Question

• Introduction
  • Brief description of the company (1 paragraph)
• Internal Environment Analysis
  • Discussion of the internal environment concept and the VC model (1 paragraphs)
  • Evaluation of internal environment: application of the value chain model to Polaris Industries (paragraph number as appropriate)
• External Environment Analysis
  • Discussion of the external environment concept and the Business Landscape model (1 paragraphs)
  • Evaluation of external environment: application of the Business Landscape model to Polaris Industries (paragraph number as appropriate)
• Conclusion
  • Summation of analysis and results (1 paragraphs)

CASE 13
Polaris and Victory: Entering and Growing the Motorcycle Business

Answer 1

Introduction:

Polaris Inc. is an American manufacturer of motorcycles, snowmobiles, ATV, and neighborhood electric vehicles. Polaris was founded in Roseau, Minnesota, USA, where it still has engineering and manufacturing.

Brief description of the company (1 paragraph)

Polaris has always forged our own path, creating new ways to help people experience the outdoors to the fullest. Since our founding in 1954, we've been making high-quality, breakthrough products and broadening the view of Powersports—whether it's launching the snowmobile industry, reinventing ATV categories year after year, developing the first purpose-built military vehicles, introducing a radical 3-wheel moto-roadster, or getting people to explore the outdoors by providing a network of ride and drive adventures. From our entrepreneurial roots as a mechanical shop, we've grown into a global leader with more than 30 brands and multiple services responsible for the company’s growth into a major influencer on Powersports and beyond. And in recent years, we've pushed the boundaries of our industry and expanded beyond Powersports into adjacent markets, like commercial and military vehicles, and electric vehicles, where we can add value. We support and serve our employees, customers, and the communities in which we work, live, and ride through a commitment to quality and safety and environmental stewardship. Under our guiding principle of Best People, Best Team we are committed to helping our employees unleash their full potential and develop their skills to thrive in a customer-centric environment. We lead a business that is driven by innovation and Polaris continues to Think Outside by offering a diverse portfolio of best-in-class brands that reflect who we are as well as our pioneering approach to always improve how our customers work and play outdoors.

Internal Environment Analysis

Step by Step Guide to Polaris Industries SWOT Analysis

Strengths of Polaris Industries – Internal Strategic Factors

As one of the leading organizations in its industry, Polaris Industries has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Polaris Industries are –

Successful track record of developing new products – product innovation.

Highly successful at Go To Market strategies for its products.

Strong distribution network – Over the years Polaris Industries has built a reliable distribution network that can reach the majority of its potential market.

Strong Free Cash Flow – Polaris Industries has strong free cash flows that provide resources in the hand of the company to expand into new projects.

Automation of activities brought consistency of quality to Polaris Industries products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Good Returns on Capital Expenditure – Polaris Industries is relatively successful at the execution of new projects and generated good returns on capital expenditure by building new revenue streams.

Strong dealer community – It has built a culture among distributors & dealers where the dealers not only promote the company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.

High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.

Discussion of the internal environment concept and the VC model (1 paragraph)

Environmental Principles

As a responsible corporate citizen, Polaris is dedicated to protecting human health, natural resources, and the global environment. This dedication reaches further than compliance with the law to encompass the integration of sound environmental practices into our business decisions.

The following Environmental Principles provide guidance to Polaris personnel worldwide in the conduct of their daily business practices:

We are committed to taking action to preserve the environment.

We are committed to reducing waste and pollutants, conserving resources and recycling materials at every stage of the product life cycle.

We are committed to reducing greenhouse gas intensity, improving energy efficiency and increasing renewables as a part of our energy portfolio.

We are committed to continually assessing the impact of our facilities have on the environment and the communities in which we live and operate with a goal of driving continuous improvement.

Health and Safety Principles

At Polaris, we rely on the power of our people to help deliver the best products in Power Sports Plus. Polaris’s Safety Principles help establish expectations on Our Path to Zero Harm; in which safety is everyone's responsibility, leadership is accountable for safety performance, hazards are controlled, and continuous improvement is required. Safety isn't just a priority. It's our way of life. It's a core value that makes Polaris who we are.

The following Safety Principles provide guidance to Polaris personnel worldwide in the conduct of their daily business practices:

We believe all injuries and occupational illnesses can be prevented.

We will hold Leadership accountable for safety performance.

We believe all employees and contractors have personal accountability for safety.

Assessments and continuous improvement are a requirement.

VC MODEL > Venture capital (VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in those companies.

Evaluation of internal environment: application of the value chain model to Polaris Industries (paragraph number as appropriate)

For a strategy to succeed, it should be based on a realistic assessment of the firm’s internal resources and capabilities. An internal analysis provides the means to identify the strengths to build on and the weaknesses to overcome when formulating strategies. The internal analysis process considers the firm’s resources; the business the firm is in; its objectives, policies, and plans; and how well they were achieved. All organizations irrespective of their size, nature, and scope of business perform the functions of finance, production, marketing, and human resource development. For efficient strategic management, careful planning, execution, and coordination of various functions -- marketing, production and operations, finance and accounting, research and development, and human resource management -- is highly essential. Each of the functional areas has strengths or weaknesses depending on how the function is being managed. The joint performance of these functions will have a direct bearing on the firm’s performance in terms of superior product design and quality, superior customer service, and superior speed.

The management can be evaluated on the basis of the organizational profile of strengths and weaknesses in light of what it has or has not done, or what it has or has not achieved. Similarly, the role of the board of directions should also be analyzed. An organization’s culture (shared values) should have a good fit with its strategy and other factors such as structure, systems, management style, and human resources (staff and their skills), as depicted in the McKinsey 7-S framework. If the existing culture will not be suitable for a desired strategic alternative, the management has to decide whether it will be feasible to change the culture, and how much time and other resources would be required to achieve this culture change.

Value chain analysis divides a firm’s activities into two major categories -- primary and support activities. Primary activities are those activities that are involved in the physical creation of the product (inbound logistics, operations, and outbound logistics), marketing and sales, and after-sales support. Firm infrastructure, human resource management, technology development, and procurement are the support activities.

application of the value chain model to Polaris Industries > Like many other manufacturers competing in discretionary and seasonal consumer-oriented markets, Polaris Industries Inc. is attempting to manage the right level of inventory to meet a current surge in demand for its products. A Wall Street Journal article, After Slashing Inventory, Polaris Now Struggles to Meet Demand, (paid subscription may be required) outlines a current common problem being expressed by many. This manufacturer of recreational equipment such as motorcycles, snowmobiles, and four-wheelers had to make dramatic cuts in production and inventory during this past recession. Now that consumers are returning to dealer showrooms, Polaris needs to ensure that its dealers have the right product on-hand, but also ensure that inventory investment is not overdone if another hiccup in the economy should occur.

Polaris cut its North American inventories by nearly a quarter last year and expects an additional 15% drop this year, its lowest level since 1997. The company has rehired 10% of its production workforce and is urging its dealers to order inventories in smaller quantities on a much more frequent basis. Polaris had been previously noted as a ‘channel stuffer’, pressing its dealers to take more inventory than they really needed, in exchange for financial incentives.

Behind these headlines, a broader supply chain agility story is being played out at Polaris. The company has plans to double revenues to $3 billion by 2014 which includes expanding into Latin America, and leveraged use of supply chain technology may help in this effort. Polaris invested in multi-echelon inventory optimization technology from SmartOps as well as supply chain execution technology from RedPrairie. While competitors in its industry sector severely cut back in product innovation, Polaris launched 34 new products in 2009. The company also made a comprehensive analysis of its product sales and determined that two-thirds of revenues come from two varieties of ATV products, and that about 40 percent of North American sales originate from the southern part of the U.S.

Polaris announced plans last week to restructure core strategic manufacturing operations, creating manufacturing centers of excellence, with plans to open a new manufacturing facility in the Monterrey/Saltillo area of Mexico in the next 15 months. Polaris will unfortunately close its Osceola Minnesota plant if a new plant supplier-buyer cannot be found. To emphasize its commitment to supply chain transformation, It recently recruited Suresh Krishna as its new vice-president of supply chain and integration. Krishna has a background in global operations and IT having a recent role leading the supply chain activities of the Fire and Security division of United Technologies (UTC).  Supply Chain Matters has previously commented on the notion that in the presence of broad supply chain transformation, combining supply chain and IT responsibilities can be effective in alignment with common supply chain processes and business objectives.

External Environment Analysis

External analysis is very important in making informed strategic decisions in any organization (Robbins, 2007). For any strategic decision to be successful it must at least be an informed decision. There are various External analysis techniques with each providing a different yet useful sets of information. They include PESTEL analysis for analyzing macro environment; SWOT analysis which allows analysis of the opportunities and threats; Michael Porters 5 forces and industry life cycle from industry analysis, the critical success factors and industry groups to identify the competitors.

Discussion of the external environment concept and the Business Landscape model

the external environment concept > Define the external environment of organizations.

To succeed and thrive, organizations must adapt, exploit, and fit with the forces in their external environments. Organizations are groups of people deliberately formed together to serve a purpose through structured and coordinated goals and plans. As such, organizations operate in different external environments and are organized and structured internally to meet both external and internal demands and opportunities. Different types of organizations include not-for-profit, for-profit, public, private, government, voluntary, family-owned and operated, and publicly traded on stock exchanges. Organizations are commonly referred to as companies, firms, corporations, institutions, agencies, associations, groups, consortiums, and conglomerates.

Business Landscape model>

The purpose of business landscapes is to visualize business functionalities, business data, business roles, and their relationships with each other. Human agents represent business roles, such as members of the sales department. Functional agents represent business functionality. Storages can either represent stored master data or dynamic data. Channels connect agents with each other. The semantics of a connection established via a channel is that information is flowing between the two connected agents. If a storage is connected with two agents, it is not necessary to additionally connect these two agents with a channel.

Evaluation of external environment: application of the Business Landscape model to Polaris Industries (paragraph number as appropriate)

Attractive dealer and distributor network; focused on commercial markets Primary business/product focus = price-sensitive fleet golf buyer Increased focus on nongolf utility segments Textron consolidating with Cushman, TUG, Bad Boy, Douglas, and Premier European LDH vehicles; Piaggio strong presence in India Leverage automotive brand & distribution – limited product innovation Ligier – aggressive with enclosed quadricycles (ECQ), #2 player Leading niche players with a strong presence in targeted verticals Nominal product innovation historically Highly fragmented distribution network presence Traditional Powersports players compete for rental, heavy-duty ag, construction, landscaping Kubota and Kawasaki most aggressive

Conclusion

Polaris Industries was recognized with the Excellence in Service and It has a long history of mutually beneficial business practices, and have built a strong, symbiotic relationship that has helped both companies outperform their expectations. Polaris Industries has strong Internal and external behavior with a very strong VC model. Overall the Company has a very good culture and very good working environment,

Summation of analysis and results: Headquartered in Minnesota, United States, Polaris Industries is a leading manufacturer of All-Terrain Vehicles (ATVs), snowmobiles, and electric vehicles. The company recently stopped the production of its watercraft. Polaris is also a manufacturer of motorcycles, which it produces through its subsidiaries Victory Motorcycles and Indian Motorcycle.

We present Analysis of Polaris Industries. A complete and comprehensive analysis of Polaris Industries, includes an overview of the industry the company operates in, a PEST Framework Analysis of the industry, and then moves on to analyzing the company itself.

Company analysis includes a history of Polaris Industries, a business segment analysis of the segments Polaris Industries operates through, a look at the organization structure of the company, a geographical operating segments analysis, an analysis of the company’s major competitors.

A financial analysis of Polaris Industries is presented in the report which includes a ratio analysis, basic profit and loss analysis, presentation of the company balance sheet, and much more.

A SWOT Framework Analysis of Polaris Industries and three of its competitors completes this in-depth company analysis.

Polaris and Victory: Entering and Growing the Motorcycle Business

Over the last 50 years, Polaris has become a household name for its high-performance snowmobiles, all-terrain vehicles (ATVs), utility vehicles, and motorcycles. To maintain the strong brand equity of Victory® Motorcycles among cruiser bike aficionados, product developers at Medina, Minnesota-based Polaris Industries recognized the need to bring new Victory models to market more often. Unveiling a new product every two or three years simply offered too much opportunity for competitors to fill the void in the marketplace. Further complicating matters, these shorter development times had to occur while preserving the superior performance and attractive pricing that has made Victory bikes darlings with consumers and the media over the last several years. Polaris has historically conducted most of its Victory prototype design validation on a test track. This involves attaching various sensors to the motorcycle in development, and hiring several riders to log thousands of miles in the full range of operating conditions. Engineers then analyze collected data to characterize prototype durability and identify any mechanical systems in need of improvement. The process often takes several months to complete. In addition to being timeconsuming and expensive, track testing is inherently less repeatable due to rider habits, weather changes, and other variables, limiting the integrity of data gathered. MTS Solution John Callahan, Polaris Engineering Director, joined the company in 2001 with a clear idea of how to achieve shorter development cycles, higher product quality, and lower development costs with Victory. Callahan’s previous work in commercial truck development gave him hands-on experience using MTS testing technology, and he saw this same technology as a perfect fit for Polaris. “Earlier in my career, I saw firsthand how the MTS equipment helped us achieve far higher testing speed and accuracy by moving our testing off the test track and into the test lab,” Callahan said. “MTS test systems are capable of applying the same mechanical forces and motions to prototypes that they undergo on the proving ground, only in a much faster, more controlled, and more repeatable manner. I was confident MTS could help us achieve similar results.” MTS helped Polaris integrate the MTS Model 320 2-Post Test System at its facility in Wyoming, Minnesota. The MTS Model 320 system is a tire-coupled simulator that leverages MTS’ industry-leading RPC® software to reproduce the desired vertical spindle motion. This results in loads and moments in the motorcycle chassis that closely resemble conditions on the proving ground. What’s more, the laboratory simulation significantly reduces the time to generate the same amount of damage compared to on-track testing. “We can now get a Victory motorcycle test done in 19 days as opposed to six months, and we’re bringing a new model to market at least once per year,” Callahan said. According to Callahan, Polaris has also benefited from MTS’ commitment to customer support, including close collaboration with an MTS technician to help maintain the system. “MTS is available when we need them, and we’ve had very little downtime because our technician is diligent about keeping up with the necessary routine maintenance.” Customer Benefits Since adding the MTS Model 320 2-Post Test System to its Wyoming, Minnesota facility, Polaris has moved virtually all of its Victory durability testing into the lab. “We would not be able to keep our product development cycles where they are without this equipment,” Callahan said. “We’ve significantly raised the bar for speed, quality, and efficiency, and the MTS test system is a must-have for us to continue competing at such a high level.” Besides efficiency, Callahan said Polaris has benefited from the depth of knowledge they glean from the MTS test system. Knowing more about how the motorcycle chassis will react to road stresses earlier in the design process ultimately leads to better bikes reaching the marketplace. “This additional insight has led to the development of the Victory Vision™, our top-of-the-line touring motorcycle that is our most complex introduction to date,” Callahan said. “Because we know how to test the product so well on the MTS test system, our quality is really first in the industry, and we’re hearing this positive feedback from both critics and customers.” The Victory line now consistently wins quality awards from J. D. Power & Associates, along with “cruiser of the year” accolades from cycling industry magazines. Victory also recently received a number one ranking from customers on the motorcycle.com Web site. Because of the positive results achieved with MTS technology on Victory motorcycles, Polaris is now using MTS technology for durability and performance testing on other product lines. That includes the use of an MTS Model 329 spindle-coupled road simulator for testing Polaris ATVs. “MTS has been very versatile and has demonstrated its ability to grow as we’ve grown,” Callahan said. “We look forward to reaching more product milestones in partnership with MTS in the future.”