Question: Define an acquisition. What are the general strategic objectives of an acquisition strategy? How have acquisitions contributed to enhancing Harley Davidson's market position? (Chapter 6).

Background

Harley-Davidson is a major US motorcycle manufacturer that sells its bikes worldwide through a network of more than 1,500 dealers. The company offers heavyweight cruiser and touring models, standard, sportbikes, and dual models that can be used on- and off-road. Its six families of motorcycles include Touring, Trike, Softail, H-D Street, Sportster, and its Customer Vehicle Operations (CVO) models. Harley-Davidson also sells attitude with its brand-name products, which include a line of riding gear and apparel (MotorClothes). Harley-Davidson Financial Services (HDFS) offers financing to dealers and consumers in the US and Canada. The US generates almost 70% of Harley's revenue (D&B Hoover's, Inc., 2020).

Corporate Highlights

Background
Headquarters	Milwaukee, WI
Total number of employees	5,600
Company type:	Public
Traded	HOG (NYSE)
Established	1903
Industry
D&B Hoovers	Miscellaneous Transportation Equipment Manufacturing
SIC	Motorcycles and related parts (SIC #37510100)
NAICS	Motorcycle, Bicycle, and Parts Manufacturing (NAICS Code 336991)

*Adopted from (D&B Hoover's, Inc., 2020; Dyer, et al., 2020)

Strategy

Harleys bikes are known for their distinctive design and heavy customization and the bike is considered to be a symbol of American design and manufacturing. For many, owning Harley-Davidson is a lifestyle tied to American individualism. Considering this, the company has been able to command a premium for its products and establish a loyal customer base within a niche market. As Jim Ziemer, CEO (retired), explained, One of the main things that gives us an edge over the competition is that we sell more than just motorcycles and related products we sell a complete experience. (Dyer, et al., p. C-63, 2020). Harley-Davidson is committed to serving a market in which buyer needs and preferences are distinctly different compared to rivals. To that end, the company builds bikes that appeal specifically to their target customers.

The Company's long-term strategy to build the next generation of Harley-Davidson riders globally includes the following 2027 objectives: expand total Harley-Davidson riders to 4 million in the U.S.; grow international business to 50% of annual HDMC revenue; launch 100 new, high-impact Harley-Davidson motorcycles beginning in 2017; deliver superior return on invested capital for HDMC that falls within the top quartile of the S&P 500; and grow the business without growing its environmental impact.

In 2019, Harley introduced LiveWire, its first electric motorcycle, which it plans to begin selling during the second half of the year. The company is also developing a new middle-weight platform for adventure touring bikes, custom motorcycles, and streetfighter models.

Geographic Reach

Harley-Davidson is based in Milwaukee, WI where it houses its corporate offices. Its manufacturing facilities are located in other cities in Wisconsin, Missouri, as well as in Pennsylvania. Outside the US, Harley's manufacturing plants are in Thailand, Brazil, and India. Harley also operates a product development center in Wauwatosa, WI.

Beginning in 2000, Harley looked to expand internationally as the U.S. market had matured. Yet, critics have argued Harley hasnt moved internationally quickly enough to find new customers or establish low-cost factories (Dyer, et al., 2020). That said, through its expansion Harley has been committed to its brand having an integrated approach to producing, selling, and delivering their bikes to the global market. The company sells products under the highly recognizable Harley-Davidson brand and competes using the same capabilities worldwide. Local managers at international Harley-Davidson stores are expected to stick closely with the companys worldwide strategy.

Mergers and Acquisitions

In early 2019, Harley-Davidson acquired StaCyc, maker of the EDRIVE electric-powered two-wheelers specifically designed for kids. The acquisition falls in line with Harley's plan to continue developing electric motorcycles. Harley already sells the StaCyc EDRIVE at about 30 of its dealerships. The company believes the StaCyc provides an introduction to motorcycling to the youngest riders (D&B Hoover's, Inc., 2020).

Manufacturing and Operations

Historically, Harley-Davidson has manufactured its bikes in the U.S at its Wisconsin, Missouri, and Pennsylvania locations. In 2018, the company announced plans to move some of its manufacturing overseas to avoid retaliatory tariffs imposed by the European Union in response to U.S. import taxes (Fattore, 2018).

Similar to the automotive industry, Harley sources parts globally for manufacturing. As an example, brakes are imported from Italy, engine pistons are produced in Austria, the bike suspension from Japan, and several electronic components are built in Mexico and China (Fattore, 2018).

SWOT Analysis

	Positive	Negative
Internal attributes	Strengths Market presence Manufacturing and distribution network Increase in new working capital Highly recognized and admired brand	Weaknesses Business performance in motorcycles and related products Debt High production price compared to competition
External attributes	Opportunities International expansion Global electric vehicle sales Inorganic initiatives Growth potential in financial services segment New model launch project rushmore	Threats New emission standards for two wheelers Foreign currency fluctuations High import duties and shipping costs for global sales

Adopted from (D&B Hoover's, Inc., 2020; Dyer, et al., 2020)