...Harley-Davidson/Ducati Case Study November 20, 2013 Question 1 Ducati: Ducati is an Italian motorcycle manufacturing company that is renowned for its high performance and stylish motorcycles. Ducati is committed to racing competitions, state of the art design, style, and most importantly, an immense passion for bikes. Ducati has created a strong bond with its customers, beginning on the racetracks and spreading worldwide. Ducati builds high performance bikes for bike enthusiasts, known as “Ducatisti”. Ducastisti are individuals who value performance as the main attribute in a motorcycle. Since Ducati delivers this, it creates brand loyalty. Since the early 90s, Ducati has created a distinctive community image with local and national Ducati enthusiast clubs by placing Ducati as a symbol of refined skills and craftsmanship that every motorcycle evokes and represents. In the World Superbike Championship, Ducati has won 15 out of the last 18 Riders’ titles and 16 Manufacturers’ titles. In conclusion, Ducati customers are confident that they are purchasing high performance motorcycles. Harley Haley Davidson is exhibited as an American icon. Consumers view and associate Harley Davidson with riders, wear leather, have tattoos and with police officers, military dispatch riders and motorcycle gangs. Harley’s image is also viewed as something that is catered for and used by Caucasian American males in their 40-50 (Nolan pg.2-3).Harley Davidson’s riders feel a lifestyle connection...
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...Trocquet Ducati Case Analysis A worldwide motorcycle icon that had been in business since 1926 was on the verge on bankruptcy in late 1996 before it was purchased by the Texas Pacific Group. Frederico Minoli was widely known as being a turnaround experience expert, and he already had previous experience with a Texas Pacific Group partner named Abel Halpern. Minoli’s reputation and Halpern’s previous involvement with Minoli made it a seemingly easy decision to bring Minoli on as the CEO of Ducati. Minoli started at Ducati with two precise goals: he wanted to attain double digit growth and he wanted to rival Harley Davidson’s profit level of around 20%. When Minoli took over as CEO of Ducati, there was a clear absence of a strategic plan as well as non-existent functional divisions within the company. This lead to what Minoli termed “a structured chaos” and was not a foundation for a successful company. Despite these conditions, Minoli found that Ducati had good products, top-notch engineers in both the retail and racing divisions, and very large potential. Before talking about Minoli’s strategy for the Ducati turnaround, I think it is appropriate to perform an industry analysis on the motorcycle industry using the Porter five forces model. The threat of new entrants which would be large enough to cut into the profits of the motorcycle industry is fairly low considering how much startup capital is necessary to produce bikes. The end of the case mentions that for Ducati to...
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...Unit Reading Leenen, S. & Jelassi, T. 2005, 'Ducati (Italy) vs. Harley-Davidson (USA)', in Strategies for E-Business, ed.T. Jelassi & A. Enders, Pearson Education Limited, Harlow, pp. 366-398. Ievisia-1111-1311 _. .. . .. _...__...__._ . . . ..___. _. . . ll I 1..-_. .. ..._._. . ._._ _ . __.. _ ._..._ __ i"“ Ducati (Italy) vs. Harley-Davidson (USA) Innovating business processes and managing value networks In 2001, as Ducati celebrated its 75th anniversary, Group (TPG) and Deutsche Morgan Grenfell Capital some executives wondered whether the recent corporate restructuring had repositioned the company (Italy). A new management team initiated a turnaround programme aiming at increased production efficiency, net sales and profit. ‘Since 1996, we were really working against a backdrop that wasn’t so far successfully. As part of this, the Italian motorcycle manufacturer had adopted a new focus on R&D, marketing and sales, moving away from its initial manufacturing strength. In addition, the company removed from bankruptcy’, said Carlo di Biagio, Chief Executive Officer of DMH. ‘Now our situation is different. Sooner or later, we think investors will see that.’ By 2001, the company had restructured its value chain activities, outsourcing 90% of its production and, in order to decrease costs, introducing a platform strat- had embraced the Internet, deciding in Ianuary 2000 to sell its new motorcycle, apparel and accessories exclusively online...
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...Ducati was a company that was on the verge of going bankrupt in 1996 but took a turn for the better when it was acquired by Texas Pacific Group, driven by Abel Halpern, who then appointed his close friend, Federico Minoli, as CEO of Ducati. When Federico took over, he made it clear that the fundamental economic logic was “the idea that everything should be continuously re-discussed is still the way I look at things.” Ducati had the qualities of a profitable company but was lacking the right management. Minoli made it clear that he had two goals in mind: double-digit growth, and equaling Harley-Davidson’s profit level. If these goals were accomplished, Minoli believe he could “turnaround” the near demise of Ducati and look for continued growth and profitability. Minoli’s “Turnaround Program” would be seen as a successful plan in reinventing Ducati as a global brand and broadening its spectrum of customers. By looking at exhibits 1 and 3 in the casebook, we can see how Ducati’s market share (in its relevant market) nearly doubled from 1996 to 2001. Despite its small scale, Ducati was able to effectively create a strong global brand. We also see a steady growth of sales in every product line Ducati offers in exhibit 8. This was the road Ducati took to become the second most profitable motorcycle maker in the world. But in 2001, Minoli was at the end of the turnaround and needed to make a decision on how to keep expanding Ducati’s growth and profitability. To keep...
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...Explain what Minoli did to fix Ducati. Describe the fundamental logic behind this turnaround. Minoli fixed Ducati by: evaluating Ducati’s key strengths and weaknesses, defining a strategy to exploit these strengths, investing to further strengthen Ducati’s resources/capabilities and address key weaknesses. 1. Evaluated & appraised what key resources existed at Ducati: • Tangible: good products (“unique and beautiful performance motorcycle”) • Intangible: strong brand (high customer loyalty), location – industrial area of Bologna • Human Resources: top-notch engineers that know what Ducati’s customers want (“knee down” riders, designing good products without marketing research). 2. Defined a new strategy to exploit Ducati’s key strengths: “develop a global brand that could appeal not only to extreme riders”, but also to those who attracted by intrinsic attributes of the motorcycle, but what the motorcycle evokes and represents”. 3. Focused on strengthening the brand and customer loyalty through the “World of Ducati”. • Racing: open paddock policy to make the people “participate” • Stores: reduced the number of stores, more control, improved average quality - Ducati stores (Separate, unique, retail environment emphasizing Ducati’s brand, superior technical and service support) - Ducati mono-franchised dealers to ensure higher quality (More competent sales force, more space to display motorcycles, good technical assistance) • Events: World Ducati Weekends, a way to broaden fan-base...
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...Ducati – Italian motorcycles Competitors: Harley Davidson, Honda, BMW, Triumph, Japanese (Yamaha, Kawasaki, Suzuki) -Decline in 1980’s due to a decision of its major shareholder at that time to refocus the company on products other than motorcycles. • Bought by Italian company Cagiva -Almost bankrupt in 1996—saved by American hedge fund, Texas Pacific Group and appointed Federico Minoli as CEO of Ducati • Wanted to broaden segment from extreme riders to broader spectrum of riders • “The World of Ducati” • Launched hyper-sport, super-sport, naked, sport-touring, limited editions, spare parts, accessories, and apparel • More focus on outsourcing production (90%) • More selective and strict suppliers—better procedures and quality control • New distribution strategy o Taking control of distribution and marketing in strategic markets by establishing totally owned sales and marketing subsidiaries o Reorganization of the network of dealers, improve average quality of dealers (competent sales force, good technical assistance, and adequate physical space) o Creation of chain “Ducati Stores” mono-franchise dealers in select markets and cities around the world • World of Ducati o Racing, advertising, museums, Ducati owners club, events 1st motorcycle—after ww2 • Il cucciolo—blockbuster ( • Technical signature = valve distribution system Suppliers (Low) • Dependent on suppliers—outsource manufacturing but they don’t need to • Carefully choose suppliers • Low switching...
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...of any offer to sell or issue, or invitation to purchase or subscribe for, or any solicitation or any offer to purchase or subscribe for any Ducati Securities, nor shall they form the basis of, or be relied on in connection with any contract or commitment to purchase Ducati Securities. Any recipient of this document considering a purchase of Ducati Securities in a rights issue following publication of an Italian prospectus in connection therewith is hereby reminded that any such purchase should be made solely on the basis of the information contained in such Italian prospectus. The information in these materials includes forward-looking statements, concerning in particular economic and financial trends, which have been made by the management and are based on current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions. In light of this, the events described in the forward-looking statements may not occur. These materials are not being issued in the United States of America and should not be distributed to United States persons or publications with a general circulation in the United States. These materials are not an offer to sell or issue Ducati Securities in the United States. No public offering of Ducati Securities will be made in the United States. Ducati Securities have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be sold or issued...
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...September 24, 2013 Ducati Motorcycles Analysis In order to understand the potential decisions and trade offs available for Ducati to organize its strategic plan, a thorough analysis of the motorcycle industry was essential. In 1996, Ducati Motorcycles operated in a highly unattractive industry. The forces of competition were strong. The high bargaining buyer of buyers, the moderate bargaining power of suppliers, threat of substitutes, and the threat of new entrants fueled this situation. Ducati competed with other notable firms that manufactured similar bikes that were comparable in price and quality. These factors lowered the switching costs for buyers and created an intense rivalry among competitors. While all of the manufacturers relied on a large amount of suppliers for their production needs, this emphasized a great responsibility for the manufacturing firms to consistently manage their suppliers. Ducati motorcycles have historically differentiated themselves from their competitors due to a respected excellence racing and in its niche market, sport bikes. While only manufacturing a small amount of motorcycle, Ducati bikes were easily recognized by their sleek, unique design, distinct sound, and advanced technology. While any company could choose to produce a motorcycle, it was a difficult market to enter, due to heavy weight competitors that had an established brand loyalty with their customers. Frederico Minoli discovered a way for Ducati to reinvent its entire...
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...Introduction Acting as the Purchasing Manager of this organization I have chosen, Ducati Motor Holding S.p.A., Italy, there will be an analysis report of the three aspects of the purchasing management. Firstly, the supplier selection criteria and supplier evaluation system, which includes the purchasing goals, the needs of the organization as well as the purchasing cost analysis. Secondly, the usage of ICT (Information and Communication Technologies) for purchasing operations. Lastly, for the purchasing operations and management will be covered in this essay. Ducati first succeeded in manufacturing the fastest 250cc production bike in 1960 called the Mach 1, which was lightweight and a true sports bike design. From this initial success...
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...For the exclusive use of Z. Xu, 2016. 9-701-132 REV. MARCH 8, 2002 GIOVANNI GAVETTI Ducati By the end of 2000, Federico Minoli had won his battle. Over the past five years, the “turnaround i artist” -- as Forbes magazine dubbed him –- had transformed a company on the verge of bankruptcy into one of the most profitable motorcycle manufacturers in the world; a mechanical concern into a global brand; a fast motorcycle into a symbol of Italian design and tradition, extreme performance, and technical excellence. Under Minoli, Ducati had enjoyed explosive growth and profitability. Revenues had quadrupled since 1996; EBITDA had grown from 33.4 million Euros in 1997 to around 60.0 million Euros in 2000; the market share had gone from 5.1% in the sport bikes segment in 1997 to 6.7% in 2000 (see Exhibit 1). Despite this success, Minoli was concerned with the future of the company. He knew that Ducati could not grow indefinitely, and was struggling with what strategy might overtake these bounds. Minoli and the rest of Ducati’s top management team were considering different alternatives. One alternative was to attack Harley Davidson’s niche with a Ducati interpretation of a cruiser. Was this broadening of Ducati’s traditional niche the right move to sustain the profitable growth of the company? The Market for Motorcycles in 2001 The roots of the motorcycle industry date back to 1868, when Louis Perraux installed a steam engine on a rudimentary bicycle. In 1894...
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...|PROBLEM STATEMENTS/WEAKNESSES/STATISTICS |STRENGTHS/STRATEGIES IN PLACE | |What can be Ducati’s strategy for long-term growth? |Motocycles evoke” rebellion, freedom, desire, sex, mobility, design, technology, engineering, innovation, | |Was broadening of Ducati’s traditional niche the right move? |speed, and death” | |Should Ducati attack Harley Davidson’s niche with an interpretation of a cruiser? ** Ducati’s |Cruisers are big motorcycles with an upright riding position. Design emphasized styling over comfort and | |unexplored market segments include Off Road/Dual Purpose, Cruiser and Touring (Exhibit 5 – page 17) |speed., and preferred by many American riders. = this design will definitely not cater to European and Asian | |Ducati’s Fixed Sales Cost in 2000 is 3 times as that of HD (14.5Million vs. 5million). |customers. | |EBITDA – is a measure of a company’s cash flow before certain deductions. It is not a realistic view |Desmodromic engine ...
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...|PROBLEM STATEMENTS/WEAKNESSES/STATISTICS |STRENGTHS/STRATEGIES IN PLACE | |What can be Ducati’s strategy for long-term growth? |Motocycles evoke” rebellion, freedom, desire, sex, mobility, design, technology, engineering, innovation, | |Was broadening of Ducati’s traditional niche the right move? |speed, and death” | |Should Ducati attack Harley Davidson’s niche with an interpretation of a cruiser? ** Ducati’s |Cruisers are big motorcycles with an upright riding position. Design emphasized styling over comfort and | |unexplored market segments include Off Road/Dual Purpose, Cruiser and Touring (Exhibit 5 – page 17) |speed., and preferred by many American riders. = this design will definitely not cater to European and Asian | |Ducati’s Fixed Sales Cost in 2000 is 3 times as that of HD (14.5Million vs. 5million). |customers. | |EBITDA – is a measure of a company’s cash flow before certain deductions. It is not a realistic view |Desmodromic engine ...
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...M&A (B) – Ducati & TPG Question1: On a scale from 0 to 10, we would like to mark it with 2. Answer: TPG is overwhelmingly acting as a financial buyer. Firstly, picking up Ducati as its target company is quite opportunistic. From the traditional investment style’s point of view, TPG is interested in those companies that had grown rapidly but still had the corporate structures of very small companies which caused great stress to the management of the business, and the assets of their target companies always being considered to be divided in order to improve the business riping for LBO. Besides, TPG is expecting to add complexity to the doing the deals and realize fiscal efficiency. Ducati is thus to be an ideal target from these perspectives. Secondly, as the one of the clearest difference between a strategic buyer and a financial buyer is that the strategic buyer wants to “Buy and Hold” and the financial buyer tends to want to “Buy Low and Exit High”. TPG hold that Ducati is a high-value added business and a low cost producer, and TPG itself is a private equity fund and must eventually sell their investment to return capital and profit to their investors, so it is concerned about the eventual exit from their investment in Ducati, and TPG also conclude that an IPO of Ducati might trigger a higher price and trade sale, setting the deal structure suits IPO. Last but not least, TPG also partially played a strategic buyer’s role. TPG is not only working for a good bid...
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...9-701-132 REV. MARCH 8, 2002 GIOVANNI GAVETTI Ducati By the end of 2000, Federico Minoli had won his battle. Over the past five years, the “turnaround i artist” -- as Forbes magazine dubbed him –- had transformed a company on the verge of bankruptcy into one of the most profitable motorcycle manufacturers in the world; a mechanical concern into a global brand; a fast motorcycle into a symbol of Italian design and tradition, extreme performance, and technical excellence. Under Minoli, Ducati had enjoyed explosive growth and profitability. Revenues had quadrupled since 1996; EBITDA had grown from 33.4 million Euros in 1997 to around 60.0 million Euros in 2000; the market share had gone from 5.1% in the sport bikes segment in 1997 to 6.7% in 2000 (see Exhibit 1). Despite this success, Minoli was concerned with the future of the company. He knew that Ducati could not grow indefinitely, and was struggling with what strategy might overtake these bounds. Minoli and the rest of Ducati’s top management team were considering different alternatives. One alternative was to attack Harley Davidson’s niche with a Ducati interpretation of a cruiser. Was this broadening of Ducati’s traditional niche the right move to sustain the profitable growth of the company? The Market for Motorcycles in 2001 The roots of the motorcycle industry date back to 1868, when Louis Perraux installed a steam engine on a rudimentary bicycle. In 1894, the Hildebrand brothers and Alois Wolfmüller produced...
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...Within the first 15 minutes of his documentary Where to Invade Next, Michael Moore shows himself having a conversation with the CEO of the Ducati Motorcycle company, Claudio Domenicali. During their conversation, Domenicali says, “We really feel that we are being rewarded by this. Because the people are very committed There is no clash between the profit of the company and the wellbeing of the people.” Moore repeats this line, and Domenicali reaffirms and says “Yes”. In this paper I’ll consider the implications of “clash” and why Moore chose to include Domenicali saying it, especially at the start of his film. Moore begins this segment with shots of him and Domenicali walking onto the assembly floor. Domenicali says they are at the end of the assembly line, to which Moore responds surprised, “You call this an assembly line?...
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