+ Efforts are also underway to expand the sales of motorcycles in international markets. Harley-Davidson owned distributorships have been established in Japan, Belgium, France, Germany, and the United Kingdom. Independent distributors are located in Canada, Australia, Greece, Italy, Norway, Portugal, Spain, Sweden and Switzerland. There are 26 full line dealerships in the Latin American market, 98 in the Asia-Pacific market and 298 in the Europe-Middle East-Africa market. Harley-Davidson will also be setting up dealerships in Egypt and Romania in the near future.
+ Horizontal Diversification
+ Harley-Davidson has acquired Buell Motorcycles and Eaglemark Financial Services, inc. in order to provide new product lines for their customers. Buell was acquired in order to be able to provide customers with a V-twin powered Sport motorcycle. This type of motorcycle has become increasingly popular with the younger and European riders.
+ Harley-Davidson also owns Eaglemark Financing. Eaglemark provides motorcycle financing, motorcycle casualty insurance and extended service contracts for Harley-Davidson and Buell motorcycles. They also issue the Harley-Davidson Chrome VISA Card, allowing riders and customers to show their brand loyalty.
+ Focus/Differentiation
+ Harley-Davidson s business level strategy is Focus/Differentiation. They focus on heavyweight motorcycles and differentiate on the basis of quality and brand recognition.
Policies
+ Foster a retail customer satisfaction culture throughout the organization.
+ Enhance two-way customer communications.
+ Offer choices of higher, lower complexity products.
+ Improve control and support of distribution channels by strengthening partnerships with dealers.
+ Empower employees so they feel connected to the organization and reward them through gain sharing
SWOT Analysis Begins
II, Corporate Governance
A. Board of Directors
+ Board consists of six numbers
+ Internal members consist of Vaughn L. Beals, Jr., Chairman,
and Richard F. Teerlink, President and Chief Executive Officer
+ External members consist of William F. Andrews, Richard G. Lefauve, William B. Potter, and Richard J. Herman-Taylor
+ William F. Andrews, Chairman, Schrader Inc.
Monroe, North Carolina
+ Richard G. Lefauve, Group Executive, NAO Small Car Group General Motors Corporation Detroit, Michigan
+ William B. Potter, Independent Investor & Consultant
Preston, Maryland
+ Richard J. Herman-Taylor, President, Bioscience International Inc., Boston, Massachusetts
B. Top management consists of ten members
+ Top management consist of ten members
+ Vaughn L. Beals, Jr. 67 years old; Chairman
1.3% of stock
+ Richard F. Teerlink 59 years old; President and Chief Executive Officer; 2.84% of stock
+ Jeffrey L. Bleustein 56 years old; President and Chief Operating Officer Motor Company; .80% of stock
+ James M. Brostowitz 44 years old; Vice President, Controller and Treasurer
+ Thomas A. Gelb 60 years old; Vice President, Continuous Improvement; .18% of stock
+ C. William Gray 54 years old; Vice President, Human Resources; .17% of stock
+ Timothy K. Hoelter 49 years old; Vice President, General Counsel and Secretary
+ Martin R. Snoey 52 years old; President and Chief Operating Officer, Holiday Rambler
+ James L. Ziemer 46 years old; Vice President, Chief Financial Officer and Assistant Treasurer; .41% of stock
+ Michael B. Weiss 52 years old; Assistant Secretary
+ All individuals have been employed by the company in an executive capacity for more than 5 years, except Martin R. Snoey
+ Mr. Snoey has been President and Chief Operating Officer of Holiday Rambler since joining the company in January 1993
+ From January 1992 to December 1992 he held a general management consulting assignment with Precision Castparts Corporation, a specialty manufacturer supplying the transportation industry.
+ Top management is centralized
III. EXTERNAL ENVIRONMENT
OPPORTUNITIES AND THREATS (SWOT)
Motorcycle Segment
A. Societal Environment
+ Key economic indicators such as interests rates, inflation, personal income, and gross domestic product are favorable and expected to remain favorable.
+ Consumer confidence is high and increasing.
+ Younger buyers, who traditionally could not afford the heavyweight motorcycles, are able to obtain favorable financing and credit terms. This has led to an increase in demand from younger buyers.
+ Because of their lower operating costs, has compared to automobiles, many consumers are switching to motorcycles as a primary means of transportation.
+ Primary resources such as, sheet metal, metal coils, aluminum, plastics, tires, and wiring, used in the manufacturing of motorcycles and related products are in abundant supply.
+ Fuel and oil prices are expected to rise modestly, but no extraordinary increases are expected.
+ There is an abundant supply of quality labor in all occupational skill levels.
+ Regional trade agreements/associations are reducing trade barriers and opening up new opportunities overseas.
+ Income levels and technological advancements are rising in developing countries.
+ The aging of the baby boom population has increased demand for heavyweight motorcycles. The baby boomers are the number one consumer of heavyweight motorcycles. They are captivated with the lifestyle of owning a heavyweight motorcycle, and have the money to make discretionary spending.
+ Motorcycle manufacturers must ensure that they remain informed of the variety environmental and traffic/highway safety laws, to ensure that their products are not subject to fines and production recalls.
B. Task Environment
+ Consumer demand for heavyweight motorcycle is high and continues to rise.
+ Customer loyalty to the Harley-Davidson brand is extremely strong, and customers are willing to endure long wait times and higher prices to own a Harley.
+ Harley-Davidson maintains the market leader position in the heavyweight motorcycle division.
+ The motorcycle industry is a growth industry and competition is extremely fierce, both domestically and internationally.
+ Manufacturers must constantly be aware of the threat of substitute products that have the potential to erode existing market shares.
Summary of External Factors (Motorcycle Segment)
Harley-Davidson has a very loyal following of consumers. Strong consumer loyalty and demand have made it possible for Harley-Davidson to become the market leader in the heavyweight motorcycle industry. As the economy becomes more and more global, companies within the industry will have to contend with additional competitors. However, the globalization of the economy is opening up more possibilities to increase market share. Also, substitute products seem to be a fairly strong unfavorable force within the industry. Overall the numerous factors evaluated, and the outlook for the economy point toward favorable conditions. Probably the most significant external environmental variable is the aging of the baby boom generation, and their subsequent fascination with the lifestyle/image of owning a motorcycle. The factors within the external environment point toward growth, and there are no significant unfavorable factors that show otherwise.
Transportation Vehicle Segment
A. Societal Environment
+ The motor home and travel trailer industry is extremely susceptible to fluctuating interest rates, income growth, and consumer confidence levels. The mid 1990 s have been particularly good for motor home and travel trailer manufacturers. Low interest rates, modest gasoline prices, and low unemployment, have resulted in increased sales.
+ As manufacturers begin to explore market opportunities overseas, they must contend with country specific traffic and environmental laws. In particular, size restrictions in Japan and Germany, are forcing manufacturers to redesign there products in order to compete in theses markets.
+ As regional trade agreements/associations continue to lessen barriers to trade, manufacturers must learn to adapt to the differences in culture and business practices within foreign countries.
+ The recent trend in developing countries such as, who have experienced a surge in technological development and rising income levels, has opened up new opportunities in overseas markets.
+ The growth in demand for motor home and travel trailers, in the mid-1990s has been attributed to the growing population of aging baby boomers, who are retiring and have more time and money to travel and camp. This age group is the primary consumer for the motor home and travel trailer industry.
B. Task Environment
+ Competition is most intense within the U.S., where a few dominant manufacturers hold the largest percentage of market share. Primary factors of competition are, pricing and innovative design features. Globalization of the economy will make competition even more intense.
+ Campground facilities are few and inadequate compared to those in the U.S. Manufacturers must make special design modifications in order to deal with such variations as, electrical hook-ups.
+ Motor home and travel trailer industry is growing; as more people reach middle age and begin to retire analysts predict further growth.
Summary of External Factors (Transportation Vehicle Segment)
Overall Evaluation: Steady increases in sales within the transportation vehicles segment, and a positive forecast points toward the potential for growth in the industry. Key economic indicators all favor expansion within the motor home and travel trailer industries. Interest rates are reasonable, personal income is up, fuel prices are moderate, and consumers have an overall healthy outlook towards the economy. Probably the most significant factor, in regards to the motor home and travel trailer industries, is the aging of the baby boom population. These individuals will continue to make up the greatest percentage of the American population well into the next century. They are expected to continue retiring in greater numbers, and are the primary consumers of recreational vehicles. Increasingly fierce competition will make it difficult for under-performing companies to remain in the industry. The globalization of the economy will make it possible for Harley-Davidson to seek out new market share by taking advantage of increasing income levels in developing countries. Competition will become more intense as foreign companies try to enter the U.S. market with innovating designs and lower prices. All competitors must strive to remain up-to-date with the latest regional/country specific environmental and traffic safety regulations. With only a few minor unfavorable external environmental factors, the outlook for the industry points toward growth.
IV. INTERNAL ENVIRONMENT:
STRENGTHS AND WEAKNESSES (SWOT)
A. Corporate Structure
+ Harley-Davidson s decision-making authority is decentralized into three standing committees totaling twenty-five executives, known internally as the circles of leadership . They manage the company around issues of customers, production, and corporate support. Each group reports directly to the CEO, Richard F. Teerlink. Successful implementation of this program occurs when there is commitment at all levels of organization. Top management must not only direct but take direction from the lower level employees. In order for top management to feel comfortable with this they must encourage education for employees of the company objectives and develop a trust that employees will make the right decisions. To implement this strategy