Strategic Management - SIM336

Case Study Ducati: in De Wit & Meyer (2004:854-871)

Word Count:

Priyal Fernando
STUDENT NO 109149062 (Off Campus)

Strategic Management Fernando Student No: 109149062

Table of Contents

Priyal

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. Ducatis Future Scope / Focus to Achieve Competitive Advantage ..........23 3.4. Long Term Strategic Plan for Ducati..........................................................24 Conclusion........................................................................................................... 25 Online Journals References..................................................................................26 Appendix.............................................................................................................. 28 Appendix 1 - Ducati Supply Chain network.......................................................28

Table of Figures
Figure 1: Strategic Management Process Diagram................................................5 2

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Figure 2: Market Competition on Different Segments............................................6 Figure 3: Porters Value Chain Analysis on Ducati..................................................9 Figure 4: Industry Factors on Ducati....................................................................11 Figure 5: Deliberate & Emergent Strategy Formulation.......................................15 Figure 6: The World of Ducati. Source: Case Study..............................................17 Figure 7: Recommended Deliberate and Emergent Strategies for Ducati...........19 Figure 8: Porters Generic Strategies applied to Ducati........................................22 Figure 9: Ducati supply Chain Network (www.ducati.com)..................................28

List of Tables
Strategic ............................................................................................................... 1 Management - SIM336 ......................................1

Table 1: Market Segments and features of the Motorbikes....................................8 Table 2: PEST Analysis of Motorbike Industry......................................................12 Table 3: 2011 U.S. Motorcycle Sales - January to September 2011 (3 Quarters) 13 Table 4: Competitors Analysis of Ducati..............................................................21 Table 5: Recommended Strategies for Ducati to Achieve Competitive Advantage in Market.............................................................................................................. 24

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Executive Summary

Priyal

Ducati is an Italian company which was founded on 1926 by three brothers Adriano, Marcello and Bruno Ducati. The main business of the company is producing and selling the motorcycles. The trademark of Ducati's technical superiority has been the design of its engine, famous for its remarkable power delivery. In 1996, Ducati was on the edge of bankruptcy due to lack of working capital. The company rebounded by 2000, quadrupling its revenues, doubling its EBITDA (since 1997) and doubling its market share (since 1996). The reason for Ducatis bounce back into the industry since 1996 was the strategic change which was adopted by Fedrico Minoli, the CEO of the company. The economic logic behind the rebound lied in reduced costs (12.4%), increased productivity (15%), improved quality and higher reliability. This was achieved by massive standardization of critical components, by increasing the outsourcing of production activities to 87%, by adopting a accurate quality control process, by maintaining a tighter grip on the suppliers and by increasing the production efficiency through adoption of platform process. In contemporary market Japanese manufacturers: Honda, Kawasaki, Suzuki, and Yamaha still remain as the major competitors for Ducati along with Harley-Davidson, the key competitor in the United States. 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.

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Chapter 1 - Process of Strategic Management

Johnson, 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, within a competitive environment, to match with the market trends and to fulfil stakeholder expectations. Strategic management process consist with three steps,

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, when a strategy has been analysed and selected, the task is then to translate it into organisational action

Strategic Choice This involves understanding the nature of stakeholder expectations, identifying strategic options, and then evaluating and selecting strategic options.

Figure 1: Strategic Management Process Diagram

1.1. 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. It is important for the organisations to have clear estimates about the business environments and the trends in the market. These analysing tools such as Michael Porters Five forces and Value chain enables organisations to find out more about the Industry, current trends, business environment, opportunities, competitors information, supplier chain, customer demands, and internal value chain of the business.
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1.2. Porters 5 forces Analysis relevant to Ducati

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Porter (1980) defines that competition in an industry is rooted in its underlying economic structure and goes beyond the behaviours of current competitors. The market competition is based on five basic competitive forces, Competition in Market The motorcycle market had been divided into four main segments which are off road, cruisers, touring and sports bikes. The following diagram illustrates the key competitors in the market for Ducati in each of these segments.

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, Kawasaki, Yamaha, Suzuki) and few in Europe (BMW, Triumph). Harleys acquisition of Buell motorcycles in 1998 made it tough for Ducati to compete in sports bikes segment. Harleys global presence with manufacturing parts and
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accessories had given strong gains over the competitors. While, Honda had a reputation for reliability and technical excellence, BMW reputed for safety and quality. With all these Ducati had to face into a tough competition to overcome the problems that they were facing. Bargaining Power of Suppliers Ducati maintained a strategy of outsourcing, for all its productions except R&D, design, quality control, and the machining of two key strategic components which are crank cases and cylinder heads. In that case the numbers of suppliers were less. 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. There were three main suppliers Brembo (brakes, wheels, rims, clutch), Magneti Marelli (control units and fuel injection systems) and the Japanese Showa Corporation (forks and shock absorbers). 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, switching to the alternative supplier when they need more. 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. One main supplier was responsible for a particular component and he had to manage the suppliers 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. Threat of new Entrants In motorcycle industry there are many entry barriers for the new entrants since the requirements of large manufacturing facilities equipments. New entrants must have a large amount of capital at the beginning to compete with the well established brands like Ducati, Honda, Harley, BMW and etc. The advertising and marketing campaigns of these existing giants in the industry have gained the customer loyalty on their products. In the current industry they compete with each other by delivering new products by replicating competitors designs in the market.

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Bargaining Power of Buyers

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Ducati customers have been defined by Gavetti (2004) as wide variety of customers having equally different taste, who bought and rode motorcycles. In this industry customers always look for the performance of the bike and its functions. 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, engine performance, handling and comfort. Gavetti identified the following segments with their specified demands
Knee down / Racing Aficionados Easy Riders Weekend Riders & Highway lovers The other Riders

Extreme performance and functionality Associated with the motorcycle with a particular life style Interested in functionality and comfort 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, income, education and gender. Ducati buyers median age is ranged between 25 to 35 and women have become the new attractive customers in motorcycle industry. Ducati introduced The Monster with the low seat height and weight to match their demand and accounted 8% from their overall sales. 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. Ducati had to fulfil all these customer requirements to overcome in the industry. 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. The cost of purchasing a motorcycle is also very low compared to another vehicle such as car. If the switching cost is low in substitutes customers will tend to move (The products like TATA Nano a mini car.), though it is really difficult to compare the image and fashion of Ducati or Harley motorcycle with a mini car. It can be said that the impact of substitute products is minimal in the motorcycle industry and also on Ducati.

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1.3. Porters Value chain in Ducati

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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. The strengths of Ducati in their primary activities mainly sales and marketing enable them to achieve the focused the sport bike segment. The combination of these strategies and market analysis helped Ducati for its successful turnaround in 2001.

Figure 3: Porters Value Chain Analysis on Ducati

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1.4. Core Competencies of Ducati

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This refers to unique advantages inside the organisation which other competitors in the market do not have or do not do as well (Drejer, 2002) . 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. The CEO of Ducati Federico Minoli identified three unique things inside the organisation which had huge potential, which can take the business up to the level which he expected. Ducati had a good product which is unique, beautiful performance motorcycle. That time Japanese bicycles were famous for reliability and efficiency, though Ducati was having well qualified professional engineers for both research and Development and racing divisions. Their ambition was to continually defeat the Japanese motorcycles in the superbike championship. These people were the backbone in Ducati. It reflects in the superbike championship results table, Ducati dominated since 1990 to 2000. The third unique competency was Ducatis ability to create loyal customers in European market. 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. Apart from these they had some more reasons which were unique. The newly appointed management team was also coming out with creative ideas. When they were appointed Minoli was looking for their talent as well the potential they were having who could become passionate about Ducati. The continuous R&D programmes enabled Ducati to be more efficient in technology and to make the products, to fitting with customer perception as a prestige brand. These approaches set the background of creating more lighter and reliable motorcycles by using composites, carbonium, titanium and magnesium. 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. 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, Lamborghini, Maserati always encouraged Ducatis highly
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profiled CEO Federico Minoli to go for a quality product. 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. 1.5. 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. It is important to analyse the business environment factors before discussing the industry factors of the motorcycle industry. The linkage between these two components can be graphically presented as follows.

The National, Internation al economy Technolog y

The Industry Suppliers Selected group of companies that supply quality products and services (Appendix 1) Competitors Japanese, Harley, BMW, Triumph Customers Racing Aficionados, Easy Riders, Weekend & Highway lovers
Figure 4: Industry Factors on Ducati

The Natural, Environme nt Demograp hic Structure

Governme nt & Politics

Social Structure

It illustrates the external factors which influence the motorcycle industry, which are beyond the control of company. The PEST analysis of motorcycle industry is as follows.

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Political

The requirement of more road networks : To create roads impose more taxes International trade barriers : Import and export restrictions and high tax policies has limited the operations of the companies 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. Increase of fuel Prices have limited the vehicle consumption The pressure from the employee unions. (In 1996 Minoli had to deal this matter with the Italian communist unions around Ducati.) 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 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

Economical

Social

Technological

technological features force companies to more focus on the R&D More powerful engines with designs, safety, 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 12 the products into the market. (This will give a clear picture to customers and more details of about the product specifications) Table 2: PEST Analysis Motorbike
Industry

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There are some legislative agenda for key players in motorcycle industry to deal with, which includes the riding test review, new technical regulations from Europe (anti tampering, emissions and ABS), wheels to work, bikes in bus lanes and motorcycle sport issues. 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. Electric powered motorcycles are the latest trend in the industry both for environmental issues and due to the rising cost of fuel. The new grouping, called the e-MCIA (to be known as eMCI), is born from developing contacts with new players in the ePTW sector, coupled with increasing interest in alternative powered technologies from existing major manufacturers. A recently published MCI report on the potential of electric motorcycles as part of a UK low carbon transport strategy, revealed a need for industry to act in a positive way. (MCI Press released, 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 rising fuel prices also make it difficult for customers and have limited their consumption levels. In Europe, ACEM reports that from January to August of 2011, sales of new motorcycles and scooters in the countries monitored by ACEM were down 8.86% over the same period in 2010, with 1056,906 registered units. Malaguti, the Italian scooter manufacturer, will close this year after 81 years of operation. Among the five main EU markets studied by ACEM, Powered Two-Wheeler (PTW) sales in Italy are down 17.3%; Spain down 15, 1% and The Netherlands down 13%. France is down 2.82%, while Germany is up 3.7%. UK is down 2.36%. Even in US market the sales in all the segments have slightly gone down as follows.

Table 3: 2011 U.S. Motorcycle Sales - January to September 2011 (3 Quarters)

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The industry is further expanding though the entries of new segments such as women riders who are more fascinated in motorcycles. Harley and Ducati have gained more advantages out of these by designing motorcycles with attractive features such as Monster a specialized bike for sporting women. While analysing the key industry factors the motorcycle racing competitions are the main trade mark of the bicycles. 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. The Strong integration between R&D and marketing has caused a vast improvement of technology in motorcycle industry as well.

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Chapter 2 - Strategic Overview of Ducati

Priyal

Following its 1996 liquidity crisis, Ducati adopted new strategic plan under new management of Minoli aiming at strengthening the company brand, enhancing its portfolio and increasing its sales and profitability. 2.1. Deliberate and Emergent Strategy The deliberate strategy is determined and the result matches the intended course of action. It does not consider the external or other facts. Deliberate strategies guide the companies with a sense of focused direction (Mintzberg, Lampel, Quinn, Ghoshal, 2003) Emergent strategy of a company is not a part of original planning process; consist with a set of actions, or behaviours which are added in to the strategic process in time to time. Emergent strategy develops over a period of time through adjustments, influenced by external factors or some internal limitations. A mix of deliberate and emergent strategies in some way will help the organization to control its course while encouraging the learning process (Mintzberg, 1994).

Deliberate Strategy

1996 2001 Turnaround

Goals & Objectives To match the Harleys profit Levels Double digit Growth

Difficulties External Influence Competitors strategies Market Trends Customer perceptions Emergent Strategies

Formulati on
Figure 5: Deliberate & Emergent Strategy Formulation

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2.2. The Deliberate Strategy of Ducati

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In September 1996 Minoli started the turnaround programme in Ducati. Initially there were two goals in CEOs mind to double digit growth and equalling Harley Davidsons profit level. In order to achieve these goals Minoli adapted a strategy of increasing its working capital to raise production levels. This was followed by installing new management team and hired 250 expertises around the world to rebuilt Ducatis sales, marketing activities and public relations departments. The series of activities of restructuring its distribution network, strengthening its brand and raising production efficiency, introducing new models, Ducati continuously upgraded its motorcycles through design and technical innovations, which constitute its main product differentiation. These activities were backed by the engineers of the company with their desire to compete in the Superbike championships. Their intended strategies were to invest heavily in product and rationalize production process, with a new engine or to enter in to the Grand Prix racing (Gavetti, 2004). This was justified by producing 12,117 motorcycles in 1996 and earning 4% market share in sports bike segment. But Ducati had lot to do to achieve their ultimate target of passing Harleys market shares. 2.3. Formulation of Emergent Strategy in Ducati After recruiting the new Management team which, no one had previous experience in motorcycle industry Ducati was struggling to achieve their strategic targets. The functional divisions were largely absent and it was really difficult for the top management team to make their decisions. Managers, who identified the passion of Ducati, later came out with brilliant decisions. The deliberate strategy of Ducati was to maximise the profit and increase the market share which was a difficult task for Minolis team. The Budget was limited and there were some renovations left in the factory as well. As a solution for these external influences, 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
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symbol to the Ducati Staff to develop their powerful brand.

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strategy of profit maximisation. That was the birth of Ducati Museum which was a

Suddenly the branding was the strategy of the Ducati instead of profitability and competing with Japanese motorcycles, which Minoli wanted to symbolize as a dream, passion a piece of history, and a motorcycle is at its heart (Gavetti, 2004). This lead to the formation of The World of Ducati the strategy of all Ducatis operations, link each other. The centre of this strategy is the motorcycle which serves to all customer segments in the market.

Figure 6: The World of Ducati. Source: Case Study

1997 was a life changing year for Ducati. 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. As a part of creating a specialized brand, Minoli also wanted to identify the core attributes associated with identity and uniqueness of Ducati motorcycles. Then he found five distinctive features which are Desmodromic distribution system, L-twin engine, Italian style, tubular trestle frame and the unique Ducati sound. In the same year, to further establish the brand name, Minoli decided to enter in to the accessories and apparel market by acquiring Gio.Ca.Moto a company was producing accessories for Ducati.

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2.4. Evaluation and Recommendation of Ducati Strategies

Priyal

After analysing the aforementioned strategies, it can be said that Minoli has adapted both school of thoughts in to the Ducatis strategic transformation. The ultimate target was to equal the Harleys market share and to achieve double digit growth. By the end of April 2001 Minoli achieved the target with a potential growing company, with increasing market share up to 10%. The expansion of Ducati product portfolio, reformatting Ducati distribution network and reenergizing Ducati brand name were the key elements of this transformation. Minolis ambition was to enter in to the new markets and in 2001 Ducati was well positioned to face the attack from competitors. As an emergent strategy to face the competitors such as Honda, Minoli could have diversified Ducati in to the other market segments such as automobiles, robots and etc. The expertise engineering force could have been an additional advantage for Minoli in such a situation. The opportunity of establishing Ducati brand name in those markets could have expanded the operations of The world of Ducati. Minolis emergent strategic creation, The world of Ducati has its events and other initiatives that are helping to create a community of Ducati Supporters. This is important for growth as Ducati hopes to attract new customers into the sport bike segment such as women, and switchers from other motorbike segments. The Ducatis deliberate strategy of establishing in sports bike segment is the greatest competitive advantage since it is difficult for other competitors to attack Ducatis position in that particular market. A combination of these strategic approaches of product specialization and diversification could have taken Ducati into the markets of emerging economies such as Russia, China, India and Brazil which have good potential. (According to ft.com 2011, India is a country that people loving mostly to motorbikes than other vehicles, In 2007 Indian Government allowed foreign companies to enter in to the local market which have a good potential, with their luxury brands). At the initial stage, when Minoli formulating Ducatis deliberate strategy, the whole management team was changed. This caused Ducati to struggle at the beginning. 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. This stage Minoli had the
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opportunity to consider the future market potentials which he can expand Ducatis business chain and he could have recruit the expertise according to that. That could have created an easy approach when Ducati considering the diversification strategies later. At the transformation period, if Minoli adapted only the deliberate strategy, Ducati would have focused only in Harleys market share, market growth rate and compete with Japanese motorcycles in superbike championship. 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. The combination of both of these schools of thoughts is the success in Ducatis turn around (Volberda and Elfring, 2004)

Deliberate strategy Product Specialization .Sport segment Change management .Expertise in different fields, Automobile, Robot technology

1996 2001Minolis Turnaround

Realized Goals .Achieving Harleys market niche .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

Emergent Strategy strategy Branding .Expanding World of Ducati Diversification .Different products Automobiles, robots .Different Markets BRIC approach

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Chapter 3 - Porters Theory of Competitive Advantage

Priyal

In 1985 Michael E. Porter identified the concept of competitive advantage among the rivals in the market. 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. Porter defines the competitive advantage as the way that firm practices the generic strategies in the operational level. Porters theory of generic strategies consists with three dimensions which are; cost leadership, differentiation and focus which enable firms to achieve competitive edge in the fluctuating market (De Wit and Meyer, 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, their innovative features and reliability of the bikes with long time durability force customers to think twice before moving to another brand. (Ducati motorcycle had longer lifespan than typical competitors machines. For instance, the lifespan of the engine was typically 10 years, and the frame at least 5 years, Gavetti 2004). Before create a strategy for Ducati in order to achieve a competitive advantage in its future operations, it is important to analyse the competitors strategies of their own market positioning.

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3.1 Competitor Analysis

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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, 2008). Ducati operates in a highly competitive market with following major rivals. Competitor Harley Davidson Strategic Approach by using Competitive Edge Harley had more modest global presence with historic brand name compete in all the segments in industry. The Harley Owners Group (HOG) is the largest club of Triumph motorcycle owners. Target for largely high income, middle aged professionals with a reputation of making virtually unbreakable bikes. Triumph uses product differentiation strategy to compete in Yamaha the market with Japanese production techniques. Yamaha has a product differentiated with technological innovations. Company diversified into the production of water vehicles, all-terrain vehicles, leisure and fishing boats, snowmobiles and golf carts. Yamaha does Most of Honda its operation (85%) outside Japan. Honda possessed a superior competence at engine design which was continually translated into products that outclassed those of competitors. Honda has a reputation for reliability and technical excellence utilizing low emission, furl efficient engines. Most importantly the bikes BMW are less expensive than other major brands. Huge dealer network with famous brand name, pioneered technical innovations like advanced suspension system, fuel injection, anti lock brakes giving the firm a reputation for exceptional quality, safety, reliability and comfort. In 2001 company specialized in touring bikes with 11 models.
Table 4: Competitors Analysis of Ducati

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3.2. Generic Competitive Strategies

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Porters Generic analysis enable firms to determine its position, whether profitability is above or below the industry average. A firm must position well, itself in the industry to earn high rates of return. According to De Witt and Meyer 2004, there are two types of competitive advantage a firm can possess which are low cost and differentiation. These two types of competitive advantage set the scope of activities to the firm which leads to the cost leadership, Product differentiation and focus. Focus strategies also consists with two variants, cost focus and differentiation focus.

Figure 8: Porters Generic Strategies applied to Ducati

After analysing the Ducatis existing business Strategies, firm can be placed on product differentiation category. The pricing strategy is always high in Ducati than the competitors, which is associated with the Ducati quality and the brand. Company perception is to present a quality product under recognized brand at high price in to the market. Thus, it is difficult for Ducati to gain a price based competitive advantage in the market. Ducati engineers are more focused on adding new innovations and technological advancement into their production models. That strategic approach guides Ducati management to compete in the market with advanced products with different features. This clearly defines Ducatis product differentiation strategy to increase their brand image to gain competitive advantage. The following paragraph of the case study (Giovanni Gavetti, 2004) clearly illustrates this strategic concept.

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Source: De Wit, B. and Meyer, R. (2004) Strategy Process, Content and Context: An International Perspective

3.3. Ducatis Future Scope / Focus to Achieve Competitive Advantage After analysing the market environment and existing strategies, it is important to develop a modern strategy for Ducatis future operation. The author recommend that company should focus on increasing profits, achieving further growth and enhancing its brand value by investing in growing markets mostly in Asia and Latin America. By using existing competencies Ducati can develop new models while focusing on cost reduction, production systems and the Life Science business, in order to achieve the competitive advantage in current market. Ducatis deliberate strategy should focus on areas including the Personal Mobility, Ducati Brand, Engine Component and New markets. That can capitalize the assets, characteristics and competitive advantages of the Ducati, outlining the strategy of the company's progress and expansion. By considering contemporary market trends, In order to achieve profits in high potential Asia and Latin American countries, Ducati should change its high pricing strategies after considering the buying behaviours on the consumers in those particular markets. Majority of motorbike lovers in counties like India and China are middle class people who earn less amount of salary, as the income source, who seek for quality, cost effective, convenient travelling option, which fulfil their daily needs (ft.com, 2011). A low price ranged motorbike with less technological features, but with an attractive look and good durability will be a good product to gain the competitive advantage in that kind of market.

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3.4. Long Term Strategic Plan for Ducati

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In long term operations, Ducati should focus on their deliberate strategies to exist in the market, to gain a competitive advantage over the industry rivals and expand the business into potential future markets. The following recommended deliberate strategies for Ducati concentrated four main areas. Personal Mobility Focus The firm can offer best mobility solutions from a broader perspective that includes not only its products but also the overall transportation system as well as lifestyle oriented approaches. Ducati can focus on the areas including motorcycles with superior environmental performance, low-priced and new concept personal commuter vehicles. Further attention can be given into electrohybrid bicycles and electric vehicles Brand Focus This is a valuable intangible for Ducati. Customers, who enjoy Ducati products worldwide, thus further enhancing brand value (The operations in Ducati owners Club & World of Ducati). The strategy can be included secondary services and spare time solutions for Ducati users. Engine Component Based on the expertise, Ducati has gained through personal mobility development and manufacturing engineering, the company can grow its business by developing engine components into a core competency. This includes commercializing power sources such as power assist systems, automotive engines, and next-generation engines, in addition to motorcycle components and aluminium and magnesium parts. Entering Industries New Here the company can build on its element technologies to achieve further expansion in new applications. The company can apply such element technologies as electronic control acquired in the development of industrial robots and industrial unmanned helicopters and biotechnology, derived from the Life Science business, to different fields in creating new businesses.
Table 5: Recommended Strategies for Ducati to Achieve Competitive Advantage in Market

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Conclusion

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Concluding the report, after analysing deeply relevant to the Ducati Company, its business strategies, turnaround programme, current trends in the market, market situation and future focus, it can be recommended that Ducati should focus on both Deliberate and emergent strategies to succeed in the market, above its rivals. The recommended business plan for Ducati, at the end of the report, is a Quantum Leap for Ducati to achieve a good market position with its deliberate strategies. 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. This is where Ducati must identify the situation and use its emergent strategies in order to gain a competitive advantage in the market. This is the reason that Strategic Management has to play a vital role with business entities in the trade.

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Bibliography Book References

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De Wit, B. and Meyer, R. (2004) Strategy Process, Content and Context: An International Perspective (3rd Edition) Thomson Learning Drejer, A. (2002) Strategic Management and Core Competencies (1 st Edition) Quorum Books: Westport Hax, A. C. and Majluf, N. S. (1996) The Strategy Concept and Process: A Pragmatic Approach (2nd Edition) Prentice Hall: New Jersey. Johnson, G., Scholes, K. and Whittington, R. (2005) Exploring Corporate Strategy: Text and Cases (7th Edition), Financial Times/ Prentice Hall. Mintzberg, H. (1994) The Rise and Fall of Strategic Planning (1 st Edition) The Free Press: New York. Mintzberg, H., Lampel, J., Quinn, J. B. and Ghoshal, S. (2003) The Strategy Process Concepts Contexts Cases (4 th Edition) Pearson Education Limited: England

Porter, M. E., (1980) Competitive Strategy (2 nd Edition) The Free Press: New York. Singh, M. (2008) Strategic Management and Competitive Advantage (1 st Edition) Global India Publications Pvt Ltd: New Delhi Volberda, H. W. and Elfring, T. (2004) Rethinking Strategy (3 rd Edition) SAGE Publications Ltd: London.

Online Journals References Porter, M. E. (1991) Towards a Dynamic Theory of Strategy: Strategic Management Journal, [Online] Vol. 12, pp. 95 117 Available at: Ebsco publishing <http://www.ebscohost.com/academic/> [Accessed 25th November 2011]

David, R. L. (2012) "Japans Motorcycle Wars: An Industry History", Journal of Management History, [Online] Vol. 18 Iss: 1, pp. Available at: < http://www.emeraldinsight.com/journals.htm?issn=17511348&volume=18&issue=1&articleid=17009783&show=html> December 2011]
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Online Press Release References

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MCI, 2011, Motorcycle Live attendance up to 14% [Press Release], 28 th November 2011, Available at: <http://www.mcia.co.uk/Press-and-Statistics/PressReleases/Article/Motorcycle-Live-attendance-up-14.aspx> December 2011] [Accessed 11th

MCI, 2011, eMCI to be Launched [Press Release], 21 st March 2011, Available at: <http://www.mcia.co.uk/Press-and-Statistics/Press-Releases/Article/eMCI-to-beLaunched.aspx> [Accessed 11th December 2011]

YAMAHA, 2008, Yamaha Motor Announces New Medium term Management Plan: Phase One of Long-term Vision Frontier 2020 [Press Release], 05 th February 2008, Available at: < > http://www.yamaha[Accessed 21st motor.co.jp/global/news/2008/02/05/frontier2020.html December2011]

Online Newspapers and Articles References Watkins, M. (2011) Luxury Motorbike sales accelerate in India, ft.com, [Internet] 17 July 2011 Available at: <http://www.ft.com/cms/s/0/367731a2-abcd-11e0945a-00144feabdc0.html#axzz1i1h9kmF0 > [Accessed 15 December 2011] Bobbie, 7 (2011) The U.S. Motorcycle Market: Motorcycle Industry Research and Statistics, Version 235, Knol, [Internet] 08 Aug 2011. Available at: <http://knol.google.com/k/bobbie7/the-u-s-motorcyclemarket/21yokwucnoqmb/6> [Accessed on 2nd December 2011] Annual Report References Honda Motor Co.Ltd, 2011, Annual Report 2010 2011. [Online] Available at: <http://world.honda.com/investors/library/annual_report/2011/honda2011ar-alle.pdf> [Accessed 12th December 2011] Course Materials University of Sunderland, (2004) Strategic Management, SIM 336, University of Sunderland: UK. Website References www.Ducati.com/ [Accessed 15th November 2011]

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www.harley-davidson.com/ [Accessed 21st November 2011] Appendix Appendix 1 - Ducati Supply Chain network

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Figure 9: Ducati supply Chain Network (www.ducati.com)