Case 13: Polaris and Victory: Entering and Growing the Motorcycle Business C-169military motorcycles. In 2009, Harley offered over thirty
different motorcycle models. Harley-Davidson benefit-
ted from having one of the world’s most recognized and
respected brand names and their motorcycle models-
Sportster, Super Glide, Low Rider, Dyna Glide, Wide
Glide, Softail, Road King, Electra Glide and Tour Glide,
were among the best-known in the industry. Harley
also supplied or licensed motorcycle replacement parts,
accessories, riding and fashion apparel and collectibles.
Harley-Davidson formed a riders club in 1983 and by
2006 the Harley Owners Group (HOG) had in excess of
900,000 members worldwide. HOG was the industry’s
largest company-sponsored enthusiast organization. By
comparison, Honda’s Gold Wing Road Riders associa-
tion registered only 75,000 members.^35
In 1993, Harley-Davidson took an equity stake in the
Buell Motorcycle Co. of East Troy, Wisconsin, and began
selling Buell cycles through its dealer network.^34 Erik
Buell was a former Harley engineer who left the com-
pany to start a sport-bike business. Buells were racing
bikes powered by modified Harley engines mounted on
Harley frames, and were designed to appeal to younger
riders. Harley-Davidson acquired one hundred percent
of the company in 1998, the same year as the launch of
Victory. Approximately, nine thousand bikes were sold
at its zenith in 2004. However, Buell sales both in the US
and overseas started to decline in 2004.^35 In an attempt to
continue to grow its sport bike business, Harley acquired
MV Agusta of Italy in 2009. Agusta made sport bikes for
both on and off-road enthusiasts.
Harley represented freedom and individuality.
Harley viewed competitors as trying to imitate their
motorcycles, but unable copy the intangibles that made
owning a Harley-Davidson a unique experience. Harley
managers felt they were able to determine what was orig-
inal and authentic in terms of the real riding experience.
The quality of their bikes was very good and they were
able to charge a price premium in the market. Prices
ranged from approximately $8,000 for an entry-level
Sportster to $30,000 for a top-of-the line touring bike.
They felt that even though competitors were duplicat-
ing the Harley design by making look-alike bikes that
they could not copy the Harley image. Harley tended to
appeal to older riders with relatively more riding expe-
rience. In the eighties and nineties Harleys became very
popular with higher income groups such as accountants,
lawyers and doctors who were attracted by the prestige
and image associated with owning a Harley.
In the late nineties Harley commanded forty-eight
percent share of the growing North American market for
heavy road bikes. Harley’s product line was sold through
a worldwide network of more than 1,000 dealers. Even
though the number of motorcycles produced increased,
Harley-Davidson still could not meet the demand for its
motorcycles. Customers worldwide who ordered a new
Harley sometimes waited at least a year for delivery. For
years Harley had been building presold bikes, and some
dealers have alienated customers by jacking up prices
on scarce models. The wait was sometimes as long as
two years for some models. Dealers were upset because
they sometimes had no inventory. Customers were upset
because they had to wait so long for the product.
Harley was facing a dogfight for the first time since
1983, primarily because of Victory and also because
the Japanese were planning to respond to Victory with
improvements in their cruisers as well. As Harley’s pro-
duction caught up with the demand, the phenomenal
resale value of the bikes would begin to decline. Rival
producers saw opportunity in Harley-Davidson’s pro-
duction constraints. Honda, Kawasaki, Suzuki and
Yamaha Corp. have all began chipping away at Harley’s
grip on the high-margin cruiser category. This contin-
ued through the nineties into 2014 and beyond.
By 2010 Harley production volume and sales had
dropped to 2001 levels.^36 In 2008 the company made
over 300,000 motorcycles but planned to cut produc-
tion in 2009 to around 200,000 units. It also terminated
the Buell line of sport bikes, sold the MV Agusta Italian
motorcycle business back to the Agusta founder, and
forced its labor unions into wage and benefit conces-
sions by threatening to move factories out of Milwaukee.
Its bike owners were getting old and not many younger
riders were being attracted to Harley products. Harley
sales peaked in 2006 at 349,000 units but because the
bikes were no longer in short supply, demand hit a wall.
As supply met demand Harley became just another
industry competitor and in the last quarter of 2009, it
experienced its first quarterly loss in sixteen years.^37
However, in 2014 Harley announced its new elec-
tric motorcycle- the Live Wire. The new Live Wire was
incredibly fast and quiet. The company also announced
a new smaller bike- the Street 750 which was developed
to penetrate the Asian market. All in all, Harley was
continuing to develop products around its strong brand
name and was positioning to compete into the future
heavyweight motorcycle segment.Excelsior-Henderson10,38
Brothers Dave and Dan Hanlon attended a 1993 Sturgis bike
rally in South Dakota and noticed nearly everyone owned
a Harley or a Harley knockoff. As a result they decided
to resurrect an American motorcycle manufacturing