1. Summarize the case; what is happening and why is this important? 2. How does
ID: 388625 • Letter: 1
Question
1. Summarize the case; what is happening and why is this important?
2. How does this case relate to at least three strategies (connect the dots, there are overlaps, in most of the topics (e.g. stakeholders, external, internal, five forces, rationale for biz level strategy)?
3. Make recommendations (how the company may better implement the strategy or strategies, (i.e. what makes these strategies successful? (look at notes and book)? Remember connect the dots between the topic in class (e.g. matching internal and external environment).
Use complete sentences
CASE 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 We will continue to win…, of course, but to take our businesses 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 Officer1 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 introduced 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 heavyweight motorcycles was the right road to take. He realized Polaris took a big risk by moving into motorcycle
and going up against the recognized powerhouses in the industry. Would the Indian brand live up to its tremendous 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 continue 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 manufactured snowmobiles, all terrain recreational and utility vehicles (ATVs), motorcycles and personal watercraft (PWC), on and off-road vehicles, and low emission vehicles; 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. The garment and accessory items included helmets, boots,
T-shirts, sweat pants, touring luggage and trailers. The company was widely known as the world’s largest
manufacturer of snowmobiles and one of the biggest makers of all-terrain vehicles and personal watercrafts in the United States.6 In 2013, Polaris Industries employed seven thousand people at eleven manufacturing locations and five research and development centers worldwide. The company had over three thousand dealerships and operated in more than one hundred countries. Polaris produced its first snowmobile in 1954 under co-founder and former CEO Alan Hetteen.7 Textron, Inc. bought Polaris from its original Roseau, Minnesota ownership group in 1968.7 Then in 1981, Textron, Inc. sold the Polaris division to a group of private investors led by W. Hall Wendel Jr., a Textron division head.8
The snowmobile business kept the Roseau, Minnesota plant busy six months out of the year but company
managers wanted to figure out how to fill the other six months, so they extensively surveyed their snowmobiler customer base and decided in 1985 to diversify and produce all terrain vehicles (ATVs).7 The company once again diversified by manufacturing personal watercrafts
(PWC) in 1992, and eventually became a world leader in both ATV and PWC production and sales. In 1987
Polaris became a publicly traded company. As a result of its diversification strategy, Polaris was
able to manufacture products all year. Snowmobile manufacturing took place in the spring through late autumn or early winter and personal watercraft were manufactured during the fall, winter and spring months. Polaris has had the ability to manufacture ATVs year round since May 1993. ATV production starts in late autumn and continues through early autumn of the following year.5 Because of the seasonality of the Polaris products and associated production cycles, total employment levels varied throughout the year. Approximately 3,000 individuals
were employed by the company. Polaris’ employees
have not been represented by a union since July
1982. The company announced layoffs in their Osceola,
Wisconsin plant in early 2011 due to the recession.9
Expansion Into Motorcycles7,10
Matt Parks joined Polaris in 1987 as a district sales manager
for California, Nevada, and Arizona to develop the
dealer network. He was named ATV product manager
in 1992 and earned a spot at the company’s headquarters.
W. Hall Wendel Jr. asked him to do research on prospective
acquisitions or expansions. Parks, with the additional
title of general manager of new products, considered
such things as go-karts, golf carts, lawn-and-garden
products, chain saws, and Hula-Hoops by investigating
the various industries in terms of competition, size, level
of service, and new trends. Parks and others studied the
off-road motorcycle market when two dirt bike companies
were put up for sale. Then a European motorcycle
company asked to distribute their bikes through Polaris.
“That sparked a study of the motorcycle business that
uncovered signs of a promising market. Along with the
dirt bike research, we did a quick study of the street bike
business at that time, and we were kind of interested.
We thought, ‘You know, this makes some sense,” recalls
Parks.11
In 1993, Polaris distributed over 300,000 surveys
through the company’s Spirit magazine for Polaris vehicle
owners to measure the readers’ interest in buying a
wide variety of products from Polaris. “Motorcycling did
really, really well [in the survey],” said Matt Parks.12 The
survey results were personally interesting to Parks since
he was a lifetime motorcycle rider and owned several
motorcycles, including a ’74 Norton, ’66 and ’91 BMWs,
a ’77 Harley XLCR and an ’81 Ducati. Motorcycles also
caught the interest of Wendel who at the time owned a
Harley-Davidson.
In pursuing the possibility of motorcycle production,
Victory became the project’s confidential codename.
Parks came up with the name because it was a nonsensical
name with positive connotations. “It’s ‘V’ for victory.
It’s nostalgic; it has World War II connotations.”13
Parks along with Bob Nygaard, Snowmobile Division
General Manager, proceeded with investigating the
motorcycle production possibility by hiring two outside
firms to assist them in conducting further confidential
research on motorcycles. They chose McKinsey and
Company, one of the largest and most prestigious consulting
firms in the world, and Jerry Stahl, an advertising
executive who was very familiar with recreational motorsports
and the motorcycle business. Stahl also had experience
with Harley-Davidson’s advertising campaigns.
From May through August of 1993, Parks & Nygaard
assessed the Polaris infrastructure, including the company’s
sales force, dealer network, service and warranty
operation, and parts and accessories division. They also
looked at Polaris’ current customers to see what types of
things they were interested in and whether they would
buy a motorcycle from Polaris. Polaris analysts and consultants
also analyzed statistics from the Motorcycle
Industry Council (MIC) in terms of the location, displacement,
and types of bikes sold in the industry.
The research showed there was industry capacity
for another manufacturer in the cruiser business. The
research also revealed that Polaris dealers would like to
have on-road motorcycles to sell. Consultants believed
that a functionally superior cruiser built in America
could find competitive space between Harley-Davidson
and the Japanese producers. “We focused in on Harley
and the Japanese manufacturers and said to ourselves,
‘Is Harley vulnerable from any standpoint?’ We thought
that their costs were high,” Nygaard said. “We thought
that, based on re-engineering the Harley bike, we could
build it for less money. We felt that customers were
waiting too long to take delivery of their Harleys, and
they (Harley-Davidson) were vulnerable from that
standpoint. We could get to market with a bike that
we could make money, and the heavy cruiser end of
it was certainly what we wanted to target because that’s
where the (sales) numbers were, and that’s where the
(profit) margin was. It was the best fit for us, in that the
Japanese were vulnerable there. They really hadn’t been
able to tackle Harley, because it might look like a Harley,
but the real rider knew that it wasn’t an American-made
bike from an American manufacturer. We were close (at
the time) to being in the domestic engine business, and
we could build our own U.S. engine, and that gave us
a major leg up on the Japanese. We were an American
company.”14
“The result of the study was, believe it or not, yes,
there was a tremendous opportunity in the motorcycle
market,” Parks said. “It’s not the off-road motorcycle
market; it’s the on-road motorcycle market, and the
entry point, the best entry point, would be in the cruiser
market.”14 Cruisers were defined as stripped-down versions
of heavyweight touring bikes that were intended
for leisurely travel. Research showed that many cruiser
owners immediately replaced many components, such
as brakes, seats, wheels, vibration-adsorption devices,
frame stiffeners, and intake systems on their brand-new
motorcycles. This was interpreted as an opportunity to
fulfill demand created by undershot customers in the
market.
Polaris had experience producing recreational
vehicles for over 44 years. It had the engineering talent
and production capabilities to design and produce
distinctly different vehicle lines – snowmobiles, ATVs,
and personal watercraft – and produce its own engines
for many of those vehicles. Parks said the study showed
“the manufacturing capabilities and technological knowhow
required to produce cruisers seemed within Polaris’
grasp.”14 “My biggest concern was: Let me sell against
price, let me sell against features and benefits, let me
sell against more advertising, and I can find ways to do
that,” Nygaard said. “Help me to sell against the lifestyle,
with loyalty that is as passionate as I’ve ever seen on any
product (Harley-Davidson). To sell against an image is
very, very difficult, and that was my biggest concern.”15 In
August 1993, the officer group gave the okay to continue
with the study to see if it fit with existing manufacturing
systems and if it could make money.
Victory Motorcycle Development7,10
An early decision was to determine which parts to
make or buy. Dapper and Klancher explained that “they
bought a Honda Shadow and a Harley-Davidson FXRS,
took them completely apart, weighed, measured and
estimated the cost of every single part, and determined
for each part whether they would make it or buy it.”15
After figuring manufacturer, dealer, profits and sales
volumes, the consultants and managers felt there was
a good opportunity in the motorcycle business, and in
February 1994 the officers group gave the okay to move
forward and build a prototype.
A major boost to the motorcycle development
occurred in September 1994 when Geoff Burgess agreed
to lead the Victory team. His extensive motorcycle
industry experiences and his emphasis on thorough
analysis and design work set the direction for the Victory
development. The Victory team took a very thorough,
methodical, and analytical approach to research and
development so the program didn’t waste time, money,
or valuable resources. Extensive computer-aided design
was employed in building a prototype. “A lot of up-front
thinking has saved us a lot of time on the back end,”
explained Matt Parks.16
The Victory team began an in-depth benchmarking
study by obtaining and extensively road-testing a fleet of
the competitors’ cruisers in Minnesota, Tennessee and
Arizona. The Yamaha Royal Star and Virago, Honda
Shadow ACE and Valkyrie, Harley-Davidson Road
King, Ducati Monster and BMW R1100RS were evaluated,
compared, and ranked. The goal was not to copy
the competition but to find the benchmarks for building
a superior cruiser. The cost of producing the best features
was also analyzed to ensure they could produce the
motorcycle within their target price range.
The Victory team contacted Dunlop, manufacturer
and tire supplier of Polaris ATVs, to obtain information
about motorcycle tires. Steve Paulos, a Dunlop
test technician with an impressive motorcycle industry
background, assisted the Victory team by sharing competitors’
development and production process information.
He accompanied the Victory team to Arizona
and shared valuable insights about the benchmarked
bikes.
In the early stages of the motorcycle project, the
Victory staff determined the bike must excel in two key
performance areas – handling and power. Marketing
studies told Matt Parks that the engine had to be a big
V-twin, and it had to be U.S.-made; an American company
like Polaris couldn’t import the engine for a bike
whose targeted buyers represented the red, white, and
blue image of the cruiser culture. The group felt that the
motorcycle needed to have its own signature engine. Talks
with consulting firms with power-plant expertise convinced
the Polaris team that designing an engine would
provide experience curve benefits that would become
valuable when Victory Motorcycles broadened its model
line to include other classes of bikes in the future. This
fit well with Polaris’ considerations of starting its own
engine manufacturing operation.
Geoff Burgess first laid out the parameters for the
Victory V92C engine in November 1994. Victory engineers
refined the design, and in February 1995 a concept drawing
was created. In March 1995 Polaris engineering department
visited England’s Lotus, Cosworth and Triumph
plant, Italy’s Ducati and Aprilia plant, and Germany’s
BMW operation. The team also benchmarked engines
made by Fuji, Kawasaki motorcycles and the Dodge Neon
for manufacturing and assembly ideas.
From the Arizona test, the Victory team determined
it should build a bigger engine than the competition.
This would also give it bragging rights for the biggest
cruiser engine with the most horsepower on the market.
The Arizona tests helped define handling goals as
a top priority, so much so that chassis’ and frames were
designed as desired, then the engine was reconfigured to
fit in the available space in the frame.
The Arizona tests also convinced the team that
the Victory engine should be oil-cooled. Since rows
of cooling fins are an essential part of the cruiser look,
the idea of using liquid cooling was rejected. Instead a
system was designed that circulates extra volumes of
oil to enhance the fins’ cooling effect. Steve Weinzierl,
who has deep knowledge of aircraft-engineering history,
strapped a Czech-built Velorex sidecar onto a prototype
Victory bike and took it to Death Valley, California,
for worst-case cooling trials. At temperatures of 121
degrees Fahrenheit, he pulled within ten inches of the
Victory going 90 miles per hour, and handed the rider in
the sidecar the wires from the thermocouple to test the
cooling data. This method was used to test and enhance
engine thermal stability.
Once the team had collected and analyzed loads of
chassis data, “Francis the Mule,” a crude prototype was
created in May 1995. It was built with interchangeable
clamps and drilled metal brackets so selected components,
such as its wheel base, steering-head angle, and rearsuspension
geometry, could be mounted in varied
positions and adjusted accordingly. The team could test
one thing at a time and meticulously evaluate the changes
in subsequent test rides. They also used the Mule to focus
on the chassis because it was a priority to achieve the
Victory ride and handling. After hundreds of hours riding
around on Frances and obtaining some assistance from
Polaris engineers on the frame and chassis, the team agreed
on a chassis design. Their analysis helped reduce the weight
of the frame by 20 pounds over the original prototype. In
addition, the Victory team sought larger suspension forks
to ensure that the chassis would have the desired rigidity
and earn bragging rights for the biggest forks on the market.
Some elements of the V92C design were dictated by
customer demand. It had to have some traits that are
popular with, and familiar to, cruiser enthusiasts. Styling
dictated a triangular rear swing-arm that mocked the
“hard-tail” look of the unsuspended bikes of the 1940s.
A single shock mounted underneath the seat included
an aluminum sub-frame supporting the seat and rear
fender. They determined that a high-quality Fox shock
was to be a standard feature. Polaris still owns several
rear suspension patents as a result.
In May 1995, Mark Bader, who was familiar with
compact, high-performance engines, was hired to lead
the engine design staff. One of the first engine mockups
was made from paper. Created from CAD drawings
using the Victory rapid-prototyping machine, it
was made of thousands of precisely cut pieces of paper
glued together. These computer-generated mock-ups
allow parts to be generated and test-fit without excessive
costs. The first engine prototype via computer-aideddesign
consisted of a tall, 1,507-cc V-twin with a 55-degree
angle between its cylinders. This was too big to fit the
frame so the angle was narrowed to 50 degrees. After
the frame and chassis was developed, the engine had to
be shrunk. It seemed backwards to fit the engine to the
frame and chassis, but Burgess felt it was appropriate for
the V92C in order to deliver the ride and handling they
wanted instead of the engine size determining the bike’s
size and layout. In addition, they decided to solid-mount
the engine and utilize it as a stressed member or supportive
of the frame and relatively more integral to the
bike as a whole. The handling was greatly increased.
To develop the crankshaft, the team also benchmarked
the performance of competitors’ bikes. The
Polaris team also considered using Harley-style cylinder
heads with push rods operating the valves, but they
decided on a more modern overhead-camshaft design.
The Victory team found that it could eliminate virtually
all traces of vibration, but it refused to do so because
they felt it was a trademark of a cruiser. They had to
determine the proper balance of vibration. Cruisers are
supposed to have vibration. As described by Dapper and
Klancher, “In the perfect world, there is imperfection.
Without it, things just don’t seem right. Motorcycles
need to have personality; a little rumble here and tingle
there lets you know that the machine underneath you is
alive and kicking.”18
Explanation / Answer
ANSWER-
CASE STUDY
(POLARIS/ VICTORY MOTORCYCLES)
1 - SUMMARY-
THE case is about the american company named polaris & its subsidiary victory a motorcycle manufacturing company. this case tells about the evolution of the company from a small company to big multinational company.basically, this company is the first comapny to manufacture the
snowmobiles, ATVs,and personal watercraft – and produce its own engines for those vehicles. in starting days days its only the manufracturer of vehicle parts & snowmobile & atvs. but after making a reseerch the excutives of the company saw the opportunity in the market of bikes.
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. In 2009 Victory Motorcycles celebrated its first decade in the motorcycle business
but comapny faced the down market for the demand of the bikes when recession hit the market. but comapny made strategy to tackle the recession & starting to make its own engines which were cost effective & relaible. first they were importing the engines which cost too much but after making them by in thier own company it turnout to be a profit for them. they setup a subsidiary company called VICTORY to manufacture the bikes. it also generate the employement for more than 2000 employees.
A major boost to the motorcycle development occurred in September 1994 when Geoff Burgess agreed to lead the Victory team. His extensive motorcycle industry experiences and his emphasis on thorough analysis and design work set the direction for the Victory development.
but company faced the competion from a giant manufacturer of bike harley davidson. it was very tough for them to compete beacause they had a great customer base but victory company make the strategy to make such bikes which are cheaper & have high performance engines to make it affordable for consumers & this strategy works like magic beacuse the sale of their bikes was incraesing. these bikes are called cruisers which can be used by any class of the customers.
the polaris company was also successful in the market of sports bikes which can be used in racing games.the success of the compnay was just because of its top management executives & head operations employees which were giving thier best effort to make everything successful.
SO,basically this summary about the evolution of the company & strategies based on analysis of internal factors as well as external factors & how everything works out for them.
ITS IMPORTANCE-
2- RELATION OF THE CASE WITH ATLEAST 3 BUSINESS STRATEGIES-
According to me, the first business strategy would be SWOT analysis, in which a company analyse the internal(company, employees, suppliers, etc) & external factors(customers, competitors, technological etc.) & based its strategy on the strenghts-weakness & opportunity-threats.
in this case, the strength was- manufacture of vehicle parts, atvs, own engines etc. the weakness was the low customer base for bikes the opportunity was the market segments for bikes the threat was the competition (harley davidson).
the second business strategy was to product diversification in which a company enters in to more than one products & expand its product line. in the case of the polaris company, the company was making snowmobiles or atvs its company but with this startegy copmany was also manufacturing the sports bikes, engines, crusier etc. which generates the employment as well as company was working all year. there was no ideal time for the company.
third business startegy was marketing strategy where company surveys the market & get to know its needs & demands. in relation to polaris,case, company survey the market & seeks the opportunity in bikes segment & acted upon it.whic was a really great opportunity for them.
3- RECOMMENDATION OF MAKING STRATEGY-
According to me, company make strategy of core compentency or competative advantage means the point or advantage which this company has over its competition it could be based on any factor like cost, pricing, feautres etc.
this strategy would be successful beacause if you have something which makes your product from its competitor then customer will attract to it & purchase it. for example in case of bike if your comapany & its competitor manufacture the bike of same engine desgine, same material, same weight etc but what happens you sell it cheaper than your competitor then customer will buy your bike. it is not neccessary the factor should be one. it could be anything like fuel efficient engine, years of warranty or service, free insaurance, free accessories for the bike etc.
so, above answer is given by readind above case study & my knowledge in this area.hope it will help you.
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