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Week 5 Discussion

Question Description

From the LEARN e-Activity and the case study 29 (p. 419 in the textbook), evaluate the Corporate-Level Strategy of Victory Motorcycles to determine whether you believe the strategy is appropriate to offset forces in the industry.

o Provide specific examples to support your response.

· Make recommendations for improving this strategy as well as describing any challenges you foresee in executing those recommendations.

o Provide specific examples to support your response.

Victory Motorcycle Development22,23 An early decision was to determine which parts to make and which parts to 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.”24 After figuring manufacturer, dealer, prof- its, and sales volumes, the consultants and managers felt there was a good opportunity in the motorcycle busi- ness, and in February 1994, the officers group gave the okay to move forward and build a prototype. A major boost to motorcycle development occurred in September 1994 when Geoff Burgess agreed to lead the Victory team. His extensive motorcycle industry expe- riences and 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 build- ing a prototype. “A lot of up-front thinking has saved us a lot of time on the back end,” explained Parks.25 The Victory team began an in-depth benchmark- ing 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, for 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 Parks that the engine had to be a big V-twin, and it had to be US made; an American company like Polaris couldn’t import the engine for a bike whose tar- geted 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 experts convinced the Polaris team that designing an engine would pro- vide experience curve benefits that would be valuable when Victory Motorcycles broadened its model line to include other classes of bikes in the future. This fit well with Polaris’s considerations of starting its own engine manufacturing operation. Geoff Burgess first laid out the parameters for the Victory V92C engine in November 1994. Victory engi- neers refined the design, and in February 1995, a concept drawing was created. In March 1995, the Polaris engi- neering department visited England’s Lotus, Cosworth, and Triumph plants, Italy’s Ducati and Aprilia plants, and Germany’s BMW operation. The team also bench- marked 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 give it bragging rights for the biggest cruiser engine with the most horsepower on the market.

Victory: Preparing for the

Next Decade

Mark Blackwell reflected on Victory’s first 10 years and all the events surrounding the heavyweight motorcycle industry. His company’s motorcycle had successfully taken on Harley-Davidson, an American icon. Victory sales had risen to $20.1 million in 2010, a 55 percent increase over 2009. Demand had improved across the entire Victory line, but particularly for the Cross Roads and Cross Country touring models. Markets outside North America were growing significantly, and sales of PG&A were also up 12 percent. Victory profits consti- tuted over 7 percent of the parent company’s bottom line65 (see Exhibits 7 and 8).

Blackwell realized his motorcycles had received criti- cal acclaim in the industry. Victory motorcycles were perceived as high-quality, technologically advanced bikes—especially compared to Harleys—and were offered at a very competitive price. Blackwell knew his bikes were good, but had they been marketed and dis- tributed effectively? Was Victory successfully capturing the attractive profit margin potential of the heavyweight segment as it had planned?

Blackwell knew the announcement of the new Polaris on-road vehicle division had tremendous implications for both Victory and Polaris as a whole. He was also aware that current Polaris CEO, Scott Wine, wanted the company to grow into “adjacent” businesses.

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