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					Case Study
Harley Davidson
Creating An Enduring Mystique
Contents

1st Part
   Snapshots
   Challenges
   Bounce Back
   Success
   The Take-away

2nd Part
   Information Box
    – Quality Circles
    – Internal vs External Marketing Orientation
   Issue Box
    – Should We Be Aggressive or Conservative in Our Planning
 What can be learned from the case study?
 Q&A

                                                                2
1st Part Snapshots



1903
   Harley Davidson founded & manufactured
1963
   Has a solid 70% market share in U.S
1965 - 1983
   Honda lightweight cycles had successfully penetrate US
    market, having 44% of the market by 1983
1973 - 1983
   Harley's market share went from 77.5% to 23.3% in 1983



                                                             3
1st Part Challenges

1. Refuse to change from (a) to (b)




                                      4
1st Part Challenges

2) High in parts inventory




3) Down in quality and reduce productivity




                                             5
1st Part Challenges

Taken from: Reginald A. Bruce, Ph.D.
College of Business and Public Administration
University of Louisville Year 2000
   •Corporate management focused mostly on short term
   returns.

   •Belief in quick fixes for problems, such as throwing in
   computers and state-of-the-art machinery to improve
   productivity.

   •High break-even point that left the company vulnerable to
   unpredictable market fluctuations.

   •Management that woke up too late to the threat of
   foreign competition because of the "it can't happen here"
   syndrome.
                                                                6
1st Part Bounce Back

1. The Top Management initiated
     Participated and learned about customers concerns and
      complaints at Harley Owners Group (HOG) rallies & creates
      changes

     Learned about Japanese plants and Honda

     Implement the production improvement thru Just-in-time (JIT),
      Materials-as-needed (MAN), Quality Circles (QC) & Statistical
      Operator Control (SOC)

     Educate the middle management and front line people in turning
      the plant to profit center by reducing defect products and increase
      productivity

     Implemented product improvement thru new engine, stereo
      system, etc


                                                                            7
1st Part Bounce Back

1. The Top Management initiated
   Enhanced its presence in Europe - Harley opened a
    branch office of its HOG club in Frankfurt, Germany, for its
    European fans
   1997 - A new engine plant in Milwaukee
   1998 – A new assembly plant in Kansas City




                                                                   8
1st Part Bounce Back

 Recreate the public image with high quality
                  licensed goods
    (i.e leather jackets, cologne, jewelry,
           pajamas, sheets, towels etc)




                                               9
1st Part Success

The Harley-Davidson production plant has improved, between
                       1981 – 1988

               Inventory reduced by 67%
                 Productivity up by 50%
            Scrap and rework down two-thirds
                Defect per unit down 70%




                                                             10
1st Part Success

Harley Owners Group (HOGs)
 The trailblazers for the
successful growth and
mystique to come




                             11
1st Part Success

 The branded merchandises/licensed goods has created

   New customer segment – Rubbies (the rich urban bikers)
 In 1992 the merchandises contributed $155.7 million in sales
               (alternate revenue for dealers)




                                                                12
1st Part Success

     Harley- Davidson’s Growth in Revenue & Income
               (milllions of $), 1983 - 1994




                                                     13
1st Part Success

                Motorcycle Shipments (Domestic & Export)

              120

              100
 Percentage




              80

              60
                                                  U.S   Exports
              40

              20

               0
                    1993   1997
                                  Year




                                                                  14
1st Part Success

                                    Revenues & Income

              2,000
              1,800
              1,600
              1,400
 US Dollars




              1,200                                     Revenues
              1,000
                800
                600
                400                                     Net Income
                200
                  0
                      1993   1997
                                        Year




                                                                     15
1st Part The Take-away

                           IMAGE
    The Harley-Davidson symbol is based on a pattern of
  associations that include the American flag and the eagle;
   reflective of the passion and freedom Americans enjoy.

  Harley promotes: a mystique appearance, individualism,
 the feeling of riding free, and the pride of owning a legend.

                           PRICE
           Developed a strategy of value over price.
 By not being able to meet demands, an attitude of must-have
            has developed. Customized products.




                                                                 16
1st Part The Take-away

      LISTEN TO CONSUMER DESIRES
         & CREATES QUALITY NOT
                QUANTITY
  " What the Harley management crew, who are masters of
 marketing, do well is listen to their customers. The result is
     that Harley cannot keep up with demand at current
              production levels" (Croghan 31).

 “Quantity isn’t the issue, quality is the issue. We learned in
  the early 1980s, you do not solve problems by throwing
                        money at them”
   (Gary Slutsker, “Hog Wild,” Forbes, May 24, 1993, p.46)




                                                                  17
1st Part The Take-away

                     LEADERSHIP

It takes a leader who has the vision and confidence that things
                  can be changed for the better


   PRESERVE THE STRENGTH OF BEING
    HARLEY DAVIDSON – CLASSIC &
             LEGENDARY




                                                                  18
2nd Part Quality Circles

1. To Apply Japanese management techniques which is
   Quality Circles

     Quality Circles (QCs) – worker-management committees that
      meet on weekly basis:-
      to talk about production problems
      plans to improve productivity and quality
      resolve job-related gripes on both sides.


    QCs to increase employee involvement in quality goals and to
     improve communication between management and workers.




                                                                    19
2nd Part Internal vs External
Marketing Orientation

1. Internal is appropriate……..

       When demand for product exceeds supply

       When the product cost is high and the market can be
        expanded only if costs can be brought down

       Where there is a lack of significant competition, and
        no competitive threat is expected either because:
        Severe entry requirements in the industry or
        The market is limited (H-D miscalculated)


                                                                20
2nd Part Internal vs External
Marketing Orientation

1. External orientation focuses on

   External market environment (e.g. customer
    needs/wants)

   External forces (e.g. major competitive pushes,
    changing laws and regulations, economic conditions)

             Do all firms need marketing?
                            No
             (e.g. health, and charity firms)

                                                          21
2nd Part Should We Be Aggressive
or Conservative in Our Planning

1. In growing market; to be conservative will result into
   inability of…..
     firm to handle its resources expansion sufficiently
     to control potential growth

2. On the other hand; it is good because it is not clear
   the growth is temporary or permanent

Do you think Harley-Davidson made the right decision to
                  expand conservatively?
                          Yes
        To improve its core business quality and
             to ensure the growth is lasting

                                                            22
2nd Part What can be learned from
the case study?

 That a firm can come back from difficulty

 Leadership of high order.


 Preserve the Core Business at all cost and
  strengthening its position

 The power of enduring mystique for firm

 Product uniqueness

                                               23
2nd Part Q & A

1. Yes, Beals steps were correct

   collected $81.5 million form Citicorp and solved
    financial ties against the firm

   stopped Honda domination by tariff increase 4 -45%

   increased owners moral by rallies, meetings, and
    promises

   Finally increased qualities

                                                         24
2nd Part Q & A

2. The infatuation of Rubbies will last long due
   to………

   HOGs creates loyalty and enthusiasm

   High price for bikes did not bother them

   Beals capitalized on heavyweights’ quality




                                                   25
2nd Part Q & A

3. Not abdication;
Preserve the core quality and careful expansion.

4. Yes,
I would invest due to…..
 High value of Brand name
 Strategic core business
 Positive diversification




                                                   26
2nd Part Q & A

5. Resurgence is not only luck; but is the combination of..


 good leadership,
 preserve the core business and strengthening its
  position.
 the power of enduring mystique

6. Absolutely correct; politic is more important than
   management in some situations; this is what the case
   proved. Without congress tariff increase HD would be
   passed away.

                                                              27
THANK YOU 4 LISTENING


                        28

				
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