good brand name so it’s easyfor them to eat up the competitor market share if they canprovide some more customer benefit. ? Competition is high in this segment mostly in U. S so marketpenetration can be a good choice for the company. ? Expand the HOG (Harley Owners Group) to Asian countries, if thecompany can provide the customer satisfaction that they areproviding to the U. S customers to the Asian customers they canincrease the sales. ? PRODUCT DEVELOPMENT ? Younger generation and female are now coming to this segmentso expand the motor cycle segments to younger generation andfemales. ? In Europe they can increase or expand the Buell’s market shareby introducing new motorcycles. ? MARKET DEVELOPMENT.