I.

Time context:

2009

II.

Viewpoint:
Marketing Department

III. Statement of the problem

A. Major problem:

Harley Davidsons product line is relatively out of the consumers preference in their domestic market. B. Minor problem: 1.) Decrease in annual domestic sales. 2.) Existence of foreign competitors in their local operation.
3.) Limited market segment.

IV. Objectives
A. Must/Short Range Objectives

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1. To identify the customers preference for a particular product. 2. To satisfy the target market demands and provide product line

based on their preference.

B. Want/Long Range Objectives

1. Dominate the industry despite of the high competition. 2. To have a clear strategic direction of continuing its product improvement for the benefit of the meeting customers demand. 3. To be able to capture majority of domestic market share. company and

V. Areas of Consideration
A. SWOT Analysis Strengths 1. Powerful brand image Because the firm established in the mind of customer that riding a Harleytheir dreams. 2. Strong relationship with employees Because it is one of their resources which made them successful 3. The sole American motorcycle manufacturer
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Davidson motorcycle is the fulfillment of

This is their key factor to dominate the industry for decades 4. Established Academy of Motorcycling Which provide both new and expert riders with a deeper engagement in motorcycling and to experience Harley Davidson style. 5. Product customization Which enable the customers to be more creative in the styles they want. 6. Customer loyalty Because they established on the mind of the consumer that they belong to the family of Harley when they own a unit.

Weaknesses
1. Products are more expensive

Thats why only those rich people can purchase the Harley motors.
2. People also feared of being called as hooligans in the

society when they ride a Harley Davison bike.

3.

American pride is the main basis of their product development.

4. Offers only a single product line in the industry. 5. Slow growth in the international market share.
6. Cultural diversity product designs are for big people like

American and Europeans.

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Opportunities 1. Strong growth in the motorcycle industry in Asia and Mexico. 2. Increasing numbers of women riders. 3. Increasing number of aging population which is considered as their largest market segment.
4. Technological advancement is useful in the product

development and innovation. 5. Expansion in the global market due to increase in economic growth.

Threats
1.

HDs competitors offer a more diversified product line thats why they are vulnerable in the industry changes.

2. Substitute Products potential development becomes a factor

in purchase decision making. 3. European motorcycle industry is suffering from declining of growth.
4. Extinguishment of their largest market segment which is the

aging population because they are unable to operate a motorcycle. 5. Developing car industry. 6. Changing preference of the customers.
[4]

7. Potential entries of more players with lower prices.

SWOT MATRIX Strength Having an academy of motorcycles expand the motorcycles industry in Asia and Mexico (S4,O1) The costumers loyalty in the global market (S6,O5) Weaknesses Technological advancement that puts Harley-Davison product more expensive compare to its competitors (O4,W1) Harley-Davidson pride due to increasing no. of aging population which their target market (O3,W3) Increasing no. of women riders cause of powerful brand image of Harley-Davidson Threats (S1,O2) Harley-Davidson is the Harley-Davidson must only one motorcycle manufacturer in America but its competitors offer more diversified product line
[5]

Opportunities

helps in the expansion pursuing the American

provide substitute products because its only offer single product line (T2,W7)

(S3,T1) Product customization that Harley-Davidson offer grow in the European motorcycle industry (S5,T3);

Due to changing preferences of the costumer makes slow growth in the international market shares (T6,W5)

PESTEL ANALYSIS

POLITICAL
1. The United States military and police used the product of

Harley Davidson.
2.

Harley-Davidson faced is the import/export rates on their products.

3. Harley-Davidson have ambitions to enter the Chinese

market, however currently face Chinese political issues as motorcycles are prohibited in 170 of its cities and obtaining a motorcycle license costs time and money.
4. Smoke Emission.

ECONOMICAL
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1. Confidence in economy is directly proportional to the purchasing of consumer items 2. Opportunities in emerging economies [India and china] but uncertain operating situations.
3. In York, PA the employees strike happened due to failed to

agree on wages and health benefits.

4. Rising fuel prices will affect both Harley-Davidson their

suppliers and Harley-Davidson's competitors.

5.

Consumers are less inclined to spend their money.

SOCIAL 1. The firm support BCNS (Breast Cancer Network of Strength) and (Muscular Dystrophy Association)
2. The unforgettable experience.

3. Government reports state that motorcyclists are more likely to be injured. Keeping this social issue in mind, buyers may choose a company that focuses on the safety of its products.

TECHNOLOGICAL 1. Harley-Davidson have a wide variety of products according to standard, performing, touring and custom
2. The advancement of Harley-Davidson in the parts of

motorcycles.

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3.

Anti-lock breaking systems and clutchless'' transmissions are beginning to be developed by Harley-Davidson and other competitors.

4. Harley-Davidson has prided them on having a distinctive sound.

ENVIRONMENT 1. Noise pollution and some emission standards of HarleyDavidson bike is not up to level of some countries across the globe
2. First Corporation to voluntarily enroll in the one clean-up

program, this program is design for the clean-up of the affected soil and ground water at the former york naval ordinance plant. 3. Produce an environmental warranty their warranty ensures each owner that the vehicles is design and built free of any defect in materials and workmanship that would cause the vehicles to meet EPA standards
4. Motorcycles are primarily used during warmer months,

from mid-march to august.

LEGAL 1. In India and China, delayed for several years due to high tariffs and emissions regulations

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2. The pollution regulations have recently changed, but the

tariff problem is yet unresolved 3. The import duty held up by 60% and taxes of 30% which effectively double the sales price.
4. The age restriction on riders is 17, coupled with the legal

requirement for a motorcycle license. Additionally, the motorcycle must be maintained; have an MOT, tax and the rider must wear a helmet.

Industry Analysis Harley-Davidson is an American motorcycle manufacturer company that founded in Milwaukee, Wisconsin and with the headquarters in Juneau Avenue. It is one of the two major American motorcycle manufacturers that survived in the Great Depression. It is named after the late William S. Harley and his friend Arthur Davidson, Harley-Davidson started in a small engine but soon variegate.

1.

What is the product/service? Harley-Davidson sells different classes of heavyweight

motorcycles are designed for cruising on highways. They also have parts, different kinds of apparel and accessories for different ages. Harley-Davidson allows you to customize your own motorcycle for the convenience and to show out your passion. They also have a financial service that includes the group of companies doing business with Harley-Davidson which provides wholesale and retail financing and as an agent, provides insurance and
[9]

insurance related programs primarily to Harley-Davison and Buell dealers and their retail customers.

A.

What function does it serve? Harley-Davidson serves as a provider of motorcyclists and to the

general public an expanding line of motorcycles and branded products and services in selected market segments. Financial services programs to dealers and retail customers. B. What are the channels of distribution? The channel distribution uses is e-commerce and web design.

2.

What is the industry size in units and dollars? Harley Davidson is increasingly reliant on international sales,

especially in Europe. In 2004, only 18% of the companys sales were international. This figure had moved to 32.5% by 2010, helped by a heavily weakening dollar. Because Harley incurs its production costs in the United States, it benefits when the dollar weakens against the Euro and the Yen. People tend to buy dollars to buy U.S. goods, or to hedge against the fluctuation of global currency (the U.S. Dollar is the world's most trusted currency). When people buy dollars, the dollar goes up. A. How fast is it growing? Harley- Davidson is increasingly reliant on international sales, especially in Europe. In 2004, only 18% of the companys sales were come from international account, figure had move to 32.5% by 2010
[10]

helped by a heavily weak dollar. Because Harley incurs its production costs in the U.S it benefits when the dollar weaken against the Euro and Yen.

B. Are product differentiated? From the above mentioned products and services, we can derive that Harley-Davidsons products and services are differentiated.

C.

Are there high exit barriers? There is a low exit barrier because the market is stable so the

profit margins do not oscillate along time and also because of many players in the market industry.

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D.

Are there high fixed cost? Yes, worldwide independent dealer retail sales of Harley-

Davidson motorcycles. Retail sales continue to be impacted on a global basis by difficult economic conditions.

E.

Are there some of the forces that determine the strength

of competition among existing competitors? In its market industry, the company had these following factors: Consumer Loyalty, Brand Awareness, Financial Position, Price Competitiveness, Market Positioning, Product and Service Quality, Global Expansion, Organizational Structures and Product Diversity.

3.

Who are the major competitors? Harley-Davidsons direct existing competitors are the powerful

Japanese makers Honda, Yamaha, Kawasaki and Suzuki. Germany's BMW also competes in this segment, Polaris the snow bikes maker and the other minor European makers such as Ducati and Guzzi by Britains Norton.

A.

What are their market shares?

Harley-Davidson increased market share in the U.S., its biggest market, for the quarter and year, while sales slipped a modest .02%. The Motor Company stated that U.S. 651+cc sales were down 14.6% for the year, while Harley sales were down only 11.7% for the year.
[12]

Their U.S. market share in that segment increased to 54.9% from 53.3% a year earlier and 45.4% in 2008.

Worldwide, H-D sales were down 8.5% from 2009 to 2010, though sales increased in Europe and Latin America. And overall international sales were down only 1.9% from a year earlier. And the world market share is 31.9%.

Harley-Davidson Motorcycles

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[14]

B.

Is the industry consolidated or fragmented? The industry is fragmented because there are many players

in the industry and operates, not only in their respective domestic area but also operates in the global market. 4. Who are the major customers of the industry?
The average Harley customer is an upper-class 47-year-old white male, and has been getting older at a rate of 6 months every year for the last 20 years.

A.

Are they powerful? -No, because most of the customers came from specific

individuals. B. What gives them power?

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-Consumers of Harley Davidson motorcycles are individual customers, thats why they cant seriously affect Harleys financial position. -The number of dealers around the globe is also less and they are also dependent to the individual customers that cannot affect Harley-Davidson financial position. 5. Who are the major suppliers of the industry? -Faria A. Are they powerful? -No B. What gives them power? - Steel is the basic electrical requirement and shipping of final motorcycles is the main thing Harley-Davidson seeks from the suppliers. -Harley-Davidson has wide span of suppliers, so that if one supplier attempted to increase the price they can easily switch to the alternative suppliers without any problem in production. 6. Do significant entry barriers exist? Barriers to entry, the motorbikes market are characterized by the high technology, mass production and low prices in the lightweight segment.

A.

What are they?

Japanese makers own the biggest market share against other strong European competitors
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* Chezks Husquaena and the Spanish Derby they manufacture and customized bikes * Customer loyalty and strong image is a barrier for the makers than the classic Harley-Davidson Inc. and BMW just as for the super car segment Ferrari and Porsche. * Product differentiation * Switching costs on the cost that buyer has to absorb to switch from one supplier to another. * Capital requirements for entry, the investment of large Capital and the significant risk to enter.

B. Are they effective in protecting existing competitors thus enhancing profits? Yes, because of the brand loyalty that continuing in the mind set of an individual that if you say Harley-Davidson its has a good quality and an adventure experience to have this kind of product and services that HD offered. The real power of Harley-Davidson is the power to market to consumers who love the product

7. A. Are they any close substitutes for industry product and services? Natural substitutes of heavy and super heavyweight motorbikes are medium and lightweight motorcycles, mopeds scooters and as a meaning of transportation cars, trucks, SUV's, public transportation and bikes. Both suppliers and distributors have low impact in this

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market because of the atomized of the number of suppliers and the brand loyalty of distributors/dealers.

7 B. Do they provide pressure on prices change in the industry? No, because they choose to be traditionally different in their competitors offering lower prices compare to them. All they want is to satisfy their customers and give the best experience in motorcycling. Factors differentiated HD from competitors: it has always been strongly market focused unlike its more technology focused competitors. Coherently, it offers highly customized motorcycles that imply higher production costs, yet provide customers with extra value thus increasing their loyalty.

8 A. What are the basic strategies of competitors? Sales-Marketing method that involve high advertisements Distribution method Operational Excellence-strategy is predicated on the production

and delivery of products and services. The objective is to lead the industry in terms of price and convenience. Product Leadership-strategy is predicated on producing a

continuous stream of state-of-the-art products and services. The objective is the quick commercialization of new ideas.

8 B. How successful they are?

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Different competitors have different market strategy to advertise and effectively introduce their certain products.

9 A. To what extent is the industry global? They are in the international market segment that includes America, Europe and Asia. Harley-Davidson is one of those excellent companies whom had challenged traditional ideas.

9 B. Are there any apparent advantages to being involved in more than one (1) nation? Yes, because if a business is engaging in more than one (1) nation you can have some of the following benefits: increase level of demand Brand recognition-the product will be easily known to other

regions The customer can easily have access to business in terms of

product maintenance Increase of income Improvement of quantity and quality of the products

10 A. Is the industry regulated? With regards to the exportation and importation of the products the laws of each country applies in order for them to monitor the goods which enter into their territory.
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10 B. What influence do regulations have on industry competitiveness? It has a major influence to the industry because they cannot operate beyond the rules and regulations that are being implemented in each area of operation. Another thing is they can also use the fact of being regulated specially by the government to be their competitive advantage if they follow the laws that is being implemented to establish a strong foundation in their respective market.

VI. Alternative Courses of Action

ACA#1: To introduce new and enticing product based on local market preference of the target market while maintaining the brand name.

ADVANTAGES: Innovation can create new growth segment Gain new valuable costumer It would be difficult for rivals imitate Create more awareness of the product existence

DISADVANTAGES: -

Introducing new product would be costly and expensive. Risk for the new product not to be successful. Their limited edition product can be replaced in the market.

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ACA#2: Strengthen Harleys product advertisement. ADVANTAGES:

-

Increase the firm sales. Raises customers product awareness. Serves as a catalyst to re-establish he firm as the prime dealer of motorcycles. Enhance their market competitiveness.

DISADVANTAGES:
-

A stand-out advertisement is costly and expensive. Unique and effective advertising ideas are difficult to produce. It may not be effective to attract local customers.

ACA#3: Differentiation of the product they are offering in terms of its features and quality. ADVANTAGES: Products that have distinction provide more value for customers. Expansion of market segment. Unique products are difficult for competitors to imitate. Core competence will be enhanced. Brand loyalty is increased.

DISADVANTAGES: Implementation is costly and expensive.

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Risk of the product not to be successful. It is difficult to come up with advantageous and unique idea. Harley Davidson not to be able to sustain their brand image.

Alternative Courses of Action Evaluation Weight Weig ht 1 The criterion that would have this weight is not the main focus or consideration for the company as of the current time 2 frame. The factor to be spotted in this particular weight would have the companys moderate consideration that will affect their 3 decision making. This weight means that the company puts a lot of focus and consideration in this criterion. They think that it will be the companys best need at the current time context.

Rubrics

Criterion Potential impact on companys performance.

5 There is a great positive impact on companys performance.

3 The company is seeing an average impact on this

1 The company have low impact on the performance of

[22]

alternative and will not adversely affect the companys Ease of Implementation The decision of the company to implement the actions needed is not Benefit/Cost Relationship complicated. The benefit that will be gained would exceed the cost to be incurred in a very significant Speed of Implementation percentage. The implementation can be done within a short period of time. The implementation will be done beyond a reasonable duration. performance. The decision of the company to implement the actions related is not that hard to implement. The benefit that will be gained will or wont exceed the cost to be incurred.

this alternative.

The decision of the company to implement the action is complex. The benefit that will be gained in the future will be for a short period time only. The implementation will be done in a very long period of time.

Decision Matrix

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Alternative Course of Action Number One Criterion Weight Rating Potential impact 3 5 on Companys performance Ease of Implementation Benefit/Cost relationship Speed of Implementation Total Rating 1 2 2 5 5 3

Score 15

5 10 6 36

Alternative Course of Action Number Two Criterion Weight Rating Potential impact 3 5 on Companys performance Ease of Implementation Benefit/Cost relationship Speed of Implementation Total Rating 1 2 2 3 3 3

Score 15

3 6 6 30

Alternative Course of Action Number Three Criterion Weight Rating Potential impact 3 5 on Companys
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Score 15

performance Ease of Implementation Benefit/Cost relationship Speed of Implementation Total Rating 1 2 2 3 3 3 3 6 6 30

VII. Recommendation
Harley Davidsons problem on its product line with respect to the competitiveness can be resolved using ACA#1. This only means that the company must introduce a new yet enticing product while using the preference of their target local market as a basis for innovation, at the same time, HD must maintain their brand image. Another thing is they will satisfy the customers demand in line of motorcycle especially todays consumers preference are rapidly changing. Lastly, it will become a competitive edge over its competitors offering a consumer preferred unit having a Harley Davidson quality and style.

VIII. Conclusion
Thus, with all the given arguments and considerations mentioned above, introducing new and enticing product based on the local preference of their target market while maintaining the brand image.

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This gives HD a competitive edge over its competitors; it will also serve as a catalyst for their eventual dominance of the motorcycle industry.

IX. Detailed Action Plan

Time Frame

Person Responsible/Depar tment Concerned Keith Wandell, Secretary

Activities

Budget

1 day

Scheduling a meeting together with the marketing department to discuss their chosen solution in the problem which is introducing a new product of Harley Davidson Preparation of the documents needed for the meeting Meeting with the top and lower management especially with the product

1-2 days

Secretary

1 day

Marketing Department

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development team for the R&D plan on identifying the local market 1-6 months Marketing Department together with the Product Development 1 week Team Keith Wandell, Product Development Team preference Start and finalization of the gathered data on the research and development Discussion of the new product to be introduce in the market and forecasting of product development cost that will be possibly incurred 1-2 days Strategic Business Unit by the company Finalization of the needed capital for the proposed product 1-4 months Product Development Team development Research and Development that will be done by the team to start the formulation of
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$40,000,00 0

$1,000,000

plans for the Keith Wandell, 1-2 days Product Development Team, Marketing 3 days Department Keith Wandell and the Department head 1 month Chief Finance Officer propose product Meeting to discuss the proposal done by the team and its approval Dissemination of information of the propose product development Meeting with possible investor and other Financing services 1 week Production Head firm Discussion of the materials needed and the its 1 day Production Head incremental cost Submission of the report for the projected cost of 1-2 days Keith Wandell production Approval of the projected production and 1-2 months Production Department development cost Commencement of the production of the newly develop product $35,000,00 0

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1-2 months

Quality Control Department

Testing, monitoring, evaluating of the newly develop product Meeting for the launch and continues advertisement of the product Start of product launch and advertisement Sales and Product performance Evaluation

$2,000,000

2 months

Keith Wandell, Marketing Department

3 months

Marketing Department

$1,000,000

Quarterly Semi-annually Annually

Keith Wandell and Top Management

X. Financial Analysis
Debt Ratio 2009 7047400 / 9155518 = 76.97% 2008 3914887 / 7828625 = .5 or 50% 2007 2099955 / 5656606 = 37.12%

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Current Ratio 2009 4341949/2268224 = 1.914 2008 5377881 / 2603757 = 2.06 times 2007 3467314 / 1905079 = 1.82 times Acid Test Ratio 2009 1899804/4341949 = 0.4375 2008 (593558 + 400908) / 2603757 = .38 times 2007 (402854 + 349697) / 1905079 = .40 times ROA (Return on Investment in Assets) 2008 654718 / [(7828625 + 5656606) / 2] 654718 / 6742615.5 = 9.7% 2007 933843[(5656606 + 5532150) / 2] 933843 / 5594378 = 16.69% ROE (Return on Investment on Equity)
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2008 654718[(2115603 + 2375491) / 2] 654718 / 2245547 = 29.16% 2007 933843[(2375491 + 2756737) / 2] 933843 / 2566114 = 36.4%

Equity Ratio 2009 2108118/9155518 = 0.2302 2008 2115603 / 7828625 = 27.02% 2007 2375491 / 5656606 = 42%

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Technological Institute of the Philippines 938 Aurora Boulevard Cubao Quezon City

(CASE ANALYSIS)

Presented and Submitted by: Diamante, Cheryl

[32]

Dinglasan, Paolo T. Llorca, Hazeline L. Manuguid, Lorilyn C. Mendoza, Jay-Ar V. Nadal, Rachel Anne V. Tirana, Raymart C

Submitted to: Prof. Paul Ma. Pesito

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