Harley Davidson :: Business Management Essays

Overview Harley-Davidson’s management had much to be proud of as the company wrapped up its Open Road Tour centennial celebration that began in July 2002 in Atlanta, Georgia, and ended on the 2003 Memorial Day Weekend in Harley’s hometown of Milwaukee, Wisconsin. The 14-month Open Road Tour drew large crowds of Harley owners in each of its five stops in North America and additional stops in Australia, Japan, Spain, and Germany. Also during its 2003 centennial year, Harley-Davidson was named to Fortune’s list of â€Å"100 Best Companies to Work For† and was judged third in automotive quality behind Rolls-Royce and Mercedes-Benz by Harris Interactive, a worldwide market research and consulting firm best known for the Harris Poll. The company’s revenues had grown at a compounded annual rate of 16.6% since 1994 to reach $4.6 billion in 2003—marking its 18th consecutive year of record revenues and earnings. In 2003, the company sold more than 290,000 motor cycles, giving it a commanding share of the 651+cc motorcycle market in the U.S. and the leading share of the market in the Asia/Pacific region. The consistent growth had allowed Harley-Davidson’s share price to appreciate by more than 15,000% since the company’s initial public offering in 1986. In January 2004 the company’s CEO, Jeffrey Bleustein, stated that Harley-Davidson’s earnings growth rate should fall in the mid-teens for the foreseeable further and the company expected to increase unit sales to 400,000 units by 2007. However, not everyone was as bullish *This teaching note reflects the thinking, insight, and analysis of case authors, Professor John E. Gamble and Diplom-Betriebswirt Roger Schà ¤fer, both of the University of South Alabama. on Harley-Davidson’s future, with analysts pointing out that the company’s plans for growth were too dependent on aging baby boomers. The company had achieved its record growth during the 1990s and early-2000s primarily through the appeal of its image with baby boomers in the U.S. There was some question how much longer boomers would choose to spend recreational time touring the country by motorcycle and attending motorcycle rallies. The company had yet to develop a motorcycle that appealed in large numbers to motorcycle riders in their 20s or cyclists in Europe who both preferred performance oriented bikes rather than cruisers or touring motorcycles. Another concern of analysts watching the company was Harley-Davidson’s short-term oversupply of certain models brought about by the 14-month production run for its 100th anniversary models.