KAIST College of Business - mbacasecomp.com
Transcript of KAIST College of Business - mbacasecomp.com
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Harley Davidson : Driving Disruption
KAIST Consulting
Matt Levatich, CEO of Harley Davidson
Haerin Shin, Jaewon Lee, Adam Schwarz, Jason Han
KAIST College of Business
1/10/2019
1
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Executive Summary
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2
Issue Recommendations Costs
Changing
Government
Policies – Tariffs
- Expand existing Thailand facility to support entrance to Asia-Pacific
- Hire US Lobbying firm to advocate for Tariff reductions and exceptions
$35 Million
$100 K/yr
(for 3yrs)
Changing Demand
- Disruptors and
Technology
- Aggressive Marketing Plan to embolden new technologies
- China Marketing Plan to help expansion into EV Moped market
- Extend EV options to entire product line-up
- Produce Hydrogen-Jet motorcycle for ‘greener’ iconic Harley rumble
- JV with Toyota
- Embrace the Rental Economy: US & China
3% of Sales
$1 Million/yr
$12 Million
$2 Million
Changing
Demographic –
Strength in
Diversity
- Aggressive Marketing Plan to redefine the Harley brand for all
demographics: More ethnicities, more Women, more people
- Sponsor E-Sport racing events and influence developers of video games
3% of Sales
$1 Million/yr
(for 5 yrs)
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Elevator Pitch
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Expand market utilizing policy
Lead changing demand rather than follow
Attract diversified fans of Harley Davison
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Global Market Share
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Asia Pacific Europe Unite States
Motocycles Moped
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Global
Motorcycle
/Moped
Market
Value
India
Bajaja(India)
Hero(India)
Honda(Japan)
Yamaha(Japan)
Other
Europe
BMW(Germany)
Honda(Japan)
Piaggio(Italy)
Yamaha(Japan)
Other
USA
Harley davidson(USA)
Honda(Japan)
Kawasaki(Japan)
Yamaha(Japan)
Other
NO Harley! NO Harley! Only 33%!!
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WHY 5 POINT STRATEGY
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Disruption
• Tariff
• Environment
• Innovation of technology
• Emerging Economy
QUESTIONS
• How we can maintain our brand
• How we can manage competitors
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Competition environment
China
India
EU
Japan
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• Competitor : Jiangmen Dachangjian • Rental EV
• Competitor : Hero, Royal Enfield • Selling EV
Hard
Very Hard
Positive
Hard
• Competitor : BMW, Piaggio
• Competitor : Honda, Suzuki, Kawasaki
• Hydrogen jet motor cycle
• No further actions
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People love Harley Davidson
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• People desires Legacy motor cycle of Harley davidson✓ Emerging Asian market, Rich asians
• Sounds of Harley Davidson is lovely✓Lovely, but too loud
✓This can be simulated by technology
• E-sports is booming ✓Influencers through twitch, Youtube
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Financial Snapshot
• Going down• Competition
• Tariffs
• Trade Wars
• Changing Demographics
• How can Harley Davidson reclaim decreased profits?
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$733,993.00 $844,611.00
$752,207.00 $692,164.00
$521,759.00
2013 2014 2015 2016 2017
$U
SD
(In
thousa
nds)
NET INCOME 2013-2017
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Financial Snapshot
• Not a lot drastic change to cost of revenue
• Impressive control of costs
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$3,561,409.00
$3,707,077.00
$3,518,267.00
$3,593,466.00
$3,441,876.00
2013 2014 2015 2016 2017$
USD
(in
Th
ou
san
ds)
Year
COST OF REVENUE 2013-2017
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How Do We Make Money
• Motorcycles• Touring
• Street
• Dyna
• Softail
• V-Rod
• Sportster
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• Financial Services• Everyone deserves a Harley
• Parts & Accessories • Keeping Harley’s on the road
• Merchandise • Extreme global portfolio
• Iconic Brand• Licensing
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Pricing Model
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Rental EV
• Moped’s
• Per Hour
• $5/hour
• Luxury
• Per day
• $75-$100
Electric Motors
• Moped
• Starting at $1500
• Prime
• Starting at $9900
• Luxury
• Starting at $18,000
Hydrogen Jet Motorcycle
• New and Revolutionary
• Starting at $21,000
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Recommendation Costs
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- Expand existing Thailand facility to support entrance to Asia-Pacific
- Hire US Lobbying firm to advocate for Tariff reductions and exceptions
$35 Million
$100 K/yr (for
3yrs)
- Aggressive Marketing Plan to embolden new technologies
- China Marketing Plan to help expansion into EV Moped market
- Extend EV options to entire product line-up
- Produce Hydrogen-Jet motorcycle for ‘greener’ iconic Harley rumble
- JV with Toyota
- Embrace the Rental Economy: US & China
3% of Sales
$1 Million/yr
$12 Million
$2 Million
- Aggressive Marketing Plan to redefine the Harley brand for all demographics: More
ethnicities, more Women, more people
- Sponsor E-Sport racing events and influence developers of video games
3% of Sales
$1 Million/yr (for
5 yrs)
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Revenue Projections
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$5,873,112.96 $6,401,693.13 $7,169,896.30 $8,317,079.71
$9,647,812.46
$-
$2,000,000.00
$4,000,000.00
$6,000,000.00
$8,000,000.00
$10,000,000.00
$12,000,000.00
2018 2019 2020 2021 2022
$U
SD
(IN
TH
OU
SA
ND
S)
YEAR
Revenue Projections
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Risk and Mitigations
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Risk Likelihood Damage Mitigation
Change in China attitude
towards US BrandsLow Medium
- Marketing campaign
- Country/Culture expert
- E-Sports influence
Alienate traditional customer
baseLow High
- Keep Iconic Products
- Segregate branding
- New Hydrogen Jet Bike
Government Policy Change High Medium
- US Lobbying
- Currency Hedge
- Diversify Portfolio
- Manufacturing to other countries
IP Issues Medium Medium
- Keep manufacturing out of China
- Good Lawyer Team
- First to market on innovation
Slow Adoption of Hydrogen
TechnologyLow Medium
- Work with Toyota
- Work with local and federal governments
- Marketing campaign
- Partial funding if need be
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Implementation : Changing Policies
Increasing Tariffs
Increased cost
Increased price
Lost price competitive-ness
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Implementation : Changing Policies
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Expand Thailand facility
Cheaper cost
Closed to new market (Asia)
Rev $480 million a year in Asia
$50 million expansion cost
US Lobbying
Lessen tariff
$100,000 a year
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Implementation : Changing Demand
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Environmental cause
Air pollution
EV
Low Price
High efficiency
Utility vehicle
Price efficiency
Technology
Disruption
EV
AV
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Implementation : Changing Demand
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Push for
“EV”
Development in process
Fuel efficient
Solves environmental cause
$1 million/year R&D investment
Start
“Hydrogen-Jet” motorcycle
JV with Toyota
Fuel efficient
Strengthened branch (power)
$12 million initial investment
Launch
“Rental business”
New business model
Expensive to buy, cheaper to rent
Targets price sensitive customers
Rental racks/shops
$2 million initial investment
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Implementation : Changing Demand
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Rental business
• For mopeds
• Installed on the streets
• GPS attached for each unit
• Customer behavior database
Rental racks
• For more luxurious models
• Sales shops used for rental shops
• Engagement with potential customers
Rental shops
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Implementation : Changing Demand
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6 month
• Inventory setup
• Distribution channel setup
1 year
• Sales shop as a rental service shops
• Rental racks installation
1 ½ year
• Launch of the rental business
2 year
• New revenue created
• More contacts with potential customers
Rental business
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Implementation : Changing Demographic
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New countries
Asia
China
New customer group
Young
Female
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Implementation : Changing Demand
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Push for
“Street fighter”
Light
Agile
Practical
Targets Asian market
Push for
“EV”
Mainly targets Chinese market
Air pollution
Difficult to get driver’s license
$1 million/year R&D investment