Harley - Davidson Inc. Motorcycle Industry

INTRODUCTION

The purpose of this report is to develop a strategic corporate objective
for HarleyDavidson Inc., a publicly traded, employee owned manufacturer of
heavyweight motorcycles, recreational and commercial vehicles, military defense
items, and small engines, distributing its products to domestic and
international markets targeting all men and women of all ages.

INDUSTRY AND COMPETITIVE MARKET

The industry under study is the motorcycle industry consisting of five
major manufacturers: one American (Harley Davidson), and four Japanese (Honda,
Yamaha, Kawasaki, Suzuki) and some European companies (mainly BMW of Germany and
some other Italian companies). Most companies market their motorcycles and
accessories on a worldwide basis, handling international trade through foreign
distributors and domestic sales through franchised outlets. Industry sales of
motorcycles were shrinking in the early l990s because of the recession and the
competition from computers and electronic products decreasing consumers'
discretionary income.

Sales of accessories and parts make up 36% of total retail sales and is a
viable area for producers to explore because people want something to
differentiate their bikes. Previously, motorcycles were viewed as a cheap means
of transportation. By 1992, they came to be viewed as a recreational, or a
luxury item. This new perception of motorcycles led to the introduction of more
expensive models with higher prices. This led to the introduction of consumer
financing, one of the fastest growing service areas in the motorcycle industry.

MISSION

Harley's strategic objective is to continue to provide safe, high
technology heavyweight bikes and keep customer satisfaction at high levels. This
quality vision more than doubled Harley's market share and increased its brand
loyalty.

EXTERNAL PLANNING PREMISES

CUSTOMERS
They can be divided into 2 categories men and women.

Men. A. Men under 30. This group accounts for 44% of all sales. Therefore, a
great opportunity exists here because of the group's size. This group's members
buy motorcycles for their transportation and recreation needs. Men in this group
buy more of mopeds, scooters and entry level lightweight road bikes.

B. Men between 30 and 50. This age group makes up 45k of buyers another
large area providing opportunities for firms. The motorcycles most frequently
purchased are the heavyweight tourers and cruisers. Many buyers are married
couples looking for an alternative to taking the car out for weekend drives to
the country.

C. Men over 50. This group accounts for about 11% of motorcycle sales.
The heavyweight touring class and the middleweight road bike categories account
for most of the sales here.

Women. This group is a segment that is growing at a fast rate, thereby
representing an opportunity area. Firms to be successful here are to provide
smaller, easier to handle, comfortable, and good quality bikes to build up brand
loyalty.

PRODUCTS
Three types of products/services are being offered motorcycles,
accessories, and financing services, all related to the sale of the main product
motorcycles.

Motorcycles: It includes mopeds or scooters (with engines under 125cc
which are used as an alternative to walking), accounting for about 17% of total
motorcycle sales; lightweight motorcycles road bikes, dirt bikes, dual purpose
bikes (with engines ranging from 125cc to 499cc), accounting for 51% of sales;
sport motorcycles street bikes, and superbikes (with engines ranging from 450
to 749cc) accounting for 13% of sales; heavyweight motorcycles cruisers, tourers
(ranging from 750cc to 1500cc) accounting for 19% of sales.

Accessories: Aftermarket accessories, such as saddle bags, higher
windshields, customized seats, and clothing items are produced or contracted to
be produced by all leading manufacturers. Since these items realize high profits
and strengthen customer relations and customer loyalty, this area is providing
an opportunity for companies. To succeed here, firms provide a wide product line,
of stylish items, and aggressively advertise/market them.

Financing Services: As prices of motorcycles increased well above the
reach of many motorcycle enthusiasts, manufacturers begun to set up consumer
credit arrangements falling into 3 categories consumer, dealer, and corporate
financing. Financing services are vital for success in the industry and firms
unable to provide them will lose market share. To succeed here, firms are to
provide a wide variety of flexible (in terms of maturity and payment
arrangements) plans.

MARKETS
Although motorcycles are sold internationally, 3 main geographic markets
comprise the bulk of motorcycle sales North America, Asia, and Europe. The
largest is the North American Market (USA and Canada account for about 60% of
this market) accounting for 60% of worldwide motorcycle sales. With the baby
generation aging, opportunities exist for the penetration of new markets.

The Japanese market accounting for a great chunk of the Asian Market
is an untapped one for foreign manufacturers. Government regulations and trade
policies make it difficult for foreign manufacturers to enter though. Most
Asians consider motorcycles as a basic means of transportation. Major target
areas include China, Korea, Taiwan and Vietnam.

The European Market is another market with great potentials since
Europeans have