How did Ducati become the second most profitable motorcycle maker in the world despite its small scale? What is the fundamental logic of Minoli’s turn around? Operational effectiveness is a key to gain profitability. [p 29 What is Strategy?] Constant improvements in the following operational activities resulted in profit maximization of Ducati:
Standardization of products using two crank cases and three cylinder heads provided efficiency gains in manufacturing.
Moved towards a platform based approach to production gaining more efficiency with economies of scale.
Outsourced almost 87% of production activities involving spare parts while maintaining core competencies like R&D, design, quality control and key trademark component machining in house which resulted in greater flexibility in new part productions, improved distribution and revised pricing.
Implemented a rigorous quality control system focused on improving reliability and overall quality. In general, Ducati utilized their inputs effectively by reducing cost at the same time increasing product quality and reliability gaining profitability. However, sustainable profitability requires a competitive strategy. Minoli’s fundamental logic was to understand and leverage existing resources and capabilities and to position Ducati by means of performing similar activities in different ways than its competitors as explained below:
Analyzing resources and integrating into capabilities: Minoli first identified Ducati’s strength in uniqueness, high performance products, top-notch engineers and customer brand loyalty; identifying current resources and capabilities is a key when the current markets are volatile [Grant p 122]; knowledge management help capability development [Grant 164] •
The core competencies of a Desmodromic distribution system, L-twin engine, tubular trestle frame, Italian style and its unique sound became Ducati’s technical signature. •
Excellent engineers and designers with real...
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