Innovation Assumptions

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.Break Even Analysis and 12 Month Projection Strategic Management Body: Both the break even and 12 month projection spreadsheets were created using a combination of existing corporate data and a number of reasonable adjustments and assumptions. There is presently no publically available financial information regarding the innovation, so it is impossible to accurately know the product’s exact cost structure or even its expected sale price per unit. Therefore, the choice was made to make reasonable assumptions using publically available corporate financial data as a starting point. The primary source for that was data thus obtained from the company’s 2013 10-K filing (Harley-Davidson, Inc. February 24, 2014 "Harley-Davidson 2013…show more content…
A first year sales volume of 5,000 units is assumed. Restructuring Costs had a direct effect on net income for the three previous fiscal years and according to the 10-K there will be additional impact going forward (Harley-Davidson, Inc. Form 10-K, page 26). These costs do not have a direct impact in the new product’s direct production costs nor do they impact a viability evaluation, therefore this line item is excluded in both spreadsheets. Despite the certainty that the innovation would comprise a small portion of sales at best, Advertising Expense is projected at a level consistent with historical operations. There are a number of reasons for this. An electric motorcycle is a fairly new idea in the motorcycle industry, other smaller companies with similar products are now competing more anticipated market share and given the Company’s advantages in scale and brand recognition it can choose to comfortably allocate more resources to marketing and may take advantage of these facts, the Company has already announced and initiated a nationwide marketing campaign where it is allowing interested consumers to test a fleet of preproduction models, and has already stated its intention to continue the program in Canada and Europe in 2015, and an electronic motorcycle by its nature will not be attractive to 100% of existing motorcycle consumers given its obvious difference in
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