Case Analysis Ducati

Case Analysis

Ducati

Ducati's has had much success in the past, but there was still concern for the future of the company. Ducati could not continue to grow indefinitely and the challenge is how they can approach this with the right strategy that may overtake these bounds that allow for continuous growth.

Federico Minoli was named by Forbes' magazine as the "turnaround artist" in which he had transformed a company on the verge of bankruptcy into one of the most profitable motorcycle manufacturers in the world. Under Minoli, Ducati experienced great growth and profitability. Revenues had quadrupled since 1996. EBITDA had grown from 33.4 million Euros in 1997 to around 60.0 million Euros in 2000. The market share had gone up from 5.1% in the sport bike segment in 1997 to 6.7% in 2000. At the end of April 2001, Ducati had a market share of almost 7% of its relevant market, with its goal of 10% market share in near sight.

There are a couple ways Ducati can approach their goal of trying to achieve that extra 3% market share. One alternative would be to enter Harley's niche of the cruiser market. 400,000 of these units were sold in 2000 which makes it a tremendously large segment in the large displacement motorcycle industry. Ducati can also advertise itself more broadly, to attract a wider base of customers, rather than strictly through specialized magazines. Ducati can also increase their R & D spending. In 2000, they only spent 1.1% of revenue in R&D while Harley spent 2% which is almost double that of Ducati.

My final recommendation would be for Ducati to come up with a cruiser model so they are able to compete with Harley, and the 400,000 that Harley sold in one year. In doing so, they will attract a much broader market of customers and gear more toward the laid back easy go riders, rather than be mostly geared toward the die hard adrenaline seekers. Ducati already has their own interpretation of the cruiser with Ducati's "desmodromic L-twin engine"(Ducati,pp.14) If they are also able to price these cruiser models at similar prices of Harley at around $10,000 to $20,000, I believe they will be able to take a large amount of customers from Harley and redirect them to Ducati's way.