Analysis of External Environment of Ducati (Answer of Q. 2)
In classical strategy literature, competitive advantage of a company is generally attributed to the management’s ability to position the company’s assets against some external context (Mintzberg et al, 2005 & Juga, 1999). This external context is referred (Porter, 2004) as external environment for a particular company. According to Johnson et al (2008:54), the environment is what gives organisations their means of survival.” So, it is important to a great extent that most of companies be aware of the environment in which they are operating. In Author’s view, Ducati was aware to a certain extent what is the external environment surrounding it. This answer will attempt to analyse the external environment as it appears to author from the analysis of case study (Wit & Meyer, 2004:854). This answer will look first macro environment of Ducati using PESTEL framework, then Industrial environment, and after that Competitors and Markets (Johnson et al, 2008) mainly using Porter’s five forces model (Porter, 2004:6).
Macro environment of Ducati
Macro is remote environment of a company comprising economic, social, political, technological and ecological factors (Pearce & Robinson, 2005). One way of looking at remote environment is PESTEL framework (Johnson et al, 2008). 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. 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.
* Women becoming oriented towards biking
* Different tastes and lifestyle , and changing at faster rate
* Fuel efficient and high performance engines
* Improvement in Paint, Trim, Chrome, Exhaust pipe shaping (Wit & Meyer, 2004:857). * Electronic Components
* CAD & CNC
* Not explicit in the case
* Green issues (in author’s view)
Free markets, not much restriction from the governments except safety standards (In author’s view)
PESTEL analysis helps a company analyse remote environment but more important is the immediate environment of the company or industry in which the company is operating in (Johnson et al, 2008). Five forces framework is one of tools to analyse the immediate environment of a company. According to Porter (2004:7),” The five forces framework allows a firm to see through the complexity and pinpoint those factors that are critical to competition in its industry, as well as to identify those strategic innovations that would most improve the industry’s and its own profitability.” Threat of New Entrants
Number of motorcycles manufactures decreasing (pg. 858)
Threat not significant as already many established players in the market and required a significant initial network, resources and investment
Applying five forces framework to Ducati
In sports sub segment Naked, Harley Buell model was a threat. BMW also competed in sport sub segment Naked (pg. 859) Japanese companies Honda, Kawasaki, Suzuki, and Yamaha had substitutable products (figure 3, pg. 859) 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
Majority supplier belongs to Emilian District (pp.866)
Two sources available for each part and alternative available (pp. 867) Mostly short term contracts except few long term suppliers of strategic importance (867) Buyers
Wide variety of individuals with equally different tastes and reasons for buying (pg. 856). Knee down, Fast, Urban, Weekend, Highway, Easy and Undecided...
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