Ducati

Executive Summary

Ducati, founded on July 4, 1926, is an Italian company that produces and sells sport motorcycles. From the advent, Ducati has been a front runner on the motorcycle technology front. The hallmark of Ducati's technical excellence has been its Desmodromic engine, famous for its remarkable power delivery. It is found on almost every motorcycle Ducati has produced till date. In 1996, Ducati was on the verge of bankruptcy due to lack of working capital. The company rebounded by 2000, quadrupling its revenues, doubling its EBITDA (since 1997) and doubling its market share (since 1996).

This rebound can be ascribed to two strategic changes that Ducati adopted; firstly Ducati increased its global reach and expanded its offerings within the sport segment and secondly it transformed itself from being a manufacturing company to an entertainment company e.g. the brand Ducati was not about just motorcycle anymore, but it was also about experiencing and enjoying various aspects of Ducati (Ducati Stores, Ducati Owner Clubs, Events, Museums etc.).

The economic logic behind the rebound lied in reduced costs (12.4%), increased productivity (15%), improved quality and higher reliability. This was achieved by massive standardization of critical components, by increasing the outsourcing of production activities to 87%, by adopting a rigorous quality control process, by maintaining a tighter grip on the suppliers and by increasing the production efficiency through adoption of platform process.

As of 2001, Ducati's competitors still hold 79% market share of Ducati's niche segment, in spite of Ducati being able to command a premium on its products due to superior technology and quality. Therefore the strategy for Ducati would be to continue on the path of global expansion in its current segment. Ducati should do that by broadening the product offerings within the sport motorcycle segment and venturing