case study harley davidson creating an enduring mystique
TRANSCRIPT
Case StudyHarley Davidson
Creating An Enduring Mystique
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Contents
1st Part Snapshots Challenges Bounce Back Success The Take-away
2nd Part Information Box
– Quality Circles– Internal vs External Marketing Orientation
Issue Box– Should We Be Aggressive or Conservative in Our Planning
What can be learned from the case study? Q&A
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1st Part Snapshots
1903 Harley Davidson founded & manufactured
1963 Has a solid 70% market share in U.S
1965 - 1983 Honda lightweight cycles had successfully penetrate US
market, having 44% of the market by 1983
1973 - 1983 Harley's market share went from 77.5% to 23.3% in 1983
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1st Part Challenges
1. Refuse to change from (a) to (b)
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1st Part Challenges
2) High in parts inventory
3) Down in quality and reduce productivity
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1st Part Challenges
Taken from: Reginald A. Bruce, Ph.D.College of Business and Public AdministrationUniversity of Louisville Year 2000
•Corporate management focused mostly on short term returns.
•Belief in quick fixes for problems, such as throwing in computers and state-of-the-art machinery to improve productivity.
•High break-even point that left the company vulnerable to unpredictable market fluctuations.
•Management that woke up too late to the threat of foreign competition because of the "it can't happen here" syndrome.
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1st Part Bounce Back
1. The Top Management initiated Participated and learned about customers concerns and complaints
at Harley Owners Group (HOG) rallies & creates changes
Learned about Japanese plants and Honda
Implement the production improvement thru Just-in-time (JIT), Materials-as-needed (MAN), Quality Circles (QC) & Statistical Operator Control (SOC)
Educate the middle management and front line people in turning the plant to profit center by reducing defect products and increase productivity
Implemented product improvement thru new engine, stereo system, etc
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1st Part Bounce Back
1. The Top Management initiated Enhanced its presence in Europe - Harley opened a
branch office of its HOG club in Frankfurt, Germany, for its European fans
1997 - A new engine plant in Milwaukee 1998 – A new assembly plant in Kansas City
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1st Part Bounce Back
Recreate the public image with high quality licensed goods
(i.e leather jackets, cologne, jewelry, pajamas, sheets, towels etc)
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1st Part Success
The Harley-Davidson production plant has improved, between 1981 – 1988
Inventory reduced by 67%Productivity up by 50%
Scrap and rework down two-thirdsDefect per unit down 70%
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1st Part Success
Harley Owners Group (HOGs) The trailblazers for the
successful growth and
mystique to come
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1st Part Success
The branded merchandises/licensed goods has created
New customer segment – Rubbies (the rich urban bikers)In 1992 the merchandises contributed $155.7 million in sales
(alternate revenue for dealers)
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1st Part Success
Harley- Davidson’s Growth in Revenue & Income (milllions of $), 1983 - 1994
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1st Part Success
0
20
40
60
80
100
120
1993 1997
Year
Per
cen
tag
e
U.S Exports
Motorcycle Shipments (Domestic & Export)
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1st Part Success
0200
400600
8001,000
1,2001,400
1,6001,800
2,000
1993 1997
Year
US
Do
llar
s
Revenues
Net Income
Revenues & Income
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1st Part The Take-away
IMAGE
The Harley-Davidson symbol is based on a pattern of associations that include the American flag and the eagle;
reflective of the passion and freedom Americans enjoy.
Harley promotes: a mystique appearance, individualism, the feeling of riding free, and the pride of owning a legend.
PRICE
Developed a strategy of value over price. By not being able to meet demands, an attitude of must-have
has developed. Customized products.
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1st Part The Take-away
LISTEN TO CONSUMER DESIRES & CREATES QUALITY NOT
QUANTITY
" What the Harley management crew, who are masters of marketing, do well is listen to their customers. The result is
that Harley cannot keep up with demand at current production levels" (Croghan 31).
“Quantity isn’t the issue, quality is the issue. We learned in the early 1980s, you do not solve problems by throwing
money at them” (Gary Slutsker, “Hog Wild,” Forbes, May 24, 1993, p.46)
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1st Part The Take-away
LEADERSHIP
It takes a leader who has the vision and confidence that things can be changed for the better
PRESERVE THE STRENGTH OF BEING HARLEY DAVIDSON – CLASSIC &
LEGENDARY
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2nd Part Quality Circles
1.1. To Apply Japanese management techniques which is To Apply Japanese management techniques which is Quality CirclesQuality Circles
Quality Circles (QCs) – worker-management committees that Quality Circles (QCs) – worker-management committees that meet on weekly basis:-meet on weekly basis:- to talk about production problems to talk about production problems plans to improve productivity and quality plans to improve productivity and quality resolve job-related gripes on both sides.resolve job-related gripes on both sides.
QCs to increase employee involvement in quality goals and to QCs to increase employee involvement in quality goals and to improve communication between management and workers.improve communication between management and workers.
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2nd Part Internal vs External Marketing Orientation
1.1. Internal is appropriate……..Internal is appropriate……..
When demand for product exceeds supplyWhen demand for product exceeds supply
When the product cost is high and the market can be When the product cost is high and the market can be expanded only if costs can be brought downexpanded only if costs can be brought down
Where there is a lack of significant competition, and Where there is a lack of significant competition, and no competitive threat is expected either because:no competitive threat is expected either because:
Severe entry requirements in the industry orSevere entry requirements in the industry or The market is limited The market is limited (H-D miscalculated)(H-D miscalculated)
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2nd Part Internal vs External Marketing Orientation
1.1. External orientation focuses onExternal orientation focuses on
External market environment (e.g. customer External market environment (e.g. customer needs/wants)needs/wants)
External forces (e.g. major competitive pushes, External forces (e.g. major competitive pushes, changing laws and regulations, economic conditions) changing laws and regulations, economic conditions)
Do all firms need marketing?Do all firms need marketing?
NoNo
(e.g. health, and charity firms)(e.g. health, and charity firms)
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2nd Part Should We Be Aggressive or Conservative in Our Planning
1.1. In growing market; to be In growing market; to be conservativeconservative will result into will result into inability of….. inability of…..
firm to handle its resources expansion sufficiently firm to handle its resources expansion sufficiently to control potential growthto control potential growth
2.2. On the other hand; it is good because it is not clear On the other hand; it is good because it is not clear the growth is temporary or permanentthe growth is temporary or permanent
Do you think Harley-Davidson made the right decision to Do you think Harley-Davidson made the right decision to expand conservatively?expand conservatively?
YesYesTo improve its core business quality and To improve its core business quality and
to ensure the growth is lastingto ensure the growth is lasting
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2nd Part What can be learned from the case study?
That a firm can come back from difficulty
Leadership of high order.
Preserve the Core Business at all cost and strengthening its position
The power of enduring mystique for firm
Product uniqueness
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2nd Part Q & A
1. Yes, Beals steps were correct
collected $81.5 million form Citicorp and solved financial ties against the firm
stopped Honda domination by tariff increase 4 -45%
increased owners moral by rallies, meetings, and
promises
Finally increased qualities
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2nd Part Q & A
2. The infatuation of Rubbies will last long due to………
HOGs creates loyalty and enthusiasm
High price for bikes did not bother them
Beals capitalized on heavyweights’ quality
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2nd Part Q & A
3. Not abdication;
Preserve the core quality and careful expansion.
4. Yes,
I would invest due to….. High value of Brand name Strategic core business Positive diversification
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2nd Part Q & A
5. Resurgence is not only luck; but is the combination of..
good leadership, preserve the core business and strengthening its
position. the power of enduring mystique
6. Absolutely correct; politic is more important than management in some situations; this is what the case proved. Without congress tariff increase HD would be passed away.
