Harley-Davidson is the 100-year-old, leader in manufacturing and selling motorcycles. Good relationships, continuous improvement, employee and management involvement, team building or employee training and empowerment are not just words out of a management book for Harley-Davidson. Only by adopting those management techniques and building a solid base between the management and the Unions/employees made it possible for Harley-Davidson to improve its management processes.
While management’s responsibility is to build relationships with the employees, marketing’s responsibility is to build relationship with the potential and existing customers.
The realization of the importance of customer feedback led Harley to develop new marketing techniques. But, marketing strategies would not be enough if quality and reliability did not improve. Therefore, we can clearly see the impact Harley’s improved manufacturing process, which consisted of: JIT, EI, and SOC had on their continuously improving environment.
The three M’s to Harley’s success (management, marketing, and manufacturing) can be implemented into any company.
The key is to understand that all companies are different and the specifics, which may have worked for Harley, may not work for another. However, the concepts will be the same. If management can grasp the ideals that Harley thrives on, today, any company can learn to compete in this newly developing global economy.
The Strategy according to the company levels: Corporate: Corporate management focused mostly on short term returns.
Division: Harley-Davidson Credit, Eagelmark’s largest division provides wholesale financing and insurance programs, including motorcycle floor-planning, parts and accessories trade acceptance and commercial insurance brokerage to Harley-Davidson’s US dealer network.
Harley-Davidson believes the key to success is to balance stakeholders’ interests through the empowerment of all employees to focus on value-added activities.
Harley-Davidson is driven by a constant vision of what an excellent company should be: one that is never satisfied with the status quo but is always searching for ways to do things better. This is best exemplified by a manager’s comment, “The day we think we’ve arrived is the day we should all be replaced by managers of greater vision” All companies can and should learn from this position and adopt the idea of continuous improvement. Continuous improvement demands involvement from employees. Management’s dilemma was how to align employee motivation with company goals.
In Harley-Davidson’s case, all employees take part in a gain-sharing program and are paid cash incentives for attaining and maintaining quality, profitability, and product delivery goals. In 1995, more than 2,000 of Harley’s 4,694 employees took training and education programs from the Harley-Davidson Learning Center. These courses helped the company to be more competitive and to foster employees’ personal growth and development. Extensive team-building has taken place at all levels of the company, including team-building for union leaders, negotiation committees, and stewards.
Open communication, at all levels, is used as a major key to achieving teamwork and employee participation. For example, engineers are located right in the plant, within walking distance of machine operators. The practice of open communication is also represented in the relationship between top management and the union. Harley Davidson has an untypical relationship with the union. Continuous improvement techniques could have been stopped if the company did not have a good relationship with the union. The union viewed management as a partner instead of an adversary.
Management’s good-faith dealing’s with the union was a factor in this special relationship. Harley-Davidson’s Marketing Mix:
Not only does it serves as a customer relation’s device, but as a way to showcase and demonstrate new production.
The use of priceless advertising concluded with leather jackets, T- shirts, chaps, boots, caps, helmets and other accessories. Also it conducted Motor Cycle rallies improving its dealer network to broaden its appeal to new customers. Further it improved the motorcycle displays, apparel and other merchandize that cyclist wished to purchase.
Currently, people must wait six to eighteen months for a new motorcycle and the price for a year-old Harley is 25% to 30% higher than a new one. By not being able to meet demands, an attitude of must-have has developed. Therefore, Harley has plans to double capacity to 200,000 motorcycles annually by 2003. Dealers: 1,065 dealers sell Harley-Davidson motorcycles worldwide. The company owns 54 percent of the market share in the USA, 16 percent in Japan, 10 percent in Europe, and 38 percent in Australia. External forces that have acted on its decision making (Reference 3rd chapter):
The breakdown of financial services by region in USA Direct competitors: The competitors are Yamaha, Suzuki, Honda, Potential/New competitors/Substitute competitors: Japanese manufacturers Suzuki, Kawasaki, Yamaha, and Honda may be substitutes in the market. Supplier factors: Harley expects suppliers to continually cut production costs, yet it used to be so difficult to work with, it created expenses for suppliers. Reference: Harley’s success depends on cutting costs in the supply chain, according to analysts who track the company’s stock.
Harley’s revenue will jump to $5. 5 billion in 2004, up from $2 billion in 1998, predicts equity research firm Banc of America Securities. Its gross margins will improve to 36. 8%, up from 33. 5%, thanks in part to operating expenses falling to 14. 2% from 17. 7% for the same years. Buyer factors: European countries Buyers: The European parliament and European council included motorcycles in their agreement to reduce exhaust gas values during their March 2002 meeting. This is to reduce pollution by 60 % for all motorcycles produced after 2003.
They require certification by EPA (Environmental Protection Agency) Financial analysis: Financial Objectives: The ten (10) of the most common financial objectives that Harley-Davidson uses. Here are a couple of those objectives: a. Increased after-tax profits, b. Increased annual dividends, c. Reduced operating costs, d. Reduced inventory costs, e. Stable profits during recessions, f. Sufficient cash flow to fund new capital investments Reference: Harley’s success depends on cutting costs in the supply chain, according to analysts who track the company’s stock. Harley’s revenue will jump to $5.
5 billion in 2004, up from $2 billion in 1998, predicts equity research firm Banc of America Securities. Its gross margins will improve to 36. 8%, up from 33. 5%, thanks in part to operating expenses falling to 14. 2% from 17. 7% for the same years. In 2003, Harley-Davidson’s record revenue and earnings, consolidated revenue for the Company was $4. 62 billion, a 13% increase over 2002, while net income was $760. 9 million, a 31. 1% increase over the prior year. Diluted earnings per share rose to $2. 50, a 31. 6% increase over 2002. The Company shipped 291,147 Harley-Davidson motorcycles in 2003, a 10.
4% increase over 2002 and nearly double the 150,818 motorcycles produced just five years ago during our 95th anniversary year. Retail sales of Harley-Davidson motorcycles for 2003 grew 8. 8% in the United States, 11. 8% in Europe and 8. 3% in Japan, outpacing the heavyweight motorcycle industry in those markets. Parts & Accessories revenue increased 13. 3% to $712. 8 million in 2003. Revenue for General Merchandise, which consists of Motor Clothes? apparel and collectibles, totaled $211. 4 million. Excluding 100th Anniversary merchandise from the mix in both 2002 and 2003, General Merchandise revenue grew 12. 7% year-over-year.
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