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
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* The Question of Rareness * All the Ducati’s bikes use the Desmodromic valve control system which enhances the engine performance and only Ducati uses this system in the market. * All Ducati’s engines were built in the unique L-twin design which gives the benefit of improved aerodynamics and lighter weight. This design is rare since the two cylinders of the engine are mounted at a 90-degree angle, which it has to work with the unique Desmodromic valve control system to reach its full ability. Moreover, it gives a unique low-hum engine sound which makes Ducati’s engine even more special. * The Ducati’s tubular trestle frame design was evolved from the Fornula One-inspired tubular trestle with Ducati engineers’ special design to enhance the performance features of the bikes. * The Question of Imitability * With Ducati’s investment in research and development, it would be hard for competitors to just imitate Ducati’s newest technology. * Ducati’s in-house design team creates a barrier to imitation since its job is to design completely new model. Moreover, Ducati started to use online resources to gain insight into customers’ needs and perceptions. * Ducati’s Italian styling and origin lower the possibility of its design being imitated, yet it is worth to be noted that MV Agusta is owned by an Italian investment group and its designer Massimo Tamburini had worked in Ducati before, which make it easier