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Ducati Case Study

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Scott Robinson

on 28 April 2015

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Transcript of Ducati Case Study

Ducati Case Study
Potential stagnant growth for the company

Should Ducati enter the cruiser market?

Would entering the cruiser segment, and broadening Ducati's traditional niche, help them sustain the profitable growth of the organization?
Do not expand

Financial distress & risk
High level of difficulty to penetrate market
Unpredictable economic conditions
Potential loss of focus and brand loyalty

Target Demographic
Younger target audience
25 to 35 year olds
“Undecided” consumers
Lighter weight
Reduced ride height
Increased handling capacity
Speed, plain and simple
Ducati riders believe they are part of something “greater”, embracing the brand
Sense of pride when owning a Ducati motorcycle

Historical Overview
Ducati organization founded in Italy in 1926
Established itself as a high-end lifestyle brand
Focuses primarily on motorcycle production and sales
Produced their first fully functional cycle in 1950
Leader in motorcycle-related technology
Desmodromic valve; L-Twin engine
Concentrates on dominating a niche
Performance-driven motorcycles
Lighter frame
Forward-leaning seat position
Significant handling capabilities
Luxury of comfort is sacrificed

Porter's Five Forces
Threat of New Entrants → Low
High capital expenditures
Highly differentiated products already in industry
Brand loyalty and high switching costs

Bargaining Power of Suppliers → Low
Many suppliers, low input differentiation
Low switching costs

Bargaining Power of Buyers → Medium
Small number of buyers
High switching costs, brand loyalty, differentiation

Inter-Industry Level Analysis
Godfrey Chan, Matt Elkins, Scott Robinson, Rebecca Zielke, Lauren Zin
Porter's Five Forces
Threat of Substitutes → Low
Differing audience of cars
Motorcycle and brand loyalty
High switching costs

Rivalry Among Firms → Medium
Low exit barriers
Brand loyalty

Potential Influences
Factors Effecting Forces
Profitability of the Forces
Intra-Industry Analysis
Intra-Industry Analysis: Differentiation
Slow Performers in the Race
Competitive Dynamics Between Competitors
Firm Level Analysis - VRIO
Company's Strategy
Four Segments of Motorcycles
Ducati's Relevant Market (Sports Niche)
Ducati's Sustainable Competitive Strategy
"The World of Ducati"
Future of the Industry
Technology and R&D
Potential Threats
Pros and Cons
Electric Engines
Completely different market
Harder to produce same high performance
Allow new competitors into industry
Companies that already make electric engines

Strategy Change
Other firm moving from differentiation to cost-leadership and vice-versa
Possibility to steal customers because of price or new features
Economy dependent

Forces effecting other forces

Factors that effect more than one force changing
Ex: decrease in threat of substitutes = decrease in new entrants
Brand loyalty and switching costs are common in most forces
Large impact factors
Multiple suppliers
Small impact factor

Each force drives profitability in a different way
Some directly, some indirectly

Ducati is very profitable in this industry
Brand loyalty


Major competitors:
Leader of technological advances
Reliability and safety
Most produced
Lifestyle brand
Durability, virtually unbreakable

Different model for different purposes
Represents the thoughts and feelings that come with riding a motorcycle

Fewer bikes sold in the USA
Focuses on other products

Concentrates on parts rather than the whole vehicle

Honda and Yamaha
Jointly transport motorcycles and spare parts
Estimated savings of 30% on transportation costs

Kawasaki and Suzuki
Plan to also jointly transport motorcycles and spare parts

Internally analyze a firm’s resources and capabilities to ensure it can be a source of sustained competitive advantage

→ Technological advancements; Skilled engineers; Design team
→ Distinct sound; Unique design; Performance capabilities
→ R&D department; Brand/Customer loyalty
→ Leadership of Federico Minoli; History of Ducati and inherent subsidiaries

Not only for “extreme” riders
Common board basis customers
What a motorcycle represents
“The World of Ducati”
Maintain market share, technologically advanced

Aggressive Outsourcing
80% in 1996, 87% in 2001
Maintaining internal R&D and design
Standardization of products

Take control of subsidiaries
Improve average quality of dealers
Creation of a chain of “Ducati Stores”

Ducati Owners Clubs

Technology and R&D


Potential Threats

2-5% of revenue invested in R&D
Weight and drag reducing features
Optimize engine quality and performance
Improvement in aerodynamics
Stronger integration between R&D and marketing

Invest more to automate production lines
Outsourcing of inputs
Increase flexibility of streamlined production structure
Implement Japanese manufacturing techniques

Alternative fuel source

Electrical vehicle phase

Pros: Expansion of segments, Increase in market share
Cons: Heavy capital investment, Time consuming, Unpredictable economic conditions

Not Expanding
Pros: Risk reduction, Sustain current brand name
Cons: Lose the chance of potential expansion

Do not expand
Ducati may lose focus and hence brand loyalty
R&D efforts might not pay off
Difficult to penetrate Harley Davidson’s cruiser market
Unpredictable economic conditions can lead to failure
Expand on Sport niche segment
Increase R&D on electric motors and alternative fuels
Focus on development of customer demographics
Maintain good relationship with other Italian Automakers

In 2011, released the 2011 Ducati Diavel
Hybrid, but 2012, classified it as a cruiser
Sold over 20,000 motorcycles
Most successful cruiser

In 2012, Ducati was bought out by Audi
Audi expands Ducati’s cruiser segment


The World of Ducati, Ducati.com
Most efficient manufacturers 2001
Aggressive outsourcing
Quality distribution



BMW, Honda

Japanese Companies, Ducati

Historical Overview Continued
Ducati's Turnaround Program
Federico Minoli, CEO, implemented two goals
Double-digit growth
Equaling Harley-Davidson's profit level

Appointed new Top Management Team
"Structured chaos"
Developed a global brand
Appeal to a broad spectrum of consumers
"The World of Ducati"
Execute outsourcing policy
Bring it to 90%
Adopt strict selection/quality control procedures
Total suppliers decreased from 200 to 130
Move toward a platform approach to distribution
Start a new distribution strategy
Profitability In Industry
Problem and Related Recommendation
Historical Overview of the Firm
Inter-Industry Level Analysis
Intra-Industry Level Analysis
Future of the Industry
Firm Level Analysis
Organizational Activities
Reinforce Recommendation

SWOT Analysis
Company Update
Full transcript