Strategic Management

Word Count:
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. Ducatis Future Scope / Focus to Achieve Competitive Advantage.................23
3.4. Long Term Strategic Plan for Ducati................................................................24
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Conclusion..................................................................................................................25
Bibliography................................................................................................................26
Appendix.....................................................................................................................28
Appendix 1 - Ducati Supply Chain network.............................................................28
Table of Figures
Figure 1: Strategic Management Process Diagram.....................................................5
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
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
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

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

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
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, 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

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

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
Technology
Governme
nt &
Politics
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
The
Natural,
Environme
nt
Demograp
hic
Structure
Social
Structure
Figure 4: Industry Factors on Ducati
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.
Political
The requirement of more road networks : To create roads impose

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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.
Social
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
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, 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
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, which includes the
riding test review, new technical regulations from Europe
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(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)
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
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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

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
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
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2.2. The Deliberate Strategy of Ducati

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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strategy of profit maximisation. That was the birth of Ducati Museum which was a
symbol to the Ducati Staff to develop their powerful brand.
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

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
1996 2001Minolis
Turnaround
Product
Specialization
.Sport segment
Change
management
.Expertise in
different fields,
Automobile, Robot
technology
Emergent
Strategy
strategy
Branding
.Expanding
World of Ducati
Diversification
.Different
products
Automobiles,
robots
.Different
Markets BRIC
approach
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
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Chapter 3 - Porters Theory of Competitive Advantage

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

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
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. 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

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.
23
Priyal
3.4. Long Term Strategic Plan for Ducati

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
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.
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
Based on the expertise, Ducati has gained through personal
Component
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
24
Priyal
Conclusion
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.
25
Priyal
Bibliography
Book References
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>
[Accessed
30th
December 2011]
26
Priyal
Online Press Release References
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>
[Accessed
11th
December 2011]
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:
motor.co.jp/global/news/2008/02/05/frontier2020.html
<
http://www.yamaha>
[Accessed
21st
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-motorcycle-
market/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]
27
Priyal
www.harley-davidson.com/ [Accessed 21st November 2011]
Appendix
Appendix 1 - Ducati Supply Chain network
28
Figure 9: Ducati supply Chain Network
(www.ducati.com)

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Chapter 1 - Process of Strategic Management

Figure 1: Strategic Management

1.2. Porters 5 forces Analysis relevant to Ducati

Figure 2: Market Competition on Different

Bargaining Power of Buyers

Extreme performance and functionality

Associated with the motorcycle with a particular life style

More Balanced and flexible bike

1.3. Porters Value chain in Ducati

Figure 3: Porters Value Chain Analysis on

1.4. Core Competencies of Ducati

Figure 4: Industry Factors on Ducati

The requirement of more road networks : To create roads impose

International trade barriers : Import and export restrictions and high

The environmental protection laws : Specially the sound and air

pollution from motorcycles

E business has become more popular : specially online sales and

Globalization has allowed the people in different part of the world to

Increase of fuel Prices have limited the vehicle consumption

Unreliability and the expensiveness of the public transport services

Demographic factors such as increase of population and age ranges

The new segment of women riders are more fascinated in

The perceptions of young generation the motorcycle as a passion of

It is easy to use the motorcycle in highly congested areas

The increase of the demand

from the customers for new

technological features force companies to more focus on the R&D

The Internet market is more popular among the motorcycle

There are some legislative

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

gained more advantages out of these by designing motorcycles with attractive

Chapter 2 - Strategic Overview of Ducati

2.2. The Deliberate Strategy of Ducati

Their intended strategies were to invest heavily in

Figure 6: The World of Ducati. Source: Case

2.4. Evaluation and Recommendation of Ducati Strategies

The expansion of Ducati product portfolio,

Chapter 3 - Porters Theory of Competitive Advantage

3.1 Competitor Analysis

Strategic Approach by using Competitive Edge

Harley had more modest global presence with historic

the market with Japanese production techniques.

its operation (85%) outside Japan.

emission, furl efficient engines. Most importantly the bikes

are less expensive than other major brands.

3.2. Generic Competitive Strategies

Figure 8: Porters Generic Strategies

3.3. Ducatis Future Scope / Focus to Achieve Competitive Advantage

3.4. Long Term Strategic Plan for Ducati

The firm can offer best mobility solutions from a broader

This is a valuable intangible for Ducati. Customers, who enjoy

Based on the expertise, Ducati has gained through personal

company can grow its business by developing engine components

New Here the company can build on its element technologies to

Table 5: Recommended Strategies for Ducati to Achieve Competitive

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

Drejer, A. (2002) Strategic Management and Core Competencies (1 st Edition)

Hax, A. C. and Majluf, N. S. (1996) The Strategy Concept and Process: A

Johnson, G., Scholes, K. and Whittington, R. (2005) Exploring Corporate

Singh, M. (2008) Strategic Management and Competitive Advantage (1 st Edition)

Volberda, H. W. and Elfring, T. (2004) Rethinking Strategy (3 rd Edition) SAGE

Online Journals References