3. Learning
Insight
Question
Answers
Case
Content
Background
High Performance
1905, H-D motorcycle wins a 15 mile race in Chicago with a time of 19:02
1908, Walter Davidson scores a perfect 1,000 points at the 7th Annual Federation
of American Motorcyclists Endurance and Reliability Contest
Distribution channel
1917, one-third of all Harley-Davidson motorcycles produced are sold to the U.S.
military
Early time success
3
8. Learning
Insight
Question
Answers
Case
Content
•Honda began to penetrate the U.S.
market, but with a distinctly different
strategy.
•Lightweight cycles and an advertisements
approach directed toward new customers
•Harley’s market share fell dramatically
•No reaction at all on the early stage!
•The management saw no threat in Honda’s
thrust into the market with lightweight
machines.
•The company actually attempted to fight
back by introducing an Italian-made
lightweight in the mid-1960s, but far too late.
Honda’s invasion and
Harley’s reaction
Early
1960s
Timeline
1960-1989
Timeline (1960-1989)
8
10. Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
From 1960 to 1981
Model Light weight motorcycle Heavy weight motorcycle
Function Transportation use Leisure-time use
Style Practical, functional, features Cool, stylish, American spirit
Target customers Mass People pursuit freedom,
individualism, life style
Communication
strategies
Aggressive, Direct approach to
new customers
Passive
Production control Excellent Poor
Product quality Excellent
5% failed quality-control check
Poor
50%-60% failed quality-control
check
Operating cost 30% lower than Harley-Davidson High
Timeline (1960-1989)
10
11. Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
Timeline (1960-1989)
• Promotion strategy
To compete with Harley, Honda adopted an advertising slogan that countered this
tough image. The “You meet the nicest people on a Honda” campaign became the
overriding theme of Honda. Armed with the slogan, Honda launched the SOHC
inline 4-cylinder 750 in 1969 which became very successful.
• Product Strategy
Honda focused fully on lightweight motorcycle market, which is exactly different from
Harley’s products.
1. Production advantage: Cheaper labor cost
2. Problem handling
• Distribution Channel
1. Store location: Honda established its stores in downtown area.
2. New market, new customers: renting service
Honda’s analysis
11
12. Learning
Insight
Question
Answers
Case
Content
•In 1965, the company faced a struggle for control soon after its first public stock
offering, which made Harley with no choice to merge with AMF, an American
company with strong interests in recreational equipment.
•The marriage was troubled, and quality was going down just as fast as production
was going up”.
•AMF suffered an average $4.8 million operating loss for eleven years.
•Market share fall to a record low 3% in motorcycle market
1965 1981
AMF
Timeline
1960-1989
Timeline (1960-1989)
12
13. Learning
Insight
Question
Answers
Case
Content
Vaughan Beals led a team that used $81.5 million to
complete a leveraged buyout of Harley-Davidson.
•Who is Vaughan Beals? Why he was so magical?
•In 1983, Congress passed a huge tariff increase on
Japanese motorcycles, from 4 percent to 45 percent!
•Key to rebuild market share was restoring confidence
in the quality of its products.
1981
1986
Vaughan Beals
Timeline
1960-1989
Timeline (1960-1989)
13
14. Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
Timeline (1960-1989)
1986
Struggle
back
1989
• Bealss and other managers visited Japanese plants in
Japan and Honda’s assembly plant, then results of the
production improvement
Management technique introduced Functions Results changed in 1988
Just-in-time inventory
Control and minimize all inventories both
inside and outside the plants
Inventory reduced by 67%
Material-as-needed (MAN) system
Quality circles (QCs)
Increase employee involvement in quality
goals and to improve communication
between management and works Productivity up by 50%
Scrap and rework down 2/3
Defects per unit down 70%
Statistical operator control (SOC)
Employees are responsible for checking
the quality of their work and making
proper collecting adjustments
14
20. 1
Question
Answers
Case
Content
1990s Success
•Product oriented Market oriented
Bealss Joined HOGs (Harley Owners Group), Hard-core loyalist of Harley-
Davidson, to understand their concerns and needs
The company learned that it needed to give the customers a choice and now
offers a variety of models, including Athletes, Super Glides, Low Riders etc.
Marketing
•Brand Image
Perfectly match with American Culture
•Customer relations
HOG was founded
20
22. “Quantity isn’t the issue, quality is the issue.”
------ Richard Teerlink
22
23. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
150.0
237.5
325.0
412.5
500.0
1992 1993 1996
280
345
420
Harley’s Output
bikesmadeperday
Harley-Davidson had such a loyal body of customers that delays in
product gratification were not likely to turn many away to competitors.
1990s Success
Product Demand
23
24. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
- The European big-bike market grew by an
astounding 33% between 1990-1992. And Harleys
had become very popular in Europe.
- But company had promised its domestic dealers
that exports would not go beyond 30%.
1990s Success
Export Potential
24
25. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
- So, Harley could only maintain a 9% - 10% share
of this market.
- To enhance its presence in Europe, Harley
opened a branch office of its HOG club in
Frankfurt, Germany, for its European fans.
1990s Success
Export Potential
25
26. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
Year Revenue Net Income
1982 210 def.$25.1
1983 254 1.0
1984 294 2.9
1985 287 2.6
1986 295 4.3
1987 685 17.7
1988 757 27.2
1989 791 32.6
1990 865 38.3
1991 940 37.0
1992 1,100 54.0
1993 1,210 68.0
1994 1,537 83.0
stock sold$7
stock sold $39
market share 63%
market share 12.5%
Harley-Davidson’s Growth in Revenue and Income (million of $),
1983-1994
1990s Success
Specific Resurgence of
Harley Davidson
26
28. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
- 1990s, demand grew with the mystique as
strong as ever.
- 1997, a new engine plant in Milwaukee.
- 1998, a new assembly plant in Kansas City.
Recent
development
Recent Development
28
29. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
U.S. Exports
1997 96.2 36.1
1993 57.2 24.5
Revenues
($M)
Net Income
($M)
1997 1,763 174.0
1993 1,217 18.4
Motorcycle shipments
(in thousands of units)
Growth in revenues and income
Recent
development
Recent Development
29
30. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
- Despite continuous increases in production, U.S.
consumers still had to wait to purchase a new Harley
Davidson bike, but the wait only added to the mystique.
- 1998, Wolverine World Wide entered into a licensing
agreement with Harley to use its name for a line of boots
and fashion shoes.
- In January 7, 2002 issue, Forbes declared Harley to be
its “Company of the Year”.
Recent
development
Recent Development
30
31. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
- Jeffrey Bleustein was diversifying into small, cheaper bikes
to attract younger riders, as well as women, who
represented only 9% of Harley riders.
- The cult image was stronger than ever.
- Around 4,000 company’s employees rode Harleys around
the country for pleasure and to promote the company.
- In 2002, there were 640,000 owners and the Harley-
Davidson name was on everything from blue jeans to pickup
trucks.
Recent
development
Recent Development
31
32. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
Recent
development
Light sports bike designed for American men 25 to 34 rose to 90% from
1998 to 2001.
Trend: younger generations of Americans prefer the sleeker, sportier
and lighter types of motorcycles as opposed to the big cruiser bikes so
closely identified to Harley's brand.
Harley’s reaction this time?
Harley has introduced new models designed to attract the youth. The
$17,000 Harley V-Rod is one of these bikes targeted for the younger
generations.
Future: Harley will need to compete with Honda head-on.
Recent Development
32
33. Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away to competitors.
Learning
Insight
Question
Answers
Case
Content
- 2003-2005, developed classic style
motorcycle. And clothes for not only men
but also women and kids .
- 2006, Harley-Davidson entered
mainland China’s market.
- 2008, an all-new museum opened in
Milwaukee.
Recent
development
Recent Development
33
37. Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Discuss and evaluate other strategies that
he might have pursued.
Case
Content
Questions & Hands on exercises
Q1
“Beals’s rejuvenation strategy”
1. Production improvement by acquiring Japanese management techniques
2. From product oriented to market oriented
3. Massive lobbying in order to impose heavy tariff for the Japanese motorcycles import
4. Licensing program on merchandised goods
5. Sponsor HOGs to strengthen customer loyalty
“best” – the way or the solutions to make Harley Davidson re-lead the
heavyweight motorcycle market as much as possible.
Definition
37
38. Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Discuss and evaluate other strategies that
he might have pursued.
Case
Content
Questions & Hands on exercises
Q1
Internal
Situation
• Harley was falling down on quality.
ı “If you’re buying a Harley, you’d better buy two - one for spare parts.” – Dexter
Hutchins
• Passive Marketing Strategy
• Product-oriented
• Outdated management techniques and old equipment delay the development.
38
39. Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Discuss and evaluate other strategies that
he might have pursued.
Case
Content
Questions & Hands on exercises
Q1
External
Situation
• Market Share fell down deeply.
ı Early 1960s – solid 70% market
1981 - Only contain 3% market after buyout
• Japanese manufacture flooded the market with high-quality
lightweight motorcycles.
• 1977 - Honda grabbed 47% of the motorcycle market in U.S.
39
40. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Q1
Other Possible
Strategies
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Discuss and evaluate other strategies that
he might have pursued.
1. No action
2. Switch the focus
3. Grab the customers
40
41. Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Discuss and evaluate other strategies that
he might have pursued.
Case
Content
Questions & Hands on exercises
Q1
Comparison
Pros Cons
Bearl’s Strategy •Hit the core problem
•Reduce competition
•Learn but can not exceed
•
No Action •No potential risks
•Good for company’s steady operation
•No good future
•dilemma situation
Switch Focus •May attract new customers
•Diversification for the company
•The company image will be diluted
•Need time and money to adjust strategy
Grab customers •May beat challengers •Head on competition
41
42. Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Discuss and evaluate other strategies that
he might have pursued.
Case
Content
Questions & Hands on exercises
Q1
Beals’s strategy
outcome
Tariff leads to entry barrier
Magnificent production improvement
Inventory reduced by 67%
Productivity up by 50%
Scrap and rework down 2/3
Defects/unit down 70%
Market share increase to 63% in 1993
42
43. Learning
Insight
Question
Answers
Vaughn Beals
Q1&H1
Case
Content
Questions & Hands on exercises
• Be a Devil’s Advocate.
• Your mutual fund has a major investment in Harley-Davidson,
and you are concerned with Vaughn Beals’s presence at
motorcycle rallies, hobnobbing with black-jacketed motorcycle
gangs. He maintains this is the way to cultivate a loyal core of
customers.
• Argue against Beals’s practices.
H1
43
44. Learning
Insight
Question
Answers
• Be a Devil’s Advocate.
• Your mutual fund has a major investment
in Harley-Davidson, and you are
concerned with Vaughn Beals’s presence
at motorcycle rallies, hobnobbing with
black-jacketed motorcycle gangs. He
maintains this is the way to cultivate a
loyal core of customers.
• Argue against Beals’s practices.
Case
Content
Questions & Hands on exercises
H1
Definition
– “You”= Mutual fund investor, care about the profitability of HD
– “Loyal core of customers”=HOG members+ Rubbies
– “Beals’s practices”=present at motorcycle rallies,communicate
with HOG members
44
45. Learning
Insight
Question
Answers
• Be a Devil’s Advocate.
• Your mutual fund has a major investment
in Harley-Davidson, and you are
concerned with Vaughn Beals’s presence
at motorcycle rallies, hobnobbing with
black-jacketed motorcycle gangs. He
maintains this is the way to cultivate a
loyal core of customers.
• Argue against Beals’s practices.
Case
Content
Questions & Hands on exercises
H1
Arguments
• Beals’s practices would:
• Harm the company’s public image
– The public will associate the company’s image with the CEO’s practice
– HOGs are regarded as the potsmoking, beer-drinking, woman-chasing, tattoo-
covered, leather-clad biker
• Ignore the new market segment
– The Rubbies (rich urban bikers)
• E.g, Bankers, doctors, lawyers, and entertainers
45
48. Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
What leads you to this
conclusion?
Case
Content
Q2
Questions & Hands on exercises
Definition
“Durable” – The length that customers’ fascination to Harley Davidson
lasts. ı
“Rubbies” – the rich urban bikers, and high prices for bikes did not bother
them in the least.
“Infatuation” - The state of being completely carried away by unreasoned
passion or love; addictive love for Harley Davidson.
48
49. Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
What leads you to this
conclusion?
Case
Content
Q2
Questions & Hands on exercises
Rubbie’s
infatuation
Harley-Davidson’s Share of the U.S.
Heavyweight Motorcycle Market,
Selected
Years, 1983-1993
49
50. Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
What leads you to this
conclusion?
Case
Content
Q2
Questions & Hands on exercises
Why infatuation?
• The company culture is fascinating.
ı Harley Davidson stands for “Strength”, “Style”, “Respect” and
“Freedom”, which match with the American spirit.
• The company has earned high reputation through over a hundred
year’s operation.
• Identity recognition.
ı It’s a symbol of identity.
50
51. Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
What leads you to this
conclusion?
Case
Content
Q2
Questions & Hands on exercises
How long will
the infatuation last?
• Environment Change
(financial crisis)
• Philosophy Change
(Sense of worth)
• Values and Tastes
51
53. Learning
Insight
Question
Answers
“Harley-Davidson’s resurgence is
only the purest luck. Who could
have predicted, or influenced,
the new popularity of big bikes
with the affluent?” Discuss
Case
Content
Questions & Hands on exercises
Q5
•Resurgence: its market share rebound from 3% to the
leading position of heavy weight motorcycle market
•Purest luck: the company did nothing and regained its
market leader position
•The affluent: bankers, lawyers, professionals or managers
with high household income about $45000
Definition
53
54. Learning
Insight
Question
Answers
“Harley-Davidson’s resurgence is
only the purest luck. Who could
have predicted, or influenced,
the new popularity of big bikes
with the affluent?” Discuss
Case
Content
Questions & Hands on exercises
Q5
•Its high quality and charismatic products which tailors the
needs of the target customers
•Its company culture, every employee engage in producing
the best Harley Davidson motorcycles.
•Its brand image which perfectly match with the culture of
American
Not purest luck
54
55. Learning
Insight
Question
Answers
“Harley-Davidson’s resurgence is
only the purest luck. Who could
have predicted, or influenced,
the new popularity of big bikes
with the affluent?” Discuss
Case
Content
Questions & Hands on exercises
Q5
•Vaughan Bealss
•took a leading role in understanding the needs and concerns of HOGs
and modified the products to cater the needs of target customers
•HOGs
•Super-loyal customers to make HD survival during the down period
•HD’s true spokesperson who are representing American Spirit which
attract more Americans
Influencer
55
56. Learning
Insight
Question
Answers
Mystique
Q2&Q5&H3
Case
Content
Questions & Hands on exercises
H3
• As a staff assistant to Vaughan Bealss when he first took over,
you have been charged to design a strategy to bring a mystique
to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend your reasoning.
56
57. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
– “You”= staff assistant to Bealss
– “Mystique”= an aura of heightened value or
interest or meaning surrounding a person or thing
Definition
57
58. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
Ways to develop/
acquire a mystique
58
59. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
Differentiation
• For a company to achieve a mystique,
certainly its product has to be unique.
• Unique product can help a firm achieve
differentiation, but far from mystique.
Focus on product differentiation
59
60. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
Image-building
advertising
• Build brand identity and
personality (HOGs/Rubbies)
• Attitude branding
– the choice to represent a larger
feeling, which is not necessarily
connected with the product or
consumption of the product at al
• Highlight the people that customers might wish
to emulate.
• Founder’s story
– It's a classic American story. Boys get
idea. Boys start company. Boys make lots
of money.
• Company museum
60
61. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
• Harley Owners Groups (HOGs)
– The old group of core customers
– Very loyal to Harley-Davidson
– Represent the classic image of Harley-Davidson
• Rich urban bikers (Rubbies)
– The new group of key customers
– Loyal to Harley-Davidson
– Rich and willing to spend a lot on Harley-Davidson bikes
– The Rubbies brought Harley back to a leading position in the industry by 1989
– Their demands are growing rapidly, from 10% (1983) to 63% (1989)
Focusing on the target
buyers
61
62. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
Related/Unrelated
Expansion
• Expand the reach of the name/logo to other goods
– Related expansion
• E.g Jackets,helmets,boots, etc
– Unrelated expansion
• E.g Parjamas,sheets, towels, etc
62
63. Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged to design a strategy to bring a
mystique to the Harley-Davidson name.
• How would you propose to do this?
• Be as specific as you can, and defend
your reasoning.
Case
Content
Questions & Hands on exercises
H3
• Besides the strategy talked before, there’s some other ideas we could use. Like:
• Personalization: carve the customers’ names on their own motorcycle. Customers
could join designing and the color choosing.
• Advertisement: consistent style (Black background), Broadcast time (Before action
movies in cinema), Sponsor (for competition like boxing, car racing)
• Some standard or rules to the customers in order to increase their ownership and
loyalty to HD. Also create a mystery image to potential market.
63
65. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Development
Q3&Q4
Q3
ı A Harley-Davidson stockholder criticizes present
management: “it is a mistake of the greatest
magnitude that we abdicate a decent share of the
European motorcycle market to foreign competitors,
simply because we do not gear up our production to
meet the demand.” Discuss.
65
66. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
A Harley-Davidson stockholder criticizes
present management: “it is a mistake of
the greatest magnitude that we
abdicate a decent share of the
European motorcycle market to foreign
competitors, simply because we do not
gear up our production to meet the
demand.” Discuss.
Q3
• “Mistake” – no further actions while the demand in
Europe is always larger than production
• “abdicate” – Harley Davidson won’t even consider
the Europe market unless the domestic market is
fulfilled.
Definition
66
67. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
A Harley-Davidson stockholder criticizes
present management: “it is a mistake of
the greatest magnitude that we
abdicate a decent share of the
European motorcycle market to foreign
competitors, simply because we do not
gear up our production to meet the
demand.” Discuss.
Q3
• The abdication is reasonable
• Quality cycle & Distribution center
• Loyal customers won’t leave.
• Harley Davidson is highly appreciated for its Customized
motorcycle
• Also create a mystique to potential market.
At that time…
67
68. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
A Harley-Davidson stockholder criticizes
present management: “it is a mistake of
the greatest magnitude that we
abdicate a decent share of the
European motorcycle market to foreign
competitors, simply because we do not
gear up our production to meet the
demand.” Discuss.
Q3
What about now?
• Increase 31% market share in Europe (2007)
• Buyout MVAgusta Group,Italy (2008)
• 10+% increase of market share three years in a roll
68
70. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in the
1990s, would you invest
money now in the
company?
Q4
Definition
“You” means Public
Investors
“NOW”=2005 (when the book
was published)
70
72. • Range from $50 to $60
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in the
1990s, would you invest
money now in the
company?
Q4
Financial Statistics
2005 2004 2003
Net Income $959,604 $889,776 $760,928
Shares 280,303 295,008 302,271
EPS 3.42 3.02 2.52
•EPS is increasing steadily every
year
•PE is about 12 to 15, which is in
average level
72
73. • Range from $50 to $60
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in the
1990s, would you invest
money now in the
company?
Q4
Financial Statistics
2005 2004 2003
Total assets $5,255,209 $5,483,293 $4,923,088
Current finance
debt
204,973 495,441 324,305
Long term finance
debt
1,000,000 800,000 670,000
Total finance debt 1,204,973 1,295,441 994,305
Not much finance debt, cash flow
will be good
73
75. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in the
1990s, would you invest
money now in the
company?
Q4
Company Development
• Introduce new product
line
– the Street Bob and the
Street Glide
• Work with the dealers
to create a better
customer experience
75
78. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Japanese
Competitors
Q6&Q8
Q6
“The tariff increase on Japanese motorcycles in 1983 gave
Harley-Davidson badly needed breathing room. In the
final analysis, politics is more important than
management in competing with foreign firms.” What are
your thoughts?
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79. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
“The tariff increase on Japanese
motorcycles in 1983 gave Harley-
Davidson badly needed breathing
room. In the final analysis, politics is
more important than management
in competing with foreign firms.”
What are your thoughts?
Q6
It depends.
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80. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Q6
How did tariff save
Harley-Davidson?
Direct competitor Japanese company, Honda,
introduced lightweight cycles of good quality.
Harley-Davidson’s market share decrease
dramatically to 3%.
US imposed a 45% tariff for coming 5 years.
New tariff policy increase the cost of Honda substantially. And it helps
prevent the foreign automobile companies from entering US market.
Harley-Davidson began to rebuild market share by
restoring consumer confidence on its products quality.
“The tariff increase on Japanese
motorcycles in 1983 gave Harley-
Davidson badly needed breathing
room. In the final analysis, politics is
more important than management
in competing with foreign firms.”
What are your thoughts?
80
81. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Q6
In the case, both politics and
management are essential to
the company competing with
foreign firms.
Management Politics
Inventory reduced by
67%
Increased entry
barriers for new
foreign competitors
Productivity up by 50% Decreased the
bargaining power of
existing foreign
competitors
Increased product
quality
Benefits
“The tariff increase on Japanese
motorcycles in 1983 gave Harley-
Davidson badly needed breathing
room. In the final analysis, politics is
more important than management
in competing with foreign firms.”
What are your thoughts?
81
82. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Japanese
Competitors
Q6&Q8
• As a vice president at Harley-Davidson in the 1990s, you believe the recovery
efforts should have gone well beyond the heavyweight bikes into lightweights.
• What arguments would you present for this change in strategy, and what specific
recommendations would you make for such a new course of action?
• What contrary arguments would you expect? How would you counter them?
H2
82
83. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in the 1990s,
you believe the recovery efforts should have gone
well beyond the heavyweight bikes into lightweights.
• What arguments would you present for this change in
strategy, and what specific recommendations would
you make for such a new course of action?
• What contrary arguments would you expect? How
would you counter them?
– “You”=Vice president of HD in 1990s
– “this change in strategy”= enter the lightweight motorbike
market
Definition
H2
83
84. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in the 1990s,
you believe the recovery efforts should have gone
well beyond the heavyweight bikes into lightweights.
• What arguments would you present for this change in
strategy, and what specific recommendations would
you make for such a new course of action?
• What contrary arguments would you expect? How
would you counter them?
Arguments for entering the
lightweight market
H2
• Heavyweight motorcycle market is just a niche market, whereas
lightweights is a mass market and a growing potential one.
• There are more younger riders,as well as women, who ride
smaller and cheaper bikes.
84
85. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in the 1990s,
you believe the recovery efforts should have gone
well beyond the heavyweight bikes into lightweights.
• What arguments would you present for this change in
strategy, and what specific recommendations would
you make for such a new course of action?
• What contrary arguments would you expect? How
would you counter them?
Recommendations for
such a new course of
action
H2
– Introduce the Harley-Davidson lightweight motorbikes
– Harley-Davidson lightweights can mainly target the
young females.
– Promote the American values (seek for freedom and
adventure)
85
86. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in the 1990s,
you believe the recovery efforts should have gone
well beyond the heavyweight bikes into lightweights.
• What arguments would you present for this change in
strategy, and what specific recommendations would
you make for such a new course of action?
• What contrary arguments would you expect? How
would you counter them?
Contrary arguments
H2
– Harley-Davidson might not be able to compete with
Honda in the lightweight market.
– Harley-Davidson is only for men, not suitable for women.
86
87. Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in the 1990s,
you believe the recovery efforts should have gone
well beyond the heavyweight bikes into lightweights.
• What arguments would you present for this change in
strategy, and what specific recommendations would
you make for such a new course of action?
• What contrary arguments would you expect? How
would you counter them?
How would you counter?
H2
– Honda is regarded as a transportation vehicle, while Harley-Davidson is an
American icon. Harley-Davidson lightweight motorbike can target a
different group of customers who appreciate the American culture.
– Harley-Davidson does not target at all the females. The feminist can be a
perfect match to the Harley-Davidson lightweight motorbike.
87
89. Learning
Insight
Learning
Insight
1. Quality vs. Quantity
Marketing Implication
Quality first!!
Why?
Focus on quality control
Increase urgency of buying
Show high status
Richard Teerlink,
“Quantity isn’t the issue, quality is the issue...”
Question
Answers
Case
Content
89
90. Learning
Insight
Learning
Insight
Limited Product Line
User-friendly name
Macbook ------ For common users
Macbook Pro ----- For more “Pro” users
Macbook Air ----- Thin as “Air”
No R65 or VGN-Z550N
Controlled Distribution channel
Apple store (iTunes)
Apple store (Retails)
Other qualified distributors
Question
Answers
Case
Content
90
91. Learning
Insight
Learning
Insight
June 2008 “Starbucks to Close 600 Stores”
Global expansion From profit to loss
Lower cultural added value
Lower service quality
Decentralized staff training
Capacity challenge (e.g. queue)
Question
Answers
Case
Content
91
94. Learning
Insight
Learning
Insight
Relationship Marketing is not only for
Luxury Products
Big Brands
but everyone, like
Seth Godin
Marketing Guru
Bestselling Author e.g. <Permission Marketing>
How does he build relationships with his readers?
By his Blog (Most viewed one in the world)
After you subscribe, you can get
Sample of his new book
PowerPoint of his new book
Videos which is talking about his new book
and you will spread it to your friends
You are not only his reader, but also his evangelist!
Question
Answers
Case
Content
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95. Learning
Insight
Learning
Insight
3. Yell out your brand
Marketing Implication
Spirit First!!
Why?
Exposure to Icon to Spirit
Licensing
Question
Answers
Case
Content
Rebellion & Freedom
95