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Ducati Q) How did Ducati become a profitable motorcycle maker despite its small scale? Before its takeover by the American private equity firm Texas Pacific Group (TPG), Ducati went from being one of the top manufacturers of the high performance sport motorcycle industry to being on the verge of bankruptcy. TPG identified Ducati as a high end product with enormous potential for growth but realized that serious change was required if Ducati was to ever fulfill this potential. TPG decided to appoint Federico Minoli, an expert in turnaround management as the CEO of Ducati. When Minoli arrived he saw that the company had no distinct overriding strategy, there was no management structure and no set goals to guide the direction the…show more content…
Ducati had managed to successfully establish itself as a producer of high quality, reliable and stylish motorcycles. They did this through an aggressive outsourcing policy, using strict supplier criteria, using the platform approach to production and by leveraging the advantages of being located in the highly sophisticated Emilian mechanical district. Ducati outsourced around 87% of their production, which was the highest in the industry. By outsourcing to highly specialized components producers in the Emilian district Ducati could focus on the key value adders such as design, R&D, the production of strategic parts and quality control. Ducati was very selective and placed great emphasis on the quality of its suppliers, so its number of suppliers decreased from 200 to 130. It typically identified at least 2 suppliers for each component and signed only short term contracts with them. This provided Ducati with a pool of highly competitive and dedicated suppliers. A big factor in the efficiency of the production process was the platform approach to production. Ducati would divide motorcycles into a small number of large components which would consist of smaller subcomponents. A key supplier would then be made responsible for a component and managing the suppliers for the respective subcomponents. Heavy investment in R&D was made and an internal design division

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