MACRO – Socio-Cultural
• Europe– The population growth in Europe has been
increasing since 1999 through 2002
0.000.050.100.150.200.250.300.35
1992-931993-941994-951995-961996-971998-991999-002000-012001-022002-03
Year
PopulationPopulationgrowth (%)
PopulationDensity
MACRO – Socio-Cultural
• The market for motorcycles or two-wheeled vehicles has stabilized just under 25,000 after a spike in 1997.
Total Two-wheeler vehicles in use
0
5,000
10,000
15,000
20,000
25,000
30,000
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Total Two-wheelervehicles in use
MACRO – Socio-Cultural
• Registration of vehicles increased for passenger vehicles, but a decrease for two wheelers.
Total Vehicle Registration
02,0004,0006,0008,000
10,00012,00014,00016,000
1998 1999 2000 2001 2002 2003
Total new registration of two-wheelers
Total new registration of passenger cars
MACRO – Socio-Cultural
• Japan– The population has been steadily increasing
for the past 10 years, along with the density and also the mean age of the population.
– Currently the mean age of the population is 41.43 years
MACRO – Socio-Cultural
• The population aged 20-24 has been steadily decreasing since 1996
• The population aged 35-39 has been steadily increasing since 1997
Population by Age
6,000.00
7,000.00
8,000.00
9,000.00
10,000.00
1997 1998 1999 2000 2001 2002 2003
Population aged 20-24: January 1st S1
Population aged 35-39: January 1st S2
MACRO – Socio-Cultural
• High population density in Japan of 349.62 people per square km
• A huge surge of car ownership of 64% in just over twenty years
• Japan has an extremely strained road network.
MACRO – Socio-Cultural
• United States– There was significant population growth in
the warmer climate states such as California, Florida, Texas and Nevada.
10,000
15,000
20,000
25,000
30,000
35,000
Population Growth
0 10,000 20,000 30,000 40,000
Nevada
Texas
Florida
California
MACRO – Socio-Cultural
• Currently there are 5.5 million motorcycle owners in the U.S. but only 3.9 million are registered
Two Wheeler vehicles
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
1998 1999 2000 2001 2002 2003
Two-wheelers in use('000)
Production of two-wheelers('000)
New registrations of two-wheelers('000)
MACRO – Political-Legal
• Europe– Transportation regulations are set out by
governments and agencies of the individual countries within the European Union
– Legislation has been set forth to control emissions and braking systems.
– Other laws regulate the use of motorcycles such as licensing, safety regulations, and equipment requirements.
MACRO – Political / Legal
• Japan – There is currently a new proposal for emission
standards for Japan
– The legal minimum age to drive a lightweight is 16 and 18 for heavyweights
– Japan has responded to many American requests regarding laws for motorcycles and motorcycle riders.
MACRO – Political/Legal
• United States– All 50 states require motorcycle riders to
obtain a special license to operate a motorcycle
– Currently under the Motorcycle Helmet Act, states have different stipulations regarding mandatory use of helmets
Industry Overview
• The primary NAICS code is 336991– Motorcycle & arts Manufacturing.
• The annual industry sales were reportedly worth $19.2 Billion in 2003 – 12.7% increase from 2002 revenue totals.
• The annual growth rate of the motorcycle industry over the span of three years is 4.11%.
Industry Overview
• The 2003 industry return rates are above average when compared to other industries and are listed as follows:
– Return on Assets (ROA) is 10.2%, – Return on Equity (ROE) is 22.7%– Return on Investment (ROI) is 37.9%.
Industry Overview
• There are 17,151 people employed in the U.S. motorcycle industry alone.
• Currently under the NAICS code 336991 there are 22 firms that operate solely in the motorcycle and parts manufacturing industry.
• Some examples include BMW, Suzuki, Honda and Polaris Industries.
INDUSTRY – Strategic Group Map
Rough &
Tough
Per
ceiv
ed I
mag
e
Sophisticated
Low HighQuality of Product
Kawasaki
Harley-Davidson
Honda
BMW
Yamaha
Suzuki
Value Chain Analysis
Corporate HQ/ Executive3 Year sales increase– 28 % U.S,15 % Europe, 17% Japan.
-10-505
1015202530
% c
han
ge
U.S EU JPN
Region
Sales Harley
Industry
Corporate HQ/ Executive
• The return ratio’s are significantly higher than the competition’s
0
10
20
30
40
50
Perc
ent
TotalD
/E
RO
A
RO
EFinancial Strenght
Harley
Industry
Market Capitalization
• The market is confident that Harley-Davidson is going to remain a long term market leader.
-0.3-0.2-0.1
00.10.20.30.4
Gro
wth
2001-2002 2002-2003
year over year
Market Capitalization
Harley
Honda
Corporate StrategyVertical Integration
• Harley-Davidson is a mid-stream company with its main focus on manufacturing motorcycles.
• It would not be beneficial for Harley-Davidson to backwards integrate.
• It would not be beneficial for Harley-Davidson to forward integrate
Vertical Integration
Potential Problems and Recommendations• The dealer/Supplier relationships is the
foundation of its successful supply chain management
• Harley-Davidson should continue to build positive relationships to retain the competitive advantage
Corporate Strategy Horizontal Diversification
• Harley-Davidson is not horizontally diversified
• Harley only has one NAICS code 336991
• The industry of manufacturing motorcycles, bicycles and parts.
Horizontal Diversification• Harley-Davidson products and services
include:– Harley Gear –clothing– Harley accessories– Harley-Davidson Financial Services
• The merchandise and financial services act as catalysts to the sale of Harley-Davidson motorcycles and to the image of the Harley way of life.
Horizontal Diversification
• Potential Problems and Recommendations– Harley-Davidson is dominating the motorcycle
manufacturing industry.
– Harley-Davidson has such a loyal customer base, strong brand name and image
– it would be detrimental if they diversify into markets unrelated to motorcycles.
Corporate StrategyGeographic Diversification
• Harley-Davidson currently operates in three main global regions: – North America, – Europe– Asia.
• Harley-Davidson operates under a global strategy
• It offers standardized products across global markets
• Competitive strategy is centralized
Geographic Diversification
• International revenue accounted for approximately 18%, of net revenue
• Harley-Davidson 2003 Market Share– 50% United States – 8% Europe – 26% Asia
• Harley-Davidson outpaced the industry in sales in each region in 2003
• It is recommended that Harley-Davidson remains in the European, Japanese markets
Geographic Diversification
Potential Problems and Recommendations• The company has expressed interest in other
markets– South America, Africa and Southeast Asia.
• Recommend that Harley-Davidson enters the Chinese market through a strategic alliance with Zongshen Motorcycle Group.
• Not recommended entry into South American or African markets at this time
Recommended