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Ducati Case Study

1147 words - 5 pages

Cameron Sigler MGT 3830 – Case 2 September 24, 2013

Ducati Motorcycles Analysis

In order to understand the potential decisions and trade offs available for Ducati to organize its strategic plan, a thorough analysis of the motorcycle industry was essential. In 1996, Ducati Motorcycles operated in a highly unattractive industry. The forces of competition were strong. The high bargaining buyer of buyers, the moderate bargaining power of suppliers, threat of substitutes, and the threat of new entrants fueled this situation. Ducati competed with other notable firms that manufactured similar bikes that were comparable in price and quality. These factors lowered the switching costs ...view middle of the document...

Ducati’s new branding strategy, “The World of Ducati”, was a multi step program of transformation. Through this process, Minoli repositioned the company’s objective of selling well-made motorcycles to offering an entertainment lifestyle. This was a critical factor in Ducati’s strategy. Ducati revamped itself similar to Harley Davidson, the most profitable motorcycle company at the time, by introducing new products, services, and advertising that added value to their customers. This approach helped to drive a wedge in between their buyer’s willingness to pay and relative cost, in turn, combating the forces of competition. The decision to reshape its product line to emphasize its profitable products was effective strategy. This enabled the firm to quickly regain respect for its well-designed motorcycles, while providing it with additional resources to focus on other crucial aspects of its transformation.
Minoli implemented a strategy to gain profitability by consistently increasing the operational effectiveness Ducati’s operations. Activities such as standardizing its cranks and cylinder heads and moving to a platform approach of production helped the firm increase manufacturing efficiency by creating economies of scale. Ducati was able to significantly decrease its amount of suppliers and remove its management responsibility over them by outsourcing nearly ninety percent of its production and offering short contracts with its suppliers. This revolutionary move allowed the firm to decrease the bargaining power of their suppliers while freeing significant resources to refocus in other areas that would help the firm add value. This saved capital was reinvested in areas that Ducati needed to expand to make the “World of Ducati” come to fruition. Ducati moved its core competencies of R&D (research and development), quality control, and design in house to better focus and align their strategies. By relocating the essential aspects of the company under one roof that thrived with a creative culture, the firm experienced explosive growth though its product development, design and R&D. These advancements were critical in re-establishing the Ducati’s brand loyalty in the racing world, which was an essential component to secure a successful positioning for the firm. These operational changes enabled the firm to effectively utilize their inputs, reduce cost, increase product quality, and gain reliable profitability.
Just as important as the inner transformation of Ducati was the external makeover for the public. Similar to Apple’s hub strategy, Ducati’s transition to an entertainment lifestyle involved repositioning their high performing bikes in the middle of other value...

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