1. Strategic Audit
Business Strategies
Tim Fowler

2. Harley-Davidson Motorcycle Company is
considered a successful company for four key
reasons…
1. Strong brand loyalty
2. Independent women riders
3. Increasing plant efficiency by reorganizing
4. Expanding international markets
… which has lead to an increase in market share and cost savings
… 2

3. Harley-Davidson has a strong brand loyalty
among their customers
• In 2011, 65% of people that purchased
a new Harley-Davidson motorcycle in
the U.S. had owned a Harley-Davidson
previously in their lifetime.1
• 57% of people that purchased a new
motorcycle around the globe had
previously owned a Harley-Davidson.1
• In the U.S. Harley-Davidson owns over 1
50% of the motorcycle market.2
• The Harley Owners Group (H.O.G) is a
site where the owners of Harleys can
register to receive special benefits.3
• The Harley Owners Group has over
1,400 chapters all over the world.3
1
1http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-demographics&locale=en_US&bmLocale=en_US
2http://finance.yahoo.com/news/harley-davidson-remains-outperform-153018666.html
3http://www.harley-davidson.com/en_US/Content/Pages/HOG/HOG.html 3

4. Harley-Davidson is expanding their target
market to include independent women riders
• According to theMotorcycle Industry Council, women riders have increased to 7.2 million of
27 million riders.1
• Harley-Davidson is producing more motorcycles that are low to the ground, so women can
plant their feet firmly at rest.2
– They have also developed narrower seats and softer clutches; they are also adjusting
handlebars and windshields to make their bikes more comfortable for smaller riders. 2
• Approximately 12% of all Harley-Davidson motorcycle sales are to women. Roughly 32,000
new bikes in 2006 – compared to 4% in 1990, and 9% in 1998, and 10.6% in 2003.3
• It is estimated that women will spend around $300 million on Harley-Davidson motorcycles
this year in the United States, not including accessories, riding gear, or clothing.3
• In July 2011, Harley-Davidson launched the $7,990 Harley Superlow, designed to appeal to
both women and first-time riders.4
– The bike is 150 pounds lighter than a typical Harley-Davidson motorcycle, with a generous
rear-suspension travel, a deeply cushioned seat, easy-reach handlebar and the lowest seat
(25.5″) in Harley’s 32-bike lineup.4
• The company now has a 53% point market-share lead among female motorcycle riders.4
1http://www.cbsnews.com/8301-201_162-57465216/women-riding-motorcycles-in-increasing-numbers/
2http://www.nytimes.com/2007/07/25/business/25biker.html?_r=0
3http://www.nytimes.com/2007/07/25/business/25biker.html?_r=0
4http://cyrilhuzeblog.com/2010/10/03/harley-davidson-scoring-high-after-intensively-courting-women/
4

5. Harley-Davidson is increasing their
efficiency by reorganizing their plants
• Restructuring the plants has allowed the • By reorganizing their plants, Harley-Davidson will
company to have “surge capability” to match in turn increase their EPS. The impact of
production with seasonal demands.1 restructuring costs and benefit changes in 2012
and 2013, is add +$0.25 in 2012, and another
• The company is also restructuring the inner-
+$0.25 in 2013.3
workings of the plants to allow for more
employee feedback.1 Harley-DavidsonAnnual Units: 2000-2011
• Harley-Davidson has eliminated the problem
with bottlenecks in the development process by
loading finished products directly on the trucks;
this doubles the staging capability in the plants.1
• Improvements that used to take months, now
are completed in only weeks.1
• As a result of these changes, Harley-Davidson
will build more motorcycles in one facility this
year than they did in all 41 facilities in 2011.1
• Harley-Davidson also is trying to reduce the 3
amount of time it takes to develop a new
product from five years down to three. 2 Despite some reasonable unit growth this
year, Harley-Davidson's bike units are still
substantially below the average level of the
past 10 years. The trough in unit sales appears
to have come as recently as 2010.3
1http://www.harley-davidson.com
2http://www.manufacturing.net/news/2010/11/harley-davidson-restructuring-plans-in-place
3http://seekingalpha.com/article/317846-harley-davidson-could-have-25-upside-based-on-restructuring-benefits-and-volume-increases
5

6. Harley-Davidson has expanded
internationally into other markets
• In 2011, Harley-Davidson announced the opening of their Latin American headquarters in
Miami, FL.1
• Harley-Davidson is now implementing a “multi-generational and multi-cultural marketing
strategy” as it looks to increase sales to non-core customer (women, young adults, and
ethnically diverse adults) without alienating its core customer base.1
• Harley-Davidson predicts that sales outside of the United States will exceed 40% by 2014.2
• By implementing permanent headquarters in Miami, Harley-Davidson is able to better
accommodate Latin American customers more quickly.3
• “There is a longstanding history between Hispanics and Harley-Davidson and we want to
celebrate it,” said Karina Jaramillo-Saa, manager of market outreach, Harley-Davidson Motor
Company.3
• “Harlistas” section on website showcasing stories of Latino riders and their bikes, also features
short films on Latino heritage and culture.3
• For the full year 2012, retail unit sales of new Harley-Davidson motorcycles grew 6.2%
worldwide, with increases of 6.6% in the U.S. and 5.6% internationally compared to 2011.3
• Dealers sold 249,849 new Harley-Davidson motorcycles worldwide in 2012, with retail unit
sales up 39.2% in the Latin America region, 14.3% in the Asia Pacific region and 6.2% in the
North America region (U.S. and Canada).3
1http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-newsArticle&id=1616776
2http://seekingalpha.com/article/281976-harley-davidson-riding-on-international-growth-and-new-riders
3http://www.motorcycle-usa.com/568/3071/Motorcycle-Article/Harley-Davidson-Celebrates-Hispanic-Riders.aspx
6

7. Harley-Davidson's strategies have lead to
increased market share and cost savings
• Harley-Davidson’s international sales has
increased.3
– In 2006, 80% of sales were in the U.S.
– By 2010, only 60% of sales were in the
U.S.
• Restructuring activities have saved Harley-
Davidson over $217 million dollars.1 1
• In the fourth quarter of 2010 revenue was
$697.8 million, up 26.4% compared to
2009.2
• Harley-Davidson’s market share in the
U.S., their biggest market, increased 54.9%
in 2010, from 53.3% in 2009, and 45.4% in
2008, for the sales of the 651+cc.2
1
* Estimated savings
1http://www.zacks.com/stock/news/76075/harley-davidson-remains-outperform
2http://www.cyclenews.com/articles/industry-news/2011/01/25/harley-davidson-increases-u-s-market-share
3http://www.trefis.com/stock/hog/articles/65441/harley/2011-07-21 7

8. Harley-Davidson faces 3 external
opportunities and 3 external threats
External Factor Analysis Summary
Opportunities: Comments/Data:
1. The improvement of the economy in 1. China has entered the World Trade
other countries Organization.
2. A new generation/younger 2. Anything can be customized from
generation to market to – clothing, cars, food, toys, etc.
customization trend
3. The economy (current & future)
Threats: Comments/Data:
1. The aging baby boomers population 1. Baby boomers make up
2. Competitors approximately 28% of the U.S.
3. The economy (2008-current) population.
2. BMW holds a considerable size of
the market share in Europe.
3. The amount of disposable income is
dramatically lower.
8

9. Improving economies around the world will provide the
opportunity to expand into other markets
• China's economic reforms and Asia: 2012 GDP Growth Forecast
entry into the World Trade
Organization have improved the
company's investment
opportunities and warmed up the
country's leisure heavyweight
motorcycle market.1
• The International Monetary Fund
(IMF) and the World Bank have
helped many countries to improve
their economic management.2
– They have provided temporary financial
assistance to countries to help ease
balance-of-payment difficulties and
offered training for government finance
officials.
• The Universal Postal Union (UPU)
facilitates the exchange of
international mail and develops
social, cultural and commercial
communications between peoples
and businesses with up-to-date 3
postal services and products.2
1https://www.chinabusinessreview.com/public/1201/miller.html
2http://www.un.org/un60/60ways/ec_dev.shtml
3http://www.imf.org/external/pubs/ft/weo/2012/01/pdf/text.pdf
9

10. Younger generations are demanding customization for
their products…
• In today's market, people can customize just about
anything they buy.1
– Anything can be customized, from clothing, cars, food,
toys, electronic, etc.
– Many brands are taking products to the next level by
offering incremental customization to refresh established
products.
– The customization trend ranges from products that spice it
up with customized features, to products that are
customized from the inside out.
• Founded 13 years ago, Build-A-Bear Workshop was an early
entrant into mass customization.
• With more than 400 stores worldwide, it has successfully scaled to
become the largest chain dedicated to the create-your-own trend.
…which is a great opportunity for Harley-Davidson
1http://www.articlesbase.com/marketing-tips-articles/the-customization-consumer-trend-2953150.html
10

11. The economy is an excellent opportunity for Harley-
Davidson because the rise in sales is steadily growing
with each year
• Any sales increase is a positive sign for the economy, but sales of high-end
equipment are especially important.1
– In the technology sector, large servers and other expensive electronic equipment have
increased. The purchase of specialized medical testing equipment by hospitals and labs
has also increased from the end of 2010 through early 2011.
• According to the Brookings Institution, in the third quarter of 2010,
housing prices rose in 80 of the 100 largest metropolitan areas in the U.S.1
– They rose 0.6 percent overall among those 100 cities. While the gain is small, it's
significant because each of those 100 cities had experienced a decline in housing prices
for the previous three quarters.
• Standard & Poor's 500 Index shows 2010 was the third-best year for
corporations since 1998.1
– Even adjusted for inflation, corporate profits were much more robust in 2010 than in
2009, showing a 17 percent increase.
– This figure excludes financial corporations, who had such a terrible 2009 that they'd
make those profits look artificially huge if they were included.
• The National Retail Federation's 2011 economic forecast predicts a 4
percent increase in retail sales.1
– Retail growth has enjoyed seven months of continual growth, and retailers had a pretty
good 2010 holiday shopping season.
1http://www.howstuffworks.com/10-signs-the-economy-is-improving.htm#page=1
11

12. The aging baby boomer population is a
major threat to Harley-Davidson
• Baby boomers make up approximately
28% of the U.S. population.1
• By 2020, the population of Americans
between ages 55 to 64 will have
increased 73% since 2000.2
• On January 1, 2011, as the baby
boomers begin to celebrate their 65th
birthdays, 10,000 people will turn 65
every day. This trend will continue for 20
years.5
• 20% of Harley-Davidson riders are over
the age of 55.3 4
– Someday thousands of those Harley-
Davidson riders will have to trade in their
hogs for rocking chairs
The increasing number
1http://www.babyboomer-magazine.com/news/165/ARTICLE/1437/2010-04-04.html of Americans 65 and
2http://www.huffingtonpost.com/2012/04/02/aging-in-america-baby-boomers-arianna-huffington_n_1397686.html
3http://www.brandchannel.com/features_effect.asp?pf_id=55
older is a growing trend
4http://insiderlouisville.com/news/2011/02/02/louisville-adds-dharma-construction-building-long-term-care-industry-hub/
12
5http://mayoresearch.mayo.edu/aging_center/aging_demographics.cfm

13. A threat to Harley-Davidson is competition
from other companies
Harley Davidson faces competition from four major companies: Suzuki, Yamaha,
BMW, and Polaris.
•
BMW is currently Harley-Davidson’s biggest competitor.
• BMW currently holds a considerable size of market share in the European market. BMW and
Harley-Davidson currently hold the same brand image when it comes to consumers. BMW
continues to fashion their marketing strategies to appeal to current Harley-Davidson customers.1
• Suzuki is a Japanese company that holds a large market share in the Asian
markets.
• They have a diverse portfolio of different motorcycle styles that compete with Harley-Davidson.
They are considered competition to Harley-Davidson because they develop motorcycles that are
affordable.1
• Yamaha like Suzuki manufacture a wide variety of motorcycle styles that appeal
to consumers.
• Yamaha is a major competitor to Harley-Davidson because they can supply parts to other
manufactures in the industry.1
• Polaris is Harley-Davidson’s biggest competitor in the 1400cc and up engine size
for motorcycles.
• Polaris has been able to compete with Harley-Davidson by offering bikes that are less expensive.
Polaris was able to compete with Harley-Davidson by purchasing Indian.2
1http://bmw.ezinemark.com/harley-davidson-competitor-analysis-1866a32568f.html
2http://money.cnn.com/2012/10/03/auto/harley-davidson-polaris.fortune/index.html
13

14. The economy has been a major threat to Harley-
Davidson because of the lack of disposable
income in the United States
• The disposable income of Americans is still trying to reach what it was in 2008. The average measure of
disposable income on a per capita basis is still 20% lower than what it was in 2007. 1
• The average per capita disposable personal income rose 4.7% from four years ago, which is the smallest
gain since the late 1940s. Adjusted for inflation, the income of the average American is 2.1% lower than
four years ago. 1
• Data released by the Commerce Department showed that personal income fell 3.6% in January 2013.3
– Real personal disposable income, after taxes and inflation are taken out, fell by 4% which was the
biggest monthly drop in half a century.
• Disposable Personal Income in the United States decreased to 11,923.20 Billion in January of 2013 from
12,422.40 Billion in December of 2012.4
4
1http://www.nytimes.com/2012/06/09/business/economy/as-recovery-drags-on-income-and-wealth-lag.html?_r=0
2http://www.nytimes.com/interactive/2012/06/08/business/Earning-Less-and-Worth-Less.html?ref=economy
3http://business.time.com/2013/03/05/why-many-americans-feel-like-theyre-getting-poorer/
4http://www.tradingeconomics.com/united-states/disposable-personal-income
14

15. Harley-Davidson faces 4 internal
strengths and 3 internal weaknesses
Internal Factor Analysis Summary
Strengths: Comments/Data:
1. Harley-Davidson can reduce production 1. They are consolidating their current 41 buildings
cost/streamline their factories into 1 large facility
2. They have created a strong brand loyalty and 2. In 2011 Harley-Davidson made over a billion
dealer network dollars in selling Harley-Davison branded
3. They have great cash equivalents merchandise
4. They have the opportunity to expand their 3. HOG's liquidity remains strong, with $1.1 billion
customization options of cash, cash equivalents and marketable
securities
4. H-D1™ is the full customization process made
easy
Weaknesses: Comments/Data:
1. Their price point is too high 1. The Harley-Davidson Financial Services financed
2. Harley-Davidson has created quite a bit of debt roughly 47.9% of all new Harley-Davidson
3. They have a limited market 2. Harley-Davidson current has an estimated $5.10
billion dollars in debt
3. In 2003, baby boomer riders outnumbered Gen
Y motorcyclists almost four to one
15

16. An internal strength of Harley-Davidson is their
low production costs
• Consolidating their current 41 buildings at
the York Plant to one large new facility in
Kansas City, MO.1
• Brought in automation to reduce their
work force by up to 50%.1
• Harley-Davidson no longer needs peak
production levels to achieve strong
profits.1
• They have negotiated new terms with
unions to help control production costs.1
• Revamping has allowed Harley-Davidson
to quickly increase or cut production in
response to shifting demand.1
• In 2013, they will have finished all of the
reorganization of the major plants which
brings the large cash flows to an end.1
• Revenue has not fully recovered, but
profits are increasing due to this strategy.1 1
Harley-Davidson is slowly
recovering their Net Income
although their sales are still
fairly low.
1http://online.wsj.com/article/SB10000872396390443720204578004164199848452.html
16

17. One of Harley-Davidson’s internal strengths is
their strong brand loyalty and devoted market
following
• In 2011 Harley-Davidson made Sales by Product Line
over a billion dollars in selling
Harley-Davison branded
merchandise and accessories.1
• Harley-Davidson established
Harley Owners Groups (HOG), a
motorcycle group with over a
million members belonging to
over 1,400 owner groups across
the U.S.2
• They grew their brand loyalty by
sponsoring huge motorcycle
rallies in Florida and South
Dakota, which each attract over
half a million riders each year.2
3
1http://media.corporate-ir.net/media_files/IROL/87/87981/HD.pdf
2http://cultbrands.net/harley-davidson/
3http://www.harley-davidson/com
17

18. Harley-Davidson’s strong cash equivalents is an
internal strength
• HOG's liquidity remains strong, with $1.1 billion of cash,
cash equivalents and marketable securities as of April 1,
2012. 1
• After backing out its debt, it was in a $761 million net cash
position. This was despite the company making another
$200 million voluntary contribution to its pension plans.1
• Fitch, a company that rates corporate credit, recently
upgraded Harley's outlook from "Negative" to "Stable" due
to: "[Harley's] leading market position, strong cash position
and relatively low debt levels."2
• This strong cash position gives Harley-Davidson the ability
to respond to negative conditions, expand or acquire debt
relatively easy to accomplish strategies for the future.2
1http://www.reuters.com/article/2012/07/20/idUSWNA157520120720
2http://motorcycles.about.com/b/2010/08/04/harleys-upgrade-to-stable-suggests-light-at-the-end-of-the-tunnel.htm 18

19. Customization options is another internal
strength for Harley-Davidson
H-D1™ is the full customization process made easy. Only H-D1™ brings the exclusive parts, processes and expertise together so you can build
your one-of-a-kind Harley-Davidson® motorcycle.1
• Fit
– A good fit is like your favorite pair of jeans - the better you fit your motorcycle, the better the ride. The right fit is crucial for
maximizing comfort and getting the most out of every ride. Once you've chosen your Harley, take the time to custom fit your
handlebars, seat, foot controls and suspension. To find the right fit for you visit the H-D Fit Shop.2
• Function
– Decide how you want to roll. Solo and stripped down, two-up and fully loaded, or anywhere in between, you can tailor any H-D
motorcycle to meet the demands of the byways. If you crave maximum storage capacity and on-road versatility, detachable
accessories can be changed in seconds.2
• Style
– With Harley, your custom style possibilities are endless. Have an overall plan to maximize installation efficiency and minimize
your time off the road.2
• Performance
– Let's talk torque, horsepower, brute force and speed. Whether you're into aggressive riding or need to haul a heavy load,
Screamin' Eagle® Performance Parts are proven on the track and engineered for the streets.2
Factory Customization
From your plan, to our factory, to you. In as little as 4 weeks.3
3 Easy Steps:
1) H-D1 Bike Builder
Only you can design your perfect bike. Use the online H-D1 Bike Builder tool to build a bike that fits your style and personality.3
2) Head to your dealer
Bring your plan to your Harley-Davidson dealer for consultation and to place your order.3
3) We build it
Our employees go to work, building your motorcycle according to your design and in about 4 weeks* your masterpiece will be ready for
you at your dealer.3
1http://www.harley-davidson.com/en_US/Content/Pages/H-D1_Customization/h-d1_customization.html?locale=en_US&bmLocale=en_US
2http://www.harley-davidson.com/en_US/Content/Pages/H-D1_Customization/guide-to-customizing.html?locale=en_US&bmLocale=en_US
3http://www.harley-davidson.com/en_US/Content/Pages/H-D1_Customization/factory-customization.html?locale=en_US&bmLocale=en_US
19

20. The number of motorcycles that are being
financed is an internal weakness
• A motorcycle loan is a way for those who don't have the cash on hand to buy
outright.1
• At the end of 2011, the net accounts receivables for Harley-Davidson was
$4,026,214. At the end of 2012, it rose to $4,038,807.
– Those numbers are astonishing because that is the amount of money that consumers owe to
Harley-Davidson based on their purchases on credit.2
• Asset quality performance has shown stabilization and, recently, improvement.
Annualized losses on HDFS’ managed retail motorcycle loans were 2.04% during
the first half of 2010 compared to 2.69% during the first half of last year.3
• The Financial Services segment recorded operating income of $62 million in the
third quarter, compared to operating income of $50.9 million in the year-ago
quarter.
– The increase in year-over-year operating income was largely the result of continued
improvement in credit performance at Harley-Davidson Financial Services. Through nine
months, operating income from financial services was $212 million, compared to operating
income of $138.4 million in the first three quarters of 2010.4
• The Harley-Davidson Financial Services financed roughly 47.9% of all new Harley-
Davidson purchases in the United States in 2010, which shows that Americans do
not have the disposable income that they have had in prior years.5
1http://www.ehow.com/about_4680984_motorcycle-loans.html
2http://www.harley-davidson.com/en_US/Content/Pages/HD_News/Company/news.html?article=en_US/News/1611_press_release.hdnews
3http://motorsportsnewswire.wordpress.com/2010/08/02/fitch-raises-outlook-on-harley-davidson-debt-0802101/
4http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-newsArticle&id=1618163
20
5http://www.asphaltandrubber.com/banter/five-interesting-facts-harley-davidson-annual-report/

21. Harley-Davidson has an internal weakness
because of the amount of debt they have
• Harley-Davidson
current has an
estimated $5.10 billion
dollars in debt.1
• For the first nine
months of 2012,
Harley Davidson had
an interest expense of 4
$34,528,000.2
• Harley-Davidson
currently has a 72.1 This graph shows the long term debt
times total liabilities to that Harley-Davidson has. It is broken
down by quarter, and starts from the
total assets ratio.3 third quarter of 2010, and is extended
until the fourth quarter of 2012.
1http://finance.yahoo.com/q/ks?s=HOG+Key+Statistics
2http://www.sec.gov/Archives/edgar/data/793952/000144530512003553/hog-09302012x10q.htm
3http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=HOG 21
4http://www.wikinvest.com/stock/Harley-Davidson_(HOG)/Data/Long-Term_Debt

22. Harley-Davidson’s limited market is an
internal weakness
• A New Generation is Riding
– “In 2003, baby boomer riders outnumbered Gen Y motorcyclists almost four to one. But Gen Y
motorcycle ownership grew 62 percent since 2003, putting the current ratio of baby boomers
to Gen Y at two to one.”1
– Due to fuel prices, more riders are transitioning to using motorcycles more often for
transportation. 1
• Riders are doing it for transportation, not just recreation. Motorcycling for Americans is
primarily about recreation and the pure joy of riding, but among the reasons given for
motorcycling, transportation climbed to second place in the 2008 survey.1
• Sport Bikes Rule With Gen Y
– 1/2 of baby boomer motorcyclists surveyed ride traditional cruisers, but among Gen Y
motorcyclists, modern, high-tech sport bikes lead the way with 30% of those riders.1
• Motorcyclists Make More Money
– While owning a motorcycle is much more affordable in many ways compared to having a car,
the median household income of motorcycle owners exceeds that of the average American.
Two-wheel households average $59,290 while the U.S. average is $50,233.1
• Of all the motorcycles registered in the USA, (6,567,197) 4.3% of them are used for year-round
primary transportation (282,389), with an additional 9.9% used seasonally for this purpose
(932,542 total).2
• Out of a total 129,141,982 commuters in this country 147,703 ride motorcycles to work regularly.
That’s about 1.1 percent.2
1http://www.womenridersnow.com/pages/story_detail.aspx?lid=1221
2http://trafficsafety.org/safety/sharing/motorcycle/motor-facts/motorcycling-to-work.com 22

23. Based on EFAS and IFAS analyses, we have
identified 13 potential strategies and a ‘wild
idea’…
Potential and Recommended Strategies, and a ‘wild idea’
1. Harley-Davidson could license their 7. Expand into more areas of South
logo to other companies and do America making their customization
partnership deals options more affordable for people to use
2. Create a three wheeler type bike to 8. Create focus groups to get feedback
market to their aging baby boomer from the biking community
generation 9.Create a fuel efficient bike
3. Introduce a build your bike from 10. Enter the ATV market
scratch option 11. Electric/Hybrid bikes
4. Sell a line of cheap sport bikes 12. A bike you can ride on water
under a different brand name 13. A bike shell
5. Market to a younger generation 14. Wild Idea: Hover bike
with a more affordable line of
‘beginner’ bikes
6. Create a new sportier bike (crotch
rocket style)
…and we recommend 5 of these ideas for implementation
23

24. The key components of our first strategy
includes reaching out to current clientele…
• Beginning to design their new ‘easy rider’ bikes
• Reach out to already established clientele that are moving up in age
• Start the initiative as soon as they have a bike available
• Use their own stores / facilities to reach their customers
• Reach their customers through the Harley-Davidson forums that
exist
• Start working on a design immediately with their creative engineers
• Research similar bikes that other companies have made as a
starting off point
• Test their idea at biker gatherings like Sturgis (and similar venues)
24

25. …which presents several benefits and
risks to Harley-Davidson
Key benefits and risks of strategy baby boomers
Benefits Risks
• This idea will keep clients that • Current clients won’t want to
are already Harley-Davidson switch to the new kind of bike
owners riding the bikes long • It will change the overall image
into their retirement for Harley-Davidson from
• The idea expands on a market “tough” to “accommodating”
that Harley-Davidson already • The cost of developing a new line
has of bikes will add to Harley-
• Will create a “bike for any age” Davidson’s overall debt issues.
promotion for Harley-Davidson
25

26. The key components of selling cheaper starter
and sport bikes under a different brand
nameinclude marketing a new brand…
• Design the brand name, logo, and register them
• Design cheaper bikes that more customers can afford
• Create the supply chain
– including cheaper lightweight materials
– new dealerships
• Design a market campaign
• Market the new brand
• Evaluate the results and make improvements
26

27. …which present several benefits and risks to
Harley-Davidson
Key benefits and risks of selling cheaper starter bikes
Benefits Risks
• New markets for Harley- • Requires significant resources
Davidson to compete in • May have to issue more debt
• A new source for profits • The process might take a long
• Keeps the Harley-Davidson time to see a profit
image of a higher priced quality • Consumers may avoid buying
brand bikes from a new brand in favor
• More diversification of established brands
• Harley-Davidson could use the • Harley-Davidson may not be
ideas and experiences from the able to keep costs low enough
new brand to improve current to compete on prices
process • Employees and management
may resist the new brand
27

28. The key components of the sport bike strategy
include building cheaper and faster
motorcycles...
• Building motorcycles that are faster
• Motorcycles that are cheaper
• Motorcycles that are Light weight
• Sleek looking
• Motorcycles that appeal to the younger generation
• Less noisy
28

29. …which present several benefits and risks
to Harley-Davidson
Key benefits and risks of the sport bike strategy
Benefits Risks
• It will appeal more to younger • Their current customer base could
riders such as Generation Y alienate them
• They will have a motorcycle • Could lose loyal customers
that will be in same category as • If a motorcycle is introduced a
their major competitors lower price point it could dilute
• BMW, Suzuki, and Yamaha Harley-Davidson motorcycle values
• It would be a motorcycle that • Has the possibility to fail because
would be introduced at a lower Harley-Davidson’s competitor have
price point already perfected the art of making
• With the economy being what sport bikes
it is, people would get the
Harley-Davidson brand at a
lower price
29

30. The key components of the fuel efficient bike
strategy include increasing fuel economy and
MPG…
• Currently, Harley-Davidson’s most fuel-efficient bike is
the Iron 883 weighing 553lbs and gets 51 MPG
– Prototype: 400-500 cc Engine with MPG greater than 60
MSRP around $6,000
• Smaller engines accompanied by smaller frames
• Focus on consumer wants and needs with smaller bikes
• Target fuel economy: greater than 60 mpg
• More diverse selling markets
• More transportation use
30

31. …which presents several benefits and
risks to Harley-Davidson
Key benefits and risks of a fuel efficient bike
Benefits Risks
• More diverse selling markets • Bike will lose “Harley-
such as India and Latin America Davidson” brand feel
• Motorcycles can be used for • Customers will not support
transportation purposes more
brand change
• Lower selling costs
• Market to entry-level riders and • May not have classic
younger consumers “Harley Davidson” sound
• Smaller, more eco-friendly bikes • Overpriced compared to
may appeal to new riders competitors
• Compete with over brands such
as Honda, Kawasaki, and BMW
who offer fuel-efficient models
already
31

32. The key components of entering the ATV
market includes expanding their customer
base…
• Increases customer base due to new product line.
• A unique advertising campaign marketed not only to Harley-
Davidson riders, but also to outdoor enthusiasts in general.
• If production design and pricing schedules were developed
now, the company could be geared towards release in Spring
2014.
• Market through current Harley-Davidson channels
(commercials, dealerships, etc.)
• Get feedback from / demonstrate a model to current clients at
events (such as Sturgis).
32

33. …which presents several benefits and
risks to Harley-Davidson
Key benefits and risks of entering the ATV market
Benefits Risks
1. A new source of revenue for 1. Products may be too
Harley-Davidson. expensive for people to
2. Dedicated following already reasonably afford.
exists; the company would now 2. May not be “off-road”
be meeting an additional need. enough.
3. New market and new potential 3. ATVs for recreation or
customers. transport? The company
4. Freedom for Harley to design would have to decide.
from scratch to meet the needs 4. The demand for ATVs may
of their customers. not be high enough to
5. Steal market share from some justify production.
competitors. 5. Could potentially alienate
current customers.
33

34. The key components of the “wild idea” of
creating a hover bike includes developing anti-
gravitation technology…
• It would be made from lightweight materials
• It would feature an anti-gravity mechanism that would allow the bike to
rise to any height
• Engineered for maximum enjoyment and freedom
• It would still feature the traditional Harley-Davidson look and sound
• It would feature an innovative way for the bike to stay parked so it does
not scrape the bottom of the bike.
• Engineered with safety features that would keep the rider from falling off
the bike
34

35. …which presents several benefits and risks to
Harley-Davidson
Key benefits and risks of the hover bike
Benefits Risks
1. It would be the first of its kind to 1. Could anger some of the “old
be manufactured school” riders
2. It would reduce the chance of an 2. Could be a complete flop, and
accident with another vehicle waste the company’s time and
3. It would reduce the time of the money.
commute for the user 3. Research and Development
4. It could virtually go any where would be costly to design the
since it does not touch the new product.
ground 4. It could be unreliable since it
5. It would allow the user to avoid would be the first of its kind
any traffic on their commute
35

36. The ATV strategy will take 1 ½ years to complete and will
cost approximately $34,350,000 to implement
Strategy ATV action plan and costs
Sample Action Plan, with Cost Estimates
Item Description Responsibility Duration Units Start Date End Date Estimated Cost
Collect information from client base Marketing Dept. 6 Months 4/1/2013 9/30/2013 $300,000
Create team of professionals to design the product
R&D Dept. 6 Months 4/1/2013 9/30/2013 $1,500,000
Gather research on exisiting production plants CFO 3 Months 4/1/2013 7/1/2013 $0
Inform internal employees of new direction CEO 2 Months 6/1/2013 8/1/2013 $75,000
Build prototypes of possible design ATV specialist 3 Months 10/1/2013 1/5/2014 $1,500,000
Secure component suppliers Operations Manager 2 Months 10/1/2013 12/1/2013 $0
Build production plant CEO / Construction Co. 9 Months 7/1/2013 4/1/2013 $7,500,000
Create marking plan Marketing Dept. 2 Months 10/1/2013 12/1/2013 $150,000
Implement new advertising campaign Marketing/Sales team 2 Months 1/5/2014 3/1/2014 $750,000
Take product models to shows/events to debut Marketing/Sales team 4 Months 2/1/2014 6/1/2014 $75,000
Take pre-orders Sales Team 2 Months 6/15/2014 8/15/2014 $0
Mass produce ATVs Operations Manager 5 Months 6/15/2014 11/15/2014 $15,000,000
Distribute to current sales facilities Distribution Center 2 Months 8/1/2014 8/15/2014 $7,500,000
Total $34,350,000
Team estimates 36

37. … and there are several key implementation considerations that
must be addressed for the ATV strategy to be successful.
ATV strategy key implementation considerations
• This will be a costly venture, that will take a significant
amount of time to complete.
• There will be a lot of data that is collected in the beginning of
this strategy; all of which must be considered before
progressing further with the project.
• Current Harley client’s feedback will be vital to the
progression of this new venture.
• Harley may have to consider changing it’s image to
accommodate a new product line.
37

38. Success of the ATV strategy will be
assessed through financial and customer
measures…
ATV Strategy – Financial and Customer Measures
Measurement Area Baseline Target
Financial 1. The R&D within 1. R&D under $95,000
budget $100,000 2. Total budget
2. Total budget stays $1,930,000
under 1,930,000 3. Earnings per share**
3. Earnings per share** 4. Profit Margin**
4. Profit Margin**
Customer 1. ATV is affordable 1. Affordable, yet good
2. Under $10,000 quality
($4,000-10,000) 2. Price competes with
3. Track amount of competitors
purchases 3. 10,000 ATVs made
and sold every year
38

39. …as well as through business process, and
innovation and learning measures
ATV Strategy – Business Process and
Innovation and Learning Measures
Measurement Area Baseline Target
Business Process 1. Effective and efficient 1. Comparable to biggest
operations while staying under competition in the market
budget 2. Operations fulfilling
2. Keep operations under production needs of 10,00 ATVs
budget 3. Keep Inventory turnover
3. Inventory turnover 8.42** 8.42 **
4. Cash Conversion Cycle** 4. Cash Conversion Cycle**
Innovation and Learning 1. Track new product lines emerging 1. Research 4 new product lines in
on the market depth every year
2. Track customer wants and needs 2. Research recent ATV trends every
in ATV (survey 1 per year) 6 months
3. Research customer feedback on 3. Track feedback on competitors
ATVs (2 surveys per year) (Compile once per year)
4. 0 people trained 4. Train 2 people per store
5. Duration** (4 years 9 months) 5. Duration** 4 years target
according to task descriptions in
section5
39

40. Harley-Davidson’s five year projected inflows
and outflows for the ATV strategy…
Implementation Year 1 Year 2 Year 3 Year 4 Year 5 Total
Initial
investment ($34,350,000) $0 $0 $0 $0 $0 ($34,350,000)
Cost of
goods sold $0 ($37,500,000) ($75,000,000) ($112,500,000) ($135,000,000) ($105,000,000) ($465,000,000)
Sales $0 $50,000,000 $100,000,000 $150,000,000 $180,000,000 $140,000,000 $620,000,000
Net per year ($34,350,000) $12,500,000 $25,000,000 $37,500,000 $45,000,000 $35,000,000 $120,650,000
Team estimates
40

41. …will provide a ROI of 24%
• Inflows: $620,000,000.
• Outflows: $499,350,000.
• ROI: (620,000,000 – 499,350,000)
= 24%
499,350,000
41

42. Questions?
42