Harley Davidson Motorcycles Has Been

Harley Davidson Motorcycles has been subject to some steep declines and inclines in fortune over the past couple of decades. The firm has built its business on a number of key success factors, such as its branding, matching its products to its image and its successful change management process in the early 1980s. However, the company has also experienced a number of setbacks that stem from key failure factors, including shifting consumer tastes, poor dealer relations and the inability to innovate.

One of the most important key success factors for Harley Davidson is its branding efforts. The company has fostered strong brand loyalty by aggressively marketing its brand, including a wide range of spinoff products. Harley considers branded merchandise to be one of its key divisions, earning $313 million for the company in 2008 (2008 Annual Report). This has contributed not only to the company's bottom line but also to its brand development, reinforcing the Harley Davidson image.

The second key success factor is the congruence between the image that Harley-Davidson has been cultivating and its product lines. Harley competes almost exclusively in the superheavyweight category of motorcycles. Their products are simple, but strong, which is congruent with their image. For example, Harley seldom updates its engine, in contrast to competing manufacturers. Its branded merchandise is supports the image of the all-American outlaw that has been fostered over the past century.

The third key success factor for Harley-Davidson is the company's successful overhaul following its near-demise in the early 1980s. The company was able to improve on a number of issues simultaneously, including bike design, introducing the Harley Owners Group (HOG), and lowering manufacturing costs (Sexton, 2009).

Among the key failure factors in the motorcycle industry for Harley Davidson has been poor dealer relations. During its leanest years, Harley had found that dealer relations had deteriorated. The sales and service functions were not being performed to a strong standard, and the company's relations were poor. As the company strengthened its relationship with the dealer network, culminating in a sales service agreement that ushered in a new era of company-dealer cooperation (Teerlink & Ozley, 2000), which in turn helped facilitate strong sales growth.

Another key failure factor is shifting consumer preferences. These are driven by shifting demographics, as Harley's core target market is aging out of the range at which it would consider purchasing a Harley bike. This core market -- white males in their 40s and 50s -- has been fuelled by the baby boomer generation, who are now growing too old for superheavyweight bikes (Steverman, 2009).

A third key failure factor for Harley is the company's recent credit practices. The firm engaged in subprime lending in order to sustain its business in the face of slowing sales. As a consequence, however, it now faces a credit crunch. The firm has raised only part of the operating capital it requires, and is paying a high rate of interest (15%) for the privilege (Hamner, 2009). Almost a quarter of Harley's consumer loans were subprime in 2008, resulting in defaults. Harley wrote down $80 million in bad loans for 2008. Such writedowns, especially in the face of slowing sales, have contributed to a poor financial situation.

The company's current situation is a unique mix of hitting key success factors to build a strong business, then suffering through some of the key failure factors. At present, the latter are more prevalent, resulting in Harley's present struggles.