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Harley-Davidson Strategic Management Presentation

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Adam H

on 9 April 2014

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Transcript of Harley-Davidson Strategic Management Presentation

Adam Haese • Michael Fedele
Chris Cassano • Courtney Iverson
Teresea Decaino • Michael Hancock

About Harley-Davidson Inc.
-Founded by William Harley and Arthur and Walter Davidson in 1901 in Milwaukee, Wisconsin.
-In 1903, they had sold a total of 3 bikes and 1904 a total of 8.
-In 1907, William and Arthur established their business as a company in Juneau Avenue, Milwaukee, Wisconsin.
- 1907 Chicago Auto Show helped promote the Harley-Davidson brand.
- By the end of 1908, dealerships were established in New York, Chicago, Philadelphia, Atlanta, Newark, and many more cities.
- By 1912, Harley-Davidson had over 200 dealerships and began distributing motorcycles overseas in Japan.
Harley-Davidson Today
-Roughly 868 licensed dealers throughout the US.
-More than 1550+ licensed dealers worldwide.
-Publicly traded on the NYSE. (HOG)
-Currently owned by Willie G. Davidson.
-Headquartered in Milwaukee, Wisconsin.
Harley-Davidson, Inc.
10-K Annual Report
Return on Investment Perspective
6-Month Time Frame
Return On Investment Perspective
5-Year Timeframe
Harley Davidson Mission

Mission Statement:
"We ride with our customers and apply this deep connection in every market we serve to create superior value for all of our stakeholders."
Harley Davidson Values
Values:
Telling the Truth
Keeping our Promises
Respecting the Individual
Encouraging Intellectual Curiosity
Be Fair
Harley-Davidson Objectives
1. Build Values For Customers
2. Create Customer's Confidence
3. Further International Expansion
Defined Objectives:
Board is made up of 13 members.
Age range from 50-73.
There is the only internal member, Keith E. Wandell.
All directors must hold 15,000 shares of Harley Davidson Common Stock.
The guidelines provide that until the applicable ownership level is achieved, the director must receive at least 50% of his or her fees in the form of stock.
Board of Directors
Board Of Directors
Keith E. Wandell is Chairman of the Board, CEO and president of Harley Davidson Inc.
Wandell is 63 years old.
He has been the CEO and President of Harley Davidson Inc. since May 1, 2009.
He has been the Chairman of Harley Davidson, Inc., a holding company of Harley-Davidson Financial Services, Inc., since February 7, 2012.
He also served as the President and COO of Johnson Controls Inc., from 2006 to 2009.
Top Management
Key Executives
Emerging Markets
The company's presence in emerging economies such as India could prove to be very beneficial to the company. In November 2013,the company announced to manufacture street motorcycles in India with low price range, aiming towards the young audience offering good city performance.
Research & Development
Continuous research and development activity enables the company to maintain a leading position in custom and touring motorcycle market and develop products for the performance segment. Focused R&D activities enable the company to offer innovative products and improve its operational performance.

Product Line Extension
With the Green and Environmental trend, electric bikes will become more and more popular. As an established leader in American made motorcycle motors, this would easy for them to dominate as well.

Opportunities
Threats
Competition
Harley Davidson is on nearly every continent. They are usuallyhigher in price in comparison to their counterparts and not as diversified in the automotive and motorcycle industries.
Raw Material Procurement
Acquiring raw materials from global sources subjects Harley Davidson to changing market prices, and exchange rates leading to higher operational and manufacturing costs.
Laws and Regulation
Harley-Davidson could face increased challenges in its two wheeler business due to the stringent emission standards. According to Dealernews.com, motorcycle industry stakeholders in Europe announced plans to increase €3 emission standards to more stringent €5 standards by 2015. The same could be true for the United States. Failure to comply with the standards could result in penalties and affect its profit margins.
Economy
Less disposable income of consumers could potentially negatively affect Harley Davidson, and perhaps, result in product substitution.
Motorcycles and Related Products

Financial Services

Corporate Structure
“Everyday Values”
Harley-Davidson Code of Business Conduct

“The Code reminds us that our Values and Expected Behaviors should shape our decisions and it is critical that we all understand its importance. It is a great resource for dealing with various business situations we encounter in our day-to-day environment.”


Corporate Culture
“We are a global company built on a foundation of Values and Expected Behaviors that guide not only the way we do business, but the way we interact with the world around us every day.”

Tell the Truth
Be Fair
Keep Your Promises
Respect the Individual
Encourage Intellectual Curiosity
Corporate Culture
Values:
Strategic Pillars
Growth
Continuous Improvement
Leadership Development
Sustainability


Corporate Culture
Expected Behavior
Integrity
Accountability
Teamwork
Creativity
Diversity


Focus on both core and outreach customers
Well-known brand name
Dealer promotions
Customer events
Magazine and direct mail advertising
Public relations
Cooperative programs with Harley Davidson
National television advertising

Marketing
1985 Citicorp refused to lend money, almost went bankrupt
Harley-Davidson Financial Services
Net income for 2013: $734.0 million compared to $623.9 million in 2012
Driven by strong financial performance at the Motorcycles segment
Project Rushmore

Finance
Significant factor in Harley-Davidson’s ability to lead the custom and touring motorcycle market
Product Development Center (PDC)
Working on development of new strategy
Spending: $152.2 million, $137.3 million and $145.4 million during 2013, 2012 and 2011, respectively.

Research and Development
Independent dealerships
Secondary retail locations (SRLs)
Alternate retail outlets (AROs)
Seasonal retail outlets (SROs)
Foreign operations
E-Commerce business model (2011)
Operations
Motorcycle segment: approximately 5,800 employees (Dec. 2013)
Financial segment: approximately 600 employees (Dec. 2013)
Unionized employees at manufacturing facilities
United Steelworkers of America (USW)
International Association of Machinist and Aerospace Workers (IAM)
Human Resources
Continually modifying and enhancing its systems and technology to increase productivity and efficiency
Information Systems
Global expansion
Diversification
Museum, merchandise, accessories, etc.
Product
Sport/performance machines and large, heavyweight bikes
Corporate reputation
Honored on numerous lists of corporate accolades

Strengths
Seasonality
Aging target market
Baby Boomers
Niche status
Concern for “non-riding” market

Weaknesses
Internal Factor Analysis Summary
(IFAS) Table
Broadening target market
Younger and female target markets
Further product diversification
Might be outside scope of expertise
Strengthening financing company
Major revenue generator for numerous auto-oriented companies

Opportunities
Unwarranted expansion

Weak economy

Competitor development
Threats
External Factor Analysis Summary
(EFAS) Table
Strategic Alternatives
Customization
Many Harley-Davidson owners make it a point to customize their motorcycle to match their preferences.
Harley-Davidson website can allow consumers to mix and match interchangeable parts between motorcycles or create a specific customizable motorcycle segment for those seeking alternate parts.

Strategic Alternatives
Customization
Fine detail and personalization of paint and design is commonplace amongst avid Harley-Davidson riders.
Harley-Davidson can either hire third party shops or train and perform custom paint design and airbrushing in house. This will likely be a value-added sale and the company can charge a premium for this service.
Customers can submit visuals/patterns via online request form or visit Harley-Davidson retailer for design creation through exclusive Harley-Davidson software.
Strategic Alternatives
Concentration of Attention in Popular Markets
Harley-Davidson is “all-American” and still sells motorcycles worldwide.
Costs can be cut and sales can increase by giving up market share and sales in less appealing markets/countries where motorcycles may sit on lots for long periods of time
Strategic Alternatives
Concentration of Attention in Popular Markets
Concentration on high-sales area/segment
Harley-Davidson sells many motorcycles every year throughout the Americas and many large European countries. Concentrating on these markets to create more appealing products to different age groups and/or conduct consensus to gain a better understanding of what their “large-country” consumers desire can yield higher sales figures.
Corporate Roles
Implementation
Human Resources develops programs for new strategies for the CEO to overview and make a decision on
Evaluation and Control
Information System
Performance for Harley-Davidson is pinpointed by area and segment. Concentration is on high sales in domestic and foreign markets. Segments targeted are both “traditional” and non-traditional. Females are now targeted as well.
Evaluation and Control
Information System
Information is forwarded traditionally. Quarterly statements of financials and sales figures from both foreign and domestic affairs.
Benchmarking is existent solely in the area of sales and reliability. Harley-Davidson thrives off of its originality and its founding culture as well as newfound segments in which to sell.
Evaluation and Control
Control Measures

Standards for motorcycle/motorcycle products are consistent throughout the company’s segments and international endeavors. The only difference is the array of products offered for certain areas. One segment may attribute higher sales of certain models than others (which is accounted for).
Evaluation and Control
Control Measures

The Company intends to provide a total compensation opportunity for its employees that includes incentive compensation dependent upon continuously improving performance. Following the end of each year, the Human Resources Committee will calculate the performance award amount for each employee. A performance percentage is determined for each performance category based upon actual performance and the applicable performance scale.
Implementation
Further International Expansion

More environmentally friendly production plants
Full transcript