Operational Restructuring at Harley Davidson

            
 
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Case Details:

Case Code : OPER021
Case Length : 15 Pages
Period : 1996 - 2002
Organization : Tata Steel
Pub Date : 2003
Teaching Note :Not Available
Countries : India
Industry : Steel

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Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"Suppliers will lie down on the train tracks for Harley."

- 'High-Octane Hog,' Forbes, September 2001.

The Problems of Plenty

The Harley-Davidson (H-D) motorcycle brand is undoubtedly an American cultural icon, along with brands like Coca-Cola, McDonald's and Marlboro. H-D's motorcycles had become a symbol of individuality and the spirit of freedom and independence, for customers in the US and in various other parts of the world.

Success had not come easily to H-D. In the early 1980s, the company almost went bankrupt on account of severe competition from Japanese motorcycle brands such as Honda, Suzuki and Kawasaki. However, H-D revived its operations by a rigorous, comprehensive restructuring exercise that covered various aspects of its business such as manufacturing, marketing and distribution.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Since 1984, the company registered a continuous growth in revenues and earnings as the demand for H-D motorcycles increased immensely. By the mid-1990s, demand for the motorcycles increased to such an extent that it was becoming difficult for H-D to fulfill it. Customers were forced to wait for a long period to get delivery of their H-D motorcycles (reportedly, the wait period ranged from six months to over a year). The imbalance between supply and demand was so high that the dealers began taking advantage of it by selling H-D motorcycles at high margins.

The huge gap between supply and demand resulted in a flourishing black market for H-D motorcycles with each vehicle selling for a much higher price than its list price. Not only the dealers, even customers began cashing in on this opportunity. Many customers on the waiting lists began trading their places on the list to other impatient customers, who were placed further down the list.

The inability to satisfy customer demand because of supply constraints prevented H-D from expanding its operations globally as it had planned. Analysts were quick to point that if such a scenario prevailed for a long period, H-D could find it difficult to sustain its leadership status.

They felt that such a long waiting list might lead the disappointed and frustrated customers to opt for other motorcycle brands in the market, despite their yearning for H-D motorcycles.

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