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Autor: anton 04 December 2010
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INTRODUCTION AND OVERVIEW OF HALEY DAVIDSON
Harley-Davidson, Inc. is primarily in the business of recreational vehicle. Harley-Davidson was incorporated in 1981 and is based in Milwaukee, Wisconsin.
It is the parent company for the group of companies doing business as Harley-Davidson Motor Company (Motor Company), Buell Motorcycle Company (BMC) and Harley-Davidson Financial Services (HDFS). The Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, apparel and general merchandise. The Motor Company manufactures five families of motorcycles: Touring, Dyna Glide, Softail, VRSC and Sportster. BMC produces sport motorcycles, including five v-twin XB models and the single-cylinder Buell Blast. BMC also offers a line of motorcycle parts, accessories, apparel and general merchandise. HDFS provides wholesale and retail financing and insurance programs primarily to Harley-Davidson/Buell dealers and customers. The Company operates in two principal business segments: Motorcycles and Related Products (Motorcycles) and Financial Services. HDI is a manufacturer of motorcycles based in Milwaukee, Wisconsin, making it one of the two remaining American mass-producer of motorcycles (along with Victory Motorcycles). The company emphasizes heavy bikes designed for cruising, bikes known for their distinctive exhaust noise.
The Motorcycles segment designs, manufactures, and sells primarily heavyweight, touring, custom, and performance motorcycles, as well as a line of motorcycle parts, accessories, clothing, and collectibles. It also offers police, fire, and rescue motorcycles. The Financial Services segment engages in financing and servicing wholesale inventory receivables and consumer retail loans primarily for the purchase of motorcycles in the United States, Canada, and Europe. It provides wholesale financial services to its dealers and retail financing to consumers. Its wholesale financial services include floorplan and open account financing of motorcycles, and motorcycle parts and accessories; real estate loans; computer loans; and showroom remodeling loans. Retail financial services include installment lending for its new and used motorcycles. The Financial Services segment also provides the brokerage of various motorcycle insurance policies and service warranty agreements.
Harley-Davidson also provides other services to its dealers, including service and business management training schools, customized dealer software packages, delivery of its motorcycles, a motorcycle rental program, and a rider training program. In addition, the company licenses the name â€˜Harley-Davidsonâ€™ and other trademarks owned by it. Its licensed products include T-shirts, jewelry, small leather goods, and toys.
The company considers 1903 to be its year of founding, though the Harley-Davidson enterprise could be considered to have started in 1901 when William S. Harley, age 21, drew up plans for a small engine that displaced 7.07 cubic inches (116cc) and had four-inch flywheels. The engine was designed for use in a regular pedal-bicycle frame.
Over the next two years Harley and his boyhood pal Arthur Davidson labored on their little motor-bicycle using the northside machine shop of their friend Henry Melk. It was finished in 1903 with the help of Arthur's brother, Walter Davidson. Upon completion the boys found their little "power-cycle" unable to conquer Milwaukee's modest hills without pedal assistance. Bill Harley and the Davidsons quickly wrote off their first motor-bicycle as a valuable learning experiment.
Starting fresh, work was immediately begun on a new and much improved machine. This first "real" Harley-Davidson motorcycle would have a bigger engine of 24.74 cubic inches (405cc) with 9-3/4 inch flywheels weighing 28 pounds. The machine's advanced loop-frame was similar to the 1903 Milwaukee Merkel motorcycle. They also got help with their new engine from outboard motor pioneer Ole Evinrude. Elder brother William A. Davidson also lent a hand in the enterprise. The prototype of the new improved loop-frame model was assembled in a 10 by 15 foot (3 by 5 meter) shed in the Davidson family backyard. The machine was functional by 8 September 1904 when it was entered in a Milwaukee motorcycle race, the first known appearance of a Harley-Davidson motorcycle.
In January 1905, small advertisements were placed in the "Automobile and Cycle Trade Journal" that offered bare Harley-Davidson engines to the do-it-yourself trade. By April, complete motorcycles were in production on a very limited basis. In 1905 no more than a dozen machines were built in the backyard n 1906 Harley and the Davidsons built their first factory on Chestnut Street (later Juneau Avenue). This location remains the Motor Company's corporate headquarters today. The first Juneau Avenue plant was a modest 40 by 60-foot single-story wooden structure. That year around 50 motorcycles were produced.
(Source: 1.Corporate website of Harley Davidson)
â€œWE FULFILL DREAMS THROUGH THE EXPERIENCES OF MOTORCYCLING, BY PROVIDING TO MOTORCYCLISTS AND TO THE GENERAL PUBLIC AN EXPANDING LINE OF MOTORCYCLES AND BRANDED PRODUCTS AND SERVICES IN SELECTED MARKET SEGMENTS.â€
Harley-Davidson, Inc. is an action-oriented, international company, a leader in its commitment to continuously improve our mutually beneficial relationships with stakeholders (customers, suppliers, employees, shareholders, governments and society). Harley-Davidson believes the key to success is to balance stakeholdersâ€™ interests through the empowerment of all employees to focus on value-added activities.
 Tell the Truth.
 Be Fair.
 Keep Your Promises.
 Respect the Individual.
 Encourage Intellectual Curiosity.
The company fosters these values by actively communicating their importance and encouraging employee involvement and development. We believe that our business will be most successful if we tap the contributions of each of our people.
1. Analysis of Strategic Factors
INDUSTRY AN ALYSIS
It has better profit margin than the industryâ€™s average. This is depicted by the following data:
HARLEY-DAVIDSON INC. one-year net profit margin: 17.7%
* Difference from the company's 5-year average net profit margin: 2.6 pct. pts.
Difference from the average for the Recreational Vehicles group: 11.3 pct. pts.
Net profit margins (%)
Company 5-Yr Avg. 15.1%
(See Reference No. 3. Source MSN.com)
This indicates it is less risky than the industry.
FOR other questions see attached excel sheet.
POSITIVE RECENT DEVELOPMENTS
1. Harley-Davidson, Inc. announced that its third quarter results keep it on track with its previously disclosed guidance for 2005. The Company has also broadened its long-term guidance on wholesale unit growth to 5 to 9% annually. This will support annual earnings per share growth target in the range of 11 to 17%. According to Reuters Estimates, analysts expect the Company to earn $3.36 per share for fiscal 2005.
2. Harley-Davidson, Inc. raised its outlook, citing record-level sales of Harley-Davidson motorcycles during the second quarter and an increase in European demand. The Company now expects full year 2005 earnings per share growth to be in the 10% to 13% range. According to Reuters Estimates, analysts on average were expecting the Company to report full year 2005 earnings per share of $3.19. The Company had previously set expectations that wholesale shipment volume would drive earnings per share growth of 5% to 8% for the year. Harley-Davidson's longer-term guidance remains at 7% to 9% annual growth in motorcycle unit shipments, supporting earnings per share growth in the mid-teens.
Harley-Davidson, Inc. Introduces Three Motorcycles
Harley-Davidson, Inc. announced that it has expanded its model offerings with an all-new 2006 VRSCR Street Rod, a big bore 15th Anniversary Edition 2005 Fat Boy and dirt track-inspired 2005 Sportster 883R.
AMERICAN ICON â€“ (SFAS Summary) SWOT ANALYSIS OF HDI
As many enthusiasts may describe it, the pride of owning a Harley-Davidson is the pride of owning an 'American Icon'. Harley-Davidson's (HDI) positioning strategy can best be defined by its mission statement: "We fulfill dreams through the experience of motorcycling- by providing to motorcyclists and to the general public an expanding line of motorcycles, and branded products and services in selected market segments." Now in its 100th year, however, the ideal of owning an 'American Icon' has slowly dwindled out of the public's mind, due mostly to the competition from Japanese manufacturers like Honda and Yamaha. HD's most important promotional tool is the brand image of a truly American product. Such a tool appeals to the domestic market, and owning a Harley-Davidson bike fits well into supporting the national feelings of pride for America.
HD's strength's of its powerful brand image, maintaining good customer relationships, strong financial position, and superiority of technology and design are hindered by its weaknesses related to product capacity and unfulfilled demand for their products.
Internal factor analysis summary (IFAS)
Since the 1950â€™s, Harley-Davidson has been an integral part of American pop culture. The days of the lone rider crossing a long stretch of highway that extends as far as the eye can see sparks nostalgia in any red blooded American. It is has been this key relationship with the name Harley-Davidson that powers the thirst for people to purchase an American road bike. Name recognition is very important in the business world and often people refer to any heavyweight motorcycle as a â€œHarleyâ€.
The loyalty of the customer has been seen in the long run through repeat business. Repeat business has also lead to a steady flow of income for the company. The restructuring of Harley-Davidson in the 1980â€™s has lead to two decades of growth. Stock prices continued to rise and both net income and sale have reached an all time high. There has been such a demand for Harley-Davidson motorcycles that a one to two year waiting line built up.
The fact Harley-Davidson motorcycles are all slightly unique have lead to their success. The owners of the motorcycles feel as though they have a custom bike, which has lead to the acceptance of higher prices. This â€œmass customizingâ€ of motorcycles was unique to the industry, furthering the loyalty of owners as well as makers. Due to the high demand for Harleyâ€™s, resale prices have been higher than the competitions. This has made some ownerâ€™s feel as though their Harley-Davidson is an investment allowing them to justify higher sales prices.
By increasing productivity, Harley-Davidson has increased net sales ( For detailed financial analysis see attached excel sheet)
Over 80% of the suppliers of Harley-Davidsonâ€™s materials have been located within 160 miles of the manufacturing facilities. By using a just-in-time system, named MAN (materials as needed), Harley adopted a very efficient approach to manufacturing. Offering long-term contracts to suppliers who have met the companiesâ€™ requirements and making their own pickups allowed Harley-Davidson to cut costs. Using modern technology in research and development and computer-aided drawing also gave them competitive advantage. A product development center in Milwaukee built in 1996 lead to shortening the time of product to market.
Employee pride was another strong point in the Harley-Davidson philosophy. Employee benefits, such as stock options, have lead to high moral. Employee training and development gave more satisfaction to the workers. From the standpoint of productivity happy workers are also more productive workers. Also workers were encouraged to participate in demonstration rides for potential customers. This proved to be very expensive yet worthwhile to the company and customers alike. Demonstration days opened up lines of communication and further increased customer loyalty.
Harley-Davidson has been a very strong company since the 1980â€™s. Demanded soared for their products. The demand grew so fast that manufacturing could not keep up. Customerâ€™s were forced to wait a year or longer to get their motorcycle. During this period many customerâ€™s switched to the competition in order to get their product. The demographics that Harley-Davidson is target at is mid 40â€™s educated male making around $68,000 a year. This target audience has stayed loyal to Harley and been able to withstand the long wait. The younger people that had yet to gain loyalty to the company were not being satisfied and many have moved to cheaper foreign substitutes.
Women only made up 2% of the total Harley-Davidson sales . Many women complained that the size of the motorcycles were too large for them to feel comfortable. With a price exceeding $20,000 for a top of the line model, Harley-Davidson motorcycles were more expensive than their competition. Even the lower end models were not affordable for some potential customers.
In an industry with competitors that had many more resources and products, Harley-Davidson was limited by their size. Many competitors have a more diversified product line that allowed for them to make a lower profit on some products. Honda, for example, had more options for the budget-minded entry-level customer. Once entered into Hondaâ€™s product line they felt that they would be able to get repeat business for their more profitable motorcycles due to customer loyalty. It was very hard for Harley-Davidson to get new customers due to their limited ability to provide a new product and the high price of used Harleyâ€™s.
External factor Analysis summary (EFAS)
The main threats for Harley-Davidson came from Japanese companies such as Honda, Kawasaki, Suzuki, and Yamaha. Some competition also came from domestic competitors in Polaris, Excelsior, and Indian. As the only major US manufacturer of motorcycles, Harley-Davidson could see future domestic market share shrink with the success of Polaris.
The post baby-boomers were the main customer for Harley-Davidson during the 80â€™s and 90â€™s. As these members of society grow older, their purchasing power will decrease. A tight demographic has forced Harley-Davidson to rely on a portion of the population that has been declining. With fewer core customers, Harley needed to consider marketing to new customers.
Women made up more than half of the worldâ€™s population. Yet Harley-Davidson only drew 2% of its sales from women. Competitors have been able to entice women into buying their products by offering smaller, more women specific motorcycles. Since many women had husbands or boyfriends , they could have influenced their partners into purchasing competitors motorcycles. With a specific product line, Harley-Davidson may alienate future customers.
Harley-Davidson has much strength that can lead to great opportunities for the companiesâ€™ future. The three major opportunities are, introducing more products for women, expanding the product line in order to compete in the international arena, and increasing production to meet demand.
2. Strategic Alternatives and Recommended Strategy
There are fundamental questions that all businesses must ask themselves to play a pro-active role in the competitive environment.
 What to change?
 When to change?
 How to change?
 How FAST to change?
 How to ensure the capability to change?
There is a need to constantly renew their processes, their knowledge, their technology, their people, and finally, the strategies.
It is useful to examine the competencies that Harley possesses in its current operations. It has been theorized that companies deliver superior customer value by performing exceptionally well in one or more of three areas, Operational Excellence, Customer Intimacy, and Product Leadership. Based on the above discussion, it is relatively easy to theorize that Harley primary strengths lie in the area of Customer intimacy and product innovation.
A. Strategic Alternatives (From SFAS)
Strategic Alternatives are developed by matching of the Threats-Opportunities-Weaknesses-
Strengths (SWOT) Matrix, the Internal- External (IE) Matrix. Any organization, whether military, product-oriented, service-oriented, governmental, or evenathletic, must develop and execute good strategies to win.
Various Alternatives for Harley-Davidson are:
1. Continue current horizontal growth strategy by replicating its success in other international markets for Harley-Davidson
Pro: Uses core competency to build a desirable product.
Cons: Need to significantly increase marketing effort and expenses.
2. Follow vertical growth strategy of having plant of rawmaterial like auto components or company owned showrooms
Pros: May enable better integration with value chain.
Con: Likely to significantly increase R&D costs and also capital costs.
3. Follow vertical growth strategy of acquiring manufacturing facilities.
Pros: May be able to reduce unit costs via process R&D; could improve product development function. Cons: Expensive and capital intensive; would restrict flexibility.
4. Investigate acquisition of another Auto Company.
Pros: economies of scale and scope possible so can compete in other product segments.
May increase sales and reduce costs in every area.
Con: May not be enough to compete in other segments.
5. Growth through Differentiation focus: The opportunities are, introducing more products for women, expanding the product line in order to compete in the international arena
Pro: Uses core competency to build a desirable product.
Cons: Need to significantly increase marketing effort and expenses.
Advantages of growth strategy will lead to increase in the market share and the economies of scale.
Disadvantages: There may be risk of losing
Consolidates various acquisitions to find economies and to encourage innovation among the business units.
Advantages : may lead to increase in the short term profitability.
Disadvantages: There may be risk of losing
the market share and revenues.
1. What recommended Strategy would you use?
There is no doubt that strategies evolve because of the unexpected responses such as customersâ€™ expectations, new technologies, popular commodities, the change in the environment and pop culture. Thus a companyâ€™s strategy must be combined with a proactive strategy and reactive strategy. Furthermore, a company strategy should not be bland and generic where many companies are doing the exact thing. The best solution is to alter the tactics by creating new innovative ways to be unique and different from the competitors. IF we closely analyze this statement, the patterns of an organization's actions will be clearly reflected not only in the financial performance of an organization over the years but in the relative strengths, weaknesses and strategic positioning of the firm in the business environment, industry or economy it operates in. The understanding of these elements is the prima facie requirement in the strategic planning and management process and is closely analyzed in the environmental scanning process of an organization. These factors are very important in establishing the corporate level strategies of an organization. But one has to remember that there are numerous other factors also such as general state of economy, industry growth rates, etc. which influence the formulation of strategy
HD should chose following:
Growth through Differentiation focus:
The opportunities are, introducing more products for women, expanding the product line in order to compete in the international arena. HD should target a younger market that is technologically conscious in order to increase its share in the performance cruiser market space. With the introduction of the new V-Rod motorcycle, HD is in a position of attaining a sizeable share in the performance cruiser marketplace. To target the younger market with the new product line, the company should adopt the following marketing objectives:
HD should continue current horizontal growth strategy by replicating its success in other international markets for Harley-Davidson
Implementation, Evaluation and Control
1. What kinds of programs (for example, restructuring the corporation or instituting TQM) should be developed to implement the recommended strategy?
Effective implementation depends upon carefully communicating the strategy to all stakeholders - both inside and outside the organization. When strategy drives the planning process, implementation is eased. When new strategies are implemented, changes must often be made - particularly in terms of structure and processes in the organization. Implementation can also be eased as complexity is reduced. And finally, having key processes in place (including decision-making, problem analysis, opportunity analysis, situation analysis, and project management) will assist in effective implementation. Thus the strategy and its programs must be communicated to the stakeholders of Harley.
Implementing strategy involves
* Creating fits between way things are done & what it takes for effective strategy execution
* Executing strategy proficiently & efficiently
* Producing excellent results in timely manner
* Most important FITS are between strategy AND
o Organizational capabilities
o Reward structure
o Internal support systems
o Organizational culture
PRINCIPAL TASKS OF STRATEGY IMPLEMENTATION
* Building a capable organization
* Allocating ample resources to strategy-critical activities
* Establishing strategy supportive policies & procedures
* Instituting best practices & mechanisms for continuous improvement
I will recommend Benchmarking for Harley. Benchmarking is a process, which evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows divisions/organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance.
Benchmarking is simply about making comparisons with other organisations and then learning the lessons that those comparisons throw up".
Source: The European Benchmarking Code of Conduct
"Benchmarking is the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders (best in class)".
Source: The Xerox Corporation
Benchmarking will be primarily with the companies in the industry it is operating like with Honda, Polaris and other rivals. We will also consider world class companies in other industries, which can suitably be applied, to our situation. It will encompass the following:
â€¢ Regularly comparing aspects of performance (functions or processes) with best practitioners;
â€¢ Identifying gaps in performance;
â€¢ Seeking fresh approaches to bring about improvements in performance;
â€¢ Following through with implementing improvements; and
â€¢ Following up by monitoring progress and reviewing the benefits.
In benchmarking with comparable others, an organization:
* Determines how leading organizations perform specific process(es)
* Compares their methods with its own
* Uses the information to improve upon or completely change its processes.
It is important when benchmarking with stellar organizations that you gain a clear understanding of the scope of their project, the methodology they used, the critical success factors they identified, the challenges and opportunities they faced in implementation, and the important lessons they learned.
The â€˜Gap Analysisâ€™
When examining the best practices of others and drawing comparisons, an organization will often perform what is called a "gap analysis." This is a way to identify the performance or operational differences between your process and that of your benchmarking partners, and to understand why the differences exist. One way to identify these gaps is through a technique called "activity modeling," a useful method for understanding how a business process really works by first describing how things are ("as-is" modeling), and then by how you want them to be ("to-be" modeling). Key Actions in Benchmarking for Best Practices
Number of steps that are integral to an effective best practice review:
* Research to plan the review. Before selecting comparison organizations, research the organizations themselves as well as current industry trends and developments.
* Select appropriate organizations. Your research should yield a list of best practice organizations. Use this list to determine how many and which ones to visit. Experts suggest keeping the list to a manageable number, which can be as low as five.
* Collect data from selected organizations. Develop a standard list of questions to structure the interview process and guide your discussions. Gear questions toward discovering common practices and characteristics among the selected organizations. You may need to revise this list after you obtain feedback from the first interview.
* Identify barriers to change. Identify the barriers to implementation within your organization, whether real or perceived.
â€¢ Make recommendations for change constructive and convincing. Give your agency a "basket of ideas" from which to choose. Build flexibility into the recommendations, as your agency will need to adapt them to its unique needs and functions. It also helps to outline the benefits as well as the key steps that should be taken in order for implementation to be successful
Measures to be taken by Harley on the basis of benchmarking:
â€¢ A product mix that is responsive to rapidly changing market needs
â€¢ Introduction of new products based on latest R&D,
â€¢ Use of process innovation and quality improvement process to reduce cost of operations and consequently price of product
These are some of the measures that need to be taken up by the manufacturing companies to retain their competitiveness in a low margin environment. Efforts to reduce manufacturing costs need to be targeted on reduction in material related costs as well as overheads. Investment in material costs would get reduced by looking at long term contracts with vendors, reducing rejects & reworks dramatically, developing alternative materials etc. By reducing investments in inventory across the supply chain (through implementation of pull-based material procurement), even the overhead costs can be reduced further.
Benefits of benchmarking
Benchmarking opens organizations to new methods, ideas and tools to improve their effectiveness. It helps crack through resistance to change by demonstrating other methods of solving problems than the one currently employed, and demonstrating that they work, because they are being used by others.
TOTAL QUALITY MANAGEMENT CAN ALSO BE IMPLEMENTED
â€œQualityâ€ is continually evolving, an emerging consensus includes: Continuous Improvement and Learning: Continuous improvement and learning refers to both incremental and â€œbreakthroughâ€ improvement, and applies to both the individual and organizational levels. Improvement and learning can be directed toward better products and services, to better processes, and to being more responsive, adaptive, and efficient.
The companies use all the above statistical and managerial concepts. They all are very useful tools and used time and again by the organizations. According to my opinion control charts is essential to study closely the quality of the products coming from each production operation. The primary purpose of control charts is to indicate when production processes may have changed sufficiently to affect product qualtiy. This tool is very mush useful for the organisations. There are two type of control charts: 1. For variables 2. For atributes.
These charts can be used just in any application, from automated manufacturing to services. In any industrial product, say cotton yarn, the print outs of control charts for certain qualtiy measures can be provided to the consumers which will give consumers more confidence
Perceptive from Joseph M. Juran
He focused on following points:
* Quality control must be an integral part of management
* Quality is no accident
* Quality must be planned
* There are no shortcuts to quality
* Use problems as sources of improvements
Hence Harley must focus on quality as an integrated concept. They must improve the quality of every aspect of management whether it is labour, material or machine.
Perceptive from Deming
THE CONTRIBUTION BY DEMING IS VERY USEFUL. He has give the 14 points apply anywhere, to small organizations as well as to large ones, to the service industry as well as to manufacturing. They apply to a company:
1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership: The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
* Eliminate work standards (quotas) on the factory floor. Substitute leadership.
* Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective.
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.
Who should develop Evaluation programs?
Every manager has an active role. It is a job for whole management team
* Implementation involves every organization unit
* Top management has to orchestrate major implementation initiatives. But they must rely on middle & lower-level managers to get things done
c. Who should be in charge of the programs?
Incharge of program:
o Chief Executive Officer
o Heads of major organizational units
2. Are the programs financially feasible? Can pro forma budgets be developed and agreed upon? Are priorities and timetables appropriate to individual programs?
Yes programs are financially feasible. These are also known as strategic funds are expense items required for the implementation of strategic action programs whose benefits are expected to be accrued in the long term, beyond the current budget period. There are 3 major components of strategic funds:
1. Investment in tangible assets, such as new production capacity etc.
2. Increases (or decreases) in working capital generated from strategic commitments, such as
the impact of increases in inventories and receivables resulting from an increase in sales and so on.
3. Development expenses that are over and above the needs of existing business, such as advertising to introduce a new product or to reposition an existing one; R&D expenses of new products and so on.
PROFORMA Budgets have to be formulated by team of comprising organizational heads and other functional specialist on the above assumptions. Here the R&D, advertisement costs will be high of Harley in the light of new strategy.
3. Will new standard operating procedures need to be developed for Control ?
Yes it needs to be developed due to the introduction of Benchmarking and Total Quality management. Well-written Standard Operating Procedures are written documents that describe, in great detail, the routine procedures to be followed for a specific operation, analysis, or action. Consistent use of an approved Standard Operating Procedure ensures conformance with organizational practices, reduced work effort, reduction in error occurrences, and improved data comparability, credibility, and defensibility. The development and use of SOPs is an integral part of a successful quality system. It provides individuals with the information to perform a job properly and facilitates consistency in the quality and integrity of a product or end-result through consistent implementation of a process or procedure within the organization. In addition, SOPs are frequently used as checklists by inspectors when auditing procedures. Ultimately, the benefits of a valid SOP are reduced work effort, along with improved data comparability, credibility, and legal defensibility.
Standard Operating Procedures also serve as resources for training and for ready reference and documentation of proper procedures. Standard operating procedures (SOPs) provide direction, improve communication, reduce training time, and improve work consistency. The SOP development process is an excellent way for managers, workers, and technical advisers to cooperate for everyoneâ€™s benefit. A very positive sense of teamwork arises when these parties work together toward common goals.
SOPs should complement and serve as a basis for introductory training. Excessive detail also is likely to cause resentment from experienced workers. They might feel that management is using the SOP to micromanage every aspect of their work performance.
In addition, well-written SOPs act as effective communication tools that contribute to worker understanding and job satisfaction.
SOPs should be written by individuals knowledgeable with the activity and the organization's internal structure. These individuals are essentially subject-matter experts who actually perform the work or use the process. A team approach can also be followed, especially for multi-tasked processes where the experiences of a number of individuals are critical.
 Wieringa, Douglas, C. Moore, and V. Barnes. Procedure
 Writing: Principles and Practices. Columbus, Ohio. Battelle
 Press: 1998.
 Price, Brenda. Set monitoring protocols for SOPs. Dairy Herd
 Management, Vol. 38, No. 3, March 2001.
 Cornell Pro-Dairy Staff. â€œIf Iâ€™ve told you onceâ€¦â€ Northeast
 Dairy Business, Vol. 2, No. 2, April 2000.
 BOOK: OPERATIONS MANAGEMENT BY GAITHER
 WWW.INDIAINFOLINE.COM, BUSINESSWORLDINDIA.COM
 Corporate website of www.harley-davidson.com/
 Book Corporate Strategy by Gary Hamel
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