Harley-DavidsonRiding the Global Trip Harley-Davidson's American success story began in 1903 when two friendsWilliam Harley and Arthur Davidsonbuilt a motorized bicycle in a machine shop in Milwaukee, Wisconsin. The progeny of that first machine now travel the worldwith speed and style. Now the Harley Hog is going electric.

Harley's Roots When Harley-Davidson was founded, it was one of more than 100 firms producing motorcycles in the United States. By the 1950s, it was the only remaining American manufacturer. But in the 1960s, Honda began selling bikes in the United States and Harley had difficulty competing against the Japanese firm's smaller, more economical cycles.

The American Machine and Foundry Co. (AMF) bought Harley in 1969 and quickly increased production. However, this rapid expansion led to significant problems with quality, and the better-built Japanese motorcycles began to take over the market. A group of 13 managers bought Harley-Davidson back from AMF in 1981 and began a turnaround with the rallying cry "The Eagle Soars Alone." Richard Teerlink, former CEO of Harley, explained: "The solution was to get back to detail. The key was to know the business, know the customer, and pay attention to detail." The goals driving this turnaround were increasing quality and improving service to customers and dealers.

Consolidation and Renewal In 1983, Harley-Davidson asked the International Trade Commission (ITC) for tariff protection on the basis that Japanese manufacturers, including Honda, were stockpiling inventory in the United States and providing unfair competition. The request was granted. Harley was confident enough in 1987 to petition the ITC to have the tariff lifted because the company had improved its ability to compete with foreign imports. Once Harley's image had been restored, the company began to increase production and open new facilties.

The average Harley customer in the 1980s was male, late thirties, with an average household income above $40,000 (approximately $90,000 today). Teerlink said: "Our customers want the sense of adventure that they get on our bikes. . . . Harley-Davidson doesn't sell transportation, we sell transformation. We sell excitement, a way of life." The company created a line of Harley accessories available online, by catalog, or through dealers, all adorned with the Harley-Davidson logo. These jackets, caps, T-shirts, and other items became popular with nonbikers as well. In fact, the clothing and parts had a higher profit margin than the motorcycles; nonbike products made up as much as half of sales at some dealerships.

Global Expansion Although Harley had been exporting motorcycles ever since it was founded, it was not until the late 1980s that management invested seriously in international markets. Traditionally, the company's ads had been translated word for word into foreign languages. Now, new ads were developed specifically for different markets and Harley rallies were adapted to fit local customs. Harley actively recruited dealers in Europe and Japan, built a large parts warehouse in Germany, and purchased a Japanese distribution company.

Harley's management learned a great deal from these early international activities. Recognizing, for example, that German motorcyclists rode at high speedsoften more than 100 mphthe company began studying ways to give Harleys a smoother ride and emphasizing accessories that would give riders more protection. Its Japanese subsidiary adapted the company's marketing to fit local tastes, even producing shinier and more complete toolkits than those available in the United States. Harley bikes are now symbols of prestige in Japan, and many enthusiasts see themselves as rebels on wheels. The company has also made inroads into the previously elusive Chinese market. It partnered with China's Zongshen Motorcycle Group, which makes more than 4 million small-engine motorcycles each year. Despite China's growing disposable income, capitalizing on the opportunities in this new market requires overcoming several hurdles, including riding restrictions imposed by the government in urban areas.

The Future The U.S. market still represents almost 75% of Harley's sales. Executives attribute Harley's success to loyal customers and the Harley-Davidson name. "It is a unique brand that is built on personal relationships and deep connections with customers, unmatched riding experiences, and proud history," said Jim Ziemer, Harley's former president and chief executive.

CEO Keith E. Wandell seeks to increase growth by focusing effort and resources on the unique strengths of the Harley-Davidson brand. He also plans to enhance productivity and profitability through continuous improvement. Part of his approach focuses company resources on Harley-Davidson products and experiences, demographic outreach, commitment to core customers, and even more global growth. The latest innovation is the electric Hog. Harley Davidson introduced the very first, full-sized, fully electric sport motorcycle in 2019.

A Harley spokesperson says: "We anticipate it's going to appeal to a younger, more urban demographic" and that it is part of Harley's commitment to "preserving the riding environment."

Surprisingly, despite all of these strategic steps, Harley's sales have continued to drop for the fifth straight year. Will the motorcycle manufacturer's electric twenty-first-century move be what it takes to reset Harley-Davidson's path?

Check the News! The second half of the second decade of the third millennium was to be when Harley-Davidson took over the (motorcycling) world! But, the iconic American motorcycle company announced plans to effectively abandon the world's largest motorcycling market after an unsuccessful decade spent trying to generate a foothold in India. Tens and tens of millions of dollars spent, countless hours of work devoted to the cause, and, like Ford and General Motors before it, Harley Davidson was not able to find a good answer to the puzzling question of how to find success in the Indian markets. So, what do you think? Why are these large, otherwise uber successful companies unable to prosper in a country boasting the world's largest, and fastest-grown middle class?

Case Analysis Questions 1. Discussion If you were CEO of Harley-Davidson, how would you compare the advantages and disadvantages of using exports, joint ventures, and foreign subsidiaries as ways of expanding international sales?

2. Discussion In America, Harley has shifted the positioning of its products away from simply motorcycles and more toward being status symbols of a particular lifestyle. What are the implications of cultural factors for positioning in other countries that Harley has targeted for growthones like Japan, China, France, and Brazil?

3. Problem Solving If you were advising Harley's CEO on business expansion in sub-Saharan Africa, what would you recommend in terms of setting up sales centers and manufacturing sites in countries like South Africa, Kenya, and Zimbabwe? When a new location is targeted, what would you suggest as the proper role for locals to play? Should they run everything, or should there be a mix of locals and expatriates? And if the CEO wants to send expatriates from the United States into some locations, what selection criteria would you recommend, and why?

4. Further Research Is it accurate to say that Harley is still "on top of its game"? How well is the company performing today in both domestic and global markets? Who are its top competitors in other parts of the world, and how well does Harley compete against them? Does the electric Harley have what it takes to fuel the company's next stage of global growth?

Case 17 Harley-DavidsonRiding the Global Trip Harley-Davidson's American success story began in 1903 when two friendsWilliam Harley and Arthur Davidsonbuilt a motorized bicycle in a machine shop in Milwaukee, Wisconsin. The progeny of that first machine now travel the worldwith speed and style. Now the Harley Hog is going electric.

Harley's Roots When Harley-Davidson was founded, it was one of more than 100 firms producing motorcycles in the United States. By the 1950s, it was the only remaining American manufacturer. But in the 1960s, Honda began selling bikes in the United States and Harley had difficulty competing against the Japanese firm's smaller, more economical cycles.

The American Machine and Foundry Co. (AMF) bought Harley in 1969 and quickly increased production. However, this rapid expansion led to significant problems with quality, and the better-built Japanese motorcycles began to take over the market. A group of 13 managers bought Harley-Davidson back from AMF in 1981 and began a turnaround with the rallying cry "The Eagle Soars Alone." Richard Teerlink, former CEO of Harley, explained: "The solution was to get back to detail. The key was to know the business, know the customer, and pay attention to detail." The goals driving this turnaround were increasing quality and improving service to customers and dealers.

Consolidation and Renewal In 1983, Harley-Davidson asked the International Trade Commission (ITC) for tariff protection on the basis that Japanese manufacturers, including Honda, were stockpiling inventory in the United States and providing unfair competition. The request was granted. Harley was confident enough in 1987 to petition the ITC to have the tariff lifted because the company had improved its ability to compete with foreign imports. Once Harley's image had been restored, the company began to increase production and open new facilties.

The average Harley customer in the 1980s was male, late thirties, with an average household income above $40,000 (approximately $90,000 today). Teerlink said: "Our customers want the sense of adventure that they get on our bikes. . . . Harley-Davidson doesn't sell transportation, we sell transformation. We sell excitement, a way of life." The company created a line of Harley accessories available online, by catalog, or through dealers, all adorned with the Harley-Davidson logo. These jackets, caps, T-shirts, and other items became popular with nonbikers as well. In fact, the clothing and parts had a higher profit margin than the motorcycles; nonbike products made up as much as half of sales at some dealerships.

Global Expansion Although Harley had been exporting motorcycles ever since it was founded, it was not until the late 1980s that management invested seriously in international markets. Traditionally, the company's ads had been translated word for word into foreign languages. Now, new ads were developed specifically for different markets and Harley rallies were adapted to fit local customs. Harley actively recruited dealers in Europe and Japan, built a large parts warehouse in Germany, and purchased a Japanese distribution company.

Harley's management learned a great deal from these early international activities. Recognizing, for example, that German motorcyclists rode at high speedsoften more than 100 mphthe company began studying ways to give Harleys a smoother ride and emphasizing accessories that would give riders more protection. Its Japanese subsidiary adapted the company's marketing to fit local tastes, even producing shinier and more complete toolkits than those available in the United States. Harley bikes are now symbols of prestige in Japan, and many enthusiasts see themselves as rebels on wheels. The company has also made inroads into the previously elusive Chinese market. It partnered with China's Zongshen Motorcycle Group, which makes more than 4 million small-engine motorcycles each year. Despite China's growing disposable income, capitalizing on the opportunities in this new market requires overcoming several hurdles, including riding restrictions imposed by the government in urban areas.

The Future The U.S. market still represents almost 75% of Harley's sales. Executives attribute Harley's success to loyal customers and the Harley-Davidson name. "It is a unique brand that is built on personal relationships and deep connections with customers, unmatched riding experiences, and proud history," said Jim Ziemer, Harley's former president and chief executive.

CEO Keith E. Wandell seeks to increase growth by focusing effort and resources on the unique strengths of the Harley-Davidson brand. He also plans to enhance productivity and profitability through continuous improvement. Part of his approach focuses company resources on Harley-Davidson products and experiences, demographic outreach, commitment to core customers, and even more global growth. The latest innovation is the electric Hog. Harley Davidson introduced the very first, full-sized, fully electric sport motorcycle in 2019.

A Harley spokesperson says: "We anticipate it's going to appeal to a younger, more urban demographic" and that it is part of Harley's commitment to "preserving the riding environment."

Surprisingly, despite all of these strategic steps, Harley's sales have continued to drop for the fifth straight year. Will the motorcycle manufacturer's electric twenty-first-century move be what it takes to reset Harley-Davidson's path?

Check the News! The second half of the second decade of the third millennium was to be when Harley-Davidson took over the (motorcycling) world! But, the iconic American motorcycle company announced plans to effectively abandon the world's largest motorcycling market after an unsuccessful decade spent trying to generate a foothold in India. Tens and tens of millions of dollars spent, countless hours of work devoted to the cause, and, like Ford and General Motors before it, Harley Davidson was not able to find a good answer to the puzzling question of how to find success in the Indian markets. So, what do you think? Why are these large, otherwise uber successful companies unable to prosper in a country boasting the world's largest, and fastest-grown middle class?

REFERENCE: Harley-DavidsonRiding the Global Trip

Case Analysis Questions 1. If you were CEO of Harley-Davidson, how would you compare the advantages and disadvantages of using exports, joint ventures, and foreign subsidiaries as ways of expanding international sales?

2. Discussion In America, Harley has shifted the positioning of its products away from simply motorcycles and more toward being status symbols of a particular lifestyle. What are the implications of cultural factors for positioning in other countries that Harley has targeted for growthones like Japan, China, France, and Brazil?

3. Problem Solving If you were advising Harley's CEO on business expansion in sub-Saharan Africa, what would you recommend in terms of setting up sales centers and manufacturing sites in countries like South Africa, Kenya, and Zimbabwe? When a new location is targeted, what would you suggest as the proper role for locals to play? Should they run everything, or should there be a mix of locals and expatriates? And if the CEO wants to send expatriates from the United States into some locations, what selection criteria would you recommend, and why?