MACRO SocioCultural

1
MACRO Socio-Cultural

• Europe
• The population growth in Europe has been
  increasing since 1999 through 2002

2
MACRO Socio-Cultural

• The market for motorcycles or two-wheeled
  vehicles has stabilized just under 25,000 after a
  spike in 1997.

3
MACRO Socio-Cultural

• Registration of vehicles increased for passenger
  vehicles, but a decrease for two wheelers.

4
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

5
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

6
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.

7
MACRO Socio-Cultural

• United States
• There was significant population growth in the
  warmer climate states such as California,
  Florida, Texas and Nevada.

8
MACRO Socio-Cultural

• Currently there are 5.5 million motorcycle owners
  in the U.S. but only 3.9 million are registered

9
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.

10
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.

11
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

12
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.

13
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.

14
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.

15
INDUSTRY Strategic Group Map
Rough Tough
Perceived Image
Sophisticated
Low
High
Quality of Product
16
Value Chain Analysis

• Corporate HQ/ Executive
• 3 Year sales increase
• 28 U.S,15 Europe, 17 Japan.

17
Corporate HQ/ Executive

• The return ratios are significantly higher than
  the competitions

18
Market Capitalization

• The market is confident that Harley-Davidson is
  going to remain a long term market leader.

19
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

20
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

21
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.

22
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.

23
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.

24
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

25
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

26
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