Do you think Harley-Davidson made the right decision by expanding conservatively? Why or why not? Defend your position.

The sales forecast—the estimate of sales for the periods ahead—serves a crucial role because it is the starting point for all detailed planning and budgeting. A volatile situation presents some high-risk alternatives: Should we be optimistic or conservative?
On one hand, with conservative planning in a growing market, a firm risks underestimating demand and being unable to expand its resources sufficiently to handle the potential. It may lack the manufacturing capability and sales staff to handle growth potential, and it may have to abdicate a good share of the growing business to competitors who are willing and able to expand their capability to meet the demands of the market.
On the other hand, a firm facing burgeoning demand should consider whether the growth is likely to be a short-term fad or a more permanent situation. A firm can easily become overextended in the buoyancy of booming business, only to see the collapse of such business jeopardizing its viability.
Harley’s conservative decision was undoubtedly influenced by concerns about expanding beyond the limits of good quality control. The decision was also influenced by management’s belief that Harley-Davidson had a loyal body of customers who would not switch despite the wait.