Internal Analysis of Polaris and Victory

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Internal Analysis of Polaris and Victory

  1. Key Result Areas.

 

Most of all what contributed to the success of Polaris and Victory company is its unrelenting hard work and the unfailing innovations that guaranteed them a steady market volume, in 1998 Victory began making motorcycles Polaris invested over 100 million dollars and in 2006 it became profitable for the very first time. The hard work vested in their craftsmanship. It is evident that this is what led to the growth and change of the company in terms of all capacities of volume that went through the company. In regards to the words of Scott Wine, Polaris Chairman and Chief Executive Officer. “Polaris has grown and changed significantly from the little company that Edgar and Allan Hetten and David Johnson founded 60 years ago in Roseau, Minnesota; just as they relied in innovation and hard work to satisfy customers we will strive to do the same in the decades ahead.” This a show of dedication to the product which they were at the time making the Motorcycles became a big over the several following years. ‘

 

Another key result area in Polaris and Victory company is that the in the year 1998 to 2006 Polaris the parent company invested over 100 million dollars into the child company Victory this investment ensured that the company move to greater heights in terms of the designs produced at the time and with the hard work put in the company ended up with an economic profit of up to $113  million as 7 percent of sales for that year. This financial success lead the company onto a new level. Even though there was a recession in the year that followed and there were layoffs, in that same year Polaris, Victory’s parent company, announced a new ‘on-road’ vehicle division and Mark Jonas was appointed Vice president of the new division and in an effort to promote and champion the division he entered and won the Motocross championship and was inducted into the American Motorcycle Association Hall of fame.

 

So as to put the brand that they had so developed; this a key marketing idea which would induce the much needed trust in the brand they had developed. Jonikas and Blackwell organized Victory with the very intent of developing and maintaining a high quality level engineering throughout the production process. Menneto knew for Victory 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 heavy weight competitor Harley Davidson. This is the idea that made Victory to survive and even succeed despite the increasing competition and the newness of their brand they were able to make profits in spite of all of this. The only question that they now had was that could they still continue to innovate in the increasingly crowded market.

Internal Analysis of Polaris and Victory

Diversification, this is key as to why and Polaris inc. succeeded in its inception. Polaris was bought from its original Roseau Minnesota Ownership group in 1968. Then in 1981 Textron Inc sold Polaris to a group of private investors lead by Hall Wendel Jr a Textron division head. This was the first major step in the right direction for Polaris Inc. this now ensured that Polaris was purely private company with the ability to diversify in so many different area it continued with the production and sale of Snow Mobiles but later on to ensure that the company run throughout the year it started selling Personal Water Crafts(PWCs) this made it possible for the company to sell all year round but as a last and final step the company started selling all terrain vehicles in the later parts of the year. This is what can be attributed to the success of the company diversification. The company’s ability not to yield to the surmountable forces around it but to adapt in any given situation. This ensured the company’s growth in its beginning stages.

 

One key thing that the company did not consider in order to do in its inception stages apart from adaptability which it did so well is that the company did not consider exploring into newer ways of working from the very beginning. The division of three all round the year production units was both profitable and ingenious but the company could have considered independently researching through all this areas and forming child companies to hold this areas this would have ensured better market strength in the end.

 

  1. Strategies-internal Analysis of Polaris and Victory

 

  • Business level.

In terms of strategy Polaris the parent company to Victory was well vested from the very start Polaris was the diversification of the company in order to in-cooperate a year round production schedule. Year round productivity is what was key to the growth of Polaris in terms of Financial increase. The company managers knew that they could not sell the same product all year round because of the seasonality of the products which they produced. This seasonality meant that at certain times of the year they would have to be out of business because of that reason. This meant that they had to think and roll out new methods in which to capture the market all year round and to still ensure that the products at hand would sell all year round giving the expected and even more returns at the end of the fiscal year.

 

The entrepreneurial attitude of risk taking ensured that the parent company would investigate the new industry that was seemingly opened up by the near collapse and selling of two motorcycle and dirt bike companies. This was seen as a near opportunity and the company now seeing this opportunity ventured into the business in the end. In addition to dirt bike research the company researched into street bikes. This idea was given much thought between Matt Parks and Wendel. This secret investigation even involved two other secret companies in order to come up with an informed decision. The research showed an industrial capacity for another Manufacturer in the cruiser business. This was a huge leap considering that it went through this is one of the success strategies business wise that Polaris employed before the start of Victory motorcycles.

 

  • Competitive strategy-internal Analysis of Polaris and Victory

In terms of the all out competition that Victory and its parent company Polaris faced the key management discovered new ways to strategically deal with the uprising and continual effective competition. With regards to the rapidly growing market Victory motorcycles to stay ahead of the game developed a more powerful engine than any of its competitors at the time. Much time and research was spent on building the engine during which they discovered that the engine should be cooled with oil to make it more effective in its performance and handling. The competitive strategy of Victory motorcycles was to creatively remain ahead of the game. This was well rewarded when the prototype motorcycle went into the market.

 

  • Cooperate Level-internal Analysis of Polaris and Victory

In order to come up with a large cooperate well managed environment the first obvious thing that the company did was to free itself from any parent organization that may have upheld it in the first place. This was done when Polaris was bought from Textron this enabled Polaris to freely scale newer heights in terms of development invention and innovation. Expanding the company’s reach to include motorcycles as subsidiary ensured the growth of the company to  new and it ensured an opening into a new market that is the Motorcycle market. This new and improved cooperate build ensured that the company grew from the state it was in to another new state

 

The company at its cooperate level at the start of the motorcycle production capped the productivity numbers this was to ensure that the slow steady start and in the end to come up with a fast paced international market the first release was possible because of the planned pre-release by management this made it possible for the market to appreciate the new brand this new brand was released by numbered models. This motorcycle industry made it possible for the larger cooperate expansion of the company.

 

  • International Strategy

In terms of internationally minded growth Polaris and its subsidiary companies made sure that the planned market growth influenced the international scene the development of all of their products was not based only on the needs of the Americans it was a company whose aim was to have its sales volume and its capital pool worldwide this was how the company was managed in regard to growth internationally in the company. Polaris Inc in developing Personal Water Crafts and snow mobiles the company. Its greatest leap in the international scene was done when the company considered the market for cruiser motorcycles. This niche in the market was exploited by the company and the company went and researched and went international with the idea and their sales since well researched were welcomed into the open international market with very distinctive profit margins. This movement into the international scene made it possible for the positive growth in the market.

 

  1. Core competencies-internal Analysis of Polaris and Victory

Tangible

  • Financial

The financial  concourse of Polaris Inc was quite phenomenal. $100 million dollars was invested into the company this was to fund their many high budget projects. This investment made sure that in the inception the company had enough financial leverage to start and catapult itself to a new standing. Victory sales were at an all time high of $113 Million dollars and this was just but 7% of the sales this returns are to be attributed to well managed financial investment in the companies well being and forward financial growth. Though in the following fiscal financial year there was a recession and many employees were let go. This might have happened because the recession was worldwide but on the other hand good financial competencies are ensured when the money is well managed for future use.

 

  • Physical

A key physical core competency of Polaris was that it was physically well based throughout the world. The worldwide presence of Polaris was felt in that it had several well vested branches that were physically established throughout the country. The vetting and choosing of various company directors was done with the interest of the company the people who held the higher positions of the company they were passionate individuals that made the necessary decisions to bring the company to the desired position.

 

  • Human-internal Analysis of Polaris and Victory

The human aspect of the core competencies this is viewed in terms of the directors and managers that invested their time in working for the company to achieve the goals that were set beforehand goals as such reaching the international market and impacting it in ways not thought possible before. Directors such as Mark Bader who was familiar with compact, high performance engines, was hired to lead the engine design staff. Directors like Nygaard based on re-engineering the Harley  bike it was discovered that it took too long to wait for the delivery the solution to this was to make a bike that could by all means be produced faster and easily delivered.

 

  • Organizational

A better organization standing in the company made sure that the company could withstand the growing competition in the heavyweight motorcycle market segment. Dealing with this problem would ensure an organizational boost up. New companies such as big Twin motorcycles and Lifan. Traditional Italian bike makers like Bimota, Ducati and Motto Guzzi were continuing to produce super bikes of extremely high quality and style Bombardier a Canadian firm, disrupted the market with a popular three wheel roadster. The Organizational strength to deal with this influx of competition, made it possible for the company to thrive amid this companies by also in the end offering a unique branded commodity that the customer market could enjoy. Knowing the customers wants and making sure they meet them was a very important aspect of this Organizational core competency.

 

Intangible

  • Resources for Innovation-internal Analysis of Polaris and Victory

The resources set apart for innovation by the company were a substantial part of the budget used to develop Polaris from when it began. Research money was set apart to ensure the research of the Motorcycle department even before it was fully launched. Before launching the motorcycle department the company even asked another company to investigate the Motorcycle industry to see if there was a niche in this market. This is considered as the most important stage of the start of the industry. This made it possible to start a motorcycle industry that is stable and sustainable by the market and company operations at hand. This is what gave birth to Victory motorcycles a very successful brand.

  • Reputation

The reputation that the company had gained at the years of its inception preceded it. Steve Menneto, Vice president of the Motorcycle Division at Polaris Industries, gazed up at a company headquarters  in Medina. Minnesota as he pulled his gleaming cruiser into the parking lot. He knew the company’s victory bikes ever since they had been introduced into the market. The reputation that preceded Victory motorcycles was an undoubtedly a greatly fitting reputation that it needed not be questioned it had all the hallmarks of a leading brand, a brand that was taking the market by storm. Their closest competitor Harley Davidson was by now using obsolete technologies and was being faced out of the market because of this. It is important to note that because of an outstanding reputation the company ended up making so very large returns.

 

  • Brand Loyalty-internal Analysis of Polaris and Victory

Growing the Loyalty of the brand that Polaris companies was by then producing needed that there be first of all a growth of trust on the brand. This was seemingly built over the years. Time being a very much important factor in the growth of the trust of the company. Polaris Inc. had over time proved itself to be reliant in what it produced from the All Terrain Vehicles to the snow mobiles the company really made sure that their products were crafted from hard work and innovative in design. This made their customer base to be very sure and ensured that the company would grow to generate a fitting volume of returns.

 

  1. Capabilities

VALUE CHAIN

  • Operations

In terms of operations the company had a clean start but amid the first year of profitability, the worldwide recession hit it and in the forthcoming year it had to let go of a lot of people. This is not only to be attributed to the recession but in that the company was not ready for a shake up that in the end many of the employees lost confidence in the company and in the way in which it run. Many preferred to quit altogether for sometime. The company to improve operations introduced new departments in order to ensure that it run all year round. Running all year round for the company meant an increase in profits an increase which would lead to the further expansion of the company into other areas such as the motorcycle industry. Introduction of departments such All terrain vehicles department was set up to ensure that some part of the year was catered for as it is the case with snow mobiles.

 

  • Marketing and Sales.

The marketing and sales in the company was aggressive and very much effective this is the only way that the company was able to achieve. In the late nineties Harley commanded Forty eight percent share of the growing North American market for heavy road bikes. Harleys product was sold through a worldwide network of more than a thousand dealers. Even though the number of motorcycles produced increased and Harley-Davidson could still not meet this numbers this was a loop hole that Victory motorcycles exploited. In doing this they got to be well known in the market despite the Japanese competition that came up at the moment.

 

  • Service-internal Analysis of Polaris and Victory

In terms of service Polaris Inc. was well vested as it was in the care of its product through production and manufacturing the product was well tested and customized for the best experience to the customer. The customer was always at the heart of the developers at Polaris and even at Victory. This aided the growth of the company by far into what it became.

 

  • HR

In terms of Human Resource. The company was well suited in its service the company did much to contribute to the growth of the company. The human resource part of the company made it possible for the company to be able to meet the customers needs and while meeting the needs still give the customers quality service. This quality in commodities was somewhat of an assured thing when it came to the service and quality of the products the company usually offered.

 

  • Technology

Technology was a well vested part of the companies operations. The technology aspect of the company made it possible for Polaris to develop the most creatively done engines and motorcycle models at the time. This in itself put Polaris at the head of the game in terms of the motor vehicle industry.

 

  1. Sustainable competitive Environment.

The need for an all inclusive environment in the market. The market need an environment that has relative calm and an environment that can be inclusively followed. In competing Polaris Inc. made sure that they were able to have a stake in the market and they were able to manage the market in a way.

 

  1. Structure and control

Polaris Inc. had a very closed up structure. A structure that was all inclusive of its subsidiary companies each company Polaris was controlled by a very well suited vice president. And as a whole Polaris Inc. was run by a chairman and controlled by the leading shareholder. This ensured that the company was steered in the right direction towards its goals. The control of the company was onward easily done by these key individuals.

 

F.

  • Profitability Ratio-internal Analysis of Polaris and Victory

 

Profitability Ratios  
Gross profit margin = gross income ÷ net revenue  
= $500 ÷$1,000 = 0.5, or 50%  
Operating profit margin = operating income ÷ net revenue  
= $180 ÷ $1,000 = 0.18, or 18%  
Net profit margin = net income ÷ net revenue  
= $82.75 ÷ $1,000 = 0.083, or 8.3%  
Return on assets (ROA) = net income ÷ total assets  
= $82.75 ÷ $1,485 = 0.056, or 5.6%  
Return on equity (ROE) = net income ÷ total stockholder’s equity  
= $82.75 ÷ $418 = 0.20, 20%  

 

 

  • Liquidity Ratios.

 

Current ratio = current assets ÷ current liabilities  
= $685 ÷ $750 = 0.91x  
Quick ratio = (cash + short-term marketable securities + accounts receivable) ÷ current liabilities  
= $340 ÷ $750 = 0.45x  
Cash ratio = (cash + short-term marketable securities) ÷ current liabilities  
= $200 ÷ $750 = 0.27x  

 

  • Leverage Ratios-internal Analysis of Polaris and Victory

 

Debt-to-assets ratio = total liabilities ÷ total assets  
= $1,067 ÷ $1,485 = 0.72, or 72%  
Debt-to-capital ratio = total debt* ÷ (total debt* + total shareholder’s equity)  
= $517 ÷ $935 = 0.55, or 55%  
Debt-to-equity ratio = total debt* ÷ total shareholder’s equity  
= $517 ÷ $418 = 1.24, or 124%  
Interest coverage ratio = earnings before interest and taxes* ÷ interest payments  
= $230 ÷ $100 = 2.3x  

 

  • Activity Ratios

 

Inventory turnover = cost of goods sold ÷ average inventory  
= $500 ÷ $190 = 2.6x  
Receivables turnover = net revenue ÷ average receivables  
= $1,000 ÷ $128.5 = 7.8x  
Payables turnover = purchases* ÷ average payables  
= $520 ÷ $90 = 5.8x  
Asset turnover = net revenues ÷ average total assets  
= $1,000 ÷ $1,391 = 0.72x  
  1. Strategic Leadership.

In order to achieve such strengths in there success the company was strategic in its leadership this enabled it to be able to act with tact. When the company started its success was made possible by the increased vigil in the leadership. It was possible to appreciate what was done by the company in this way.

  1. Strategic Entrepreneurship-internal Analysis of Polaris and Victory

Strategically reaching out and taking the risk in several areas of the company made it possible for the company to grow and realize some of its goals. Strategic entrepreneurship this is what the company had all through the years of its workmanship. This enabled it to be able to achieve a lot in the end of several fiscal years. Victory as an idea was a Strategic Entrepreneurship.