Harley Davidson

1560 Words7 Pages
In 1903, William Harley (age 21), a draftsman, and his friend, Arthur R. Davidson, began Experimenting with ideas to design and build their own motorcycles. They were joined by Arthur's brothers, William, a machinist, and Walter, a skilled mechanic. The Harley- Davidson Motor Company started in a lOxl5-foot shed in the Davidson family's backyard in Milwaukee, Wisconsin. This case was prepared by Professor Patricia A. Ryan of Colorado State. This case was edited for 5MBP and Cases in 5MBP-9th and 10th Edition. The copyright holders are solely responsible for the case content. Copyright @2002 and 2005 by Patricia A. Ryan and Thomas L. Wheelen. Reprint permission is solely granted to the publisher, Prentice Hall, for the books, Strategic Management and Business Policy-10th Edition (and the International version of this book) and Cases in Strategic Management and Business Policy-10th Edition by the copyright holders, Patricia A. Ryan and Thomas L. Wheel en. Any other publication of the case (translation, any form of electronics or other media) or sold (any form of partnership) to another publisher will be in violation of copyright law, unless Patricia A. Ryan and Thomas L. Wheelen have granted an additional written reprint permission. In 1903, three motorcycles were built and sold. The production increased to eight in 1904.ThecompanythenmovedtoJuneauAvenue,whichisthe siteofthecompany's present offices. In 1907,the company was incorporated. In 1969, AMF, Inc., a leisure and industrial products conglomerate, acquired Harley-,/ Davidson. The management team expanded production from 15,000in 1969to40,000motorcycles in 1974.AMF favored short-term profits instead of investing in research and development and retooling. During this time, Japanese competitors continued to improve the quality of their motorcycles, while Harley-Davidson began to turn out noisy, oil-leaking, heavily vibrating, poorly finished, and hard-to-handle machines. AMF ignored the Japanese competition. In 1975, Honda Motor Company introduced its Gold Wing, which became the standard for large touring motorcycles. Harley-Davidson had controlled that segment of the market for years. There was a $2,000 price difference between Harley's top-of-the-line motorcycles and Honda's comparable Gold Wing. This caused American buyers of motorcycles to start switching to Japanese motorcycles. The Japanese companies (Suzuki and Yamaha) from this time until the mid-1980s continued to enter the heavyweight custom market with Harley lookalikes. During AMF's ownership of the company, sales of motorcycles were strong, but profits were weak. The company had serious problems with poor-quality manufacturing and strong Japanese competition. In 1981,VaughnBeals, then head of the Harley Division, and 13 other managers conducted a leveraged buyout of the company for $65 million.

More about Harley Davidson

Open Document