The Harley Davidson Company - Corporate Finance

Outline

Business Analysis

        The Harley Davidson Company has always focused on differentiation as their business strategy.  Harley is able to provide superior value and service to its customers, which is consistent with a differentiation strategy.  Because of this strategy, Harley is able to charge a premium price for its motorcycles because of the added service and quality.  Brand loyalty is also associated with differentiation, which is important to Harley’s success both in the short term and in the long term.  For Harley to ensure their continued success, Harley will have to integrate quality into its products through performance, features, reliability, and durability.  Harley will also have to keep the customer base loyal by catering to their preferences while still maintaining the Harley Davidson image.

Mission Statement

        Harley Davidson’s mission statement is, “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.” (Harley Davidson Annual Report 2012)  The mission statement is a very clear guiding principal for all the employees to fuel the future growth of the company.

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Porter’s Five Force        

Suppliers-“Low”

Steel, electrical components, and shipping of the final motorcycles are the needs of Harley Davidson from its suppliers

Long term contracts protect Harley Davidson from supplier increase

Buyers-“Low”

Harley needs to attract younger buyers because their current demographic of baby boomers is aging(  young people can’t afford)

New Entrants

High entry barrier-requires high capital investment and is a mature industry

Low economies of scale

Small motorcycle producers play in the industry, but not a threat to major competitors

Substitutes

Cars, sports bikes, and scooter bikes are main substitutes

Harley is a luxury bike, so few close substitutes

Competitors

4 major competitors in “heavy weight” motorcycle segment: Harley/Yamaha/Suzuki/Honda

Other competitors have more financial and marketing resource

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Marketing Strategy

        One of the largest marketing strategies for Harley was the creation of HOG (Harley Owners Group).  The group allows the owners to share experiences and network through rides, rallies, and other events.  Another successful marketing strategy Harley created in 200 is Rider’s Edge which provides lessons for basic and advanced riding skills.  About %35 of the students in Rider’s Edge are young adults and %37 enrolled are women (Harley Davidson Annual Report 2012)  These statistics Rider’s Edge is an effective marketing tool for newly targeted segments for Harley.