Evaluation of Corporate Performance of Harley-Davidson



Evaluation of Corporate Performance of Harley-Davidson

Thesis Statement

Harley Davidson is a good option for long term investors as they have better growth opportunities. Short term investors should look for other alternatives as their payout is not good compared to the industry.

Introduction

Harley-Davidson claims that it's their brand which gives the rider an inner satisfaction and pleasure by the statement “Four wheels move the body. Two wheels move the soul” (Hoovers.com, 2013). Harley-Davidson is one of the leading companies of the world. It is considered to be classy, stylish and an elegant brand. It operates in two segments, i.e. motorcycle & related products and financial services. It is the number one maker and seller of heavyweight cruisers. It has more than 1300 dealers worldwide it offers a range of motorcycles. Harley-Davidson doesn't just sell motorcycle but a BRAND. It also offers clothing and accessories under the name of 'MotorClothes' and financial services to the dealers and customers of US and Canada under the name of 'Harley-Davidson Financial Services' (Harley-Davidson inc., 2013).

The idea of motorized bicycling was initiated in US by three people under a borrowed roof and materials. They manufactured the first Harley-Davidson motorcycle in those circumstances. This was an innovative and novel idea. Later in 1907, the company came into proper incorporation when another Davidson brother joined the pack and carried on 'The Harley-Davidson Motor Company'. They kept on innovating new ideas for their motorbikes which made this company an interesting brand. It became the largest motorcycle manufacturer not only in US but in the whole world. It deals in more than 67 countries and has enjoyed commendable growth in many years since its inception. It has dominated the market and has been a benchmark for all other companies of the industry. With innovation as its basic rule, it has given many new designs for individuals. It celebrated its 100th anniversary in 2003 (Retrocom.com, 2003).

Industry Analysis

The future growth potential of a company and other anticipations require a thorough analysis of many aspects like industry in which it operates, the financial position of the country, cultural acceptance external environment and related things that can have an effect on the financial position of the company. Harley-Davidson Inc falls under motor vehicle industry. It is a public listed company represented as “HOG” at NYSE.

United States have been one of the largest motorcycle markets having US $25.6 billion in 2012. New generation is not much interested in motorcycles because they like to ride bikes with more power and exclusivity features and not middle weight bikes. It was accompanied by a recession in US of 2009, so people resisted buying new bikes. The whole industry revenue dropped down by 19% in that year. All the dealers and producers had similar issues. The industry could not manage to rise again to the level that it had before this recession (Euromonitor.com, 2012).

The global motorcycle industry hasn't seen a growth in last four consecutive years. There are many divisions in the motorcycle market, ...