Case Study: Harley-Davidson Motorcycle Company

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CASE STUDY: HARLEY-DAVIDSON MOTORCYCLE COMPANY Craig A. Prince Webster University Case Study: Harley-Davidson Motorcycle Company Harley-Davidson Motorcycle Company was established in 1903 by William Harley and the Davidson brothers, William D., Arthur and Walter, handcrafted their first three motorcycles in a shed in Milwaukee. In 1909, the company introduced its trademark bike; a 2 cylinder, 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, which was thriving after World War I, was diminishing quickly as a result of the Great Depression. As one of only two remaining motorcycle companies, Harley-Davidson survived because of exports and sales to the police and military. By1953 Harley-Davidson was the last remaining major motorcycle manufacturer in the US. Harley-Davidson was taken over by the American Machine and Foundry (AMF) in 1969. AMF put the company up for sale in the late 1970's due to a gross reduction in sales. The reduction in sales was representative of a poor level of quality in the Harley bike compared to their Japanese counterpart. In 1981, thirteen members of the Harley-Davidson management team purchased the company from AMF in a leveraged buy-out. But, within the first year, overall demand for motorcycles dropped dramatically and Harley's share of this market also continued to drop. This even greater reduction in sales for Harley resulted in a large inventory of unsold products. Harley was aware they would no longer be able to continue

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