I. Current Situation (Jw Hayes)
  • Current Performance
  • Revenue 2008 $5.59 billion down from $5.73 billion in 2007
    Net Income $654.7 million down from $933.8 million in 2007
    Earnings per stock share $2.70 down from $3.74 in 2007
    Motorcycles sold 303,470 down from 330,619 in 2007
  • Numbers are all down trend not favorable
  • Strategic Posture
    • Mission
    • We ride with our customers and apply this deep connection in every market we serve to create superior value for all of our stakeholders
    • Objectives
    • We fulfill dreams inspired by the many roads of the world by providing extraordinary motorcycles and customer experiences. We fuel the passion for freedom in our customers to express their own individuality.
    • Strategies
  • vGet Cost structure correct
vObtain funding for Harley-Davidson Financial Services
vInvest in the Harley-Davidson Brand



1.Fixed costs to high need realigned – consolidate facilities, reduce distribution operations, reduce excess capacity increase efficiency 2. finance bikes thru Harley-lending down costs are up 3. brands- increase product development and marketing – new bikes – trade-up program - museum

Policies
vCustomers for life….
Harley-Davidson values the deep emotional connection that is created with our customers through our products, services and experiences. We are fueled by brand loyalty and trust that our customers place in us to deliver premium quality and the promise of a fulfilling lifetime ownership experience. We exemplify this commitment by embracing a culture of personal responsibility and stewardship for quality in everything we do.


II. Strategic Managers (Jw Hayes)
    • Board of Directors

    • 11 board members 3 are internal


    • || DIRECTORS|| JOB TITLE || CHAIRMAN OF THE BOARD|| DATE OF BOARD COMMENCEMENT|| NOMINATING AND CORPORATE GOVERNANCE COMMITTEE|| AUDIT COMMITTEE|| HUMAN RESOURCES COMMITTEE|| OTHER DIRECTORSHIPS||
      || Barry K. Allen|| Senior Advisor to Providence Equity Partners President, Allen Enterprises, LLC|| X|| May-92|| X|| Fiduciary Management BCE Inc.||
      || || || || || || || || ||
      || Richard I. Beattie|| Chairman of Simpson Thacher & Bartlett LLP|| Aug-96|| X|| X|| Heidrick & Struggles International Inc. Evercore Partners Inc.||
      || || || || || || || || ||
      || Jefferey L. Bleustein|| Chairman of the Board Harley-Davidson, Inc.|| X|| Jun-97||
      || || || || || || || || ||
      || George H. Conrades|| Executive Chairman, Akamai Technologies, Inc.|| May-02|| X|| X|| Akamai Technologies, Inc. Oracle Corporation. Ironwood Pharmaceuticals, Inc.||
      || || || || || || || || ||
Judson C. Green
Vice Chairman, NAVTEQ

Nov-04
X
X

DreamWorks Animation. Aon Corporation.








Donald A. James
Co-founder, equity owner and Chairman and Chief Executive Officer of Deeley Harley-Davidson Canada/Fred Deeley Imports Ltd.

May-91












Sara L. Levinson
Former Non-Executive Chairman of ClubMom, Inc.

Feb-96
X

X
Macy’s Inc.








George L. Miles, Jr.
Chair, Chester Engineers, Inc.

Aug-02
X
X

WESCO Intn’l Inc. EQT Corporation. American International Group, Inc. HFF, Inc.








James A. Norling
Chairman of the Board, GlobalFoundries Inc.

Dec-93
X
X










James L. Zeimer
President and CEO, Harley-Davidson, Inc.

2004



CFO Harley-Davidson








Jochen Zeitz
Chief Executive Officer and Chairman of the Board, Puma AG

Aug-07
X

X
Puma AG. PPR.

    • Top Management
  • 3 main business segments Harley-Davidson, Harley-Davidson Financial Services, Buell Motorcycle
    Zeimer started as freight elevator operator now president and CEO

Names
Title

Names
Title
Motor Company
Leadership



Joanne M. Bischmann
VP, Marketing

Steven R. Phillips
VP, Quality, Reliability and Tech Services
David P. Bozeman
GM, Powertrain Operations

Harold A. Scott
VP, Human Resources
James M. Brostowitz
VP, Treasurer

Patrick Smith
GM, General Merchandise
Leroy Coleman
VP, Advanced Operations

W. Kenneth Sutton Jr.
VP, engineering
Rodney J. Copes
VP & GM, Powertrain Operations

Michael van der Sande
Managing Director, HD Europe
William B. Dannehl
VP, North American Sales and Dealer Services

Jerry G. Wilke
VP, Customer Relationships and Product Planning
William G. Davidson
VP, Chief Styling Officer



Karl M. Eberle
VP & GM, Kansas City Operations

Corporate Officers
Harley-Davidson, Inc.
Robert S. Farchione
GM, Parts and Accessories

James L. Zeimer
President and CEO
Fred C. Gates
GM, York Operations

Thomas E. Bergmann
Executive VP and CFO
James E. Haney
VP, Chief Information Officer

Gail A. Lione
VP, General Counsel and Secretary
Michael P. Heerhold
GM, Tomahawk

James M Brostowitz
VP, Treasure, Chief Accounting Officer
Timothy K. Hoelter
VP, Government Affairs



Ronald M Hutchinson
VP, New Business

Harley-Davidson
Financial Services Leadership
Michael D. Keefe
VP & Director Harley Owners Group

Lawrence G. Hund
VP, Operations, CFO
Kathleen A. Lawler
VP, Communications

Kathryn H Marczak
VP, Chief credit and Administrative Officer
Lara L. Lee
VP, Enthusiast Services

Saiyid T. Naqvi
President
Matthew S. Levatich
VP, Materials Management



Gail A. Lione
VP, General Counsel

Beull Motorcycle
Company Leadership
James A McCaslin
President and COO

Erik F. Buell
Chairman and Chief Technical Officer
Jefferey A Merten
Managing Director, Asia Pacific and Latin America

Jon R. Flickinger
President and COO
Louis N. Netz
VP & Director, Styling



John A Olin
VP, Controller



III. External Environment (EFAS Table) (John Taylor)
    • Natural Environment
      • Rising gas prices will affect transportation and shipping costs, negatively affecting company profits. Some consumers will not buy another vehicle to put expensive fuel in while others my buy a motorcycle for better gas mileage.
    • Societal Environment
      • Economic
        • Rising Fuel prices (T)
        • Pending Recession (T)
        • Double Digit Growth (O)
        • Opening new dealership (O)
        • Addition of Buell motorcycles (O)
      • Technological
        • Creation of online catalog (O)
        • Implementation of "just-in-time" inventory procedures (S)
      • Political-Legal
        • U.S. and International EPA standards must be met (T)
        • Traffic and Motor Safety Regulations, U.S. and International (T)
      • Sociocultural
        • More safety conscious riders and consumers (O)

    • Task Environment
      • Rivalry High Competition Motorcycle manufacturers continue to improve designs and provide a competitive market for Harley Davidson to compete for new consumers.
      • Buyers Power High With over 30 different models of Harley's ranging from $6,695-20,645, and 8 Models of Buell bikes avalible from $4,695-11,995, consumers hve many options of finding the bike that meets their needs while staying within their price range.
      • Distributors Power High Harley has 684 Independent owned full service dealerships as well as 323 foreign locations.
      • Threat of Substitutes Medium Honda is a big competitor for Harley with many similar lines of bikes from the small "crotch rockets" to the bigger cruising and touring bikes.

IV. Internal Environment (IFAS Table)

A. Corporate Structure
· Business segments: Motorcycles and related products and Financial Services.
· The decision-making procedure within Harley-Davidson is decentralized according to which department is the most appropriate to address certain issues or to make the decisions.
B. Corporate Culture
· Harley-Davidson values the deep emotional connection that is created with our customers through our products, services and experiences.
· Promote stronger bonding between the top management and the non-management workers by implementing the FISH philosophy throughout the entire company.
· Harley-Davidson promotes fairness, financial transparency and accountability to all our shareholders.

    • Corporate Resources (Travis Toborg)
      • Marketing
      • Marketing was divided into several different areas that are common for most all companies. These Areas included Dealer promotions, Customer Events, Magazines, Direct Mail advertising, Public Relations, Cooperative Programs with Harley/Buell, and TV commercials. You will also see Harley promotions at several popular sporting evens such as racing and even UFC.
      • Finance
      • In 1985 Harley-Davidson was 4 hours from shutting there doors. Citicorp, Harleys main lender denied lending money in 1985 but with only 4 hours remaining to find a lending company, Harley made a deal with Heller Financial and managed to save the company. At this current time it is now funded by HDFS (Harley-Davidson Financial Services). Which is a lending company for Harley-Davidson motorcycles among several other helping factors. This means the company basically now funds itself.
      • R&D
      • Harley feels that research and development of there custom and touring motorcycles is a large part of the way they compete against the competition. They spent $178.5 million in 2005, $177.7 million in 2006, and $185.5 million in 2007 in areas such as style, purchasing, and manufacturing.
      • Operations
      • Harley-Davidson has 684 dealerships in the U.S. and of those 307 were also Buell dealers. Their are 104 Secondary Retail Locations (SRL's), 68 Alternate Retail Outlets (ARO's), and 12 Seasonal Retail Outlets (SRO's). This makes the US the largest supplier in sales of Harley-Davidson motorcycles.
      • 22% of the companies sales came from foreign Operations in Europe/Middle East/Africa at 370 dealers with 323 being combined with Buell, Asia-Pacific 130 Harley dealers with 57 selling both brands, Latin America with 31 dealers none of which also sold Buell's, and Canada which has 75 dealers, 45 of which sell both brands of motorcycles.
      • Human Resources
      • Approximately 50% of the manufacturing employees of Harley-Davidson's own Harley's themselves and buy from dealerships so they have first hand experience with what they are contributing too as a work force. There are roughly 9,000 employees of Harley-Davidson
      • Information Systems


    • Summary of Internal Factors (List in IFAS Table) (Travis Toborg)
    • || Internal Factors || Weight || Rating || Weighted Score || Comments ||
      || || || || || ||
      || Strengths || || || || ||
      || || || || || ||
      || Self Reliable, Financially || 0.15 || 5 || 0.75 || Could possibly end but lenders would step in ||
      || Great Marketing skills || 0.1 || 4 || 0.4 || Seen just about everywhere ||
      || Economic friendly || 0.05 || 3 || 0.15 || Save gas and space ||
      || Acquiring Buell || 0.2 || 5 || 1 || Drives sales up with more options ||
      || || || || || ||
      || Weaknesses || || || || ||
      || || || || || ||
      || Baby boomer era ending || 0.15 || 2 || 0.3 || Drove sales ||
      || In competition with several Japanese companies || 0.15 || 2 || 0.3 || Cost more to own and repair ||
      || Lack distributors in foreign operations || 0.1 || 2 || 0.2 || Low sales overseas ||
      || Seasons || 0.1 || 4 || 0.4 || Create sales spikes and drops ||
      || || || || || ||
      || Total Scores || 1 || || 3.5 || ||

V. Analysis of Strategic Factors (John Lerch)
    • A. Situational Analysis (SWOT) (SFAS Matrix)
      • Strengths
        • Acquiring Buell
        • Financial Self Reliability
      • Weaknesses
        • Seasons
        • Baby Boomer Era Ending
        • Competition with Several Japanese Companie
      • Opportunities
        • Addition of Buell Motorcycle Line
        • Double Digit Growth in International Market
      • Threats
        • Pending Recession
        • Rising Fuel Prices

    • B. Review of Current Mission and Objectives
      • 1. Harley Davidson's Mission and Objectives focus on the customers and the acquisition of Buell falls in line with this mission.
      • 2. They should continue with the current mission and objectives and seek ways to continue capitalizing on the international market.

SFAS Matrix





Duration

Strategic Factors
Weight
Rating
Weighted Score
Short
Intermediate
Long
Comments








S4 Acquiring Buell
0.2
5
1


X
Drive sales up with more options
S1 Self Reliable Financially
0.15
5
0.75
X
X

Could possibly end but lenders would step in








W4 Seasons
0.1
4
0.4


X
Create sales spikes and drops
W1 Baby Boomer Era Ending
0.15
2
0.3
X
X

Drove sales
W2 Competition with several Japanese Companies
0.15
2
0.3


X
Cost more to own and repair








O3 Addition of Buell Motorcycle Line
0.2
5
1
X
X

Soaring Profits from adding the Buell line to H.D. dealers
O2 Double digit growth in international market
0.1
4
0.4
X


Growth doubled in international dealer network for 2007








T2 Pending recession
0.2
2
0.4

X
X
Consumers may keep aging motorcycles or wait to purchase
T1 Rising Fuel Prices
0.3
1
0.03


X
Steady sharp rise in fuel prices since 9/11


VI. Strategic Alternatives and Recommended Strategy (Shavera Leveille)
A. Strategic Alternatives
1. Stability Strategy: Pause/Proceed with caution. Analyze the effects the recession will have on the company then react accordingly.
a. Pros: Acknowledgment of areas that are weak and need improvement. The profit strategy would not beneficial it only masks the issues instead of confronting them.
b. Cons: Strong Competition from competitors that are larger, established, and more diversified.
2. Growth Strategy: Horizontal growth strategy; concentric diversification, strategic alliance, and joint ventures. Target new market segments by developing products and services for females and younger bikers both domestically and internationally.
a. Pros: New markets would help increase customer base, brand loyalty, and profitability.
b. Cons: The new market segments may not be able to afford the products and services offered. Strategic alliances and joint ventures may result in loss of control over operations, conflicts, and higher risks.
3. Retrenchment Strategy: Turnaround strategy; close down unprofitable foreign plants and consolidate operations.
a. Pros: Allows for concentration on business segments and plants that are profitable. Prevents further losses.
b. Cons: Hinders growth
B. Recommended Strategy
Recommend alternative #2 which is growth for Harley-Davidson. The current customers are mainly comprised of the Baby Boomers. Harley-Davidson Inc. may benefit from recruiting younger customers to possibly build lifetime customer loyalty that can be passed down to younger generations. Women are also a great market segment to target because research shows that the number of female riders has risen significantly over the past few years. Concentric diversification, strategic alliances and joint ventures enable entry into foreign markets, knowledge of local conditions, sharing of costs, resources, and assets. Although, the company is facing a recession the costs of Harley-Davidson products and services should not be reduced, but rather competitively priced so that quality is not sacrificed.