Ducati Essay

2432 Words10 Pages
Questions to answer 1) How did Ducati become the second most profitable motorcycle maker in the world despite its small scale?

2) What is the fundamental economic logic of Minoli’s turnaround?

3) Can Ducati sustain its position in the sport segment? Can Honda and the other Japanese manufactures stop its growth in this segment?

4) What strategic alternatives are available to Minoli in 2001? Which alternatives would you recommend, why?

GMAN 512 Midterm
11 February 2010
Dave Reynolds What are the global driving forces in this industry in terms of cost factors, markets and competitive factors? Ducati, Harley-Davidson (H-D), BMW, Triumph, Honda, Kawasaki, Suzuki and Yamaha together produced motorcycle
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A new entrant would find itself negotiating with suppliers who possess a lot of pricing power to compensate for the risk of reallocating production used by existing customers or investing in additional capacity. These increased costs would adversely affect profit margins, which would weaken the entrant’s ROI. Of course, a new entrant could vertically integrate all the components but this would require a substantial capital investment that would have an appreciable risk of failure if sufficient market share couldn’t be taken.
Third, we see from Ducati’s approach in the case, as well as research on the internet, that niche players reinforce the brand by ensuring strongly positive and distinctive experiences at the dealer. This is achieved through retail stores dedicated to a single brand. A new entrant would incur the financial and opportunity costs of developing distribution and dealer networks to create the kind of owner experience that justifies a higher purchase price.
As a result of these reasons, we see that a new entrant would face significant barriers to entry.
The cost factors in the motorcycle industry are typical of vehicle manufacturers: * Engineering and Design talent * Raw materials & Fabrication (depending on level of outsourcing) * Components and sub-assemblies (brakes, forks, instrumentation, wheels, etc.) * Manufacturing capacity * Sales and Marketing * Distribution *

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