DUCATI

Giulia Basso
Ilaria Ghedin
Andrea Novello
Gabriele Piva
Raphael Raduzzi
Michele Robusto
Alice Varaschin

1868 Louis Perraux

build the first
Motorcycle

1894

Hildebrandt
brothers &
Wolfmuller

Evolution

The Motorcycle is a perfect metaphor for the

twentieth century. Invented at the beginning of
the industrial age, its EVOLUTION tracks the
main currents of modernity
Cit. Tom Krens,
Art Director of Guggenheim NYC

 70s electronic components

New materials &

style (composites,

carbonium, titanuim, chromes, paints)

Improve

Engine performance &

Aerodinamics
Invest in

automated production lines &

distribution

Improve quality and technology

Off-road

Touring

-Upright ergonomics

-Larger Motorcycle

-Soft shocks

-Greater Comfort

-Superior sturdiness

-equiped for Long rides

Cruisers

Sport

-Upright riding

-Forward seated

-Comfortable

-Lighter

-Powerfull

-Minimal confort
-High performance

Harley
Davidson

- Major American Manufacter

- Increase its presence in Europe

Bmw

- Top European competitor in US

- Good Reputation

Avg. Price 14.500$

Avg. Price 14.350$

Honda

Triumph

- World largest manufacturer (5.4

million)

- Notable brand in 50s

- Unbreakable Bike

- Compete in all the segment

Avg. Price 9.500 $

Avg. Price 9.300 $

 Founded

in 1926 by Antonio Cavalieri Ducati

and his 3 sons

1944

first bike il Cucciolo

50s Desmodromic Valve distribution system

70s Success

in international racing circuit

 1980's

Ducati's decline: company refocused

on products than motorcycles

1985 - Cagiva acquired Ducati

1995 - Liquidity crisis

1996 - the TPG acquired the majority stake in

Ducati
Enormous potential but poor management

[...] the idea that everything should be continuously rediscussed.

[...] I accepted to run Ducati because I saw a company
that, beyond its liquidity crisis, needed to be radically
changed in order to fully exploit its enormous
potential.

cit. Federico Minoli,

ex Ducati's CEO

2 goals
Double- digit growth
Equaling Harley Davidson's profit level

TOP MANAGEMENT TEAM

Strategy to develop Strenghts

(SWOT Analysis)
1. Good product
2. Top-notch engineers
3. Strong-potential brand

INVESTING IN THE
PRODUCT
(touring- sport,
accessories)

BRANDING
STRATEGY &
COMPANY
CULTURE

SPORT
HyperSport
Ducati
HD
BMW
Triumph
Honda
Kawasaki
Suzuki

Yamaha

SuperSport

Naked

INVESTMENT
SportTouring

Limited
Editions

Accessories
and
Apparel

[...] Ducati is not, or not only, a motorcycle

company. [] It is a dream, passion, a piece
of history, and the motorcycle is at its core.
In one word, we were moving from the
mechanical to entertainment. cit. Minoli

The World

of Ducati

Outsourcing policy (in house only: R&D,

design, quality control and the machining of
two key components

Rationalizing of suppliers network (strict

selection procedures, careful quality control,
short-term contracts)

Platform approach to production (small

number of components divided in subcomponents)

outsourcing of
production activities:
80% (1996)
Number of total
suppliers: 200 ( 1996)
Number of motocycles
produced per worker:
76 (1997)

outsourcing of
production activities :
87% (2001)
Number of total
suppliers: 130( 2001)
Number of motocycles
produced per worker:
87 (2000)

These arrangements increased the

quality and reliability of Ducatis

Multi- brand strategy

Multi- franchise retail

dealer in Italy

Indipendent distributors
in the rest of the world
(except for USA)

New distribution strategy

Establishing totally owned

sales and marketing
subsidiaries
Re-organization of the
network of dealers =
improve not their number
but their quality. Eg.: Italy,
dealers: 165 (1996); 65
(2000)
Creation of a chain of
Ducati stores

ITALY

36

USA

GERMANY

FRANCE

JAPAN

UK

1
0

20

DUCATI STORES

40

Heavy investments in:

Market researches

New design technologies (creation of Ducati

Design Center, an internal design division)

Product development R&D investiments: 3.2

million (1997); 12.9 million (2000)

Human capital (Ducatis team very skilled and

expert)

Reduction of the time to market for new products

launches

1998: 15 months to produce the new 900SSie compared

to 36 months for previous model development

RACING TEAM
open paddok policy: stay always in contact
with the racing team
racing team + R&D laboratory: together to
create a strong work group

...and the MUSEUM

since 1998 to celebrate history and traditions

ADVERTISING

Specialized magazines
Eg.: Ducati-People

Co-marketing
initiatives
Eg.: DKNY, Donna
Karan, Harrods

CLUBS & EVENTS

Ducati

Owners Clubs since 1996

since

1998: World Ducati Weekend in

Bologna

2001: Vintage Motogiro d'Italia

 e-business
market surveys
create a community

...but

our web site is first of all an

instrument to communicate to people our
Italian identity.
cit. Minoli

How did Ducati become the

second most profitable
motorcycle maker in the world
despite its small scale?
What is the fundamental economic
logic of Minolis turnaround?
1.

Ducatis motorbike became soon a success

because of its valve distribution system;
Ducatis technical superiority and
innovativeness were a constant through all the
years;
A group of top-notch engineers;
Strong brand loyalty;
Anyway, liquidity problems before 1996

1)MANAGEMENT AND ORGANIZATIONAL

STRUCTURE
Hire talented managers that could become
passionate about Ducati (committed
management)
Soften the rigidness of organizations internal
boundaries

CREATIVE DECISION-MAKING PROCESS

2) PRODUCTION PROCESS
87%-90% level of outsourcing
Standardization of products
Rationalized network of suppliers
Platform approach

DECREASE IN PRODUCTION COSTS

3)IN HOUSE ACTIVITIES

R&D
Design
Quality control
Machining of key strategic components (crank
cases and cylinder heads)

DIFFERENTIATION

4)MARKETING AND ADVERTISING

Mono-franchise dealers in selected markets and cities
around the world
Open paddock policies
Advertising through specialized magazines
Museum
DOC (Ducati Owners Club)
Events (e.g. Ducati Weekend)
Website

STRONG BRAND IMAGE AND CUSTOMERS

LOYALTY

1)MANAGEMENT AND ORG. STR.

Creative decision-making
process

2)PRODUCTION PROCESS

Low costs of production

3)IN HOUSE ACTIVITIES

4)MARKETING & ADVERTISING

Differentiation

Strong competitive advantage

2. Can Ducati sustain its position

in the sport segment?
Can Honda and the other
Japanese manufacturers stop
its growth in this segment?

2
SWOT ANALYSIS

VRIO FRAMEWORK

ANSWER

THE SWOT/TOWS ANALYSIS

Internal Strengths:

Internal Weaknesses:

1.
2.

1.
2.

Strong R&D, design and engineering

Strong
Brand
Reputation
and
Customers Loyalty (Low sensitivity to
price)
Committed Management
Product Distinctiveness (e.g.
desmodromic engine)
Platform
Approach
and
Inputs
Standardization
Patents (desmodromic engine)
Rationalized network of suppliers

3.
4.
5.
6.
7.

External Opportunities:
1.
2.
3.
4.

Possibility to enter other motorcycle 1.

Develop and Produce new product
segments (e.g. Cruisers)
lines by exploiting R&D and
Possibility to exploit merchandising
engineering capabilities
Online sales boost
2.
Enlarge merchandising distribution
Foreign demand for Italian Design
channels (e.g. e-commerce)
3.
Increase merchandising products variety

1.

3.
4.

Highly competitive sector

Increased
customers
sensitivity
towards sustainable products
Demand is correlated to race results
Technological progress

3.
4.

SO:

External Threats:
1.
2.

Small scale w.r.t. competitors

Less opportunities w.r.t. competitors
to share technology with auto
department
Poorly extended dealers network
w.r.t. competitors
Production plants and suppliers
mainly located in Italy (risky and
costly)

2.

ST:
Invest in R&D and in the world of
Ducati in order to sustain and increase
market share
Keep investing in racing and open
paddock policy to preserve brand
awareness.

WO:
1.

Enter new motorcycles families in order

to lessen the small scale threat
2.
Enlarge the dealers network abroad
(supported by a targeted marketing
campaign) to meet the demand for Italian
high-quality products

3.

1.

Explore new markets

WT:
Be aware of possible price differentials
with competitors by focusing on valuable
differentiation strategy
2.
Strengthen cooperation with auto
manufacturers to acquire knowledge in
sustainable technology
3.
Invest in R&D and Engineering to
continuously update production

The VRIO Framework

Valuable

Yes

Ducati can overcome threats and pursue opportunities by exploiting its

strengths (see SWOT analysis).

Rare

Yes

Products technology, design and quality are unique.

Inimitable

Yes

Organize

Yes

Several patents and 5 distinctive products traits (Desmodromic distribution

system, L-twin engine, tubular trestle frame, Italian style and Ducatis unique
sound).
Management commitment, lack of internal boundaries and rationalized value
chain.

1996

2001

Unexploited
competitive advantage

Sustained competitive
advantage

The Turnaround Program:

Ducatis differentiation strategy

1
Global
Market
Share
EBITDA

1996

2001

2011*

3.9%

6.7%

11%

33.4M

69.9M

94M

+64,2%

6.7
2001

11

2011

*Source: Il Sole 24 Ore

2
NEW MARKETS
EXPLORATION

In 2011 a new plant was opened in

Thailand.

LAUNCH OF
NEW PRODUCTS

17 new models were launched in the

sport segment.

80% of the revenues

comes from abroad
sales
Sales increase from
35k units (2006) to
4200 (2011)

3 . Which are the key lessons

you learned from this case
analysis?

DIFFERENTIATION
Value chain costs
minimization
Premium
products
development

High profit margin

ORGANIZATIONAL
CHANGE
Everything should
be continuously
re-discussed

CUSTOMER
ORIENTATION

Moving from
mechanical to
entertainment

Elastic way of
thinking

Idea of serving a
broader range of
customers

Creative decisionmaking process

Creating a
community