HARLEY-DAVIDSON Style and Strategy with a Global Reach Harley-Davidson's American success story began in 1903 when two friendsWilliam Harley and...
success story began in 1903 when two friendsâ€”William Harley and Arthur Davidsonâ€”
built a motorized bicycle in a machine shop in Milwaukee, Wisconsin.1 The progeny of
that Frst machine now travel the worldâ€”with speed and style. Now the Harley Hog is
going electric. Bloomberg/Getty Images Harleyâ€™s Roots When Harley-Davidson was
founded it was one of more than 100 Frms producing motorcycles in the United States.
By the 1950s, it was the only remaining American manufacturer.2 But in the 1960s,
Honda began sales in the United States and Harley had diÂ±culty competing against the
Japanese Frmâ€™s smaller bikes. The American Machine and Â²oundry Co. (AMÂ²) bought
Harley in 1969 and quickly increased production.3 However, this rapid expansion led to
signiFcant problems with quality, and the better-built Japanese motorcycles began to
take over the market.4 A group of 13 managers bought Harley-Davidson back from AMÂ²
in 1981 and began a turn around with the rallying cry â€œThe Eagle Soars Alone.â€ Richard
Teerlink, former CEO of Harley, explained: â€œThe solution was to get back to detail. The
key was to know the business, know the customer, and pay attention to detail.â€5 The
goals driving this turn around were increasing quality and improving service to
customers and dealers. Consolidation and Renewal In 1983 Harley-Davidson asked the
International Trade Commission (ITC) for tariÂ³ 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 conFdent enough in
1987 to petition the ITC to have the tariÂ³ lifted because the company had improved its
ability to compete with foreign imports. Once Harleyâ€™s image had been restored, the
company began to increase production and open new facilties.6 The average Harley
customer in the 1980s was male, late thirties, with an average household income above
$40,000. Teerlink said: â€œOur customers want the sense of adventure that they get on
our bikesâ€¦ . Harley-Davidson doesnâ€™t sell transportation, we sell transformation. We sell
excitement, a way of life.â€7 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 proFt 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 companyâ€™s ads had been translated word for word into foreign
languages. Now, new ads were developed speciFcally for diÂ³erent markets and Harley
rallies were adapted to Ft local customs.8 Harley actively recruited dealers in Europe
and Japan, built a large parts warehouse in Germany, and purchased a Japanese
distribution company. Harleyâ€™s management learned a great deal from these early
international activities. Recognizing, for example, that German motorcyclists rode at
high speedsâ€”often more than 100 mphâ€”the company began studying ways to give
Harleys a smoother ride and emphasizing accessories that would give riders more
protection.9 Its Japanese subsidiary adapted the companyâ€™s marketing to Ft 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.10 The company has also made inroads into the
previously elusive Chinese market. It partnered with Chinaâ€™s Zongshen Motorcycle
Group, which makes more than 4 million small-engine motorcycles each year.11 Despite
Chinaâ€™s growing disposable income, the new store has several hurdles ahead of it,
including riding restrictions imposed by the government in urban areas. The Â²uture The
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