Ducati has built its brand image as the sports bike manufacturer. Ducati has captured a huge portion of the market in all four categories of the sports bike. They concentrate on dominating a niche Performance-driven motorcycles, lighter frame, forward-leaning eat position, significant handling capabilities, on the other hand, luxury of comfort is sacrificed. However, in the current business situation, Ducati is facing a high competition from its rival bike manufacturers in heavy and cursing bike categories. Customer’s perception regarding repeat acquiring a bike from the same manufacturer has changed since 2000. “Exhibit 16” shows that customers of Harley-Davidson and BMW are more interested in buying bikes from them repeatedly, which is increasing the competition for Ducati to retain its current customers. Ducati is showing a steady growth and profits in its relevant market, but it is not enough to sustain in the industry for a longer period. Hence, the main issues are potential stagnant growth for the company. Should Ducati enter the cruiser market? Will entering the cruiser segment, and broadening Ducati's traditional niche, help them sustain the profitable growth of the organization?

1. Maha Hanno
Ducati
1 | P a g e
Introduction: Ducati has built its brand image as the sports bike manufacturer. Ducati has captured a huge portion of the
market in all four categories of the sports bike. They concentrate on dominating a niche Performance-driven motorcycles,
lighter frame, forward-leaning eat position, significant handling capabilities, on the other hand, luxury of comfort is
sacrificed. However, in the current business situation, Ducati is facing a high competition from its rival bike manufacturers
in heavy and cursing bike categories. Customer’s perception regarding repeat acquiring a bike from the same manufacturer
has changed since 2000. “Exhibit 16” shows that customers of Harley-Davidson and BMW are more interested in buying
bikes from them repeatedly, which is increasing the competition for Ducati to retain its current customers. Ducati is showing
a steady growth and profits in its relevant market, but it is not enough to sustain in the industry for a longer period. Hence,
the main issues are potential stagnant growth for the company. Should Ducati enter the cruiser market? Will entering the
cruiser segment, and broadening Ducati's traditional niche, help them sustain the profitable growth of the organization?
Strategic position: Ducati has developed a potent brand image as well as gained a reputation for technological superiority
and performance. While the company’s engineers have a reputation for excellent performance motorcycles, they have also
demonstrated an ability to develop successful motorcycles in other sub-segments of the market, such as the Monster in the
Naked-Sport segment. In addition, Ducati’s location in the Bologna district gives it access to a very large pool of motorcycle
component suppliers; the company has shown an ability to coordinate its supply chain in a manner that gives it flexibility
and control over the quality of components. Ducati’s high level of outsourcing its components has allowed the company to
allocate more resources towards building and enforcing its competitive advantages (brand, management, R&D, etc.). During
the turnaround, Minoli succeeded in bringing in a new management team that was, and still, is innovative, flexible and
creative. Compared to its competitors Ducati has shown that it has a positive attitude towards change, and the fact that the
turnaround program was successful has probably made the company more willing to adopt new strategies. The strength of
Ducati’s brand results in high customer loyalty, which is manifested in a high percentage of repeat purchase intentions. The
fact that Japanese manufacturers do not manage to achieve the same level of customer loyalty provides Ducati with a clear
opportunity to poach customers from these companies. Through Porter’s framework, it is apparent that there is a clear
distinction between the global and European cruiser markets. Globally, cruiser sales appear to be brand rather than attribute
driven. However, a company that is already established in the motorcycle industry (but not in the same segment) may be
able to harness its ownership advantages to facilitate entry into the cruiser market at a relatively lower cost than an entirely
new firm, as it would already have elements of the infrastructure and knowledge capital needed to facilitate its entry into the
cruiser market.
Conclusion: The turnaround program allowed Ducati to concentrate on its core competencies such as technology and R&D,
as well as create new ones (brand, management abilities and an efficient value chain). The SWOT clearly demonstrates that
Ducati could use its strengths in order to capitalize on the relatively low customer loyalty of its Japanese competitors. Using
Below analysis (PESTEL, Porter’s 5 forces, and SWOT) and strategic analysis it can be seen that no single manufacturer
has been able to harness a majority market share of the European heavyweight motorcycle market. This can be attributed to
the fact that the companies’ strategies are either brand driven or product driven. Harley Davidson’s (the global leader) global
strategy of brand driven sales seems to have failed it in Europe; while through their technological excellence Japanese
manufacturers have been able to gain significant market share in Europe, none of them emerges as a clear market leader. A
preliminary assessment of the heavyweight segment has shown that it is growing rapidly, thus providing Ducati with an
opportunity to increase sales by diversifying into new segments of the market. Furthermore, as the case study has
demonstrated, the apparent dissatisfaction of European customers with Harley’s cruisers could provide Ducati with the
impetus for entering the cruiser market.
Recommendation: Based on the above observations, it appears that Ducati might enter the cruiser market with reasonable
degree of success. It is recommended that the company should conduct a detailed survey of the cruiser market in order to
ascertain the degree of acceptance of a Ducati cruiser as well as a complete cost-benefit analysis, given the large investment
(€43 million) that would be involved in diversifying. However, should the company decide to go ahead with the development
of a cruiser, the management should be aware of the certain pitfalls that might emerge. Firstly, the company faces the threat
of diluting its brand attributes by moving into a non-sporting segment. Secondly, there is the threat of destabilization as a
result of diversifying so soon after the turnaround. The company might prevent these by creating a clear separation between
the sporting and cruiser segments by advertising and possibly distributing through different channels. In addition, Ducati
must constantly reiterate the fact that the cruiser runs on a high-performance Ducati engine. By continuing to further their
technologically advanced designs and manufacturing methods, Ducati can maintain its success level in the industry. The
search for alternative fuel sources has produced an environment of uncertainty. Regardless of the next energy source, Ducati
must be able to maintain its focus on performance cycles. As long as Ducati maintains its niche and profitability, they must
maintain their focus on producing lightweight sports bikes to differentiate themselves and maintain their brand image.

2. Maha Hanno
Ducati
2 | P a g e
References:
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Daft, R. (1983) Organisation theory and design. New York: West.
Gardinder M., (2011) "Ducati Motorcycle History: History of Ducati."
http://www.motorcycle.com/manufacturer/history-ducati-motorcycle.html.
Giovanni G., (2002). Ducati. HBS No. 9-701-132. Boston, MA: Harvard Business School Publishing.
Greenberg, K (2002). Advertising; Ducati Motor Hitches Up 'Real Riders': BRANDWEEK
Johnson, G., Scholes, K., & Whittington, R. (2008) Exploring Corporate Strategy. 8th Edn. London: FT Prentice Hall.
Juga, J. (1999) ‘Generic capabilities: combining positional and resource-based views for strategic advantage’. Journal
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Mintzberg, H., Ahlstrand, B. & Lampel, J. (2005) Strategy Safari: a guided tour through the wilds of Strategic
Management. 1st edn. NewYork: Free Press.
Montano G. (2011) "Ducati." Wikipedia. http://en.wikipedia.org/wiki/Ducati
Nauman, M., (2004) California Dream; For Italian Bike Maker, Being In This State Is Golden, San Jose Mercury
News (California), 2004 Final Edition; Pg. 1H, 1074 Mercury News
Nonaka, I. & Takeuchi, H. (1995) The knowledge creating company: How Japanese companies create the dynamics
of Innovation. New York: Oxford University Press.
Porter, E.M. (2004) Competitive Advantage. NewYork: Free Press.
Stalk, G., Evans, P., & Shulman, L. (1992). Competing on capabilities: the new rules of corporate strategy [online].
Harvard Business Review. 70(2).
Wit, B. D. & Meyer, R. (2004) Strategy: Process, Content, Context. 3rd Edn. London: Thomson Learning.
Exhibits:
• SWOT Analysis
• Porter’s 5 forces model
• PESTEL Analysis
• Ducati profitability in industry
• Differentiation and Positioning strategy of Ducati
• Ducati and major competitors
• Resources of Ducati
• Exhibit 16 “European data for major competitors.”

3. Maha Hanno
Ducati
3 | P a g e
SWOT Analysis:
Strengths
Technical Excellence
Efficient Value Chain ensure quality
Strong Brand/ Brand loyalty
Location Advantages
Effective management
Strategic Alliances
R&D
L-Twin engine
Weaknesses
Narrow Target Audience
Polarized sales
Low economies of scale
Sparse Dealer Network
Limited Growth since yr. 2000
Marketing
Reliance on suppliers
Reached peak of turnaround
Opportunities
Fast growing segment (Other segments in the market)
Customers of Japanese motorcycles have low brand
loyalty
Reduction in international trade barriers
Threats
Low price of competitors
Competitors enjoy lower costs
Competitors have high economies of scale and low
cost of capital
Strong competitors like Harley Davidson
Porter’s 5 forces model:
Competitiverivalry(Medium):
• Industry Competitors :Harley, BMW, Honda, Yamaha, Suzuki, Kawasaki
• Handful of players but all quite well established and all vying for customers
based on their capabilities
• Strong brand identity for Harley models
• Agreement between Honda and Yamaha about parts transport
• Low exit barriers
• Differentiation
• Brand loyalty
Bargaining power of buyers
(Medium):
• Wide variety of individuals with equally different tastes and reasons for
buying.
• Knee down, Fast, Urban, Weekend, Highway, Easy and Undecided riders.
• Each buyer differed by age, income, education, gender
• Women new customer base
• High switching costs, brand loyalty, differentiation
Bargaining power of suppliers
(Low):
• Many suppliers, low input differentiation
• Low switching costs
• Majority supplier belongs to Emilian District
• Two sources available for each part and alternative available
• Mostly short term contracts except few long term suppliers of strategic
importance
Threatofnewentrants(Low):
• Number of motorcycles manufactures decreasing
• Threat not significant as already many established players in the market and
required a significant initial network, resources and investment
• High capital expenditures
• Highly differentiated products already in industry
• Brand loyalty and high switching costs
Threatofsubstitutes(Low):
• In sports sub segment Naked, Harley Buell model was a threat. BMW also
competed in sport sub segment Naked
• Japanese companies Honda, Kawasaki, Suzuki, and Yamaha had
substitutable products
• Differing audience of cars
• Motorcycle and brand loyalty
• High switching costs

4. Maha Hanno
Ducati
4 | P a g e
Competition
Oligopoly, with Harley Davidson as
main threat (48.1% of US market share),
particularly in terms of brand.
Other competitors are
Triumph, Yamaha, Honda
(on price/technology)
& BMW
Bargaining Power
of Buyers
Power is high due to branding and loyal
customer base, so Harley buyers
unlikely to switch, as costs are too high.
New entrants unable to touch Harley’s
licensees, as they are locked in dealer
networks
Bargaining Power
of Suppliers
Power may be low within the
market, due to Harley’s
dominance.
High power with regard to new
entrants, due to high switching
costs
Threat of
Substitutes
Low threat from
Cars, as consumer likely to have one
in addition. Low threat from other
types of motorcycles, as for
different markets.
Threat from
New Entrants
Dominance and strength of Harley brand
suggests high entry barriers, so low threat
from new entrants. No dominating brand
in Europe means here threat from
new entrants higher in Europe
Porter’s Five Forces (1979), (1980), and (1985)
in analysing the cruiser market
Figure 1.

5. Maha Hanno
Ducati
5 | P a g e
Macro environment “PESTEL framework”
(Johnson et al, 2008).
Political
Not clear from the case but most
of countries like USA, UK, Japan,
Italy, France, Germany is quite
stable and company mainly
operated in developed countries.
Economic
Not comes explicitly from the case
but most of the economies that
company was mainly operating in
low growth mature markets and
open economies.
Legal
Free markets, not much
restriction from the
governments except safety
standards (In author’s view)
Technological
• Fuel efficient and high
performance engines
• Improvement in Paint,
Trim, Chrome, Exhaust
pipe shaping
• Electronic Components
• CAD & CNC
Environmental
Green issues (in author’s
view)
Social
• Women becoming
oriented towards biking
• Different tastes and
lifestyle , and changing
at faster rate

6. Maha Hanno
Ducati
6 | P a g e
Ducati profitability in industry:

7. Maha Hanno
Ducati
7 | P a g e
Ducati's Relevant Market (Sports Niche)
Differentiation and Positioning strategy of Ducati :
(This diagram does not represent any scale but only the positioning of Ducati, Harley Davidson and Japanese
Motorcycle companies.)
It also appears from the case that Ducati was aware of its environment and Minoli and his team did value chain
analysis to understand where in the companies lie value and try to match that value in a particular market segment.
Japanese
Companies
Ducati
Harley
Davidson
Knee down Riders
Riders
Urban Riders
High way lovers
Easy
Riders
Fast Riders
Function
Performance
Comfort
Life Style

8. Maha Hanno
Ducati
8 | P a g e
Ducati and major competitors:
Ducati: Major competitors:
Different model for different purposes
Represents the thoughts and feelings that come with
riding a motorcycle
BMW:
Leader of technological advances
Reliability and safety
Honda:
Most produced
Harley-Davidson:
Lifestyle brand
Triumph
Durability, virtually unbreakable
Yamaha:
Fewer bikes sold in the USA
Focuses on other products
Suzuki:
Concentrates on parts rather than the whole vehicle
Honda and Yamaha:
Jointly transport motorcycles and spare parts
Estimated savings of 30% on transportation costs
Kawasaki and Suzuki:
Plan to also jointly transport motorcycles and spare parts
Resources of Ducati:
Resources and competencies Identified
Desmodromic Distribution System
L-Twin Engine
Tubular Trestle Frame
Unique Sound
Beautiful, sophisticated powerful bikes
Culture supporting sports bike attributes
In explicit and implicit knowledge
Culture
Passion for Races
Unique Beautiful Performance Bikes,Stress on Asthetics
Top Notch Engineering
Purists
Passion for speed, performance, innovation
Diagnosis of Resources
Bench Marking Harley Davidson Business and
Model of distribution and value chain analysis
Mapping various activites and value delivered
Managing Knowledge, building
culture and building competencies
Museum building
Ducati Stores, 'History Wall' (pp. 867)
Coordination among R&D, Product development, Racing
division and Marketing department
Ducati Owners club, Events, Ducati.com
Resources of
Ducati

9. Maha Hanno
Ducati
9 | P a g e