'Motorcycle and financial services Essay\r'

'Abstract The carriage of Harley-Davidson’s grade and prevailing despoilket position give the blind drunk a wide moat, in our opinion. However, weaker consumer using up and tightly fitting creed markets atomic make out 18 presenting the unwavering with some(a) momentous near-term challenges. In addition, we call up the whole must conservatively broaden the pull in of its send to secure its long success. Harley-Davidson is a cult snitch that resonates around the world. in that respect argon more than 1 trillion members of the Harley Owners Group, and every class several hundred thousand Harley fans do biking offsprings at Daytona, Fla. , and Sturgis, S. D.\r\nIt’s no wonder that over 50% of Harley’s revenues be generated from repeat gross gross sales and these sales are at premium prices to opposite pedal brands. In addition, with al about a 50% manage of the U. S. market, Harley likewise turn overs economies of scale greater tha n most of its competitors. A Harley is not just a cycle it is an investment. brand loyalty, its economies of scale, and its ne twainrk of broadly speaking exclusive school principals turn out created significant barriers to entry, and as a result, Harley has achieved historical operate margins of over 20% and returns on invested capital of over 40%, excluding the fiscal work segment.\r\nJIT Principles JIT is an operational dodge which helps in making register levels lean. An organisation which goes for synchronal manufacturing incorporates JIT to have humiliate store levels. Synchronous manufacturing encompasses techniques of JIT to achieve the target. Organisations which have implemented JIT and are using parallel manufacturing have a very lean system. It has minimal wastage and the broad(prenominal)est possible quality. These organisations are cost effective and loosely have in high spiritser margins than their competitors.\r\nThis results in higher level of efficien cy in the organisation and a break away work environment. BPI helps in heed of inventory and related operations. It is very strategic that organisation say the importance of new methods and reengineer their touch ones in line with the requirements. The nominal level of inventory which is required as WIP is opinionated by the organization and then control efforts are put in so that there is continuously the minimum level available and it would never foul up the maximum level.\r\nThis is done because one cannot hold high levels of inventory because it scrapes at a very high cost and is an occupational and can be a operation hazard. The strength of Harley-Davidson’s brand and dominant market position give the sign of the zodiac a wide moat, in our opinion. However, weaker consumer pass and tight source markets are presenting the unfluctuating with some significant challenges and we believe the steadfastly must carefully expand the cost of its brand to secure its long term success.\r\nHarley-Davidson is a cult brand that resonates around the world. There are more than 1 million members of the Harley Owners Group, and every division several hundred thousand Harley fans attend biking events at Daytona, Fla. , and Sturgis, S. D. It’s no wonder that over 50% of Harley’s revenues are generated from repeat sales and these sales are at premium prices to other motorcycle brands. In addition, with almost a 50% share of the U. S. market, Harley in like manner achieves economies of scale greater than most of its competitors.\r\nThe bulk of the starchy’s 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 judge margins of over 20% and returns on invested capital of over 40%, excluding the pecuniary services segment. Despite its strong brand, sagging consumer spending on high-ticket items is apparent to continue to depress volumes in the near term, and we look to the economic downturn to continue the period of failing sales done 2010/11. The mansion has already cut production in an flak to trim costs in line with faling demand.\r\nin addition, just over half of Harley’s motorcycle revenues are derived from sell sales made on credit. We think that the lack of available bloods on the wholesale markets and the shrinking of the number of qualifying customers impart make it rough for the comp either’s financial services division to continue to support retail sales by providing credit to customers. Harley must trade some long-run challenges. The firm has been focused on a narrow demographic group (around 89% of customers are male) and the median age of Harley’s customers has been on a long-term upward trend.\r\nWe believe that the firm must find ways to broaden the appeal of its brand without alienating its core customer base. Harley has fully grown in recent years in the multinational market , and revenues generated abroad have risen to 25% of total revenues in 2007 from 19% in 2004. Although the firm has recently introduced a performance motorcycle for the European market, I think that it may find it difficult to deliver customized products for overseas markets while supporting its brand franchise. Risk\r\nHarley’s revenues could be severely agony by a further relenting of the world(a) economy and change magnituded reductions in consumer spending on high-ticket discretionary items, and the firm may not be able to securitize its receivables if the asset-backed security market is opposed to recover. Harley’s sales are focused on a thin demographic segment: 35- to 54-year-old males. In our opinion, the firm must broaden its appeal in order to secure its long-term profitability, but any missteps in marketing its products to other demographic segments could equipment casualty the brand.\r\nHarley-Davidson’s brand resonates around the world, and it has particular strength in its key target market of 35- to 54-year-olds. Historically, Harley has generated renounce cash flow at around 15% of revenues, allowing the firm to develop a strong leading record of returning cash to shareholders through dividends and bourgeon repurchases. Through the downturn, Harley’s management has been careful to plead spending on research and development and marketing, important steps in maintaining the strength of the brand, in our opinion.\r\nThe firm has worked successfully with its network of dealers to significantly reduce dealer inventory over the last 12 months. Harley’s core demographic, the baby boomer generation, is aging, and that’s likely to reduce demand for Harley’s products in the future. In order to mitigate the negative impact on revenues, the firm must improve its penetration in other segments. * Harley is likely to continue to face some severe short-term he ad winds, with anemic consumer spending likely to hurt revenues through 2010.\r\nThe large inventory of used Harley motorcycles is likely to contribute to Harley’s near-term challenges, as a greater number of down the stairs-pressure consumers may prefer for a cheaper used model in the indirect market. The turmoil in the credit markets is likely to put forward the cost of the short-term capital required to fund HDFS. Despite raising the retail rate on its loans, I judge the operating margins of HDFS to come under severe pressure through 2009. HDFS may also find it difficult to raise financing for retail credit in the wholesale markets.\r\nThis could restrict the number of loans the firm can make to customers and thwart the firm’s examines to support retail sales volumes. instrument vigilance in Harley Davidson Growth: Historically, the strong spending power of the baby boomers, Harley’s core demographic, has been affirmative for the motorbike maker. As the baby boomers age, however, I expect slowing domestic revenue growth to be only partially mitigated by multinational expansion. Profile: Harley-Davidson is the world’s leading manufacturer of heavyweight motorcycles, parts, and accessories.\r\nIt sells the Softail, Sportster, Dyna, Touring, and VRSC models under the Harley-Davidson name, and it also manufactures the Buell brand. Harley-Davidson financial work provides wholesale financing to dealers and retail financing and amends brokerage services to customers. Strategy: Harley leverages its strong brand to sell a broad range of motorcycling-related products. The firm is attempting to broaden its appeal to more demographic groups by expanding its product line-up.\r\nIt is also focused on world(prenominal) expansion, and it has introduced a new performance-based bike in an attempt to increase its share in overseas markets. Management: I think the quality of corporate brass instrument at Harley-Davidson is above av erage. I applaud the firm for splitting the chairman and CEO roles betwixt two individuals, although I am concerned that the relationship between the two individuals serving in these roles may weaken the chairman’s ability to provide freelancer oversight. CEO James Ziemer’s career at Harley blossomed under the leadership of former CEO and on-going Chairman Jeffrey L.\r\nBluestein. In addition, although nine of the firm’s 12 directors meet the NYSE definition of â€Å"independent,” a total of six of them have served on the hop on for over a decade, and I believe that their long-term relationships with management, together with some related-party transactions, may further via media their independence. Having said that, the Harley-Davidson board does contain a unfluctuating range of legal, accounting, and executive experience. Management compensation is reorient to long-term incentive components, and I think that this aligns the interests of the manag ement team with those of shareholders.\r\nThe firm has a strong lead-in record of returning cash to shareholders, both through dividend disbursements and share buyback programs. Harley Reports Lower 3Q Earnings I am leaving our fair value evaluate for Harley-Davidson in place following the release of third-quarter earnings, which were in line with our expectations. Revenue fell 8% year over year, to $1. 42 billion, as the economic downturn hurt retail sales volume, which declined 14%. The voguish spot was international sales, but only a small part of the 11.\r\n3% rise in international revenues was attributable to volume increases; most of the increase was caused by favourable currency movements. At Harley-Davidson Financial Services, the customer finance division, third-quarter earnings fell 28% from the same period last year, to $35. 6 million, because of lower securitization income and the write-down of some finance receivables held for sale. I was bright to note that the fir m is being proactive in securing alternative sources of funding for the finance division, in the event that it cannot raise funds in the unsecured debt market.\r\nHowever, we expect that Harley’s funding requirements would be met comfortably by its bank credit facility, if required. Supply side & adenylic acid; Economic Scenario Given the continued macroeconomic damage and tightness in credit markets, I am raising our fair value uncertainty rating for Harley-Davidson. The company’s growth has decelerated during the last 3 years, and year-over-year shipments were down 15% last quarter. In addition, we collide with significant downside risks to the contribution from Harley-Davidson Financial Services.\r\nLast quarter, financial services income was down 43% because of a $20 million reduction in securitization gains. Financial income was also affected by a $6 million write-down in retained securitization interests. Since that time credit markets have seized up, and itâ €™s likely the firm lead report increasing charge-offs on consumer loans in the overture quarters. Summary Business process reengineering is very precise for companies and industries which survive on innovation. Sometimes there are cases when old processes in the company are expiry and their is a pressing need to rejuvenate then.\r\nThis process of is known as business process reengineering. A company that does not innovate relegates out in the market. Old operations over time die down and new process needs to be rebuilt into the system. This is where the concept of business processes engineering is very critical. The fair game 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 expand analysis of it.\r\nReferences: http://www. emeraldinsight. com. / Gao, F, Li, M.& Clarke, S. (2008). knowledge, management, and knowledge management in business op erations. Nonaka, I. (2005). Knowledge Management: Critical Perspectives on Business and Management. Taylor & Francis. Tait, A & Richardson, K. A. (2010). complexity and Knowledge Management Understanding the Role of Knowledge in the Management of Social Networks. IAP Goldman, A. (n. d. ). Eliminating Bottlenecks. Retrieved 28th manglech, 2011, from http://www. gaebler. com (n. d. ).\r\nRetrieved Mar 27th, 2011, from Customer Relationship MAnagement: http://www. customerthink.com (n. d. ). Retrieved Mar 27th, 2011, from more is not value Proposition: http://sinekpartners. typepad. com Auction site. (n. d. ). Retrieved vitiate 27th, 2011, from Harley Davidson Value: http://harleyauctionsite. com Harley Davidson USA. (2011, MAr 27). Retrieved Mar 17, 2011, from Harley Davidson: http://www. harley-davidson. com Impact Factory. (2010, Feb 2nd). Retrieved mar 27th, 2011, from http://www. impactfactory. com http://www. h-dsn. com/genbus/links. jsp Management Research Review. ( 2000) Johan Van Nimwegen, Brian H. Kleiner, Volume 23 issue 7/8.\r\n'