Environmental Factors Of Harley Davidson 's Long Term Profitability

The purpose of this analysis report is to discuss the solvency and profitability of Harley-Davidson, Inc. (HOG) and formulate a measurement for is financial standing and profitability by comparison to the Industry in which it resides. Solvency is determined from data collected in the 2012 SEC Harley-Davidson, Inc. 10K report, and calculated based upon the solvency ratio; Solvency equals After Tax Net Profit plus Depreciation divided by Long Term Liabilities plus Short Term Liabilities. According to Investopedia.com the general rule of thumb is that a company with a solvency ratio greater than 20% is considered a financially healthy

The firm’s recent addition of the HD-1 Customization service offer customers to find not only a Harley Davidson motorcycle, but also provide fitting services based upon body type, accessory and paint variations. Attempting to appeal to a younger market segment that leans toward sport bikes and off road bikes, the Company has released the Dark Custom series designed to appeal to young adults ages 18-34. The Dark Custom series is able to use similar manufacturing processes with aesthetic differences such as the use of less chrome and different paint schemes that are easily changed at the factory level.

During the 18th century, the uprising of British North American Colonies “grew vastly in economic strength and forged a distinct identity”. After the French and Indian war, the Britain saw a need for the “more centralized control” (Outline of U.S. History, 2011, p.52). They felt as necessary to eliminate any interference from the colonialists. The colonies on the other hand, expected more freedom and independence. Hence there was a forthcoming conflict. When the organization of Canada and Ohio valley would not adopt the policies to “alienate the French and Indian inhabitants, and British needed more money and land for settlement” (54) and fear of more war erupting, the restricting and taxation laws were passed. For example the Proclamation

Through Harley-Davidson Financial Services (HDFS), the company offers a package of wholesale and retail financial services for its products, providing it a competitive edge in the motorcycles business in the US and Canada regions. HDFS financed 51% and 30.4% of the new Harley-Davidson motorcycles retailed by independent dealers in the US and Canada respectively in 2011. HDFS provides wholesale financial services to Harley-Davidson motorcycle dealers, including floor plan and open account financing of motorcycles and motorcycle parts and accessories. These specific services provide a competitive edge to the company in capturing a higher market share and enhancing its bottom line.

A long standing business practice at Harley-Davidson is “Excellent Corporate Governance” (Harley-Davidson, 2010b ). Last year (May 2009), Harley-Davidson welcomed its new President and Chief Executive Officer, Keith E. Wandell. Working with Mr. Wandell, is the Board of Directors,

Historically, Harley-Davidson has managed to dominate the U.S. market by becoming a staple of American culture. Specifically, the Harley-Davidson motorcycle is considered “a part of American iconography” and is typically associated with well-known American symbols, including both the U.S. flag and the bald eagle. As a direct result of this association, the company has achieved strong and long-lasting brand loyalty among U.S. customers, which has undoubtedly contributed to its great success in the U.S. market.

In this paper we will perform a complete analysis of the Harley-Davidson Corporation including their corporate and business strategies, strengths and weaknesses, environmental opportunities, the five industry forces, and financial situation. Harley-Davidson has many attributes, which will be apparent in the following analysis. The paper will attempt to define the different components of the analysis and put them all together in a way that seeks to explain the way that they contribute to the overall success of the company and its stakeholders.

The strength of Harley Davidson can be seen in its logo and product brand. In the United States, the Harley Davidson is like a cult since it has so many followers, as depicted in the case study whereby in all the rallies, hard core fans of the company, for example the Harley Owners Group was present. This gives the company a competitive advantage since it has a market that is readily available and willing to purchase its products no matter the cost. The other strength of the company as seen in the case study was in the protection by the government since it was a United States company. This helped Harley to recover when the company placed an increase on the tariffs charged on the

Rivalry Competition: Harley Davidson has a High Rivalry Competition. HD deals with a huge amount of competition in the Motorcycles industry from other motorcycle manufacturers from around the world. These include Honda, Yamaha , Suzuki from Japan; Ducati, Aprilia, BMW and Triumph from Europe; and the Indian as its main rival from the US. The major problem HD faces here is that most of its major competitors are very diversified and have larger financial and marketing resources. For example, Yamaha generates only half of its revenue from motorcycles. The growth rate of this particular industry is forecasted to be 3.4%.

Historically Harley-Davidson to be a Niche Marketer, which is they had focused in on one particular aspect of the market. Kotler and Keller identified the following characteristics of niche marketing; customers have a distinct set of needs, they are willing to pay more to the firm that best suits their needs, it is not likely to attract competitors, gains economies through specialized products and it has a size, profit and to grow. Almost all of these hold true for the “heavyweight” segment of motor cycles that Harley-Davidson produced.

The Harley Davidson brand has expanded not only in the United States but also globally, it has transformed its manufacturing, product development, and retail capabilities over

The three statics of Harley-Davidson’s is; revenue, growth rate, and number of units that are sold. The manufacturer of the United States heavyweight motorcycle division has obtained, arrested, and achieved approximately fifty-four percent of the broad United States motorcycle exchange. Harley-Davidson has fifty-two percent share of the broad motorcycle exchange in which IBISWorld INC. has estimated that it will generate six point nine billion dollars in revenue this year, (Forbes, (2014).

After an investigation by the US International Trade Commission, in 1983 President Reagan imposed a 45% tariff on imported bikes and bikes over 700 cc engine capacity. The new management deliberately exploited the past appeal of their big machines, building motorcycles that purposely adopted the look and feel of their earlier models. Quality increased, technical improvements were made, and buyers returned. Harley-Davidson once again became the sales leader in the heavyweight (over 750 cc) market.

Harley-Davidson manufactures mainly five different families of motorcycles, which target different segments. New geographical markets or targeted segments can be explored against each family to check for any potential expansion.

Currently H-D is the leading seller of heavy weight motorcycles across the entire world. Because they are at the pinnacle they are the target for the competition. Some of Harley Davidson 's advantages are name recognition, brand loyalty, brand quality and customer loyalty (Hitt, Ireland & Hoskisson, 2013, p. 81). The company benefits by having “the made in America” image attached to its products. The image of a Harley rider and owner is one of a tough, independent, free spirit, ready and willing to take on the world type of man. The sound of a H-D motorcycle in idle or being ridden is unique and very identifiable.