Harley Davidson’s Organizational Development

There are many excellent motorcycles manufactures throughout the world. One iconic name that many people are aware of is Harley. “Harley” or Harley Davidson is synonymous with built in the USA however, they have become an international organization over the years.

They have partners in other countries as well as developers, manufactures, and dealers. Becoming an international organization has allowed Harley to expand across the world. As stated on harley-davidson.com “we are building the next generation of riders globally and fostering the incredible feeling of personal freedom you get from behind the handlebars of a Harley-Davidson motorcycle (“About Harley Davidson”, n.d.).

Over the last 115 years Harley has built an iconic staple motorcycle with brand awareness and logo that anyone can point out. They had their ups and downs as any business, they stood the test of time and are looking towards the future. Most recently Harley has some sales/cost concerns and are considering moving production over sees(Harley Davidson, blaming tariffs, will shift some manufacturing oversees, 2018).

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Historical Development

Harley Davidson was founded in 1903 by William S. Harley and brothers Walter and Arthur Davidson in a small shed in Milwaukee, Wisconsin (Motorcycle USA Staff, 2008). The first motorcycle was built then tested in a race in 1904 at the State Fair Park where rider won fourth place. This was documented as the first appearance of the Harley Davidson motorcycle. In 1905 the bare Harley Davidson engine was featured a do-it-yourself trade journal (Milwaukee Motorcycle, 2011).

Harley and the Davidson brothers built a single-story wooden structure as their first factory in 1906. During their first year in the new building Harley Davidson was able to manufacture 50 motorcycles (Milwaukee Motorcycle, 2011). The company became a corporation in 1907, when it was incorporated (Motorcycle USA Staff, 2008). This was after William Harley graduated with a degree in mechanical engineering. The third Davidson Brother, William, would join the company this year. Arthur Harley acted as secretary and general sales manager, it was his job to travel the world recruiting dealers and establishing a network (Harley-Davidson Timeline, n.d.).

The expansion began in 1907 when an additional floor was added to their existing building. At this point they had produced 150 motorcycles and began selling their products to police officers which would play a part in sustaining their initial success (Milwaukee Motorcycle, 2011).

Harley Davidson is known for their V-twin engine. In 1909 they would first introduce their iconic V-twin motor (Harley Davidson – timeline, n.d.). In 1911 they showcased a smaller V-twin with better performance (Milwaukee Motorcycle, 2011). Today they are known for air – cooled V-twins. After building the new 5 story concrete factory by the 1920’s Harley was producing their signature air-cooled V-twin. (Motorcycle USA Staff, 2008). Harley grew over the next century producing motorcycles for the military in WWI and WWII (Motorcycle USA Staff, 2008).

In 1909, the famous logo with the bars and shield was introduced and is still recognized today. In 1912 Harley begins tapping into the global market. They make their first international exchange when they begin exporting motorcycles to Japan. During this year they build their 6-story headquarters and main factory. In 1914 Harley enters the racing word and eventually becomes know as the famous “Wrecking Crew.” Harley remains over the next century to have a large influence in the racing world (Harley-Davidson Timeline, n.d.).

In 1919 the sport model is introduced and sold primarily over sees. By 1920 Harley Davidson is the most popular Motorcycle company world wide it has over 2,000 dealers in 67 countries. In 1922, the “hog” association starts, known today as Harley Owners Group. By 1931 all other competition, except for Indian, in motorcycle manufacturing in American is gone. It will remain this way until 1953.

In 1935 the Rikuo motorcycle is created in Japan due to the Sankyo Company having licensing blue prints, tools, dies, and machinery. By 1943 Harley had produced many motorcycles for the service men in both world wars. During WWII while oversees the men would be introduced to the Haley Davidson and carry that memory with them when they came back home (Harley-Davidson Timeline, n.d.).

In 1953 the manufacturer of the Indian motorcycle went out of business. Harley would now be the only US made motorcycle manufacturer until 1999. They introduced the iconic sportster in 1957, which is still in the line-up today (Harley-Davidson Timeline, n.d.)

In 1969 Harley Davidson merged with the American Machine and Foundry Company (AMF). The AMF was a producer of leisure products. In 1981 the phrase “The Eagle Soars Alone” is developed because of a group of Harley Davidson senior executives came together and bought the company back from AMF (Harley-Davidson Timeline, n.d.).

In 1983 Harley petitioned for a tariff on all imported Japanese motorcycles 700cc or larger because of the stockpile of unsold Japanese motorcycles in the US, that was to last 5 years. The H.O.G. is officially formed this year worldwide. The MAN application is introduced and lowers production cost and labor the part and production are only purchased as needed for building (Harley-Davidson Timeline, n.d.).

The company became publicly traded in 1986. In 1987 it was listed in the New York Stock Exchange. Harley becomes the topic of conversation when they request to end the tariff on heavyweight motorcycles, showing they have the confidence to compete in the market. After celebrating their 90th anniversary in 1993, Harley buys minority interest in Buell Motorcycle Company (Harley-Davidson Timeline, n.d.).

In 1997 the first assembly plant opened outside of the US, it was opened in Brazil. In the same year Harley bought the remaining interest in the Buell company. In the 2000’s Harley opened their first Chinese dealership and expanded into India (Harley-Davidson Timeline, n.d.).

According to Harley-Davidson.com, Harley plans to grow its international business by 2027, to 50% of its annual volume. “We have a tremendous opportunity in developed and emerging markets internationally, where the strength of the H-D brand is just as strong as it is within the U.S. We’re growing our reach and brand awareness in these markets as we build the next generation of riders globally” (About Harley Davidson, n.d.).

Organizational Culture

Harley Davidson can build its organization on brand loyalty, innovativeness, first mover advantages, and licensing. If you have ever had a conversation with a Harley owner that is the only bike they will ever ride no matter condition or age. This is not only done throughout the brand awareness but the relationship with the customers. There are many data processes put in from tracking customers to build this relationship (Tierney, 2015). The sales people keep in touch with the purchasers. When a customer is buying the sales people offer add on sales and take down information for future marketing.

Often a motorcycle purchase is a once in a life time purchase, so the dealership and sales teams must find other ways to keep the customers loyalty (Tierney, 2015). Harley does a lot of this through licensing products. There accessory line is endless everything from helmets, clothing, toys, tattoos, to jewelry. This is where the logo comes into play and is so important.

Although its has had some adjustments over the years the shield and band logo are recognizable worldwide as Harley Davidson. It is a registered trademark that helps build the brand. The company generates income selling the use of the logo to the manufactures. As stated by Forums Editors “Sales of the emblem generate income for Harley-Davidson; for example, in 2004, the company made 41 million dollars just by licensing its logo to others” (HDForums Editors 2009).

This helps to build brand loyalty as well as brand recognition. Almost anyone that has ever road a motorcycle will know the brand just by the logo. According to this offer many people know the brand that do not ride. Harley Davidson at times in synonymous with motorcycle. Many riders will say that they ride a Harley rider, instead of motorcycle rider. Often people that are unfamiliar with motorcycle culture call all motorcycles Harleys. It goes to show just how far the brand awareness and logo go.

Harley has always been known for innovativeness. Its known from its iconic V-twin motor, many staple motorcycles, racing, and its brand. Harley has been around 115 years. It was the sole motorcycle company in America through a large part of the last century (Harley – Davidson Timeline, n.d.). These reasons alone allowed for Harley to have many first mover advantages such as building that strong brand name, build the sales volume by experience, and making it difficult for later entries to the market to obtain/maintain business (Charles W. Hill, 2018). Although Harley was not the first motorcycle company they were the first of their innovative kind.

Impact on Business and Trade

Harley Davidson is a publicly traded company (Harley-Davidson Timeline, n.d.). It has impact on trade when there are tariffs placed on products used to produce motorcycles such has steel. This happened early this year when there was a tariff placed on steel and aluminum. This was due to a trade war with Europe. Harley warned the US that this would have an impact on sales (Brassil, 2018).

The EU tariffs placed on motorcycles exported from the US have went from 6% to 31%. Harley has stated they will not immediately increase the price of their products although their cost has gone up. The EU has raised these tariffs on Harley to offset the increase the US has placed on steel and aluminum. Harely estimated the cost for the remainder of 2018 to be over $30 million (Harley Davidson, blaming tariffs, will shift some manufacturing oversees, 2018).

Harley has a timeline planned for the next 18 months to repair any damages in sales they believe they will suffer. They feel the shift from US production to their international facilities could take nine to 18 months. The company has struggled with sales since the recession and has not returned to what it once was in 2005 (Harley Davidson, blaming tariffs, will shift some manufacturing oversees, 2018).

HOG, Harley Davidson Stock is currently down .20% as of September 21, 2018 at 5:00 pm (MarketWatch, 2018). Impacts like this can be hard on a business and make for difficult trade. In June of this year according to a Bloomberg.com article that the tariffs would increase the cost of shipping a motorcycle to Europe by $2,200 per bike. This would cause to much financial strain on the company. Europe being one of the most popular countries Harley works with, Harley was planning on finding outsourced factories oversees to reduce this cost (Coppola, 2018).

Harley has products that are distributed through their global network of independent dealers that exclusively carry Harley Davidson products. There are more than 1,400 independently owned Harley-Davidson dealerships in nearly 100 countries. The Harley dealers are expected to be ambassadors of the brand and create experiences and bonds that can last a lifetime (“About Harley Davidson”, n.d.).

The company is focused on a diversified customer base within the U.S. and expanding their reach outside the U.S. Harley wants to build on that momentum, where they have evolved theirr customer-led approach to include a deeper understanding of consumer life stages and cultural shifts. The about Harley page states, “These insights are driving a richer, more targeted marketing and product development approach that will help us continue to diversify our customer base and reach the next generation of riders globally”(About Harley Davidson”, n.d.).

Recommendations for the Future

As far as Harley stock goes it has not taken a significant hit compared to the 21% it was down in June, now being down 2% (MarketWatch, 2018). Nasdaq is recommending buying the stock (Harley Davidson Analyst Stock Recommendations, 2018).

Today Harley is currently producing over 20 models of motorcycles and has discontinued over five different models in the last 30 years (Harley Davidson Models and History, n.d.). Harley announced four new models in July of this year; the all-electric Live Wire, Pan America, Custom model, and the Street fighter (Goddard, 2018). These models seem like great additions going forward. With continuing to have innovative ideas Harley will be marketable to the new generation they are hoping to appeal to.

The all electric bike will be able to be marketed to those into the hybrid and all electric vehicles. It is clean take on the on the Project Live Wire Prototype. It will be here in 2019 for all the electric enthusiasts. It should target a whole new customer (Goddard, 2018). The Pan America: Off-Road adventure will be able to compete with other all-terrain/cross country motorcycles such as the Ducati, KTM, and BMW bikes. It is set to be released in 2020 and will be Harley’s first ever adventurer bike. The motorcycle will feature 1250 cc motor which should hold up against the similar bikes on the market. The custom model will target those out of the box thinkers that one something different, but still that traditional Harley feel. It is the Harley of the new generation. Last but certainly not least planned for 2021 release is the streetfighter. It will be that sports bike that can compete with the Ducati. This just looks to be a more subdued model (Goddard, 2018).

Harley is working hard to capture the hearts of new riders. Looking at doing something different than just making some differences in the same staple bikes. In the past they have always looked back to recreate, now they are looking into the future and hope to have the four new models developed by 2021.

Harley really could benefit from some price restructuring according to this author. There are many motorcycles available from foreign competitors doing business in the US that have much lower prices for very comparable in some case higher performing/functioning products. Harley needs to look at the market and see what new faces they can promote to. The loyalty goes far but doesn’t always bring in the new buyer.

Conclusion

Harley-Davidson is the iconic American motorcycle manufacturer (Motorcycle USA Staff, 2008). Over the last 115 years they have been innovative and leaders of the industry. They are introducing more completive product over the next several years.

This author hopes for them to become more price competitive for the home country economy. If they do not they will more than likely continue to grow and move more internationally if they see fit. There are many competitors today that make a very comparable product, Kawasaki, Honda, Indian, and Yamaha, just t name a few. Most of the other manufactures are already international. Harley moving production internationally should not have a huge impact on business, but it may not be necessary.

References

1. About Harley-Davidson. (n.d.). Retrieved September 22, 2018, from https://www.harley- davidson.com/us/en/about-us/company.html
2. Brassil, G. (2018, June 1). trade. Retrieved from cnbc.com: https://www.cnbc.com/2018/06/01/harley-davidson-warns-trade-war-with-europe-will-have-significant-impact-on-sales-shares-decline.html
3. Charles W. Hill, G. T. (2018). Global Business Today. New York: McGraw-Hill Education.
4. Coppola, G. (2018, June 26). Once a Trump Favorite, Harley now Feels the Pinch From the Trump Trade War. Retrieved September 22, 2018, from bloomberg.com: https://www.bloomberg.com/news/articles/2018-06-25/harley-davidson-to-shift-motorbike-production-to-counter-tariffs
5. Goddard, N. (2018, July 31). Harley Davidon Announces Four new Suprising Models. Retrieved September 22, 2018, from Popular Mechanics: https://www.popularmechanics.com/cars/motorcycles/a22605246/harley-davidson-announces-four-surprising-new-models/
6. Harely Davidson Analyst Stock Recommendations. (2018, September 21). Retrieved September 22, 2018, from Nasdaq: https://www.nasdaq.com/symbol/hog/recommendations
7. Harley-Davidson, blaming tariffs, will shift some manufacturing oversees. (2018, June 25). Retrieved September 22, 2018, from cbsnews: https://www.cbsnews.com/news/harley-davidson-moving-some-operations-overseas-blaming-tariffs/
8. Harley Davidson Models and History. (n.d.). Retrieved September 22, 2018, from autoevolution: https://www.autoevolution.com/moto/harley-davidson/
9. Harley-Davidson Timeline. (n.d.). Retrieved September 22, 2018, from https://www.harley-davidson.com/us/en/museum/explore/hd-history.html
10. HDForums Editors. (2009, December 09). History of the Harley Davidson Logo – Harley Davidson Forums. Retrieved September 22, 2018, from https://www.hdforums.com/articles/history-of-the-harley-davidson-logo/
11. MarketWatch (2018, September 21). Retrieved from Market Watch: https://www.marketwatch.com/investing/stock/hog
12. Milwaukee Motorcycle. (2011). How It All Started: A Brief History on Harley Davidson.
13. Retrieved September 22, 2018, from http://milwaukeemotorcycle.com/milwaukee_harley.html
14. Motorcycle USA Staff. (2008, February 24). Harley-Davidson Motorcycle History. Retrieved September 22, 2018, from http://www.motorcycle-usa.com/2008/02/article/harley-davidson-motorcycle-history/
15. Tierney, J. (2015, May 11). How Does Harley Davidson Create and Maintain Its Brand Loyalty? Retrieved September 22, 2018, from https://www.loyalty360.org/content-gallery/daily-news/how-does-harley-davidson-create-brand-loyalty