Harley davidson space matrix

Introduction

Harley-Davidson, America’s largest motorcycle producer, is an iconic brand worldwide that provides a unique customer experience. The company produces custom, cruiser, and touring motorcycles, and offer parts, accessories, riding gear, apparel, and general merchandise. The latter provides wholesale and retail financing and insurance to Harley-Davidson dealers and riders located in the United States, Canada, and other international markets. (David & David, 2016). The motor cycle industry is an intensely competitive industry with many big competitors, which is why Harley had struggled over the last few years. This report will cover the following; 1) Harley’s vision and mission statements, 2) Internal/external strengths and weaknesses, SWOT Analysis, and lastly, a recommendation on the strategic direction for the company supported by the two Matrices, SPACE Matrix and the SWOT Matrix.

Company Background

Harley Davidson is America’s largest motorcycle producer that was first incorporated in 1907 by William S. Harley and Arthur Davidson. It started off in a small shed in Milwaukee, Wilsconsin with its first dealership opening in Chicago, 1904. They targeted customer needs with its unique offerings and earned price premiums. Harley operates in two primary business segments, Motorcycle & Related Products (Harley-Davidson Motor Company), and Financial Services (Harley-Davidson Financial Services). In 2014, Harley’s worldwide retail sales increased by 2.7% versus the prior year. The company has sales in almost 90 countries, with one-third of its sales coming from outside the United States. (David & David, 2016). Today, Harley remains a dominant force in the market but faces challenges in creating products relevant to younger riders and women, as well as developing international sales in countries such as India. (David & David, 2016).

Mission and Vision Statement

Many organizations today develop a vision statement that answers the following question, “What do we want to become?” “Developing a vision statement is often considered the first step in strategic planning, preceding even development of a mission statement.” (David & David, 2016). Whereas, a mission statement identifies the scope of a firm’s operations in product and market terms. It addresses the standard question which is, “What is our business?”

Harley-Davidson’s current mission statement is as follows, “We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.” The company’s vision for sustainability is, “We preserve and renew the freedom to ride.” (David & David).

We know that Harley-Davidson’s goal is to increase company shipments by 4-6% to 282,000-287,000 motorcycles worldwide, and projects its operating margin for all of 2015 from the Motorcycle segment to be 18-19 percent. We also know that the company’s strategic plan calls for international markets to play an increasingly significant role. (David & David, 2016). I believe that Harley’s current mission statement is too long as mission statements normally should be about 1-2 sentences long. My proposal for a new mission and vision statement that I feel would better represent the company Harley-Davidson would be as follows:

Mission Statement: “With the speed of our new innovative electric model, our brand will continue to expand globally and sustainably with a speedy, rechargeable engine.”

Vision Statement: “With our creative and innovate skills, Harley-Davidson can make dreams come true.”

I believe these statements better represent the company in terms of where their business wants to go and what they want to become. With the new electric models that are now killing the market as they are more sustainable and environmentally friendly, Harley would have to continue to seek new innovative ideas to remain relevant with their competitors. Another reason why I think these statements better represent Harley-Davidson is because they pursued efforts to reduce the environmental impact of its products and operations, while promoting motorcycling and preserving the authentic Harley experience. (David & David, 2016).

Objectives and Strategies

Defining your objectives and strategies are two important steps in business planning. “Strategic business plan objectives provide the specific details about what a company’s expectations are for meeting their identified goals.” (Richards, 2018). Harley Davidson’s goal is to have its full year company shipments increase 4 to 6% to 282,000–287,000 motorcycles worldwide. The company also projects its operating margin for all of 2015 from Motorcycle segment to be 18 -10%. (David & David, 2016). But, the company needs to come up with a strategy to maintain their customer base as they are aging and continue to compete with their rivals.

Innovation is key in the motorcycle industry. In order for Harley to compete against their competitors, they must continually update its existing product base and develop new innovative products that will attract key customer groups. “Harley has been focusing on motorcycles since its inception and is innovating its offering in that market, including electric bikes.” (David & David, 2016). Their strategy is to pursue efforts to reduce the environmental impact of its products and operations, while promoting motorcycling and preserving the authentic Harley experience.

The company came up with a marketing strategy that is designed to reach and engage customers. They spent around 15% of its marketing budget on traditional media. Instead of outsourcing its creative advertising work to a traditional agency, Harley engaged a crowd-sourcing firm and co-creates and tests its marketing ideas with its customers as a way to define their needs. In 2012, the company’s Chief Marketing Officer (CMO) organized an event in Rome, Italy, where Pope Francis blessed thousands of Harley raiders and their motorcycles as part of the company’s 110-year anniversary. (David & David, 2016). Their objective was to spread brand awareness internationally. They had been trying to grow its appeal across generations, cultures, and borders. Internationally, 35.9% of motorcycles were shipped to international markets in 2013. (David & David, 2016).

Internal Strengths & Weaknesses

Internal Strengths

Offer parts, accessories, riding gear, apparel, and general merchandise

They have many regular customers and built strong customer loyalty

Their motorcycles feature classic styling, innovative design, distinctive sound, and superior quality with the ability to customize

Revenue increased by $329 million in one year

Gross profit increased from $2,148 million in 2013 to $2,441 million in 2014

Net income increased by $110 million from 2013 to 2014

Harley-Davidson Financial Services (HDFS) reported $661 million in revenue from financial services up from $641 million 2013

Harley’s revenue per employee was $958,000, which is attractive for the company

20-year run of excellent profitability and stock price performance

Company manufactures 6 platforms of motorcycles: Touring, Dyna, Softail, Sportster, V-Road, and Street

Internal Weaknesses

11% decline in profits in 2015, which were just $1.44 per share

Struggled to create products relevant to younger riders and women

Faced challenges in developing international sales in countries such as India

Their engine displacement falls into the category (501cc-1,000cc) which accounts for the highest number of motorcycle related fatalities

External Opportunities & Threats

External Opportunities

Harley has about 1,400 independently owned dealers

Provides wholesale and retail financing and insurance to Harley-Davidson dealers and riders in the U.S., Canada, and other select international markets

Harley was the number one seller of new on-road motorcycles

Has two primary business segments (Motorcycle & Related Products and Financial Services)

External Threats

A 9% drop in consolidated revenue to $1.82 billion

1.4% reduction in worldwide new motorcycle sales through its dealers

Noise regulation are strict which puts Harley at risk

Primary rivals are Triumph Motorcycles Limited, Ultra Motorcycle Company, and Viper Motorcycle Company

Other competitors are Polaris Industries, Honda Motor Company Ltd, and Suzuki Motor Company

Their engine displacement falls into the category (501cc-1,000cc) which accounts for the highest number of motorcycle related fatalities

SWOT Analysis

Strengths

Sales in 90 countries

1,400 independently owned dealers

20-year run of excellent profitability and stock price performance

Harley’s worldwide sales were up 2.7% versus the prior year

Has grown among its traditional customer base

Have many regular customers and customer loyalty

Manufactures 6 platforms of motorcycles (Touring, Dyna, Softail, Sportster, V-Road, and Street)

Retail sales worldwide increased marginally in 2014

Weaknesses

Struggles in developing products relevant to younger riders and women

Struggles to develop international sales in countries such as India

EPS ratio is lower than Polaris (Harley’s 3.73, Polaris’ 6.83)

Market cap. is lower than Honda’s (Harley’s $12,280 million, Honda’s $61,190 million)

Harley’s revenue is lower than Honda’s. (Harley’s $6,228 million and Honda’s $111,137 million)

Opportunities

1,400 independently owned dealers

Pursuing efforts to lower the environmental impact of its products and operations

2 business segments (Motorcycle & Related