GB540: Economics for Global Decision Making
Harley-Davidson is a manufacturer of large motorcycles. This company began in 1903 making motorcycles out of a garage. By 1904 the company started their first dealership and as of 2014 has a dealership in every state in the US and a total of over 1500 dealerships worldwide. In 2013, Harley- Davidson was rated number 449 in the Fortune 500 list, up from number 458 in 2012. The company began with building a unique engine that was called the V-twin in 1909. This design was the beginning of what would become the mainstay of the company and their original design. The bikes produced by this company were typically of a larger scale and higher horsepower compared to other manufactures of the time. The company has always maintained a limited amount of production models throughout their history. One of the first successful ventures that fueled a massive interest and growth for the company was during WW II. The US government purchased almost exclusively all motorcycles from Harley Davidson. Their reputation for quality, innovation and durability grew exponentially from there on.
In 1969, AMF (American Machine and Foundry) purchased Harley-Davidson. One of the first strategies that AMF implemented was a streamlining of production costs. For many the loyal owner, the quality of the bike was in decline. During this time there was strong competition coming into the US from Japan. With the change in production the quality of these new imports were superior to the Harley bikes and at a lower price. By 1981 members of the Harley and Davidson families purchased the company back from AMF. Although a struggle at first, the new owners began a return to the original style, quality of manufacturing.
For the fiscal year ending on December 31, 2013, the Harley-Davidson company had a gross revenue of $5,258,290 (in thousands). This was an increase of over $310 million from 2012 or a 6% increase. This number also represents an overall increase of 33% since 2009. After adjustments and expenses, the company has a net income of over $730 million for this fiscal year. For the company this was the fifth straight year of increase in sales and net income. From the Balance sheets ending on December 31, 2014 the company does have $1,066,612 (in thousands) cash or cash equivalents. In reserve for investment Harley has $1,773,686 (in thousands). For investors in the company in 2013 the company was able to pay dividends of $.82 per share for the year. This number is up from $.62 per share from the fiscal year ending in 2012. The earnings from operations for 2013 were $3.29 per share. This number reflects an increase from 2012 where the number totaled $2.75 per share. The Harley-Davidson company also operates a Financial Division known simply as Harley-Davidson Credit Corporation. For the fiscal year ending 2013 this division had gross revenue of over $641 million dollars.
Social Factors One of the biggest issues facing Harley-Davidson is in the issue of sustainability. This issue comes mostly from the factors of the environment. Although Harley-Davidson has been monitoring the overall emission from production, there has been concern that the numbers are not a honest reflection of the data. The company has stated since 2004 they have been able to cut emissions by over 42%. Currently the company operates three plants. They have plants in Wisconsin, Kansas and Pennsylvania. All three plants are evolved in manufacturing that contributes to continual emissions. Beginning in 2009, they have issued reports regarding their “green efforts”. One of the growing concerns is the shaping of this direction in alignment with the core customer. The “softer” side of Harley is not a core characteristic for the company and the rider. Concerns when reports are being issued to the public and the stakeholders are deemed not to be a core concern of…