EFE Matrix for Harley Davidson Inc.docx

EFE Matrix for Harley Davidson IncI. CURRENT SITUATIONA. Current PerformanceLosing money, market share, and relevance in a changing industry with new foreign competitors. Stiff foreign competitors introducing new designs HD was too slow in development and unpredictable in reacting Outmoded technologies Poor quality and shoddy workmanshipB. Strategic PostureI. Mission We fulfill dreams through the experiences ofmotorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments (Harley-Davidson website, p.2).2. Objectivesa) We deliver experiencesb) Developing relationships with all stakeholderscustomers, employees, investors, suppliers, governments, and society.c) Provide a good quality cycled) Employees are both enthusiasts and customers3. Strategiesa) 1981 13 H-D executives, including William Davidson(grandson of founder Arthur Davidson), conducted aleveraged buyout of AMF to reacquire H-D and wardoff bankruptcy of the company.b) Implemented Total Quality Managementc) Implemented Just-In-Time inventoryd) Lobbied Washington for tariffs on importse) Direct marketing to the loyal customer basef) Sponsored the Harley Owners Group (HOG)g) Launched SuperRide to attract a new customer baseh) Offered customers a free one-year membership to groups, publications, receptions, etc.4. Policiesa) Short-term profits more important than R&D andretoolingb) Stiff foreign competition ignoredc) Employees has little or no input in the companyd) Very slow R&D; very slow in reacting to more advanced technological changesII. Strategic ManagersA. Board of Directors1. Nine members, seven are outsiders2. Respected Americans, four have been affiliated with HD sincethe early 1970s3. Three have specialized marketing experience; four haveinternational backgroundsB. Top Management1. Thirteen top executives who conducted the leveraged buyout2. All have worked for or been affiliated with HD since early 1970s3. Goal was to reacquire and restructure the company to stave off bankruptcy.III. External Environment (EFAS)A. Societal Environment1. Economica) Stagflation, or bottle-neck inflation, since early 1970scoupled with the OPEC oil embargo created a huge marketfor smaller vehicles and excellent gas mileagespurred themotorcycle marketb) Japanese manufacturers Honda, Kawasaki, and Yamahatake the top spot which HD had held for yearsthere were no tariffs on imports2. Technologicala) HD is extremely slow in developing new designs for itsbikesb) Technologies are outdatedc) Foreign economies are becoming more interconnected to the world market3. Political-Legala) No tariffs on imported goodsb) Very stiff competitionc) Environmental laws reflects changes in attitudes on fuel consumption and exhaust emissions4. Socioculturala) New Japanese designs create a huge following in the U.S.b) Baby Boomers want sleek new designs along with good gas mileagec) Women are now moving into the motorcycle marketd) Fuel shortage gives rise to cheap means of transportationB. Task environment1. American market becomes extremely competitiveeconomicsavvy consumers want new styles, good quality, and at a goodprice.2. Global industry sagging just as the American industry3. Japanese sleek new designs are very popular with the youngercrowd and more technologically advanced4. Rivalry among Motorcycle Manufacturers: Very high.Honda, Kawasaki, and Yamaha have taken the Americanmarket by storm5. Bargaining Power of Buyers: Moderate. HD is slow inresponding to technological advances and retooling6. Power of the Stakeholders: Low. Lost revenues and marketshares have resulted in loss of relevance in the changingindustry.7. Bargaining Power of Supplying Distributors: Low. HDbecame too unpredictable. Relationships with supplyingdistributors suffered.8. Threat of Substitutes: Very High. Hondas Gold Wingreplaces HD in the large touring cycle segment for the first time and is $2K cheaper9. Threat of New Entrants: Very High. Suzuki and Yamahadominates the heavy weight custom market for the first time with HD look-alikesSWOT ANALYSIS (EFAS)Strengths Solid loyal customer base Repeat customer base Engineering the cycle experience Long history of quality product Known worldwide for the experience that only a Harley can give Direct delivery capability Can serve from existing sites Weaknesses Slow design and development processes Outmoded technologies No quality management Huge inventory Lack of good marketing strategies Need to reconnect with suppliers and distributors Need to construct good international communication baseOpportunities Good R&D Department Develop new designs and products Reconnect with the loyal customer base Expand global market base New specialty lines Regain trend-setting pace began by HD Create a community that values the experience of riding a Harley more than the product itself Threats No tariffs at all on imports New entries into a growing market New environmental legislation enacted New environmental laws enacted the use of unleaded gasoline for reduced emissions Fast changing industry Retention of key staff critical Possible negative publicity Vulnerable to reactive attacks by major competitorsIV. Internal Environment (IFAS)A. Corporate Culture1. Two main divisions: motorcycles and related products2. AMF made decisions; the leveraged buyout produces a fresh outlook for the company and its employeesB. Corporate Culture1. AMFs quality key ingredientshort-term profits shared only by AMF2. AMF had no idea on how to restore profitability to HD3. AMF ignored the stiff foreign competitorsC. Corporate Resources1. Marketinga) Purchase of CAD system to allow changes to entire productline and still maintain traditional stylingb) zeroed in on the truly loyal customers and the loyal repeatcustomers firstd) Invite customers to test drive a HD in the SuperRidepromotione) Give the customers a chance to become a part of the HDLegacy2. Financea) MAN inventory system reduces inventory and stabilized theproduction schedule, greatly reducing costsb) Implementation of TQM to produce the quality products HDis known for to generate salesc) No more room for debt3. R&Da) New designs and stylesb) Becoming a technology follower, taking too long to get newinnovations to market4. Operationsa) Motors and related products main core competency.Continual improvements will keep it dominant in the U.S.market for many years to come.b) Quality is first and foremost. This is what HD is known for.5. Human Resourcesa) Employees disgusted with AMF. No say in operations, nointerest.b) Most employees are HD enthusiasts as well as consumers.c) Give them the opportunity to input on new designs andmodels.d) Evaluate pay scale and make it commensurate with the jobperformed by each employee.6. Information SystemsComputerizing businesses as a whole at this time is limited due to enormous expense. CAD is implemented with what is available. Most information is delivered via telephone, memos, and word of mouth. HD needs to be willing to commit the resources needed to stay competitive.SWOT ANALYSIS (IFAS)Strengths The look, the sound, the feel of a Harley Employee input on designs and products Debts in line JIT or MAN inventory Stable production schedule The motor itself The related products The quality that is legendary The durability Employees are enthusiasts as well as customers Weaknesses R&D capabilities to stay competitive Needs to expand product line in a global market Needs to get new innovations to market faster to compete Supply chain robustness? Finances in line? Core activities, distractions? Morale of employees and their commitment Need to upgrade systems and add computer enhancements to stay competitiveOpportunities New technology New innovations New marketing focus Broader global base Industry and lifestyle trends Target Markets? Tactics surprise, major contracts, etc. Business and product development Information and research Volumes, production, economies? Threats Competitor copycats Legislative and environmental effects Competitor intentions Market demand Newer technologies, services, ideas Vital contracts Sustaining internal capabilities Sustaining financial backing Economy at home and abroadV. Analysis of Strategic FactorsA. Situational AnalysisISF Weight Rating Weighted Score CommentsStrengths:HD Quality .20.5.0 1.0 Need to reinstill what the company is known forExperienced Top Management .20 5.0 1.0 Former executives and affiliates leverage a buyoutEmployee Relations .20 3.0 .60 Must rebuild their confidenceWeaknesses:Process-oriented R&D .20 3.0 .60 Need to put new innovations on marketDistribution channels .201.0 3.03.8 .603.8 Force them to upgrade their qualityESF Strengths:Solid loyal customer base .20 4.0 .80 Focus on this group before any otherEngineering the cycle experience .20 4.0 .80 Draw on the total experience HD is known forRepeat customer base .20 3.5 .70 This base gives drive for the othersWeaknesses:Slow design and development processes .20 3.0 .60 R&D must pick up to remain competitiveOutmoded technologies .201.0 3.03.5 .603.5 Must upgrade to remain competitiveB. Review of Current Mission and Objectives1. Current mission is appropriate2. Some of the objectives are really goals and need to be given time horizons.VI. Strategic Alternatives and Recommended StrategyA. Strategic Alternatives1. Growth through concentric diversification: Acquire a smaller competitor.a) Pros Product and market synergy created by integrationof the two.b) Cons HD must have the financial resources to accomplishthis.2. Pause strategy: Consolidate areas that are weaker with thestronger ones and strongly encourage design and innovations among the units.a) Pros HD must make sure it has a solid financialfoundation and administrative control.b) Cons Unless HD can keep a solid financial backing andcontinue with being privately held, it could go underto its demise.B. Recommended Strategy1. Recommend the pause strategy for the first year or two, so HDcan get a grip on its financial house and maintain administrative control.2. HD quality must be maintained, and investments into R&D must be made in order to remain competitive and make a profit.3. By internal restructuring and implementation of new tools, HD should be able to recoup any e