Presented by: :Presented by:
Introduction :It’s a story no one on Earth could have made up.
Lets have a look at the journey of one of the greatest companies on the planet…… The Unruly “Harley Davidson” Introduction
Harleys- Experience :Harleys- Experience Harleys are, just like fun stuff for people with money and appearance. So, "rich" customers rule the market. These days, in America, Harley Davidson owns 72 % of the market of motorcycles with 850 CC or more !! Harleys aren't the fastest and manageable cycles, riding a Harley is not at all comparable with riding any other bike ...
History speaks!! :1901:
William S. Harley, age 21, completes a blueprint drawing
1903:
William S. Harley and Arthur Davidson make available to the public the first production Harley-Davidson® motorcycle.
1904:
Sells one of the first three production Harley-Davidson motorcycles ever made.
1905:
A H-D motorcycle wins a 15 mile race in Chicago with a time of 19:02. In Milwaukee, the first full-time employee is hired.
1906:
A new factory is built. Staff size is increased to six full-time employees.
1907:
Factory size is doubled as well. Dealer recruitment begins, targeting the New England region. History speaks!!
The past :1910:
The famed "Bar & Shield" logo is used for the first time.
1918:
Almost half of all Harley-Davidson motorcycles produced are sold for use by the U.S. military in World War I.
At War's end, it is estimated that the Army used some 20,000 motorcycles in their efforts, most of which were Harley-Davidsons.
1920:
Harley-Davidson is the largest motorcycle manufacturer in the world.
1922:
Harley-Davidson riders sweep all eight National Championship races.
1929:
One of the 2 companies survived in great depression The past
Times gone by…. :1931:
All of Harley-Davidson's remaining American competition is now gone except Indian motorcycle manufacturing company.
1933:
An art-deco "eagle" design is painted on all gas tanks.
1936:
HD introduces ‘Knuckle head’
1941:
Production of civilian motorcycles is almost entirely suspended in favor of military production.
1945:
World War II ends, and Harley-Davidson has produced almost 90,000 WLA models for military use.
1950:
Harley-Davidson riders win 18 of 24 National Championships and set six new racing records.
1952:
HD launched Sportster Times gone by….
What went before.. :1953:
Harley-Davidson celebrates its 50th Anniversary in style. An attractive logo is created, depicting a "V" in honor of the engine.
1960:
Harley-Davidson purchases a half interest in Aeronatica-Macchi, forming Aermacchi Harley-Davidson, a European division that will produce small, single cylinder motorcycles.
1964:
The three-wheeled Servi-Car becomes the very first Harley-Davidson motorcycle to receive an electric starter.
1969:
Harley-Davidson merges with the American Machine and Foundry Company (AMF), a longtime producer of leisure products.
1971:
A new class of motorcycle, the cruiser, is born.
1981
13 executives- leveraged buyout (LBO). Struggled under heavy loans .
1982:
The Materials As Needed (MAN) application is introduced to production. This dramatically lowers production costs and improves quality. What went before..
History continues.. :1985
Came within 4 hr bankruptcy-CEO Richard Teerlink convinced new creditors for restructuring …. IPO
1986:
Harley-Davidson releases the Heritage Softail®.
1987:
Harley-Davidson is listed on the New York Stock Exchange.
1990:
Upon its introduction, the Fat Boy® almost instantaneously becomes a modern legend of motorcycle design.
1992:
JV with Buell
1993:
Harley-Davidson celebrates its 90th Anniversary in Milwaukee with a Family Reunion. An estimated 100,000 people ride in a parade of motorcycles. History continues..
Slide 10:1998:
Harley-Davidson celebrates its 95th Anniversary. 140,000 plus riders are warmly received by Milwaukee to help with the celebration.
A new assembly facility opens in Manaus, Brazil, the first operations outside of the U.S.
2003:
More than 250,000 people come to Milwaukee for the final stop of the Open Road Tour and the Harley-Davidson 100th Anniversary Celebration and Party.
2005:
Harley-Davidson and the Muscular Dystrophy Association (MDA) mark the 25th anniversary of their partnership.
2006:
Harley-Davidson unveils plans for an all-new museum in Milwaukee, opened in 2008…
2008:
105th anniversary Celebration Time…..
2008 – 105th Anniversary :2008 – 105th Anniversary
Image dilution by Bikers :Rowdy & rebellious image of bikers
1947- outlaw image- ‘Life’ magazine photographs
1954- ‘Wild One’ movie
Hells Angels made many people fearful & put bikers under close scrutiny
1969- murder by a one of Hells Angels members
Hells Angel, Pagans, Banditos & outlaws- rode only Harleys
Honda exploited Harleys image with slogan – “You meet the nicest people on Honda”- largest seller in U.S. in 1960s and 1970s
Hells Angels image spilled over entire industry & contributed to decline in sales of bikes in U.S & Europe Image dilution by Bikers
Image building started :Launch of movie “Easy Riders”- aided to change the image as rebellion image & appealed to young people in U.S. & Europe.
Harley “ Captain America” chopper ridden in movie by peter Fonda’s Wyatt character helped Harley to break outlaw image & come to represent less malevolent rebellion Image building started
Industry condition in 2007 :2007- more than 516000 units registered in U.S.& 403000 in Europe.(651+cc)
Rising income level in emerging countries- major industry growth drive force
Demand for heavyweight bikes outpaced smaller in U.S. from late 1990s till 2003.
In 2007, Demand for heavyweight motorcycles decreased by 6.2 % in US and increased by 13.7% internationally. ( Net effect - decrease in 1.8% sales internationally )
651+ cc accounted for largest portion of demand in North America & Europe Industry condition in 2007
New registrations in 651+cc Segment :New registrations in 651+cc Segment
Current Data - :Current Data -
Segmentation within 651+ cc category :4 categories- standard, performance, custom, touring Segmentation within 651+ cc category
Competition in Global Motorcycle Industry……… :Rivalry criteria- performance, styling, breadth of product line, image, reputation, quality of after sales services, price.
Difficulty U.S & European Manufacturers had in attracting price sensitive European market Competition in Global Motorcycle Industry………
Slide 20:Market share in 651+cc segment
Regulations and Legal challenges :European parliament and European countries- reduce pollutants by 60% after 2003 & more 60% after 2006
Europe- implementation of euro- prices increased substantially in many countries e.g. Germany
U.S.- producers are subject to certification by Environmental protection Agency ( EPA)
California Air Resource Board (CARB)- new tailpipe emission standards
Safety standards-NHTSA
Health insurance problem & AMA attempt to pass the bill in U.S. senate in 2003 Regulations and Legal challenges
Harley Davidson’s Strategy for competing in motorcycle industry… :After LBO company felt need to rebuilt from ground
Products were unreliable & had poorer performance relative to less expensive Japanese motorcycle
Greasy & run- down shops
Management realized that a strong alliance to Harley brand by many bilkers was the only strength
Market research to know customers- negative feedback Harley Davidson’s Strategy for competing in motorcycle industry…
Slide 23:Japanese management practices
Promotions at motorcycle rallies
improving dealer network
Pilot program – clean & attractive showrooms to showcase Harley’s improved motorcycles & display apparel & other merchandise
Pilot program led to new remodeled dealership network
1400 dealers- 75% space for accessories & earned 25 to 40 % of their earning from sale of apparels & accessories
HOG program……. :Harley owners groups (HOG) from 1983- loyal clubs -to socialize & ride with bike owners
Primary aim- to create sense of community
Free membership to HOG
HOG also organized rides, raised money for charities
HOG membership started with 33000 membership in 1983 & now grown to 7,93,000 in 1200 chapters in 2003
Co. sponsored about 100 HOG rallies in 2003
Currently over 1 million members HOG program…….
Harley Image & Appeal to Baby boomers :Traditional bikers – blue collar workers
Co. successfully added upscale consumers
( white collar) to its list of consumers
Rationalized co.’s image with upscale baby boomers with comments as “ There’s lot of beaners but they’re out on the motorcycle which is a beautiful thing”
AARP Magazine- “ Baby boomer purchase Harley to feel forever young” Harley Image & Appeal to Baby boomers
Distribution & sales in North America, Europe & Asia Pacific :Dealers responsible for promoting rallies for local HOGs.
E.g. 10000 member BRAG was also supported by dealers
2003- 644 dealers for Harley, of which 436 for Buell in U.S
161 dealers in Japan
50 dealers & 3 distributors in Australia/ Newzealand market
7 in southeast Asian markets
European region- 436 dealers Distribution & sales in North America, Europe & Asia Pacific
Recent News :In August 2008, Harley-Davidson acquired Mv Agusta Group(Italy) expanding presence in Europe @ $108 millions
Accenture is helping HD to create more strategic HR functions.
Aug 29th, 2008 105th anniversary
StockScouter rating : 8 – extremely good performance Recent News
The statements :Mission:
“We fulfill dreams through the experiences of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products, and services in selected market segments.
Vision:
“Harley-Davidson is an action-oriented, international company, a leader in its commitment to continuously improve (its) mutually beneficial relationships with stakeholders (customers, suppliers, employees, shareholders, government, and society). Harley-Davidson believes the key to success is to balance stakeholders’ interests through the empowerment of all employees to focus on value-added activities The statements
Differentiation :V-Twin, Twin Cam Engine
Ruggedness, independence, and individuality
Motor Clothes
Parts and accessories
Power, Style & Freedom
An embodiment of identity and lifestyle.
Resale Value (Some of the old bike are sold at Rs. 99,000 – Rs 1,55,000 – Source – www.bikefinder.com)
Brand recognition - Brands advertising and promotion have long been the primary means of influencing and reinforcing customer perceptions responsibility Differentiation
Slide 32:Harley creates value for its customers through providing test ride facilities at its dealerships, financing, driving instruction, insurance, service and repair facilities, owners’ club activities, and various sponsored events for Harley riders.
“Harley sells lifestyles and not motorcycles”- competitors
The SWOT analysis :Strengths:
Domestic & International Market share
Financial status
Product quality
Strong brand loyalty & HOGs
Strong distribution network
Weaknesses:
Harley Davidson does not emphasize price in its product.
Harley Davidson has had difficulty gaining market share in some European countries. The SWOT analysis
SWOT continued… :Opportunities:
The international heavy weight market is growing and is almost as large as the U. S. heavyweight market
The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world.
Women and younger riders are increasingly becoming interested in bikes. - Japan have more female HOG members
Alliances with other automobile manufacturers are possible.
Industry registrations of domestic heavyweight motorcycles are increasing.(Except last year – due to economy recession)
Market share increasing in Europe and Asia for the last two years.
Increasing demand in US markets for bikes.
Customers value quality parts. SWOT continued…
Swot continued… :Threats:
Harleys ongoing capacity restraints caused a shortage supply and a loss in domestic market share in recent years
Harleys average buying age is 46 years old and increasing.
The European Union’s motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U.S and increased environmental stand.
Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified.
Shifts in buyers needs and tastes.
Customer loyalty in European and Asian Countries.
Costs could become expensive from international importing.- for example – in India 60% tax on total cost for importing an automobile and 30% road tax Swot continued…
Slide 37:And The Great story on Earth continues its Majestic Journey… Thank You