————————————————- Subject: Ducati This memo will serve to identify the resources, capabilities and activities that are central to the competitive advantage of Ducati. Also included is an attempt to summarize the strategy essence of the firm as well as to suggest a thesis statement for Ducati. Ducati’s best resources center on their brand name (dating back to 1926), their signature Desmodromic valve distribution system, and their collection of top-notch engineers and designers.
Ducati’s location within Borgo Panigale, a highly extensive mechanical district outside of Bologna, also assured close contact with many highly regarded suppliers. Ducati’s capabilities included outsourcing 87% of their production to many manufacturers in the esteemed Emilian District, leaving Ducati with more time and resources to allot to R&D and design. Ducati streamlined the standardization of their products by producing models that all used the same two crank-cases and three cylinder-heads; this increased the productivity of each worker.
Ducati retained at least two suppliers for each component and switched to the alternative supplier as the need arose. Since 1996 the number of Ducati’s suppliers decreased from 200 to 130, allowing for greater reliability of parts and lower maintenance costs. Other Ducati activities that increased their competitive advantage was their expanding their distribution centers into Italy, Japan, France, Germany, UK and Holland and opening a chain of Ducati dealers in strategic areas around the world; these actions offered technical and service support to a broader base of Ducati users.
As Ducati began to implement this new distribution strategy, their marketing team strove toward highlighting Ducati’s heritage by placing collages of Ducati’s history, performance and engineering achievements on the walls of each of these mono-franchise dealers. While outsourcing a higher percentage of manufacturing to businesses in the Bologna District, Ducati was capable of bringing its entire R&D in-house so as to communicate more effectively with their engineering and marketing teams.
This reduced the time to market for new ideas and products. Ducati’s strategy at the time this article was written was to appeal not only to extreme sport riders but to a broader swath of users, including older individuals and females. Ducati’s thesis statement may have been “Ducati aims to offer its historically high-quality bikes to a larger segment of customers while keeping most of its efforts on its historically famous R&D and design”.