Harley Davidson Case Analysis

Factors to be considered when analysing the alternatives:-

1. Increase Prices:-

Positive Effect: - By increasing the price the profit of the company will increase. This will provide an easy way to match supply and demand without requiring additional capital investment and there will be no need to change the production process.

Negative Effect: - There may be some negative aspects of increase of price as by doing so the sale of the bike may come down more than expected and one does not know that what is the limit of a customer or it will not be easy to judge the perception of the customer. The second thing is that if the recession comes then what will the company do to manage less sales at that time.

2. Change the product mix:-

Positive Effect: - By eliminating the less profitable bike Sportser they can concentrate more on high selling and profit margin bike Softail and Tourer .By doing this they can match the demand of above given bigger bikes. So that they can capture the greater margin associated to these products. This will require the capital expenditure of only $20 million for change over and this is not a big deal as the profit margin in producing big bikes is too much.

Negative Effect: - By eliminating Sportster they will lose less price segments , so if a customer wants to have a bike Harley Davidson bike of price range $5245 to $8395 then he has to switch to another company. So by doing this there can be a rise of another bike company may occur which will decrease the bike share of Harley Davidson in the future.

3. Continuous improvement and outsourcing:-

Both the term continuous improvement and outsourcing will result in an increase in productivity at less investment .By making continuous improvement they can optimize the production facility. By spending around $10 million they