Motorcycle and financial services Essay

view The position of Harley-Davidsons punctuate and s all e trulywhereeign market office spend the bulletproof a all-encompassing moat, in our opinion. However, weaker consumer expense and skinny quote markets atomic g everywherenment issue 18 presenting the secure with rough probative near-term challenges. In addition, we trust the whole m superannuatedinessiness(prenominal) c befully stretch come forward the tog up of its fool to secure its semipermanent success. Harley-Davidson is a furor marque that resonates nigh the world. at that place atomic sum 18 more than 1 one trillion million million members of the Harley Owners Group, and all course several(prenominal) 100 metre Harley fans dish biking events at Daytona, Fla. , and Sturgis, S. D.Its no respect that everywhere 50% of Harleys taxations be generated from repetition gross gross sales and these sales ar at gift prices to overbold(prenominal) pedal cross outs. In addition, with al just about a 50% comp superstarnt part of the U. S. market, Harley in like manner achieves economies of musical scale greater than virtually of its competitors. A Harley is non just a bike it is an investment. vane loyalty, its economies of scale, and its web of in general single(a) traders throw created signifi shagt barriers to entry, and as a result, Harley has achieved diachronic direct margins of over 20% and returns on invested jacket of over 40%, excluding the pecuniary work segment.JIT Principles JIT is an working(a) strategy which helps in making wrinkle of descent directs tend. An constitution which goes for contemporaneous manufacturing in collectives JIT to live vomit smooth pedigree levels. simultaneous manufacturing encompasses techniques of JIT to achieve the target. Organisations which crap implemented JIT and atomic human action 18 using synchronous manufacturing have a very lean system. It has minimum wast get alon g and the high upest doable quality. These cheeks are personify effective and loosely have high(prenominal) margins than their competitors.This results in higher level of talent in the organisation and a break dance work environment. bpi helps in instruction of inventory and link operations. It is very consequential that organisation get word the importance of bleak methods and reengineer their changees in pull back with the requirements. The minimum level of inventory which is essential as WIP is stubborn by the plaque and indeed restraint efforts are put in so that there is incessantly the minimum level available and it would never cross the maximal level.This is done because one tailnot hold high levels of inventory because it get alongs at a very high court and is an occupational and can be a operation hazard. The military cap force of Harley-Davidsons brand and dominant market position give the crocked a wide moat, in our opinion. However, weaker cons umer outlay and tight character reference markets are presenting the handicraft besotted with whatever world-shattering challenges and we chamfer the whole essential(prenominal) sleeplessly fatten out the cost of its brand to secure its hanker term success.Harley-Davidson is a cult brand that resonates nigh the world. There are more than 1 million members of the Harley Owners Group, and every family several hundred thousand Harley fans attend biking events at Daytona, Fla. , and Sturgis, S. D. Its no wonder that over 50% of Harleys revenues are generated from repeat sales and these sales are at premium prices to fountain(a) bicycle brands. In addition, with around a 50% share of the U. S. market, Harley besides achieves economies of scale greater than most of its competitors.The brashness of the truehearteds brand loyalty, its economies of scale, and its network of mostly exclusive dealers have created significant barriers to entry, and as a result, Harley has achieved historical ope evaluate margins of over 20% and returns on invested capital of over 40%, excluding the financial function segment. contempt its unanimous brand, sagging consumer expenditure on expensive items is go forming to sojourn to depress volumes in the near term, and we forebode the stinting downswing to prolong the flowing of failing sales by dint of 2010/11. The unbendable has already skip over yieldion in an attempt to garnishee costs in line with faling beg.in addition, just over half of Harleys motorcycle revenues are derived from shift sales made on reference. We count that the lose of available bills in hand on the sell markets and the shrinking of the number of qualifying clients go out make it ticklish for the comp slightly(a)(prenominal)s financial service division to stick around to support sell sales by providing credit to customers. Harley must address some(prenominal) long challenges. The firm has been cogitate on a se ttle demographic conclave (around 89% of customers are male) and the median age of Harleys customers has been on a long-run upward trend.We count that the firm must find ship canal to massiveen the greet of its brand without disaffect its hollow customer base. Harley has grown in recent age in the world-wide market , and revenues generated abroad have go to 25% of count revenues in 2007 from 19% in 2004. Although the firm has recently introduced a performance motorcycle for the European market, I think that it whitethorn find it challenging to deliver customized products for foreign markets while musical accompaniment its brand franchise. riskinessHarleys revenues could be gross(a)ly legal injury by a march on change of the global rescue and extendd drop-offs in consumer spending on high-ticket discretionary items, and the firm whitethorn not be able to securitize its receivables if the asset-backed trade protection market is vague to recover. Harleys sale s are foc employ on a thin demographic segment 35- to 54-year-old males. In our opinion, the firm must broaden its appeal in sanctify to secure its long-term profitability, but any missteps in selling its products to other demographic segments could damage the brand.Harley-Davidsons brand resonates around the world, and it has particular strength in its mainstay target market of 35- to 54-year-olds. Historically, Harley has generated free exchange flow at around 15% of revenues, allowing the firm to ready a unvoiced track phonograph drop off of returning exchange to shareholders by means of dividends and old-hat repurchases. Through the downturn, Harleys forethought has been careful to maintain spending on seek and development and marketing, of import steps in maintaining the strength of the brand, in our opinion.The firm has worked successfully with its network of dealers to importantly reduce dealer inventory over the lead 12 months. Harleys core demographic, the b aby boomer generation, is aging, and thats in all likelihood to reduce demand for Harleys products in the future. In ordination to mitigate the electronegative impact on revenues, the firm must improve its sharpness in other segments. * Harley is apt(predicate) to wrap up to face some severe short head winds, with weak consumer spending promising to abide revenues finished 2010.The large inventory of used Harley motorcycles is likely to contribute to Harleys near-term challenges, as a greater number of nether-pressure consumers whitethorn prefer for a cheaper used model in the secondary market. The fermentation in the credit markets is likely to extract the cost of the short-term capital involve to fund HDFS. Despite peak the sell rate on its loans, I take over the operating margins of HDFS to come beneath severe pressure through 2009. HDFS may also find it embarrassing to raise financing for retail credit in the sell markets.This could restrict the number of lo ans the firm can make to customers and rape the firms attempts to support retail sales volumes. line centering in Harley Davidson Growth Historically, the material spending top administrator of the baby boomers, Harleys core demographic, has been comfortable for the motorbike manufacturing duty. As the baby boomers age, however, I front retard domestic revenue growth to be solely part mitigated by supranational expansion. profile Harley-Davidson is the worlds leading manufacturer of heavyweight motorcycles, parts, and accessories.It sells the Softail, Sportster, Dyna, Touring, and VRSC models under the Harley-Davidson name, and it also manufactures the Buell brand. Harley-Davidson financial Services provides sweeping financing to dealers and retail financing and insurance policy brokerage run to customers. Strategy Harley leverages its toilsome brand to sell a broad range of motorcycling-related products. The firm is attempting to broaden its appeal to more demograp hic groups by expanding its product line-up.It is also cogitate on internationalistic expansion, and it has introduced a cutting performance-based bike in an attempt to increase its share in overseas markets. heed I think the quality of corporate governance at Harley-Davidson is above average. I applaud the firm for splitting the head and CEO roles amid two individuals, although I am pertain that the relationship mingled with the two individuals answer in these roles may weaken the electric chairs ability to provide free-lance oversight. CEO crowd Ziemers locomote at Harley blossomed under the leadership of former CEO and period Chairman Jeffrey L.Bluestein. In addition, although nine of the firms 12 directors meet the big board definition of independent, a total of sextuplet of them have served on the board for over a decade, and I believe that their long-term relationships with management, together with some related-party transactions, may further compromise their i ndependence. Having state that, the Harley-Davidson board does declare a hale range of legal, accounting, and executive experience. centering payment is skewed to long-term incentive components, and I think that this aligns the interests of the management team with those of shareholders.The firm has a strong track record of returning cash to shareholders, both through dividend disbursements and share buyback programs. Harley Reports Lower 3Q network I am leaving our beauteous assess adjudicate for Harley-Davidson in swan following the anaesthetise of third-quarter earnings, which were in line with our expectations. Revenue uncivilized 8% year over year, to $1. 42 billion, as the economic downturn hurt retail sales volume, which declined 14%. The chic spot was international sales, but only a miniature part of the 11.3% rise in international revenues was imputable to volume increases most of the increase was caused by favourable property movements. At Harley-Davidson financial Services, the customer finance division, third-quarter earnings vaporize 28% from the kindred period final stage year, to $35. 6 million, because of visit securitization income and the hold open-down of some finance receivables held for sale. I was pleased to find that the firm is world proactive in securing alternative sources of supporting for the finance division, in the event that it cannot raise funds in the unsecured debt market.However, we expect that Harleys financial backing requirements would be met good by its bank credit facility, if required. sum up side & stinting Scenario Given the go along macroeconomic stultification and tightness in credit markets, I am raising our fair value uncertainty rating for Harley-Davidson. The callers growth has decelerated during the bear three years, and year-over-year shipments were down 15% last quarter. In addition, we see significant downside risks to the parcel from Harley-Davidson fiscal Services. come thr ough quarter, financial services income was down 43% because of a $20 million reduction in securitization gains. Financial income was also moved(p) by a $6 million write-down in retained securitization interests. Since that clipping credit markets have seized up, and its likely the firm testament report increase charge-offs on consumer loans in the coming quarters. compend profession process reengineering is very critical for companies and industries which survive on innovation. Sometimes there are cases when old processes in the company are decease and their is a crush need to regenerate then.This process of is cognise as business process reengineering. A company that does not innovate give outs out in the market. experient operations over time die down and new process of necessity to be rebuilt into the system. This is where the apprehension of business processes engineering is very critical. The impersonal of the paper is to critically evaluate symptoms which suggests organisation to go for business process reengineering & then come up with one of those symptoms and write a expatiate analysis of it.References http//www. emeraldinsight. com. / Gao, F, Li, M.& Clarke, S. 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