Management Mistakes and Successes, Tenth Edition

Chapter 5. Harley-Davidson: A Long-Overdue Revival

Harley-Davidson, a century-old firm, has exhibited stark contrasts in its history. In its first 60 years it destroyed all of its U.S. competitors and had a solid 70 percent of the motorcycle market. Then, in the early 1960s, its staid and unexciting market was shaken up, rocked to its core by the most unlikely invader. The intruder was a smallish Japanese firm that had risen out of the ashes of World War II and was now trying to encroach on U.S. territory.

Almost inconceivably, in half a decade Harley-Davidson's market share was to fall to 5 percent, even as the total market expanded many times over what it had been for decades. The foreign invader had furnished a textbook example of the awesome effectiveness of a carefully crafted strategy. In the process, the confrontation between Honda and Harley-Davidson was a harbinger of the Japanese invasion of the auto industry.

Eventually, by the late 1980s, Harley began to make a comeback. But only after more than two decades of travail and mediocrity. As it surged forward in the last of the old century, it had somehow built up a mystique, a cult following, for its big bikes. In January 7, 2002, Forbes declared Harley to be its "Company of the Year," a truly prestigious honor. But let us go back first to the dire days of the Japanese invasion.

THE INVASION

Sales of motorcycles in the United States were around 50,000 per year in the 1950s, with Harley-Davidson, Britain's Norton and Triumph, ...