Harley Davidson Case

922 WordsApr 22, 20134 Pages
1. Describe and evaluate Harley’s operations strategy (using the framework of Chapter 1) It is helpful to adopt three different yet complementary views of operations strategy: The resource view of operations comprises 4 key questions: • Sizing –Due to the volatility and cyclical motorcycle business, Harley-Davidson attempts to expand capacity without taking on further debt. Thus, it would expand capacity first through internal process improvements and restructuring, and externally only if needed. • Timing – In 1992, production capacity was increased from 75,000 to 100,000 after an internal expansion project. In 1995, a further capacity expansion was planned in response to the growing motorcycle market. • Type – Harley-Davidson has…show more content…
o Transportation technology – No information given. • Demand – Customers are loyal and identify with the HD brand. Currently demand outmatches supply, so HD is considering whether to raise prices or expand capacity via various options. • Innovation – HD invested in process improvements in 1992. One option for future expansion is to look into continuous improvement and optimization of existing facilities to maximize output. Finally, HD has to look into its organizational competencies. • Cost – HD’s cost of goods sold has increased from 1991 to 1995 due to expansion of production. Similarly, the cost of selling, admin and engineering has also increased. • Time – No information on lead times. • Quality – Historically high defect rates were reduced markedly due to process improvements. • Flexibility – Relatively inflexible operations, due to high cost ($20 million) involved in changing the Sportster production lines to produce the Softail and Tourer lines. 2. Demand uncertainty is a major factor in strategic capacity decisions. How does Harley-Davidson take uncertainty into account in its planning processes? How does HD’s history affect its decision-making process? HD prefers to expand capacity at existing plants through process improvement and restructuring first and externally only as needed. As part of the 1995 planning, HD should be able to withstand a 30% drop in

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