CASE STUDY:
Harley-Davidson rides global markets
Harley-Davidson, Inc., the quintessentially American motorcycle manufacturer, is predominantly involved n the manufacture and sale of custom, cruiser, and touring motorcycles. It has two predominant aspects to its business: motorcycles and related products, and financial services. This case study focuses on the motorcycles and related products component of the company. This component manufactures, designs, and sells, on-road Harley-Davidson motorcycles at the wholesale level. Other activities of the company include selling of motorcycle parts, accessories, general merchandise, and related services.
The history of Harley-Davidson is an interesting one, for business scholars, especially in terms of its business model, growth, and diversification, company culture, leadership team, customer focus, and stakeholder management.
The company was founded in 1903 by William Sylvester Harley, Arthur Davidson, Walter Davidson (senior), and William "Bill" Davidson. Harley-Davidson has its headquarters based in Milwaukee, Wisconsin, the place where it was founded in 1903. It is strongly rooted in the city, where it holds anniversary events every five years, attracting enthusiastic bikers for a celebration of the gleaming motorbikes and biking lifestyle that have made it the American icon it is today. In 2003, when the company celebrated its 100th anniversary, 250,000 people came to Milwaukee for the occasion (Harley-Davidson, n.d.).
In 1907, Harley-Davidson became incorporated, and Walter Davidson became the first President and General Manager, he was still president of Harley-Davidson when he died in 1942 (Harley-Davidson Insurance, 2020.).
In 1920, Harley-Davidson was recognised as the largest motorcycle manufacturer with over 2,000 dealers in 67 countries. In 1935, Alfred Child, the company's agent in Asia, convinces the company to licence production of its motorcycles in Japan. The Sankyo Seiyako Corporation purchases tooling and begins producing Harley "clones". They are sold under the name Rikuo, which means 'King of the Road'.
In 1969, Harley-Davidson is still 'a relatively closely held corporation' and its stocks are publicly traded. However, the shareholders sell the Harley-Davidson company to the American Machine and Foundry Company (AMF), a large, diversified manufacturer.
In 1973, a new assembly plant opens in York, Pennsylvania. By 1981, and after years of AME mismanagement, Harley-Davidson has lost almost all customer loyalty and profits are in freefall. When a group of company executives led by Vaughan Beals offers to buy the division for $75 million, AMF quickly agrees. Beals leads an amazing corporate turnaround. He funds new product development and implements world-class quality control. It's impossible to know what would have happened to the Harley-Davidson brand if Beals had not risen up to save it, but it is certain that no one else could have done a better job at rehabilitating it.
In 1983, The Harley Owners Group (H.O.G.) is formed. By 1987, the company makes its Initial Public Offering. Stock is traded on the NYSE, with the ticker symbol of HOG (Forbes, n.d.).
In 1988, the company opens its first foreign factory in Manaus, Brazil.
In 2009, the company found itself in the midst of an economic recession and Keith Wandell becomes the first person since 1981 to become CEO of Harley-Davidson who hadn't had any previous connections to the motorcycle company.
Throughout its history, the Harley-Davison Company has embarked on a strategy of internationalisation, shifting some of its production to overseas locations and expanding into global markets. It has been driven by weakening sales in America for several years, a sliding share price, and, more recently, trade policies of the US government that could be damaging in the long term. One has to wonder at the implications of the changes at Harley-Davidson and how these impacted on the company's business model and the workplaces it engenders at its various locations.
In relation to Harley-Davidson as a place to work, perusal of the company's Australian website provides some insights into the working conditions and what employees can expect (Harley-Davison Careers, n.d.). Other websites present a range of comments that reflect on Harley-Davidson as an employer. One such website is a job hire one, and it presents information and reviews of various aspects of the business as a workplace, including the organisational culture and the leadership team (Zippa, n.d.).
In terms of the marketplace, while these large machines attract devoted fans, most of these are older customers. Younger people nowadays are likely to favour lighter bikes, including electric bikes. And they are often looking for cheaper, simpler bikes than a Harley. The average age of the Harley owner is now 47, whereas it was 32 in 1990. Older fans are unlikely to buy another bike, and many are selling their bikes second-hand, creating competition for Harley in selling new bikes. The company would ideally be attracting younger enthusiasts but only 6% of Harley owners are between 16 and 24. Attracting international buyers has become one of its priorities. Its bikes are popular in much of Asia, and it is building smaller-engine bikes for markets such as India.
Traditionally, Harley-Davidsons have been made in the US, as befits an iconic American brand. Indeed, President Trump has been photographed with Harley's CEO in front of the White House, publicising his America First policy. However, for manufacturing companies, global supply chains are now the norm, and cost considerations are central to decision-making, Harley-Davidson is no exception. In addition to its factories in the US, it has assembly plants in Australia, Brazil, India, and Thailand. In 2018, Mr Trump announced new tariffs on imported aluminium and steel, to protect American jobs. This decision would have had adverse impacts on Harley-Davidson, which uses these imported inputs. In retaliation the EU announced a rise in tariffs on selected products, which included motorcycles imported into the EU. Tariffs on Harley's bikes would rise from 6% to 31%. This would add $2,200 to the price of each motorbike sold in Europe. There were 40,000 sold in the EU in 2017. The company announced that it would absorb this additional cost, in order to maintain its EU sales. But it is now planning to build up production at its facility in Thailand for shipping to EU member states. This news did not go down well with Mr Trump, who immediately criticised Harley for the decision. In fact, many of the company's employees and customers would agree, believing that it is a move that could potentially 'paint them as un-American' (Financial Times, 2018).
After reading the case study above, please answer the following questions:
Q1. What are the identified problems for Harley-Davidson and who are the major 6 stakeholders on the identified problems?
Q2. What are the triggers for organisational change at Harley-Davidson, with supporting references?
Q3. What are relevant change management models and theories relevant to Harley-Davidson?
Q4. What are three change management concepts that are recommendations to resolve Harley-Davison's problems?