How Did Ducati Become 2nd Most Profitable Motorcycle Maker in the World?
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2. How did Ducati become the second most profitable motorcycle maker in the world despite its small scale?
Platform Approach: Ducati divided the bike into a small number of component and sub-component assemblies. A supplier was responsible for managing and delivering the component. The platform approach minimizes detailed, multi-step assembly processes. Consequently, fewer Ducati man-hours are needed to assemble a motorcycle. The assembly expertise of each component is concentrated at the supplier so that Ducati assemblers can apply higher-value labor on the overall bike assembly.
High Degree of Component Outsourcing: As of 2001, Ducati outsourced 87% of its components to suppliers. The company planned to increase that rate to 90%. As…show more content… This too protects Ducati from Japanese substitutions.
Ducati has developed and managed their value chain very well. This contributes substantially to their strong position. I’ve already discussed Ducati’s effective management of Inbound Logistics and Operations. Ducati’s Outbound Logistics approach is oriented around brand management in each of its markets. This is accomplished through dedicated, single-franchise dealerships instead of multi-franchise dealerships. This decision means that Ducati seeks a high-value customer experience with lower volumes in lieu of a mass-market approach. This is a strategy that is consistent with being a niche player; it makes sense for the Japanese firms to have multi-franchise dealerships since they are close substitutes of each other.
Marketing and Sales represents Ducati’s most significant growth opportunities because their brand management strategy advances the Ducati name into the consciousness of their markets. In addition to motorcycles, Ducati extends the brand by selling accessories and apparel. For sure, Ducati owners will buy these products but perhaps more importantly, the aspirational aspect of the brand drives people to buy Ducati-branded items even if they don’t own the bike. This behavior is seen with the Harley-Davidson brand: many people wear H-D clothing and