Ducati has implemented various strategies that have enabled the company to overcome the five forces of business. Various analyses have been carried out that are both internal and external to determine strategies implemented by the company to acquire the current market position. The analysis of internal and external factors has been seen to affect the profitability of the firm. Ducati has had great change due to technological, societal, and market factors they have implemented. The change the company has implemented over time has made them become the fastest growing company and has acquired the second position in the motorcycle industry.We will write a custom Ducati: Company Analysis specifically for you
for only $14.00 $11,90/page 308 certified writers online Learn More
First and foremost they have embraced changes wholeheartedly which has made them one of the greatest companies. The changes that the company has implemented are a result of cutthroat completion from competitors such as Harley and Davidson, BMW, Japanese manufactures, and triumph. Japanese manufacturers include Suzuki, Yamaha, and Kawasaki. These companies have maintained the status quo i.e. surviving in a highly competitive environment and they have stood in the market through proper customer targeting having a stable distribution chain and implementing turnaround strategies that are acceptable to the customers. Advertising has become one of the key ingredients that have made these companies grow to the level they are in.
Ducati has implemented many strategies that arise from Porters’ five forces. The world market is large and people are looking for more fuel efficiency motorcycles which the company has provided. The company has risen to meet this challenge in the motorcycle manufacturing facilities as well as the distribution channels. They have risen to the second most distributed motorcycle and it is due to this fact that they are seen to have managed the five forced well. Ducati had to face porter’s force of rivalry among competing firms by entering into partnerships with distributors.
This enabled the distribution of the motorcycles easier. Ducati’s concern during this period wasn’t so much about porter’s forces of threat to new entry or rivalry but they were interested in making motorcycles that were customer-focused thus they can dominate the global market. The company has made strides in various market segments by producing fuel deficiency motorcycles that use high technology through their research in the research and development department. The engine performances of the motorcycle they manufacture are efficient and are after many years of improvement. These motorcycles are used in sports, and this has become one of the greatest turnaround strategies for the company. Much of the competition in the manufacture and distribution of motorcycles revolves around the design of cross-section high-performing engines.
Ducati has used the emotional impact of customers surrounding the beliefs about the success in sports of a motorcycle to sell their motorcycles to the wider generation (market share). This has given Ducati little course to worry about substitute products coming in to override their Honda market. They are among the first companies to launch into the market high-performing engine motorcycles thus giving them a competitive advantage. They have had good sales of motorcycles between 1996 to the year 2000. The breakdown in sales is shown by the graph below.
The graph above shows the trend taken by the motorcycles sales by Ducati and it can be noted that there is growth in sales for hyper-growth as well as Naked. It means that these two products have been noted by the customers that they have high performance in the market. This form of diversification and differentiation has enabled the company to overcome this force of substitution and entry of new competitors into the industry. This means that the company has received the highest rating for some products in the market. This rating has ensured that there is customer loyalty and preference for the company’s product as it sig owing first as compared to other competitors. The motorcycles industry has a cross-section of the market already and does not have to implement as many strategies as possible to maintain its market share.Get your
100% original paper on any topic done
in as little as 3 hours Learn More
Ducati has systematically managed to distribute their motorcycles through various forms such as stores, racing, organizing events, advertising, and inclusion of running institutions in their activities. Racing especially has played an important role in marketing the company. In the world super Bike, Champions Ducati won all champions except in the year 1997 when they did not win, either in the rider or manufacturer. Collaboration efforts between Ducati and Honda have caused the two companies to improve their production and win the champions. This is one of the five competitive strategies that proved to be successful in the choice for efforts of the company.
The company took over various markets by setting the price that attracts the young generation between the ages of 18 to 30 thus making them the cheapest motorcycle manufacturers. Brand loyalty for the Ducati motorcycle has been made possible through marketing strategies implemented at the extension of warrant programs that has incited the future interest of the buyers.
The company has implemented various strategies that have helped in determining strengths and weaknesses as well as opportunities and threats.
The Company’s strengths include:
- The ability to launch a product that can win many champions is thus acceptable by various market segments.
- The implementation of new technology especially in the engine that ensured the product used little fuel has also helped in the distribution of the motorcycles.
- The motorcycles manufactured by the company have been distributed at a low cost as compared to the other competitors in the market.
- The hiring of the turnaround artist as well as other highly management and staff is a strength that cannot be ignored by many.
- The company has also increased its market share through entering into the competition as well as entering into Harley niche
- They can promote four types of products in one place thus ensuring their success in the market.
The Company’s weaknesses include:
- Declining in the sales of supersport and touring.
- The raising of money to finance their activities especially the current period of economic hardships.
- They operate in a highly competitive environment with competitors such as BMW, Yamaha, Suzuki, Triumph, Honda, and Kawasaki.
- In some markets, there is a problem of licensing because of the political environment as well as the need to protect local industries.
The company, Ducati is a global brand that has invested in the differentiated products thus winning customers’ confidence by providing different performing motorcycles at a low cost.
The Company has many opportunities presented to them and these opportunities include;We will write a custom
Ducati: Company Analysis
specifically for you!
Get your first paper with 15% OFF Learn More
- Growth by increasing the market share which can be through mergers and acquisitions with one of the competitors of course after approval.
- Improve technology of their product by changing the styles and prototyping of the product to ensure toxic substance emissions are not part of the missions of the product. The fuel engine should be designed in a manner that can contain liquid-cooled fuels.
- They should develop other differentiated product which links the changing lifestyles of the people such as reduced weight of motorcycles, quality, and high automatic performing engines.
- They should explore third-world country’s market through direct investments, especially countries such as Kenya which is a gateway to Africa, and Asia through east Africa. They should also enter into markets such as India, China, and Indonesia where there are growth opportunities for the markets.
The Company is faced with the following threats:
- Many competitors are busy improving their marketing campaigns and ensuring they have customer loyalty
- The current economic recession has made borrowing for expansion very expensive as well as the population does not have money for consumption.
- Competitors have implemented some strategies such as just-in-time stock control, vertical integration, which makes them more efficient in their operation thus increasing competition.
- The company finds it difficult in some counties because of the rules and regulations implemented in those countries.
The greatest threat Ducati is facing is from competitors such as Honda who are currently the second largest market holder. They offer their products and services at a cheaper price. If the company continues with the cutthroat competition Ducati will lose the market share regardless of the technical superiority of their motorcycles.
Ducati was the smallest company but had grown and become one of the largest performing companies in the world. From its beginning in 1926, Ducati has become one of the most successful multinational companies in the motorcycle industry. As a manifestation of its success, they have been recognized by Fortune magazine as a global 500 company. This success was not easy as it sounds on paper. It was a result of great dreams, hard work, innovations, and passion for growth by the management. The company is now one of the most admired motorcycle manufacturers because of its dreams passion, hard work, and Innovation.
The company engineered technologies in the industries in the production and distribution of the motorcycle. They implemented CAD and CNC technologies which helped the motorcycles to become comfortable, reliable, high performing, and easy to maintain. The implementation of stock control which ensured efficiency in the use of resources also became another factor that contributed to the success. The technical superiority of the motorcycles enabled them to succeed in champions. This made them one of the greatest companies of the time.
The differentiation of products also became another source of success for the company. The company differentiated the product to include hyper sport, i.e hyper-tech motorcycles, supersport, naked sport touring, and various spare parts that are used by the company products. However, Ducati cannot simply sit back and just rely on its past success. More than ever it needs to run faster to remain in the same place and maintain the same market share. These calls for continual innovation and changes to defend their status in the market.
The company should have a great capital investment as well as high research and development expenses which will be a sign or an indicator of the ability of continuous innovation of the product. Reduced capital investment and result development expenditure is a sign of internal efficiency decline.
The Fundamental Economic Logic in the Turnaround
The company was having huge success, however; the success had started to twinkle regardless of the technical superiority of the product. The decision by the shareholders to hire a turnaround artist to make sure that the company remained in the market as well as improve their market share was economically viable.Not sure if you can write
Ducati: Company Analysis by yourself?
We can help you
for only $14.00 $11,90/page Learn More
As businesses grow continually to revolutionize their operations and the company has reached its peak in the industry,therefore, they needed a turnaround strategy to maintain quality improve workforce flexibility, and have total customer experience. The company wanted double digit growth and improved profit levels thus the hiring of Minoli the CEO. The company was at the beginning on the verge of bankruptcy and they needed a turnaround wizard who will remove them from the verge of bankruptcy to the verge of profitability. This became one of the successes of Minoli although he was in doubt for the indefinite growth of Ducati. Thus he thought of changing the strategy that will ensure the company remained profitable in the market. Ducati in its current ad future business environment must deliver a total customer experience so that the total environment will be logical. Therefore they must interpret.
Ducati operates worldwide with products that have been successive in the market. Their financial information for the last 10 years shows that the company has been experiencing growth in gross profit as well as market share. There has been consistent growth of earnings before interest, tax, and depreciation. Net income declined in the year 1999 because of high operating expenses but other sectors improved. Revenues have grown at a considerable rate even though the growth rate was not uniform. This is because of increasing competition.
Ducati market share in the sports segment
Ducati can maintain the current market position by remaining an innovative organization as well as ensuring that they differentiate and diversity the products they offer into the market. An innovative organization is an organization whose management is n a systematic renewing of the system’s organizational goals. The member should be willing to remain innovative for a long period and keep the company growing. As competition becomes stiff to maintain the current market position, they must be complacent for them to succeed in the market. They must be pioneers in the area of technology by introducing differentiated motorcycles to the market.
Honda and Ducati market share
Honda is the market leader that can take away the Ducatis market because offers over 23 models in four major families with prices ranging between $ 4999 to 1899 with an average of 9,300. While Ducatis products are averaging 10,000. All other competitors are having higher averages except Japanese manufacturers i.e. Suzuki and Kawasaki who are having lower prices than Honda. This means that with 23 models in the market, they are likely to overtake the market if they carry out their promotional activities in a strategic manner and this will put Ducati at a greater financial risk. The company which is having a market share of 7% in the year 2001 is likely to lose this 7% if other competitors not only Honda strategically innovate their models to match with the models of the company. The market shares have shown below for each competitor raises serious questions.
From the chart above it can be noted that no one market holder has a continuous market growth but they sort of have a zig-zag trend in the market share. This fact is true because of the competition among the competing firms which employs various strategies in providing products of supervisor value in the motorcycles that are used by the market.
Strategic Alternatives Available To Chief Executive Officer In 2001
There are many strategies available to the CEO in 2001. The strategies available include:
- Diversification of their products by introducing a brand that will attack the market share of Honda, Harley Davidson as well as Suzuki.
- The company should also expand its production to include their world countries in their marketing strategies.
- The company should also enter joint ventures or acquire rights in other manufacturers such as Kawasaki and Harley and Davidson in the production distribution of their motorcycles.
- They should improve the technology by producing high-performing engine motorcycles which makes life more comfortable for motorcycles owners.
- They should also diversify into motorcycle manufacturing to ensure that they have different departments that contribute to profitability.
- They should outsource some of the activities to Asia where there is cheap labor to stay competitive in the market.
- The company should also operate an online shop marketing their products as well as products of other companies. This will ensure the company remains relevant and successful in the market.
The company’s recent strategy focuses on:
- Developing new state of the art products
- Continuing the past legacy of innovation
- Enhancing the R & D funding for the two objectives above
- Developing and building an efficient and aggressive marketing technique
- Reaching out to the overseas market
Ducati has been growing since its incorporation but their market share is not as pleasant as other competitors in the same market. Therefore they need to grab existing growth opportunities that will add value to their business. Entry and production in first growing economies such as India, China, Middle East countries, and Indonesia will add benefits to the economy. This is because their competitors are performing well and they are likely to take over a European and American market. Joint ventures and equations in third world countries should be another aim for them to be relevant and successive. By implementing these strategies they will not just gain the market share but also gain experience in those markets which will provide an opportunity for them to become companies of those countries thus can launch various products in those markets.
This strategy will help Ducati build an international image and brand by diversifying its range of products and could also help them reduce its production costs making them remain, market leaders, as well as meet its objectives.
Harvard business school (2002) Ducati, Harvard business school publishing available at www.hbsp.harvard.edu.
Johnson, G Scholes K. Whitington R, (2006) Exploring corporate strategy, 7th edition prentice Hall.
Mascarenhas, O., Kesavan, R. & Bernacchi, M. 2006, ‘Lasting customer loyalty: a total customer’, vol. 23, no. 7, pp. 397-430.
Mondy, R. W., & Noe, R. M. 2005, Human Resource Management, 9th edn, Pearson Education, New Jersey.
Ng, P. T. 2004, ‘The learning organization and the innovative organization’, Human Systems Management, pp. 93-100.