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Ducati has garnered great success over the previous years and many may
argue that the turnaround has reached its peak. Their challenge is how to
rekindle this momentum in order for it to last. The purpose of this paper is to
analyze Ducati’s internal and external environments in order to identify its
strategic position, and uncover its best strategic option in moving forward.
We will analyze their value configuration and identify their key strengths and
weaknesses. When analyzing their resources, whether they have the potential
for sustained competitive advantage, it must manifest four attributes: valuable,
rare, inimitable, and non-substitutable (the VRIN framework). The company’s
threats and opportunities will be identified in the external analysis, we apply
Porter’s five forces model to gauge industry rivalry and PESTEL to uncover
important trends that will impact Ducati. The key factors derived from these
two analyses will be presented in a SWOT model, and use these to identify
strategic options Ducati could follow.
We conclude that the company should maintain their strong focus in their
niche market, but exploit the opportunities they can harvest from expanding
their customer base and efforts in e-business; an untapped source of
increasing revenues.
Brand Name. Ducati has built itself a strong brand name and image within
their niche segment; sport bikes. Their motorcycles are a symbol of Italian
design and tradition that makes them unique in the market; an asset that is
inimitable. Another characteristic about Ducati is the true passion for the
brand shared by all its employees. According to Minoli, it is ultimately the
people who run the company, representing the “real soul” of Ducati (Gavetti,
2002). Strengthening its brand and image, Ducati.com became a powerful
interface to connect with its customers, and to understand their needs and
psychology. However, the company has never utilized its full potential. The
internet is a great tool with global reach.
R&D: Technology. We may argue that Ducati’s R&D division creates value by
identifying certain development opportunities, encourage innovation, and
implement the best solutions. They “solve problems” which can be identified
as a value shop; intensive technology (Stabell & Fjeldstad, 1998). The value
creation logic differs somewhat from the logic of chain. The R&D department
is characterized by non-standardized cases and where applying competences
and expertise becomes essential for value creation. We may look at it as a
process where all the main activities contribute to generating value. The main
drivers in a shop are reputation and learning. Ducati houses a group of top-
notch engineers both in the R&D and in the racing division, and their
engineering team was reputed to be one of the most expert and skilled in the
industry. With their technical superiority Ducati achieved success in the
international racing circuit that also fueled a strong performance reputation.
Over the years, the core attributes underlying Ducati’s identity and the
uniqueness of their motorcycles, emerged as, the Desmodromic valve
distribution system, L-twin engine, tubular trestle frame, Italian style, and
Ducati’s unique sound (which the company attempted to patent) (Gavetti,
2002). The Desmo system became Ducati’s technical signature, unique to the
brand. The past few years Ducati has invested heavily in new design
technologies, product development and human capital. These strategic
resources are what create customer value, differentiated from what their
competitors can offer. Ducati’s competitive advantages enable them to offer
their products at a higher price because customers are willing to pay more for
the motorcycles.
External Analysis
There is a constellation of opportunities and threats encircling Ducati´s
business venture, and we will henceforth clarify how these can affect its
strategy. Porter´s five forces model will be applied to gauge intensity of
industry rivalry and PESTEL analysis will be used to identify relevant macro-
environmental factors. The motorcycle industry structure can be characterized
as an oligopoly in which Harley Davidson constitutes the biggest threat with
Honda, BMW, Triumph and Yamaha also competing.
Porter´s five factor model. There is an ongoing debate around the number of
factors in this model, some saying that the state and complementarities
should be added factors, while other praise it for its parsimony: PESTEL
compensates this.
There are social and demographic changes that Ducati have considered, like
the increased interest in motorcycles among females. Ducati´s bikes weigh
less and are lower in height than their competitors, making it easier for
females to use them. Ducati has created Museums, special stores and a
website to cultivate the social image of its brand, but it is facing R&D
competition from Japanese manufacturers like Honda, Suzuki and Yamaha
who are in all motorcycle market segments.
Minoli´s right hand and the mastermind who made Ducati.com, Cristiano Silei,
was however very clear that Ducati.com should not be interpreted as Ducati
becoming an e-business. 43% of their hits come from current customers, also
called Ducatiphiles, who purchase everything from accessories to broken race
engines as trophe pieces. It would be possible to offer customers the
opportunity to greatly personalize their bikes by ordering online.
This suggested strategy differs from Minoli´s plan of getting into the cruiser
market, but we think it would behoove Ducati to opt for a less risky option.
Even though Ducati has grow significantly after Minoli took the reigns, we do
warn that one should not let such things get to ones head and cloud strategic
vision. We don’t think Ducati is a typical company that can base its strategy on
throwing a wide net into the ocean to maximize the catch, but rather one that
should focus on quality over quantity (Porter, 1996). Ducati has a unique
brand that is very dependent on what it connotes, i.e. state-of-the-art sport
bikes, and anything that could jeopardize that could water down one of its key
strengths. This is interconnected with its position in a unique cluster with
similar industry leading companies, another point is that there seems to be a
dissonance about strategy between the top management and engineers at
Ducati; macro- versus micro-strategies (Salvato, 2003; Whittington, 2006).
Don’t stir the hornet’s nest. Ducati should not be to worried about Harley
getting into the naked sport segment, since the state of Ducati´s R&D on
these kinds of engines are in an entirely different league. This is reflected in
the World Superbike Championship Hall of Fame, in which Ducati has
dominated as manufacturer and in terms of riders. We hence think a proper
reaction to Harley´s entrance, and the increasing sophistication of Japanese
competitors, is to increase the focus on what Ducati does best, namely sport
bikes. Ducati has the home field advantage, which it should defend fiercely by
improving its design and engineering to a point where Honda and Kawasaki
are firmly stationed as second-rate and, in the case of Harley, third-rate
alternatives. Getting into cruisers would be tantamount to stirring the hornet’s
nest, and could precipitate a very costly warfare that could seriously wound
Ducati.
The female market. We know that females like Ducati because of their lighter
weight and lower height. Boundaries between typical male and female
hobbies are getting smaller, and this currently small female market could
present a neat market opportunity. While other companies emphasize a very
masculine brand identity, like Harley, it would behoove Ducati to consider
making models specifically for females seeking a thrill; its hence very ironic
that the most popular Ducati model among females is called “Monster”. We
think this is an unutilized opportunity for customer expansion.
One interesting feature that could edify Ducati.com would be to let costumers
customize and personalize their bikes online. They could charge a premium
for such services and take market share from regular custom shops. Such a
service does not necessarily have to be limited to full-scale bikes, but it would
also be possible to create small model-bikes for customers; so that they could
collect their dream bikes.
https://studymoose.com/ducati-case-analysis-essay
https://diamondarm.com/strategic-plan-for-ducati/