Case_In_Point_7th_Edition_Page001_183_2

+ HarRey-Davidson®
Interviewer: Our client is Harley-Davidson Motor Company. Their stock fell from $54 a share to $49 a
share on news of declining profits. What’s going on and how can we turn this around?
Student: Our client is Harley-Davidson. Their stock fell from $54 to $49 a share on news of declining
profits. We need to figure out what’s going on and how to fix it. Are there any other objectives I should be
aware of?
Interviewer: Yes, maintaining market share.
AnaIysis: The student was right to summarize the case; however, she would have made a better
impression if she had tried to quantify the case. Instead of saying the stock price dropped from $54 to
$49 a share, she should have said that the stock dropped about 10%. Remember, so much of this is
how you think — what goes through your mind when you hear some numbers.
She was also right to verify the objective and to ask if there were any other objectives she should be
concerned with. Without asking, she never would have known that maintaining market share was an
issue.
Student: I just want to take a moment to jot down some notes.
Interviewer: That’s fine.
The student writes on her paper E(P=R–C)M.
AnaIysis: This is the framework you want to use for a P&L case. Inside the parentheses is the classic
“profits equal revenues minus costs.” That tells us what’s going on inside the company. But you want to
look at external factors first. Is this a Harley problem or an industrywide problem? She starts with the E.
Student: I’d like to start with external factors first. Can you tell me what’s going on with the economy?
AnaIysis: The student would have made a much greater impression if she had told the interviewer
about the economy. If you are applying for a job in business, you should know what’s going on outside
the classroom, particularly with the economy. The other reason to tell the interviewer what’s happening
with the economy is that it gives you more control over the interview. It allows you to frame the economic
environment in which this case takes place. So many of these cases take place in a vacuum and you
don’t know what the economy is like. When you frame it yourself, there are fewer surprises. When you
talk about the economy, pick out the main factors that will affect Harley’s business. Let’s try it again...
Student: I’d like to start with some external factors first. I’d like to start with the economy. I know that the
US is in the tail-end of a recession; it is in the middle of a mortgage crisis and unemployment remains
high, so people have less disposable income. Gas prices have topped $4 a gallon. I know that the US
dollar has been gaining strength against the euro and pound, but is still fairly weak against Asian
currencies, particularly the yen. And I know that interest rates have fallen dramatically and are now close
to a 30-year low. (Note: US economy in 2011)
AnaIysis: Much better. Do you need to go into this much detail? Yes. You’ll see how everything she
brought up will tie into her answer later on. Make sure that you write everything down; it will give you
some place to go if you get stuck.
Interviewer: Good. What’s next?