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DUCATI CASE STUDY ANALYSIS

SUBMITTED BY: GROUP L-13


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ANALYSE DUCATI STRATEGY TO BECOME ONE OF THE MOST PROFITABLE MOTOR CYCLE MAKERS
DUCATI SUCCESS CAN BE ATTRIBUTED TO ITS FOCUSED DIFFERENTIATION APPROACH. DETAILED DIFFERENTIATING
FACTORS ARE LISTED BELOW:

COST Factors
Location advantage
1. High concentration of
automobile companies
and suppliers in the
area reduced training
costs and raw material
cost.

Tangible Factors
Technical Design
1. Desmodromic 2 valve L-Twin
Engine with Unique sound
2. Italian Style
3. Tubular Terstile Frame
4. Futuristic Designs
Redesigned product portfolio with
entry level and high end models

Intangible Factors
High brand building and loyalty (High Retention Rate)
1. Advertisements (Specialized Magazines)
2. World of Ducati (building lifestyle type image)
3. Various Tie Ups with luxury brands.
4. Association with various racing events.

Procurement/Distribution Strategy
1. Radically rationalized its suppliers network to improve
quality and service of ducati for customers and gain
bargaining power.
2. To gain better control over Distribution launched a 3
phase plan which improved dealers interest in the business
and thus gave bargaining power to Ducati.

Other Factors:
1. Re-alignment of Management Team to improve
team coordination Reduced lead time for
production.
2. Standardization of products

CORE LOGIC OF DUCATIS TURN AROUND AND CAN IT SUSTAIN IT?


MAIN LOGIC OF THE TURN AROUND WAS DUCATIS TARGETING A
LARGER NICHE CUSTOMER BASE RATHER THAN EXTREME RIDERS
THROUGH FOCUSED DIFFERENTIATION.

For the listed following reasons it seems that Ducati can sustain it.
1.

As most of the differentiation factors are intangible and internal to Ducati thus can be obscured from the
competitors thus would be difficult to imitate. Eg. They could patent the unique sound and engine design thus
making it difficult for competitors to replicate.
2. Deterrence and Preemption:
Eg .Product Varieties : Bikes in each sub segment.
Distribution and Supplier Network: Enrolled major suppliers.
3. Causal Ambiguity :
As Ducati differentiated itself by working on various tangible/intangible factors thus it would be difficult for
the competitors to discern the exact factor which gave Ducati the competitive advantage. Thus difficult to imitate
4. Emotional Connection (Life Style/ Racing)
Note: Reference used for formulation of answer : The nature and Source of Competitive Advantage.

SHOULD DUCATI ENTER HARLEYS CRUISER MARKET TO PURSUE FUTURE GROWTH


Based on following Cons and analysis of the market with Potter 5 Forces giving mixed signal, Ducati should not
enter the Cruiser market.
Pros

Cons

Expansion in new segment and in increase in market share

Huge capital investment and R&D investment

Ease of designing Ducati line of cruiser based on Desmodromic L


twin engine technology

Compete with Harleys established brand loyalty and customers

Ducati has a successful business strategy already in place for the


sports segment which can be replicated for the cruiser segment

Weakening of brand Ducati in the niche sports segment by


broadening focus to the cruiser segment
Harley Davidsons strategy is a strong barrier to entry
High risk and unexpected returns

THREAT OF SUBSTITUTE: (LOW)


1. More of a passion driven market rather than
utility. Thus no threat from CAR.
2. Low threat from other bikes of other
segments.

BARGAINING POWER OF SUPPLIERS: (Moderate


to low)
Ducati has radically rationalized its suppliers
network to improve quality and service of ducati
for customers and gain bargaining power.

POTTERs 5 FORCE
ANALYSIS
COMPETITION : Moderate
Even though there are many firms in
competition but the major player in the
market is Harley Davidson, which is
leveraging its lifestyle inclined image for
~50% Market Share. DUCATI is the only
oine also built its brand on similar lines.

THREAT OF NEW ENTRANT: (LOW)


1. As most of the sales in this segment of
through brand loyalty it create a high entry
barriers. Thus low threat.

BARGANING POWER OF CUSTOMER:


(Very High)
1. Customer in this segment are loyal to brand
and not just the automobile.