Economic Indicators Paper

Economic Indicators Paper

Harley-Davidson is an excellent example of an American company that turned itself around from the brink of bankruptcy back to profitability. With a hostile takeover, the American Machine and Foundry Company (AMF) acquired Harley-Davidson and on the verge of bankruptcy, AMF sold the company to a small group of investors who then made significant changes.

These investors reduced the number of motorcycles produced each year, improved the quality of the motorcycles, and began customizing bikes to the individual customers’ wants. Instead of trying to match the Japanese cycles, management deliberately exploited the “retro” appeal of the machines (Wikipedia, 2004). Management invested heavily in their factories, modernizing them and streamlining production lines. They also invested in the appearance and feel of their retail stores (USA, 2003). Today’s stores are wide aisled and clean, giving space to the Harley-Davidson clothing line. The company now makes more money selling licensed merchandise featuring the Harley-Davidson logo than selling motorcycles (USA, 2003). Harley-Davidson’s customers’ range from the bearded, beer-belly stereotypes to “yuppies.” Their largest market is the middle to upper class, middle-aged man. For these men, owning a Harley has become a status symbol. Harley-Davidson is part of the American dream.

The revitalization and success of Harley-Davidson is due largely in part from management’s vision and their ability to recognize economic factors and act accordingly. In looking at the Harley-Davidson Company today, it is hard to imagine that only a short time ago they were on the brink of bankruptcy. Harley-Davidson’s future rested solely on the shoulders of the management team. Their ability to work with the economic factors and apply them to the company is the reason they still exist today and are again, a leader in the industry.

The new management team made significant changes. Their values-tell the truth, be fair, keep your promises, respect the individual, encourage intellectual curiosity-(Harley, 2002) guide and serve as their business framework. When management began revitalizing the company, there were economic indicators they watched, and continue to monitor. Some of the indicators important to Harley-Davidson are as follows:

Market value of goods and services produced within a year known as Gross Domestic Product (GDP) is used to measure market transactions. It values activity at market price and could be used to compare market/economy performance. Real GDP is the existing price adjusted for inflation. With Harley-Davidson, comparing 2003 and 2004. In this regard, the demand for Harley-Davidson motorcycles grew at a rate of 7% to 9% per year. In 2004, the Company shipped 317,289 motorcycle units, a 9% more than in 2003. The company expects shipment to grow to 7 percent in 2005 with an annual shipment of units to target at 339,000. Overall, results of operations in 2004 compared to 2003 in 2004 totaled $5.02 billion $390.9 million or 8.5 percent