Ducati Essay

1790 WordsApr 5, 20138 Pages
Memorandum Subject: Ducati: In Pursuit of Magic (A) Date: Feb. 19th 2013 Ducati is one of the premium motorcycle producers specializing in sport segment superbike from Italy. The company experienced booming in sales and reputation in 1996-2001. This boost had attracted Texas Pacific Group to pursue controlling interest in the company for higher expected future return. The economic boom somehow masked the mistakes made by Ducati during the period. When sales started to decline during 2002-2005, three major problems started to become more obvious among the management team: * Product discontinuity. * Cost disadvantage compared to Japanese producer. * Decline in sales in U.S. market. Ducati needed to addresses these…show more content…
* Marketing cost associated with selected motorcycle publications. * The production line used the lean manufacturing, which decreases the production costs. * Competitive disadvantages: * Cost disadvantage. Japanese motorcycle makers can produce cheaper bike with advanced technology. * Product discontinuity. Evolution of products that consumers do not recognize. * Do not intend to stretch and extend business to cruiser motorcycles, i.e. limited customers. * Relatively low market share than major Japanese companies, which occupied about 78% of total market share. This lead to low brand recognition. Even though Ducati has its competitive advantages, it does not mean that these advantages are sustainable. In order to determine whether Ducati will remain competitive, Barney’s VRIO framework is going to be applied. Hence, four questions are going to be addressed in this part of the case study, which are the Question of Value, the Question of Rareness, the Question of Imitability, and the Question of Organization. * The Question of Value: * Ducati has a group of highly skilled engineers and an in-house design team which allow the firm’s products to have the attribute of speed, performance, and innovation. Such capability helps fulfill customers’ needs and perceptions. * Ducati is positioned to be fast with good braking ability. The ability of producing sport bike with

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