Polaris 2008 Annual Report Download - page 10

6 Polaris Industries Inc. 2008 Annual Report
ATV and side-by-side divisions into one off-road vehicle
division that leverages synergies, eliminates redundancies
and improves productivity. To maintain our competitive
position in motorcycles, we are revamping how we go
to market. You will see new selling tools and marketing
initiatives in 2009. With snowmobiles, our focus is on
dominating every kind of terrain, so customers can expect
a smooth, powerful ride no matter what they encounter.
Our new RUSH, (featured on Page 5), sets the tone
for Polaris snowmobiles from here on out. The dealer
experience is a key part of the powersports experience.
While we have a competitive advantage with our strong
dealer network, we will continue to enhance our dealer
support. By maintaining our lead in powersports, we
expect to generate annual compounded organic sales
growth of 5 to 8 percent over the next five years.
• Adjacencies: Winning in our core businesses is not enough.
Eventually, those markets mature and become saturated.
To be successful long term, we must expand both inside
and outside of powersports, into adjacent markets that
are a good fit for our core strengths. (See Core Strengths
featured story on Page 2.) The military market is a good
example. Another is a recent partnership with Bobcat
to provide them with differentiated private-label work
vehicles that will be sold through the Bobcat distribution
channel. We expect to generate $100 million to $300 million
in sales growth from adjacencies in the next five years.
• Internationalgrowth: Our success in Europe is a
harbinger of things to come. We are working to replicate
that success in Asia, Latin America, the Middle East and
Operational Excellence Is
Back-end Advantage
Polaris employees want to lead in every aspect of the powersports business,
and operations are no exception. In 2008, we improved our speed to market
by 15 percent. We shaved months off the time it takes to get a vehicle from
design to a customer’s garage. In the two years since we started our Operational
Excellence initiative, we’ve become 36 percent faster.
Contributing to our speed is a pilot dealer program called Maximum Velocity
Program, with improved front-end dealer processes. The program includes numerous
changes to how we and our dealers interact with the consumer and run our
businesses. For example, dealers using MVP will place orders twice a month versus
the previous twice a year. This shorter order cycle allows dealers to order products
that consumers are asking for versus what’s in inventory, which allows Polaris to
respond quickly to market changes and trends. To accommodate a faster turnaround,
we reduced supplier lead time on components, and produce mixed models on the
assembly line, thanks to our flexible manufacturing capability. The result is increased
market share and lower inventory levels among the 175 participating dealers. We
expect to expand the Maximum Velocity Program penetration in 2009.
RANGER RZR
A Letter from the CEO and COO (cont.)
Africa. We expect international sales to grow to represent
over 25 percent of the company’s total sales over the
next five years.
• OperationalExcellence: Our strategy to improve quality,
cost and speed has become a significant competitive
advantage. By applying various lean-manufacturing
philosophies, such as Kaizen, to our operations, we are
leveraging the creativity, skill and dedication of Polaris
employees to deliver greater value to both customers
and shareholders. We expect operating-margin expansion
in excess of 200 basis points in the next five years as a
result. (For more, see Operational Excellence featured
story below.)
• Financialoutperformance: Profitable growth is the
mantra, with continued focus on sustainable earnings-
per-share growth, driven by a robust combination of
revenue growth and net margin expansion.
We are confident in our strategy, and equally confident in our
ability to execute it and create a bright future for all Polaris
stakeholders. A very important part of the future is 2009.
We have already begun taking action to deal with what will
likely be one of the most challenging years in our history.
Effective leaders make the most of adversity and that
is exactly what we will do at Polaris. We will relentlessly
focus on executing our strategy and maintaining credibility
with all our stakeholders. While we do not expect sales to
grow in 2009, we expect to leverage our performance and
innovation to gain market share, and will strive to show
net margin expansion.