The Comeback of Harley Davidson – Case Analysis

Company Background

The motorcycle company Harley Davidson was founded in 1903.

Its early success came from supplying both the US and the European military with motorcycles during the two world wars.

During the 1960’ies lighter Japanese machines became increasingly popular and by 1974 Japanese companies provided 87% of all motorcycle sales in the US, compared to 6% for Harley Davidson.

The company took the step from family owned to public in 1965 to AMF, changing the operational strategy radically by moving plants from Wisconsin to Pennsylvania. The new management focused mainly on output and sales, while the quality of the motorcycles was declining, losing 48% market share in the super-heavyweight segment from 1973 to 1981.

In 1981 a group of 13 Harley Davidson executives purchased the company from AMF, beginning a total restructuring of the company. The milestones in the turnaround included implementing the JIT inventory system, better quality control, employee and union involvement, strong supplier and reseller relationships, product diversification and marketing with strong emphasis on branding.

The complete rebirth saved this mature company and revenues went from 685 millions and a net profit margin in 1987 to 5 billion in revenues in 2004 with net profit margins of 17.7%.

SWOT Analysis

Strengths

After the buyout the management at Harley Davidson implemented a strong and consistent corporate strategy with focus on cutting costs by making production leaner and improving quality by maximizing employee and supplier commitment to the company.

The change in organizational structure from a hierarchical, functional structure, to a flatter, more transparent team based architecture facilitated the cost reductions making decisions fast and easily implemented and making quality control almost obsolete as most issues were detected early on in the manufacturing process.

JIT inventory management cut the throughput time dramatically and heightened the...