HARLEY – DAVIDSON: Preparing for the Next Century

Harley-Davidson (Harley) was founded in 1903 as a small business and became the largest motorcycle company in the world after 15 years of operations. Moreover, by 1950, Harley-Davidson was the leader in the U.S. Market with over 60% market share. Historically, the key success factor in Harley-Davidson combined two important ingredients: several competitive advantages and favorable conditions in the motorcycle industry since the industry was almost new and the barriers to enter or the forces affecting it were weak (see appendix 5.1). After the victory of Walter Davidson riding a Harley-Davidson in a race and the development of unique innovations such as the V-twin engine, Harley obtained …show more content…

In just a few years Honda obtained a market share of 85% in the U.S. and in 1973 introduced the “Goldwing”, the most technologically and heavyweight motorcycle on the market, targeting Harley-Davidson customers. In respond, Harley-Davidson was acquired by AMF´s and inmediately tried to lead this critical situation by imitating the japanese strategy and focusing on the broad and cost leadership strategy (see appendix 5.3-C) but it failed because Harley did not have an effective manufacturing process to produce a high volume of products (as Honda did) without affecting the quality of their products. Finally, as a result, Harley-Davidson lost more than 80% of SOM and it became a niche player. Because of the entrance of Honda and others japanese companies into the U.S. market, the motorcycle industry started changing from an oligopolistic type to an hypercompetitive industry in which some forces began to increase their power (see appendix 5.2).

The high improvement on the operative processes, the approach and the understanding of the consumer, and the focus on people management as a key factor to reach the company´s goals, were the most important ingredients of Harley´s-Davidson transformation process. The Capability Platform (see appendix