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Strategic
Management - SIM336
Case Study – Ducati: in De Wit &
Meyer (2004:854-871)

Priyal Fernando
STUDENT NO – 109149062
(Off Campus)

Strategic Management
Fernando – Student No: 109149062

Priyal

Table of Contents
Executive Summary......................................................................................................4
Chapter 1 - Process of Strategic Management............................................................5
1.1. Impact on porters 5 forces and value chain analysis on Company Strategy.....5
1.2. Porters 5 forces Analysis relevant to Ducati......................................................6
Competition in Market............................................................................................6
Bargaining Power of Suppliers..............................................................................7
Threat of new Entrants...........................................................................................7
Bargaining Power of Buyers..................................................................................8
Threat from Substitute Products............................................................................8
1.3. Porters Value chain in Ducati.............................................................................9
1.4. Core Competencies of Ducati..........................................................................10
1.5. Key Dynamics in Motorcycle Industry..............................................................11
Chapter 2 - Strategic Overview of Ducati...................................................................15
2.1. Deliberate and Emergent Strategy...................................................................15
2.2. The Deliberate Strategy of Ducati....................................................................16
2.3. Formulation of Emergent Strategy in Ducati....................................................16
2.4. Evaluation and Recommendation of Ducati Strategies...................................18
Chapter 3 - Porters Theory of Competitive Advantage..............................................20
3.1 Competitor Analysis...........................................................................................21
3.2. Generic Competitive Strategies.......................................................................22
3.3. Ducati’s Future Scope / Focus to Achieve Competitive Advantage.................23
3.4. Long Term Strategic Plan for Ducati................................................................24
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.........28 Appendix 1 ....................................................................................................................................................................................19 Figure 8: Porters Generic Strategies applied to Ducati.................................24 3 ...................Ducati Supply Chain network.......9 Figure 4: Industry Factors on Ducati.............................................................................28 Table of Figures Figure 1: Strategic Management Process Diagram............................January to September 2011 (3 Quarters)...........6 Figure 3: Porters Value Chain Analysis on Ducati..............................11 Figure 5: Deliberate & Emergent Strategy Formulation.............................................................28 List of Tables Table 1: Market Segments and features of the Motorbikes...............ducati.......................... Motorcycle Sales ......................12 Table 3: 2011 U.................17 Figure 7: Recommended Deliberate and Emergent Strategies for Ducati................................................5 Figure 2: Market Competition on Different Segments...............................................................8 Table 2: PEST Analysis of Motorbike Industry...........com).............................S.. Source: Case Study.............................................................................26 Appendix.....................21 Table 5: Recommended Strategies for Ducati to Achieve Competitive Advantage in Market.................................................................................................................................................................25 Bibliography...............22 Figure 9: Ducati supply Chain Network (www............15 Figure 6: The World of Ducati..........................................13 Table 4: Competitors Analysis of Ducati.........................................................................................Strategic Management Fernando – Student No: 109149062 Priyal Conclusion....................................

4%). 4 . improved quality and higher reliability. The main business of the company is producing and selling the motorcycles. The threat from the other competitors such as Triumph and BMW is also there for Ducati since they are trying to gain some market niche by developing new products which are specialized for those brand names. Suzuki. The trademark of Ducati's technical superiority has been the design of its engine. the key competitor in the United States. quadrupling its revenues. Kawasaki. In contemporary market Japanese manufacturers: Honda. This was achieved by massive standardization of critical components. increased productivity (15%). by maintaining a tighter grip on the suppliers and by increasing the production efficiency through adoption of platform process. doubling its EBITDA (since 1997) and doubling its market share (since 1996). by adopting a accurate quality control process. Ducati was on the edge of bankruptcy due to lack of working capital. The reason for Ducati’s bounce back into the industry since 1996 was the strategic change which was adopted by Fedrico Minoli. The economic logic behind the rebound lied in reduced costs (12. and Yamaha still remain as the major competitors for Ducati along with Harley-Davidson. by increasing the outsourcing of production activities to 87%.Strategic Management Fernando – Student No: 109149062 Priyal Executive Summary Ducati is an Italian company which was founded on 1926 by three brothers Adriano. the CEO of the company. The company rebounded by 2000. Marcello and Bruno Ducati. famous for its remarkable power delivery. In 1996.

Process of Strategic Management Johnson. business environment. 5 . These analysing tools such as Michael Porters’ ‘Five forces’ and ‘Value chain’ enables organisations to find out more about the Industry. Scholes and Whittington (2010) define the strategic management as the direction and scope of the organisation in long term plan which enables to gain the profits and market share for the organisation by allocating the resources. Strategic Analysis ·PEST ·Scenario Planning ·Porters’ Five Forces ·Porters Value Chain ·Swot Analysis ·Market segmentation ·Competitor Analysis Strategic Process Strategy Implementation The hardest part in the process.1. opportunities. the task is then to translate it into organisational action Strategic Choice This involves understanding the nature of stakeholder expectations. It is important for the organisations to have clear estimates about the business environments and the trends in the market. competitors information. customer demands.Strategic Management Fernando – Student No: 109149062 Priyal Chapter 1 . and internal value chain of the business. Strategic management process consist with three steps. current trends. and then evaluating and selecting strategic options. identifying strategic options. when a strategy has been analysed and selected. Impact on porters 5 forces and value chain analysis on Company Strategy Strategic analysis is a key step in strategic management process in a company. Figure 1: Strategic Management Process Diagram 1. within a competitive environment. supplier chain. to match with the market trends and to fulfil stakeholder expectations.

touring and sports bikes.2. The market competition is based on five basic competitive forces. Suzuki) and few in Europe (BMW. Kawasaki. Triumph). cruisers. Harley’s global presence with manufacturing parts and 6 .Strategic Management Fernando – Student No: 109149062 Priyal 1. Yamaha. Harley’s acquisition of Buell motorcycles in 1998 made it tough for Ducati to compete in sports bikes segment. The following diagram illustrates the key competitors in the market for Ducati in each of these segments. Competition in Market The motorcycle market had been divided into four main segments which are off road. Figure 2: Market Competition on Different Segments In 2001 there were only few competitors on the motorcycle industry as shown above and it was only one American company (Harley-Davidson) and four Japanese rivals (Honda. Porters 5 forces Analysis relevant to Ducati Porter (1980) defines that competition in an industry is rooted in its underlying economic structure and goes beyond the behaviours of current competitors.

New entrants must have a large amount of capital at the beginning to compete with the well established brands like Ducati. BMW and etc. According to Giovanni (2004) Ducati had radically rationalized the suppliers’ network by adopting strict selection procedures considering the quality and cut down the numbers (200 in 1996 to 130) by prioritizing the productivity of the company. design.Strategic Management Fernando – Student No: 109149062 Priyal accessories had given strong gains over the competitors. clutch). There were three main suppliers Brembo (brakes. Honda. In that case the numbers of suppliers were less. Threat of new Entrants In motorcycle industry there are many entry barriers for the new entrants since the requirements of large manufacturing facilities equipments. While. One main supplier was responsible for a particular component and he had to manage the suppliers of sub components. switching to the alternative supplier when they need more. wheels. In the current industry they compete with each other by delivering new products by replicating competitors’ designs in the market. Bargaining Power of Suppliers Ducati maintained a strategy of outsourcing. The other strategy introduced by Ducati was Platform approach for the production which was motorcycle was divided into small number of components which were in turn made of sub components. These kinds of strategies helped Ducati to increase the reliability and quality of the production as well as to control the power of suppliers. With all these Ducati had to face into a tough competition to overcome the problems that they were facing. The advertising and marketing campaigns of these existing giants in the industry have gained the customer loyalty on their products. 7 . Harley. BMW reputed for safety and quality. for all its productions except R&D. rims. Since Ducati did not have the long term contracts with suppliers and the number of suppliers of the industry was high Ducati maintained at least two sources of suppliers for each component and the strategy was. and the machining of two key strategic components which are crank cases and cylinder heads. Honda had a reputation for reliability and technical excellence. Magneti Marelli (control units and fuel injection systems) and the Japanese Showa Corporation (forks and shock absorbers). quality control.

). Ducati had to fulfil all these customer requirements to overcome in the industry. The cost of purchasing a motorcycle is also very low compared to another vehicle such as car. Threat from Substitute Products In motorcycle industry the threat from substitutes are low since the motorcycle is a luxury fashion of the life and it is considered as a leisure product. Ducati buyers median age is ranged between 25 to 35 and women have become the new attractive customers in motorcycle industry. 8 . Customers are updated through magazines and journals about the technical and stylish characteristics of new products and they rank the motorcycles on criteria of style.Strategic Management Fernando – Student No: 109149062 Priyal Bargaining Power of Buyers Ducati customers have been defined by Gavetti (2004) as wide variety of customers having equally different taste. who bought and rode motorcycles. If the switching cost is low in substitutes customers will tend to move (The products like ‘TATA Nano’ a mini car. engine performance. It can be said that the impact of substitute products is minimal in the motorcycle industry and also on Ducati. Gavetti identified the following segments with their specified demands Knee down / Racing Extreme performance and functionality Aficionados Easy Riders Weekend Riders & Highway Associated with the motorcycle with a particular life style Interested in functionality and comfort lovers The other Riders More Balanced and flexible bike Table 1: Market Segments and features of the Motorbikes The customers’ preference to a particular brand also depends on other factors such as age. though it is really difficult to compare the image and fashion of Ducati or Harley motorcycle with a mini car. The changing designs and technological features had opened a wide range of selection criteria for the motorcycle lovers which enable them to switch from one brand to another brand. income. education and gender. handling and comfort. Ducati introduced ‘The Monster’ with the low seat height and weight to match their demand and accounted 8% from their overall sales. In this industry customers always look for the performance of the bike and its functions.

The combination of these strategies and market analysis helped Ducati for its successful turnaround in 2001. The strengths of Ducati in their primary activities mainly sales and marketing enable them to achieve the focused the sport bike segment.Strategic Management Fernando – Student No: 109149062 Priyal 1. Porters Value chain in Ducati Minoli was able to influence the strengths in value chain to position the Ducati brand as both unique and focused in sports bike segment in motorcycle market.3. Figure 3: Porters Value Chain Analysis on Ducati 9 .

Their ambition was to continually defeat the Japanese motorcycles in the superbike championship. These approaches set the background of creating more lighter and reliable motorcycles by using composites. which can take the business up to the level which he expected. That time Japanese bicycles were famous for reliability and efficiency. 2002) . When they were appointed Minoli was looking for their talent as well the potential they were having who could become passionate about Ducati.4. Lamborghini. to fitting with customer perception as a prestige brand. Here what we are going to discuss the way how Ducati managed the limited resources and core competencies they had in 1996 for its great turnaround. These people were the backbone in Ducati. Apart from these they had some more reasons which were unique. Giving the priority to create a quality product was the passion of Ducati and by locating in the middle of Emilia a city which is famous for quality brands such as Ferrari. Ducati dominated since 1990 to 2000. The newly appointed management team was also coming out with creative ideas. The CEO of Ducati Federico Minoli identified three unique things inside the organisation which had huge potential. titanium and magnesium.Strategic Management Fernando – Student No: 109149062 Priyal 1. Ducati had a good product which is unique. It reflects in the superbike championship results table. It was ranked in the top of the motorcycle rankings and statistics proved that 55% of their customer base tends to repeat purchase due to its production quality and the innovative features of the bikes. The supply chain management system as explained in Porters’ five forces analysis (Refer page 5 and Appendix 1) also gave the advantage to Ducati to stay one step forward than its competitors. Maserati always encouraged Ducati’s highly 10 . The continuous R&D programmes enabled Ducati to be more efficient in technology and to make the products. The third unique competency was Ducati’s ability to create loyal customers in European market. beautiful performance motorcycle. carbonium. though Ducati was having well qualified professional engineers for both research and Development and racing divisions. Core Competencies of Ducati This refers to unique advantages inside the organisation which other competitors in the market do not have or do not do as well (Drejer.

The PEST analysis of motorcycle industry is as follows. It is important to analyse the business environment factors before discussing the industry factors of the motorcycle industry.Strategic Management Fernando – Student No: 109149062 Priyal profiled CEO Federico Minoli to go for a quality product. 1. which are beyond the control of company. Minolis’ good understand about the motorcycle market and specialized studies in ‘Turnaround Management’ was the key advantage which Ducati enjoyed during this period of its’ strategic change. The National. Political  The requirement of more road networks : To create roads impose 11 . Key Dynamics in Motorcycle Industry The external influences which force the management to make decisions on company strategies are considered as the business environmental factors.5. Easy Riders. Internation al economy Technology Governme nt & Politics The Industry Suppliers Selected group of companies that supply quality products and services (Appendix 1) Competitors Japanese. Weekend & Highway lovers The Natural. The linkage between these two components can be graphically presented as follows. BMW. Triumph Customers Racing Aficionados. Harley. Environme nt Demograp hic Structure Social Structure Figure 4: Industry Factors on Ducati It illustrates the external factors which influence the motorcycle industry.

new technical regulations from Europe 12 .)  Unreliability and the expensiveness of the public transport services increase more motorcycle users  Demographic factors such as increase of population and age ranges are much important in motorcycle industry to make its forecasts  The new segment of women riders are more fascinated in motorcycles  The perceptions of young generation the motorcycle as a passion of their lives Technological   It is easy to use the motorcycle in highly congested areas New technological innovation keep changing the features of motorcycles which increase the competition in market  The increase of the demand from the customers for new technological features force companies to more focus on the R&D  More powerful engines with designs.Strategic Management Fernando – Student No: 109149062 Priyal more taxes  International trade barriers : Import and export restrictions and high tax policies has limited the operations of the companies Economical  The environmental protection laws : Specially the sound and air  pollution from motorcycles The recession has limited the consumers spending (buying a car is more cost effective rather than a motorcycle which is passionate)  E business has become more popular : specially online sales and auctions  Globalization has allowed the people in different part of the world to access the products in other countries. safety. which includes the riding test review. (In 1996 Minoli had to deal this matter with the Italian communist unions around Ducati. lighter and comfort are everyday coming into the market  The Internet market is more popular among the motorcycle producers to advertise their products through websites and deliver the products into the market. (This will give a clear picture to customers and more details about the product specifications) There are some legislative agenda for key players in motorcycle industry to deal Table 2: PEST Analysis of Motorbike Industry with. Social   Increase of fuel Prices have limited the vehicle consumption The pressure from the employee unions.

(MCI Press released.906 registered units. Harley and Ducati have 13 . emissions and ABS). These companies have to deal with a tough business environment and they expect some Government policies to support the industry and its current and emerging technologies. 2011) The economic factors such as the recession have spread out in Western economies and it has limited the number of purchases of motorcycles too. The new grouping. with 1056.Strategic Management Fernando – Student No: 109149062 Priyal (anti tampering.82%. Among the five main EU markets studied by ACEM.January to September 2011 (3 Quarters) The industry is further expanding though the entries of new segments such as women riders who are more fascinated in motorcycles. sales of new motorcycles and scooters in the countries monitored by ACEM were down 8. the Italian scooter manufacturer. wheels to work. Malaguti. The rising fuel prices also make it difficult for customers and have limited their consumption levels.3%. 1% and The Netherlands down 13%. France is down 2.S.86% over the same period in 2010. Electric powered motorcycles are the latest trend in the industry both for environmental issues and due to the rising cost of fuel. revealed a need for industry to act in a positive way. Powered Two-Wheeler (PTW) sales in Italy are down 17. In Europe. Motorcycle Sales . UK is down 2. will close this year after 81 years of operation. called the e-MCIA (to be known as eMCI).36%. coupled with increasing interest in alternative powered technologies from existing major manufacturers. while Germany is up 3. bikes in bus lanes and motorcycle sport issues. is born from developing contacts with new players in the ePTW sector. Even in US market the sales in all the segments have slightly gone down as follows. A recently published MCI report on the potential of electric motorcycles as part of a UK low carbon transport strategy. Table 3: 2011 U. Spain down 15. ACEM reports that from January to August of 2011.7%.

The Strong integration between R&D and marketing has caused a vast improvement of technology in motorcycle industry as well. While analysing the key industry factors the motorcycle racing competitions are the main trade mark of the bicycles.Strategic Management Fernando – Student No: 109149062 Priyal gained more advantages out of these by designing motorcycles with attractive features such as ‘Monster’ a specialized bike for sporting women. 14 . Key players in the market develop new technical solutions and test materials for competitions and they eventually transfer the effective solutions to their production series.

1. Emergent strategy develops over a period of time through adjustments. Lampel. or behaviours which are added in to the strategic process in time to time. It does not consider the external or other facts.Strategic Management Fernando – Student No: 109149062 Priyal Chapter 2 . Ghoshal. enhancing its portfolio and increasing its sales and profitability. A mix of deliberate and emergent strategies in some way will help the organization to control its course while encouraging the learning process (Mintzberg. Deliberate strategies guide the companies with a sense of focused direction (Mintzberg. 2003) Emergent strategy of a company is not a part of original planning process. 1994). Deliberate and Emergent Strategy The deliberate strategy is determined and the result matches the intended course of action. Quinn. Deliberate Strategy 1996 – 2001 Turnaround Difficulties External Influence Competitors’ strategies Market Trends Customer perceptions Emergent Strategies Goals & Objectives To match the Harleys profit Levels Double digit Growth Formulati on Figure 5: Deliberate & Emergent Strategy Formulation 15 . 2. Ducati adopted new strategic plan under new management of Minoli aiming at strengthening the company brand. consist with a set of actions.Strategic Overview of Ducati Following its 1996 liquidity crisis. influenced by external factors or some internal limitations.

This was followed by installing new management team and hired 250 expertises around the world to rebuilt Ducati’s sales. But Ducati had lot to do to achieve their ultimate target of passing Harleys market shares. strengthening its brand and raising production efficiency. Minoli analysed the industry factors and came out with an alternative strategy of developing a global brand to the worldwide customer network to compete in the market in order to achieve the deliberate 16 . The series of activities of restructuring its distribution network.117 motorcycles in 1996 and earning 4% market share in sports bike segment. 2.2.Strategic Management Fernando – Student No: 109149062 Priyal 2. marketing activities and public relations departments. The functional divisions were largely absent and it was really difficult for the top management team to make their decisions. who identified the passion of Ducati. which constitute its main product differentiation. The Deliberate Strategy of Ducati In September 1996 Minoli started the turnaround programme in Ducati. These activities were backed by the engineers of the company with their desire to compete in the Superbike championships. 2004). introducing new models. The deliberate strategy of Ducati was to maximise the profit and increase the market share which was a difficult task for Minolis’ team. In order to achieve these goals Minoli adapted a strategy of increasing its working capital to raise production levels. As a solution for these external influences. no one had previous experience in motorcycle industry Ducati was struggling to achieve their strategic targets. Initially there were two goals in CEO’s mind to double digit growth and equalling Harley Davidson’s profit level. Managers. with a new engine or to enter in to the Grand Prix racing (Gavetti. The Budget was limited and there were some renovations left in the factory as well. Formulation of Emergent Strategy in Ducati After recruiting the new Management team which. Ducati continuously upgraded its motorcycles through design and technical innovations. Their intended strategies were to invest heavily in product and rationalize production process. This was justified by producing 12.3. later came out with brilliant decisions.

and a motorcycle is at its heart (Gavetti. tubular trestle frame and the unique Ducati sound. That was the birth of Ducati Museum which was a symbol to the Ducati Staff to develop their powerful brand. Minoli decided to enter in to the accessories and apparel market by acquiring Gio. This lead to the formation of ‘The World of Ducati’ the strategy of all Ducati’s operations. Ducati came out with ‘Sport Touring Bike’ as a part of this strategy transformation which serves to age group over thirty an age group which they did not serve. passion a piece of history. Figure 6: The World of Ducati. In the same year. Italian style. The centre of this strategy is the motorcycle which serves to all customer segments in the market. which Minoli wanted to symbolize as a dream.Ca. to further establish the brand name. As a part of creating a specialized brand. 2004). link each other. 17 . Suddenly the branding was the strategy of the Ducati instead of profitability and competing with Japanese motorcycles. Minoli also wanted to identify the core attributes associated with identity and uniqueness of Ducati motorcycles. Source: Case Study 1997 was a life changing year for Ducati. L-twin engine.Strategic Management Fernando – Student No: 109149062 Priyal strategy of profit maximisation. Then he found five distinctive features which are Desmodromic distribution system.Moto a company was producing accessories for Ducati.

when Minoli formulating Ducati’s deliberate strategy.com 2011. China. At the initial stage. In 2007 Indian Government allowed foreign companies to enter in to the local market which have a good potential.Strategic Management Fernando – Student No: 109149062 Priyal 2. Evaluation and Recommendation of Ducati Strategies After analysing the aforementioned strategies. But their expertise in other areas helped them to adapt the Ducati passion and enabled Ducati to build up its niche as a global brand. robots and etc. reformatting Ducati distribution network and reenergizing Ducati brand name were the key elements of this transformation. ‘The world of Ducati’ has its events and other initiatives that are helping to create a community of Ducati Supporters. with their luxury brands). The expertise engineering force could have been an additional advantage for Minoli in such a situation. The ultimate target was to equal the Harley’s market share and to achieve double digit growth. By the end of April 2001 Minoli achieved the target with a potential growing company. (According to ft. As an emergent strategy to face the competitors such as Honda. India and Brazil which have good potential. A combination of these strategic approaches of product specialization and diversification could have taken Ducati into the markets of emerging economies such as Russia. This is important for growth as Ducati hopes to attract new customers into the sport bike segment such as women. Minoli could have diversified Ducati in to the other market segments such as automobiles. This caused Ducati to struggle at the beginning. The expansion of Ducati product portfolio. with increasing market share up to 10%. Minolis’ ambition was to enter in to the new markets and in 2001 Ducati was well positioned to face the attack from competitors. This stage Minoli had the 18 . the whole management team was changed. The opportunity of establishing Ducati brand name in those markets could have expanded the operations of ‘The world of Ducati’. The Ducati’s deliberate strategy of establishing in sports bike segment is the greatest competitive advantage since it is difficult for other competitors to attack Ducati’s position in that particular market. Minolis’ emergent strategic creation. India is a country that people loving mostly to motorbikes than other vehicles. and switchers from other motorbike segments.4. it can be said that Minoli has adapted both school of thoughts in to the Ducati’s strategic transformation.

Minolis’ branding concept was the emergent strategy for the Ducati which opened a wide range operation background under Ducati name and enable Ducati to achieve its deliberate strategies with a different approach. Robot technology Emergent Strategy strategy Branding .Different Markets – BRIC approach Realized Goals . 2004) Deliberate strategy 1996 – 2001Minolis Turnaround Product Specialization . Ducati would have focused only in Harleys market share. That could have created an easy approach when Ducati considering the diversification strategies later.Different products – Automobiles.Achieving Harley’s market niche . market growth rate and compete with Japanese motorcycles in superbike championship.Double digit growth in market share Recommended Goals Wide Range of business by entering in to the other industries Market leadership through global expansion Figure 7: Recommended Deliberate and Emergent Strategies for Ducati 19 .Expertise in different fields. The combination of both of these schools of thoughts is the success in Ducati’s turn around (Volberda and Elfring. Automobile. At the transformation period. if Minoli adapted only the deliberate strategy.Expanding World of Ducati Diversification .Sport segment Change management . robots .Strategic Management Fernando – Student No: 109149062 Priyal opportunity to consider the future market potentials which he can expand Ducati’s business chain and he could have recruit the expertise according to that.

differentiation and focus which enable firms to achieve competitive edge in the fluctuating market (De Wit and Meyer.Porters Theory of Competitive Advantage In 1985 Michael E. it is important to analyse the competitors’ strategies of their own market positioning. 2004). Ducati maintains a luxury brand image with a high pricing strategy since it has a quality product to compete in the market which is their competitive advantage. Further. 20 . Before create a strategy for Ducati in order to achieve a competitive advantage in its future operations. Gavetti 2004). For instance. Porter identified the concept of competitive advantage among the rivals in the market. Porters’ theory of generic strategies consists with three dimensions which are. and the frame at least 5 years. the lifespan of the engine was typically 10 years. Porter defines the competitive advantage as the way that firm practices the generic strategies in the operational level. their innovative features and reliability of the bikes with long time durability force customers to think twice before moving to another brand.Strategic Management Fernando – Student No: 109149062 Priyal Chapter 3 . Business strategy is concerned about the industries and market environment both and firms required to focus on their competitive advantage to face the challenge from the competitors. (Ducati motorcycle had longer lifespan than typical competitors’ machines. cost leadership.

middle aged professionals with a reputation of making virtually unbreakable bikes. Target for largely high income. 2008). safety. Most importantly the bikes BMW are less expensive than other major brands. The Harley Owners Group (HOG) is the largest club of Triumph motorcycle owners. anti lock brakes giving the firm a reputation for exceptional quality. Honda possessed a superior competence at engine design which was continually translated into products that outclassed those of competitors. Triumph uses product differentiation strategy to compete in Yamaha the market with Japanese production techniques. Company diversified into the production of water vehicles. Competitor Strategic Approach by using Competitive Edge Harley Davidson Harley had more modest global presence with historic brand name compete in all the segments in industry. fuel injection. Ducati operates in a highly competitive market with following major rivals. snowmobiles and golf carts. furl efficient engines. Honda has a reputation for reliability and technical excellence utilizing low emission.1 Competitor Analysis The following competitor analysis in the motorcycle industry enable Ducati to assess the strengths and weaknesses of current and potential competitors as well as both an offensive and defensive strategic context through which to identify opportunities and threats (Singh. reliability and comfort. Huge dealer network with famous brand name. pioneered technical innovations like advanced suspension system. leisure and fishing boats. In 2001 company specialized in touring bikes with 11 models.Strategic Management Fernando – Student No: 109149062 Priyal 3. Table 4: Competitors Analysis of Ducati 21 . Yamaha does Most of Honda its operation (85%) outside Japan. Yamaha has a product differentiated with technological innovations. all-terrain vehicles.

whether profitability is above or below the industry average.2. The pricing strategy is always high in Ducati than the competitors. which is associated with the Ducati quality and the brand. it is difficult for Ducati to gain a price based competitive advantage in the market. Figure 8: Porters Generic Strategies applied to Ducati After analysing the Ducati’s existing business Strategies. itself in the industry to earn high rates of return. cost focus and differentiation focus. Generic Competitive Strategies Porters Generic analysis enable firms to determine its position. Ducati engineers are more focused on adding new innovations and technological advancement into their production models. 22 . firm can be placed on product differentiation category. there are two types of competitive advantage a firm can possess which are low cost and differentiation. That strategic approach guides Ducati management to compete in the market with advanced products with different features.Strategic Management Fernando – Student No: 109149062 Priyal 3. A firm must position well. Thus. These two types of competitive advantage set the scope of activities to the firm which leads to the cost leadership. The following paragraph of the case study (Giovanni Gavetti. Focus strategies also consists with two variants. According to De Witt and Meyer 2004. Product differentiation and focus. This clearly defines Ducati’s product differentiation strategy to increase their brand image to gain competitive advantage. 2004) clearly illustrates this strategic concept. Company perception is to present a quality product under recognized brand at high price in to the market.

Majority of motorbike lovers in counties like India and China are middle class people who earn less amount of salary. (2004) Strategy Process. Engine Component and New markets. as the income source. it is important to develop a modern strategy for Ducati’s future operation. 2011). who seek for quality.com. cost effective. That can capitalize the assets. characteristics and competitive advantages of the Ducati. but with an attractive look and good durability will be a good product to gain the competitive advantage in that kind of market. production systems and the Life Science business. R. which fulfil their daily needs (ft. Content and Context: An International Perspective 3. In order to achieve profits in high potential Asia and Latin American countries. Ducati Brand. outlining the strategy of the company's progress and expansion.3. achieving further growth and enhancing its brand value by investing in growing markets mostly in Asia and Latin America. 23 . B. By considering contemporary market trends. Ducati’s Future Scope / Focus to Achieve Competitive Advantage After analysing the market environment and existing strategies.Strategic Management Fernando – Student No: 109149062 Priyal Source: De Wit. A low price ranged motorbike with less technological features. By using existing competencies Ducati can develop new models while focusing on cost reduction. Ducati should change its high pricing strategies after considering the buying behaviours on the consumers in those particular markets. in order to achieve the competitive advantage in current market. convenient travelling option. Ducati’s deliberate strategy should focus on areas including the Personal Mobility. The author recommend that company should focus on increasing profits. and Meyer.

This includes commercializing power sources such as power assist systems. thus further enhancing brand value (The operations in Ducati owners Club & World of Ducati). and next-generation engines. Entering Industries New Here the company can build on its element technologies to achieve further expansion in new applications. Ducati should focus on their deliberate strategies to exist in the market. low-priced and new concept personal commuter vehicles. Engine Based on the expertise.Strategic Management Fernando – Student No: 109149062 Priyal 3.4. derived from the Life Science business. Customers. Ducati can focus on the areas including motorcycles with superior environmental performance. Table 5: Recommended Strategies for Ducati to Achieve Competitive Advantage in Market 24 . to gain a competitive advantage over the industry rivals and expand the business into potential future markets. automotive engines. the company can grow its business by developing engine components into a core competency. The company can apply such element technologies as electronic control acquired in the development of industrial robots and industrial unmanned helicopters and biotechnology. The following recommended deliberate strategies for Ducati concentrated four main areas. Personal The firm can offer best mobility solutions from a broader Mobility Focus perspective that includes not only its products but also the overall transportation system as well as lifestyle oriented approaches. who enjoy Ducati products worldwide. Ducati has gained through personal Component mobility development and manufacturing engineering. in addition to motorcycle components and aluminium and magnesium parts. Long Term Strategic Plan for Ducati In long term operations. The strategy can be included secondary services and spare time solutions for Ducati users. to different fields in creating new businesses. Further attention can be given into electrohybrid bicycles and electric vehicles Brand Focus This is a valuable intangible for Ducati.

after analysing deeply relevant to the Ducati Company. This is the reason that ‘Strategic Management’ has to play a vital role with business entities in the trade. Though the Motor cycle industry is growing rapidly with new dimensions and the competitors in the market always change their focus in to the innovative products. market situation and future focus. This is where Ducati must identify the situation and use its emergent strategies in order to gain a competitive advantage in the market.Strategic Management Fernando – Student No: 109149062 Priyal Conclusion Concluding the report. turnaround programme. its business strategies. 25 . it can be recommended that Ducati should focus on both Deliberate and emergent strategies to succeed in the market. is a ‘Quantum Leap’ for Ducati to achieve a good market position with its deliberate strategies. current trends in the market. above its rivals. The recommended business plan for Ducati. at the end of the report.

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Strategic Management Fernando – Student No: 109149062  Priyal www.com) .Ducati Supply Chain network 28 Figure 9: Ducati supply Chain Network (www.com/ [Accessed 21st November 2011] Appendix Appendix 1 .ducati.harley-davidson.