Case Study - Harley-Davidson, Inc.
By
Vijaya K Ganapathy - 3/1/2008
Wayne State University
7080 ? Strategic Management
The Company
Harley-Davidson, Inc. was established in 1903 by William Harley and brothers William Davidson, Arthur Davidson, and Walter Davidson. Together they built their first motorcycles with a three horsepower engine in a shed in Milwaukee. In 1909, the company introduced its trademark bike; a 2 cylinders, v-twin engine (the fastest motorcycle at that time), able to reach speeds of 60 mph. However, a few years later the competition was becoming stiffer. During World War I, the demand for United States motorcycles overseas grew tremendously. As a result, Harley-Davidson became a leader in innovative engineering in the 1920's. With the introduction of the front brake and "teardrop" gas tanks, Harley was quickly developing its mystic appearance. The industry was thriving with the growing affluence and rise of youth culture that created a growing demand for motorcycles. Importing motorcycles from Britain and later from Japan satisfied the growing demand. With its technically advanced bikes Honda became a direct competitor to Harley-Davidson while Harley's product quality diminished. Soon Honda had replaced Harley as market leader in heavyweight motorcycles in the US.
In 1981, Harley's senior managers organized a leveraged buyout of American Machine and Foundry's Harley-Davidson division from AMF Company that owned it. Harley emerged as an independent, privately owned company, heavily laden with debt. The buyout coincided with a severe recession but Harley somehow managed to survive by producing motorcycles for the army. Management team also devoted itself to finding better production methods and improving quality of its motorcycl ...