Harley-Davidson Case Study

Harley-Davidson: History, Development, Growth

It's hard to imagine that the Harley-Davison company began in an old shed in Milwaukee, Wisconsin, but it was there that William Harley and Arthur Davidson invented their first motorcycle in 1903. After having some success with selling the motorcycles through retailers, the Harley-Davidson Motor Company was incorporated in 1907. In 1909, they company introduces their new motorcycle with V-twin engines. This model, with the forty-five degree cylinder configuration becomes the signature look of Harley-Davidson motorcycles (H-D Company History, 2006). By 1900, Harley-Davidson had sold over three thousand motorcycles (Schinwald, 2005) and was on their way to success.

Over the next few decades, operating conditions became difficult for Harley-Davidson and other motorcycle manufacturers. Inexpensive, high quality motorcycles from Japan were being imported into the United States. By 1954, Harley-Davidson was the last American motorcycle manufacturer left. In1969, Harley-Davidson was ready to declare bankruptcy due to management issues and the competitive threat that foreign motorcycle manufacturers such as Honda, Suzuki, and Yamaha had produced (Hill, Rifkin, 2000). Finally, American Machine and Foundry Company (AMF) stepped in and purchased the failing Harley-Davidson.

Unfortunately, AMF did little more then preserve the Harley-Davidson name. Despite spending millions of dollars on trying to re-vamp the company and increasing production, the quality of the Harley-Davidson motorcycles was suffering (Hill, Rifkin, 2000). The economy was experiencing a recession and interest rates were high. As sales continued to drop, AMF wanted out and decided to sell the company. In 1981, thirteen Harley-Davidson senior executives signed a letter of intent to purchase Harley-Davidson from AMF (H-D Company History, 2006). After the buy-back, Harley-Davidson continued to struggle and in 1983, it looked like Harley-Davidson was going to go bankrupt.

Harley-Davidson knew it had to make some drastic changes. In 1983, Harley-Davidson decided to petition the International Trade Commission to impose tariffs on the Japanese motorcycle manufacturers, which they were eventually granted (H-D Company History, 2006). After touring a Japanese manufacturing company, Harley-Davidson decided to introduce just-in-time inventory methods