Ducati

Good Essays
Topics: Motorcycle, Brand
Memorandum

Subject: Ducati: In Pursuit of Magic (A)
Date: Feb. 19th 2013

Ducati is one of the premium motorcycle producers specializing in sport segment superbike from Italy. The company experienced booming in sales and reputation in 1996-2001. This boost had attracted Texas Pacific Group to pursue controlling interest in the company for higher expected future return. The economic boom somehow masked the mistakes made by Ducati during the period. When sales started to decline during 2002-2005, three major problems started to become more obvious among the management team: * Product discontinuity. * Cost disadvantage compared to Japanese producer. * Decline in sales in U.S. market.
Ducati needed to addresses these problems to put the company back on track.
Before offering solutions to any of the problems mentioned above, we would like to dig into details about the industrial background, company strategic positions, and competitive advantages and disadvantages about the company. These analyses are especially beneficial to help identify potential opportunities and threats of the motorcycle industry and its sport segment. Five forces analysis are supplemented to our analysis. * Threats: * Rivalry: rivalry among industry and the sports segment came from United States and Japanese motorcycle makers. There are intense competitions among brands for entire industry as well the sport segment. A major competitor for cruiser is Harley-Davidson, and Honda and other Japanese motorcycle producers constitute major competitors for the sport segment. * Currency fluctuation: exchange rate posted issues for international operations. Ducati and fellow motorcycle companies engaged in operations all over the world, exchange rate fluctuation generated uncertainty for the company. This is for both the industry and for the sport segment. * Substitutes: there is a high incentive for alternative transportations for the US market. This

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