HARLEY-DAVIDSON MOTOR COMPANY

Harley-Davidson Motor Company: A Case Study

Harley-Davidson Motor Company: A Case Study

Company Profile

In 1965, Harley-Davidson ended family ownership with a public stock offering and then in 1969, merged with American Machine and Foundry Company (AMF). In 1981, 13 members of the Harley-Davidson management team purchased the company from AMF through a leveraged buy-out.

Today Harley-Davidson operates in domestic and international markets. The U.S. competitors' current production and sales volumes are much lower than Harley-Davidson and do not hold a significant market share. The company's major competitors: Honda, Suzuki, Kawasaki, and Yamaha are based outside the United States. Competitor's financial and marketing resources for the international marketplace are substantially greater than those of Harley-Davidson. They also have larger worldwide revenue and are more diversified than Harley-Davidson.

Growth Strategy

Growth strategy model provides some useful insights into the various growth strategies employed by Harley-Davidson over time, Harley-Davidson adopted a market penetration strategy that was centered on its core and somewhat narrow, range of heavy weight motorcycles. The market for this range of Harley's product had reached maturity and sales were declining

Vertical Strategy

Harley Davidson follows vertical strategy, because they manufacture their own products and market them by setting their own dealerships, thus saving lot of overhead costs and shipping.

Current Business Situation

Current Business situation is that the company has to improve quality, to target aggressively so as to get more business from baby boomers, as the old is fading away which was generally their repeated customers Other thing is that they have to capture international market. The company is running smoothly but profits are low not.

The key personal of this company are as follows:

Board of Directors: Harley-Davidson

Barry K Allen. President, Allen Enterprise, LLC

Richard I Beattle, Chairman of the Executive Committee, Simpson, Thatcher & Bartlett

Jeffery L Bleustein, Chairman and CEO, Harley-Davidson, Inc

Richard J. Hermon-Taylor, President, BioScience International, Inc.

Donald A James, Vice Chairman and CEO, Fred Deeley Imports, Inc.

Richard G. LeFauve, President, GM University, Senior Vice President, General Motors Corp, retired.

Sara L. Levison, Chair Mom and CEO, Club Mom, Inc.

Financial Statements And Ratios

The financial statements disclose information about company's credit policy, inventory valuation, revenue recognition, deprecation method calculations. Also ratio shows company strength and weakness. The areas of concern are receivables, which has been increasing. In the recent analysis of the company indicates, shortfall in the motorcycles maker's unit shipments and heavy reliance on the financial services unit suggests there are some fundamental negatives for the business. In reviewing financial ratios, the profitability measures are strong. The return on the investment for years of 2002-2003 was 14.3, 15.8 and 16.6 respectively which shows that company was doing well

Return on equity for the same period was 24.7, 13.8, and 14.5. Their debt structure finds the debt ratio around 42% of total financing. The debt to equity ratio is currently at almost 73% down from 77.6% in 2001.

Current ratio is a little over 2.0; their acid ratio with using only cash and account receivables is dangerously low at less than 1 times the coverage of current ...