Harley Case Study
HARLEY-DAVIDSON, INC. (1998): THE 95TH ANNIVERSARY
Introduction & Situation Analysis
Harley-Davidson has been a widely admired fixture in the motorcycle industry since the “golden years” of American motorcycle manufacturing (1900-1931), when at times there were as many as 200 different brands of American-made motorcycles. By 1930, the market had consolidation and the “big three” – Harley-Davidson, Indian Motorcycle, and Excelsior Supply – together accounted for 90% of the market (Ballon, 1997, p. 43). The Great Depression nearly destroyed the industry – wiping out all of the smaller manufacturers, forcing Excelsior out of business in 1931, and leaving Indian severely weakened until it too, ceased operations in 1953 (Ballon, 1997). When leisure and industrial product conglomerate AMF Inc. acquired Harley-Davidson in 1969, Harley was used to having the American market pretty much to itself. Focusing on short-term profits and sales volume rather than R&D or quality, AMF nearly tripled Harley-Davidson’s production from 15,000 in 1969 to 1974 (Wheelen, et al., 2000). During the 1970s, while Harley-Davidson turned out “noisy, oil-leaking, heavily vibrating, poorly finished, and hard-to-handle machines”, a number of less expensive, quality-minded Japanese competitors made inroads into the US market (Wheelen et al., 2000, p. 15-1). By the end of the decade, the Harley image was tarnished by poor quality and strong competition. In 1981, 14 managers (including Vaughn Beals, then head of the Harley division) conducted a leveraged buyout of the company. Over the next decade, Beals led Harley-Davidson on a comprehensive turnaround, focusing on quality control, productivity, manufacturing excellence, and a culture of worker participation (Young & Murrell, 1998). By the mid-1990s, Harley-Davidson was enjoying record sales and profits. In 1993, Harley expanded into the sport/performance motorcycle market by acquiring a 49% interest in Buell Motorcycle Company.
Introduction & Situation Analysis
Harley-Davidson has been a widely admired fixture in the motorcycle industry since the “golden years” of American motorcycle manufacturing (1900-1931), when at times there were as many as 200 different brands of American-made motorcycles. By 1930, the market had consolidation and the “big three” – Harley-Davidson, Indian Motorcycle, and Excelsior Supply – together accounted for 90% of the market (Ballon, 1997, p. 43). The Great Depression nearly destroyed the industry – wiping out all of the smaller manufacturers, forcing Excelsior out of business in 1931, and leaving Indian severely weakened until it too, ceased operations in 1953 (Ballon, 1997). When leisure and industrial product conglomerate AMF Inc. acquired Harley-Davidson in 1969, Harley was used to having the American market pretty much to itself. Focusing on short-term profits and sales volume rather than R&D or quality, AMF nearly tripled Harley-Davidson’s production from 15,000 in 1969 to 1974 (Wheelen, et al., 2000). During the 1970s, while Harley-Davidson turned out “noisy, oil-leaking, heavily vibrating, poorly finished, and hard-to-handle machines”, a number of less expensive, quality-minded Japanese competitors made inroads into the US market (Wheelen et al., 2000, p. 15-1). By the end of the decade, the Harley image was tarnished by poor quality and strong competition. In 1981, 14 managers (including Vaughn Beals, then head of the Harley division) conducted a leveraged buyout of the company. Over the next decade, Beals led Harley-Davidson on a comprehensive turnaround, focusing on quality control, productivity, manufacturing excellence, and a culture of worker participation (Young & Murrell, 1998). By the mid-1990s, Harley-Davidson was enjoying record sales and profits. In 1993, Harley expanded into the sport/performance motorcycle market by acquiring a 49% interest in Buell Motorcycle Company.
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