Executive Summary
The Ducati Company, which produces motorcycles, is in an attempt to acquiring a double digit increase in its revenue under the management of Federico Minoli. The vision by the manager is to achieve the success by the Harley-Davidson Inc. In this attempt; the management opts to endeavor in investing in the Harley’s niche. Through analysis of the project, the internal and external attributes and factors to the company indicate that the project will deliver results. There is however the need for the company to uphold its culture, quality and its identity. Any loss of this would mean that they lose a great number of their loyal customers. If this is observed, the future of the company is safe.
Introduction
Under management by Federico Minoli, Ducati Company has gained stability by referring to the financial records presented. With this, there is the need that the company progresses to making more profits in the future and expanding their revenues, expanding their production and taking a stronger, better position in relation to the competition in place. The idea shared by the turnaround manager is entering the Harley’s niche who presents themselves as the main competitors. He is ready to spend more in the designing of the cruiser motorcycle which had been mostly identified to be under the Harley Inc. the project is promising in terms of returns. This is a discussion on the proposed project. Analysis of the internal and external factors that may make the project a success or failure has been included as well.
External Environment
In essence, Ducati Company is operating in a fair environment. This does call for reluctance. There is need to keep tabs with the impact of the external environment on the company, trends of the external environment on the world, revelation of the environmental trends that may have an impact on the company, analysis of the trends, their effects, future trends, pointing out new opportunities and taking special measures to take advantage of the opportunities.
While still on the market environment and the project under discussion, the Ducati Company should take advantage of the fact that women have joined the cradle of motorcycle love. Harley reports that the proportion of market purchasers had increased from a 2% in 1987 to 9% in 2000. It follows then that, Ducati should migrate from this weakness and design it to be their strength. Therefore, the designers and engineers should take advantage of this and ensure that some of the cruisers they come up with attract the female gender. With this, they can design like brightly colored cruisers mainly pink in color which is reported as being a favorite to the ladies. In addition to the color aspect, it is essential that big upright riding position of the bikes should be redesigned to posses low seat height and the weight as well. Just like the Monster model that received a great welcoming by women, this is one field that Federico and the team should pay attention to. It is a promising trend.
The internet marketing as quoted by Federico has delivered results that are pleasing to sales. The company should progress to maximum utilization of the website by allowing the customers to have a sneak preview of the proposed new cruiser and their views should be collected. Their views would provide designers with ideas on what they ought to improve pertaining to the motorcycles while maintaining the vision, objective and goal of the project. This will go to improve the loyalty of the customers who will eventually feel as part of the design and engineering team.
Strengths by Ducati
As the management, there is need that you scrutinize the internal aspects of this organization such as the employee skills and the products. For instance, Ducati has managed to attain positive sales to male customers. The Ducati Hyper Sport, Super Sport, Sport Touring and the Ducati naked have made a 98%, 99%, 98%, and 96% sale respectively. This is an indication the company has a ‘pleasing’ power to male customers as compared to Harley-Davidson that has a 91%. This is an aspect that as management, you should target to capitalize on. In addition, most of the customers you have fair knowledge on motorcycles. For example, those that bought the Ducati Naked as it is in your records, they had 47% motorcycle knowledge. This is an indication that this is an opportunity that can be manipulated positively to let the customers understand the high quality of the cruiser you are about to come up with. They should be notified that it will be the best ever. It can boast of very broad aspects of strengths. To start with, the moment when Federico Minoli arrived to the company, he was full of praise for the structure and culture. He noted the good products, unique and beautiful performance and the top notch designers and engineers. He adds that there is still great potential.
Despite the customer spectrum being broad, there is an aspect of them being loyal. The end would not justify the means if the project to improve the future of the company would end up affecting the loyalty of the consumers negatively. That has to be respected and looked up to.
Ducati over time has managed to produce motorcycles of a longer lifespan as compared to the competitors. The Ducati brand has distinct qualities such as the 10 years life span of the engine and 5years for the flame. It also has a uniqueness of Desmondronic distribution system, Ducati’s unique sound, Italian Style, L-Twin engine and a tubular trestle frame. These dictate uniqueness in reliability. The company can then directly relate this to the growth of total revenues from 195.63 Euro millions in 1997 to 422.1 Euro millions in 2001. The EBITDA grew from 33.4 to 69.9 over the same period of time. What this implies then is that the growth of the company is still on, it is still developing. As the need to attack Harley Davidson’s niche is still on, the fact that Ducati has still been growing should not be ignored.
The collaboration aspect of the Ducati management is essential. Collaboration with dealers who have managed to market and sell various products from the company has contributed greatly to the growth. The company is now in control of distribution and strategic markets by establishing totally owned sales and market subsidiaries. For instance those in Japan, France, Holland and the United Kingdom. Ducati has also improved the average quality of the dealers thus reducing the number of dealers by a great margin. With this, Ducati ended up saving a lot of money. The Ducati Stores also come in to play in the strengths and opportunities that the company has. While Harley Davidson is still in attempt to broaden and widen their market geographically, this is not the case with Ducati. Ducati is aiming at expanding their line of production while the geographical coverage is constant. This may look like a weakness but on the contrary, there is need that they may attack the competitors on the terrain that they have been growing gradually than progress to invest in endeavors that would not be as profitable.
Possible alternatives
The alternatives that Ducati would most probably turn to would be to either increase the same products they have been producing or stick to the cruiser plan. If the management opts to increase their production on the products that they have continually produced, it will not be as effective. This is mainly because; there are no plans to increase the geographical coverage in terms of marketing. The customers will thus only be the same people. It is uncalled for to then opt for this. If it were to be implemented then, Ducati should then spend more than Euro 26 million in excess to establish a wider market. This is not a guaranteed endeavor as the cruiser project. The threats and weaknesses in the marketing expansion project are greater than the cruiser project. On the contrary, the cruiser project could prevail strengths and opportunities that attract more investors.
Recommendations to Ducati Management
The management under Federico Minoli should be ready to expect more benefits and witness growth if they adopt the cruiser project suggested by the manager. The project however requires that in order to be in a better position than the competitors in this case Harley Davidson, they should build on their strengths and improve on their weak sides.
The Ducati Hyper-Sport, Super-sport, Naked and Sport- Touring designs have enabled the company to grow over time. Therefore the cruiser design should deliver further revenue growth if the management sticks to the Italian style and protects the loyalty of the customers. The company has grown gradually as shown below. The target as management upon introduction of the Ducati cruiser is to let the curve grow further without slowing backwards.
Therefore, the aspects that have resulted to the growth of Ducati such as high quality, loyal customers, effective marketing and distribution should be upheld. The designers and engineers should then in respect to the loyal customers engage the customers to the development of what would be considered as the best designed cruiser. This can be achieved through the website and the events such as racing, Ducati Stores and the museums. This will ensure that the uniqueness aspect of the company is protected and upheld. In addition, the loose ends will be exposed. Women will have the opportunity to acquire the cruisers that are feminine and they can be proud of. The research team should then work even harder on the project before it resumes to come up with a the interest of the customers on whether the cruisers to be designed should offer more attention to kneel down riders, fast riders, weekend cruisers, hot riders, highway lovers or the easy riders. It is equally important in addition to the already available data.
Conclusion
Ducati has been growing under Federico Minoli; it is therefore a successful company already. He however has the target to double the revenues of the company which will automatically require a considerable investment of both money and time. If the company is to equal the profit level by their major competitors who are the Harley Davidson, there is the need to imitate what has made their competitors more successful. The imitation should not be overdone. With this, it implies that Ducati should build on what they have achieved so far even as they progress to invest in their designed cruiser that will deliver returns under the right management.
References
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