1. Harley-Davidson
A Case Study Analysis

2. Current Situation
• 1985- Harley Davidson gains new financial support from Heller Financial
• 1993- Harley Davidson gains 39% stake in Buell Motorcycle Company
• 1996- Harley Davidson turns focus back to motorcycles and sells transportation
vehicle segment
• 1998- Harley owns most of Buell and most dealerships sell both brands at
dealership by 2007
• Licenses gain a great deal of royalties for Harley through products, rallies, and
demos

3. Strategic Managers
Board of Directors
• President and CEO: James Ziemer
• Consists of 11 members: 9 internal
and 2 external; 10 males and 1 female
• Each member serves 3 staggered
terms and is compensated
$100,000/year, half of which is in
common stock
• Members have been a part of the
Board as early as 1991 and have a
variety of backgrounds
• The Board allows stock repurchases
Top Management
• Consists of 4 corporate officers:
CEO, CFO, and 2 Vice-President
positions
• Leadership is represented in three
business segments:
• motor company (29 positions)
• Buell (2 positions)
• Financial Services (3 positions)
• Responsible for the company’s current
performance

4. External Environment (1-2 slides)
• Natural - Manufactured in four seasons stable environments of the USA and
Brazil.
• Social – Economics – Harley economy is effected by world economy. 2007
international revenues were $1.52 billion. They are economically stable and
prospering.
Technology – They are active in R&D with engine advances and CAD design
customization.
Political/Legal – Harley’s are built in compliance with environmental regulatory
standards. Their trademarks are protected through registration domestically and
internationally.
Sociocultural – The average owner is an upper middle class, married male who
rides recreationally.

5. External Environment
Corporate Structure
• Motorcycles and Related Products
• Objective is design, manufacture, and sale of premium motorcycles. Domestically, HarleyDavidson has approximately 684 independently owned full-service Harley-Davidson
dealerships and internationally Harley-Davidson has 370 independent dealerships.
• Non-traditional retail outlets sell parts and accessories, general merchandise and licensed
products in satellites of main dealerships, retail outlets in high traffic areas such as
malls, airports, or popular vacation destinations and seasonal selling in high traffic areas.
• Financial Services
• Harley-Davidson Financial Services (HDFS) operates under trade name Harley-Davidson
Credit. Provides wholesale financial services to Harley-Davidson and Buell dealers and retail
financing to consumers. HDFS, operating under the trade name Harley-Davidson
Insurance, is an agent for the sale of motorcycle insurance policies and also sells extended
service warranty agreements, gap contracts, and debt protection products.

6. External Environment
Corporate Culture
• In 1996, Harley-Davidson announced a strategic decision to
discontinue operations of the Transportation Vehicles segment and
concentrate on motorcycles. This enabled the company to build
motorcycles that appeal to younger markets and female riders.
• Harley-Davidson prides itself on the special camaraderie Harley
owners have and visibly promotes and strengthens these
relationships among riders, dealers, and Harley-Davidson employees.

7. External Environment
• Marketing.
• Strongest brand name in motorcycles.
• Dealer promotions, customer events, magazine and direct mail advertising, public
relations, cooperative programs with Harley-Davidson/Buell dealers, and national television
advertising.
• Sponsors racing activities and special promotional events and participates in all major
motorcycle consumer shows and rallies.
• Finance.
• Sale of motorcycles makes up 78% of the overall revenue of the company, with parts and
accessories making up another 15 %.
• Revenues from royalties were approximately $46 million in 2007.
• Research &Development.
• Employees from styling, purchasing, and manufacturing work together with regulatory
professionals and suppliers to create a concurrent product and process development team.

8. External Environment
• Operations.
• Manufacturing process to increase capacity, improve product quality, reduce costs, and
increase flexibility to respond to market changes.
• Focus on continuous improvement, yet control costs and maintain quality.
• Monitors supply, availability, and pricing of raw materials for both suppliers and in-house
operations.
• Employee involvement, just-in-time inventory principles, partnering agreements with local
unions, high performance work organizations, and statistical process control.
• Human Resources.
• Approximately 9000 unionized employees in the motorcycle segment
• Financial services segment has 755 non-unionized employees.
• Information Systems.
• Highly interactive web site, www.harley-davidson.com
• Online catalog giving customers the ability to purchase products that are distributed from
dealers located through the website.

9. Internal Environment 2-3 slides

10. Internal Environment

11. Internal Environment

12. Analysis of Strategic Factors
STRENGTHS
Brand strength and equity
Customer loyalty
Quality product/organizational culture
Strong partnerships within the value chain;
dealerships, suppliers and distributers
Strong history of financial performance;
48.7% US market share
Company is an American classic
WEAKNESSES
Weakening financial position
6% European market penetration
Low market share among women
High R & D costs
Production of heavyweight motorcycles costly
Rising personnel costs (collective bargaining)
OPPORTUNITIES
THREATS
History of increased global sales performance
Expansion into new international markets
Retention of purchasers
Production of lighter, faster motorcycles
Gain women & younger riders
Strengthen Buell partnership
Aging “Baby Boomer” customer base
Increased safety and regulatory emission standards
Domestic sales dropped (2008)
Traditional motorcycles less popular
Global competition growing

13. Strategic Alternatives and Recommended
Strategy (2-3 slides)
• Strategic Alternatives (with Pros and Cons)
• Recommended Strategy

14. Strategic Alternatives and Recommended
Strategy

15. Strategic Alternatives and Recommended
Strategy

16. Implementation (2-3 slides)
Traditional simple style has been a trade mark of Harley products for
many years. It is also their business style. On numerous occasions
they have sold even successful divisions of their company to maintain
focus on their classic Harley motorcycle manufacturing and sales. To
free up internal resources and increase concentration on
manufacturing and sales is also what motivated their decision to
outsource IT services. The goal is that the new IT providers will be
able to offer best practice IT services to Harley and customers.
Transition: The displaced Harley IT staff will have continued
employment options with the company or proprietary placement
consideration for openings with the new IT providers.

17. Implementation
• 2008 - Update all existing data bases. Create specs for IT alignment
needs with current IT staff. Expand customer data bases.
• 2009 – Beginning accepting IT service bids. Put R&D focus on CAD
design software. Gather data for IT needs of museum, website and
social media pages.
• 2010 – Current IT staff will collaborate with engineering
staff to develop CAD optimization.

18. Implementation
• 2011 – Select IT provider from among all candidates. Negotiate
serviced and
compensation by years end. New IT staff begins working with
present IT in
the Fall to begin realignment process.
• 2012 – Current IT will work with new providers who will manage
applications, infrastructure support and hosting. Contract will be
signed by end of August with new providers. New IT facility
construction will begin in Milwaukee, and updated CAD
customizations system will be in show rooms by years end.

19. Evaluation and Control (1-2 slides)
• On one recommendation

20. Evaluation and Control
• Steering controls implemented which measure variables such as inventory
turnover ratios and customer satisfaction will be tracked with computer software
provided by the new IT provider.
• Strategic controls that focus on the organization as a whole such as return on
investment (ROI) and earnings per share (EPS) need to be closely monitored since
Harley-Davidson is a publically traded company.
• Implementation of a balanced scorecard approach monitoring key performance
measures such as maintaining and growing market share, customer acceptance of
the changes, is Harley-Davidson excelling internally with the IT changes and are
these changes helping the company to improve and create value.

21. Evaluation and Control
• Divisional and functional performance measures will be put in place to monitor
various operational programs to make sure that the expected cost of outsourcing
the IT department is aligned to the actual cost incurred.
• Budgets will be strictly enforced and reviewed monthly with variations addressed
at that time.
• As an international company, standards that measure products and services could
become barriers to the outsourcing of the IT department. Categories of
standards such as safety/environmental, energy efficiency and testing procedures
should be looked at closely and tight controls maintained over how the new IT
processes impacts processes such as the new CAD system used to custom design
motorcycles for customers .