Case 13: Polaris and Victory: Entering and Growing the Motorcycle Business C-161CASE 13
Polaris and Victory: Entering and Growing the Motorcycle Business
This case was written by Dr. Charles B. Shrader, Michelle L. Stotts, and Dr. Samuel M. DeMarie, all of the Department of Management, College of
Business, Iowa State University, February 2015. It is intended to be used as a basis for classroom discussion rather than as a demonstration of either
effective or ineffective management of a situation. Some of the opening and closing managerial situations included in the case are fictional and are for
illustrative purposes only.We will continue to win..., of course, but to take our busi-
nesses to a higher level we intend to change how the game
is played. Polaris has grown and changed significantly
from the little company that Edgar and Allan Hetteen
and David Johnson founded 60 years ago in Roseau,
Minnesota. But just as they relied on innovation and hard
work to satisfy customers, we will strive to do the same in
the decades ahead.
Scott Wine, Polaris Chairman and Chief
Executive Officer^1
Steve Menneto, vice president in charge of the Motorcycle
Division at Polaris Industries, gazed up at company
headquarters in Medina, Minnesota as he pulled his
gleaming cruiser into the parking lot. Menneto had been
with the company since 1997 and was promoted to head
of motorcycles in 2011. He knew his company’s Victory
bikes had come pretty far since they were first intro-
duced to the riding public in 1998. With the development
of new luxury touring bikes and the steady release of
aggressively-styled cruisers, along with the acquisition
of historic Indian Motorcycles, the motorcycle group
had continually innovated throughout its first fifteen
years in business. Yet Menneto pondered the recurring
questions facing Victory Motorcycles and Polaris. He
wondered if the initial decision to diversify into heavy-
weight motorcycles was the right road to take. He real-
ized Polaris took a big risk by moving into motorcycles
and going up against the recognized powerhouses in the
industry. Would the Indian brand live up to its tremen-
dous potential and capture market share at the high end
of the heavyweight segment? Would Victory continue
successfully competing against the Japanese giants, new
energetic and innovative motorcycle companies, and
their closest rival Harley-Davidson? Could the company
continue to produce state-of-the-art motorcycles while
maintaining the heritage of some of its iconic brands?
Victory began making motorcycles in 1998. From
1998 to 2006 Polaris had invested over $100 million in
motorcycle development and by 2006 the division was
profitable for the first time. Victory sales were $113
million, 7 percent of company sales for that year.^2 In 2009
Victory Motorcycles celebrated its first decade in the
motorcycle business, but a global recession led to poor
sales, corporate restructuring, and company-wide layoffs.
In that year Polaris, Victory’s parent company, announced
a new ‘on-road’ vehicle division of which Victory would
be part. Mike Jonikas was appointed as vice president of
the new division and Mark Blackwell as vice president of
the motorcycle business.^3 Blackwell, the first Victory Vice
President was an accomplished rider himself, winning
the national 500cc motocross championship and being
inducted into the American Motorcycle Association’s Hall
of Fame. Both Jonikas and Blackwell reported directly to
Polaris Chief Operating officer, Bennett Morgan.
Jonikas and Blackwell organized Victory with the
intent of maintaining a high level of quality engineering
throughout the production processes. Menneto knew
that if Victory was to be a successful brand it needed
to be able to meet customer expectations and not fall
behind in terms of innovation like its main heavyweight
competitor, Harley-Davidson.
Victory could still consider itself a new motorcycle
brand. Recent sales were strong but competition was
also getting stronger. The challenge now was how to con-
tinue to innovate and grow in an increasingly crowded
and difficult market segment. The need to examine the
motorcycle division’s strategy seemed imperative.Polaris Industries, Inc.
Polaris Industries, Inc., designed, engineered and manu-
factured snowmobiles, all terrain recreational and utility
vehicles (ATVs), motorcycles and personal watercraft
(PWC), on and off-road vehicles, and low emission vehi-
cles; and marketed them, together with related replacement
parts, garments and accessories (PG&A) through dealers
and distributors principally located in the United States,
Canada and Europe under the brand names of Victory,
Indian, Ranger, Sportsman, RZR, Switchback, and others.^4
The garment and accessory items included helmets, boots,
T-shirts, sweat pants, touring luggage and trailers.^5