what is the strategic alternatives are available to minoli in 2001?

Innovation and Change

  Ducati at a Crossroads

In 2006, Ducati was celebrating several anniversaries: 80 years since the visitor was founded, lx years since it started making motorcycles and 10 years since its current CEO, Federico Minoli, took the leadership reins. However, the company faced a key inflection indicate in its strategy. Majority shareholder Texas Pacific Group has just sold its stake to a syndicate of private investors and Minoli and his management team need to present a complete strategic plan for the next five years. In considering the future, several strategic options exist. For example, Ducati can pursue changes to the current product portfolio, invest in new product development, focus on boosting sales of accessories and apparel, alter its tribal marketing approach, expect for new uses with Ducati.com, alter the sales and distribution strategy or adapt product processes. On top of these strategic options, Minoli is interested in how the company can capture "magic" to keep feeding the mystique and "dream" of the Ducati brand.

The case, "Ducati: In Pursuit of Magic" reviews the visitor's life, since Antonio Cavalieri Ducati and his three sons set upwardly Ducati as a manufacturer of electrical components for radios in 1926. Afterward sustaining occupation and bombings of the factory during Earth War II, the company forged a new futurity by launching a minor auxiliary motor called "il Cucciolo" that could be placed on a bike to increase speed in 1946. The product became a striking, and provided the basis for future motorcycle models. In the mid-1950s, Fabio Taglioni (referred to past Ducati employees affectionately equally "Dr. T") adult the "Desmo" (Desmodromic) system allowing for more revolutions per infinitesimal and greater power. The organization was adopted in all models (it's still used today) and was essential in establishing Ducati as a major motorbike racing forcefulness. In 1993, the company transplanted the allure of the race track to the streets by releasing the "Monster." The Monster is a stripped down motorcycle with only the essential components - information technology'southward a sports racing bike without any of the front or side fairings. A year subsequently, the visitor released the 916, a high-functioning sports bike equipped with the latest technology, style and performance. Both the Monster and 916 were great successes, however they did not save the company from experiencing financial troubles. By the mid-1990s, Ducati was on the brink of bankruptcy. Texas Pacific Grouping, a U.Southward.-based private disinterestedness firm, bought a decision-making stake in Ducati assertive that it had a unique niche.

In 1996, Federico Minoli (a former consultant with McKinsey and Bain & Co. and CEO of Benetton's U.South. division) joined Ducati equally its new CEO. Minoli put together a new direction team, just left the company'south arrangement largely unstructured to encourage creativity and teamwork. Minoli believed that Ducati had three essential aspects: a unique and differentiated production, a group of highly skilled engineers, and a brand with loftier loyalty. With plans to leverage three attributes, he cast two primal goals: double-digit revenue growth and an EBITDA ratio comparable to Harley-Davidson's of 20 per centum. He gear up out to create the "World of Ducati" to enforce loyalty with the Ducatisti (the Ducati rider) and found the Ducati make as more than just a motorcycle, simply rather a dream.

To back up the notion of creating a consumer-focused Ducati experience, Minoli decided to build the Ducati Museum instead of updating the company's obsolete product plant. As he stated: "We were moving from the mechanical to entertainment." A number of initiatives such as the reduction in time to market from 36 months to fifteen months, the introduction of several commercially successful models and the cosmos of the customer acquisition model to guide a Ducatisti through his/her life from entry level to premium models, were all essential pieces of the turnaround. From 1997 to 2000, revenues increased from 195.half dozen million Euro to 379.5 1000000 Euro and EBTIDA grew from 33.4 to lx.0 Euro. Minoli exceeded his two fiscal goals.

Coming off of the turnaround period, many asked, "What'southward next?" Minoli commented, "Unfortunately for us, the 'side by side' already happened and it wasn't very pretty." Revenues stagnated from 2002 to 2005 and EBITDA became negative. Several atmospheric condition were seen to contribute to the poor fiscal results with the four major reasons being: production discontinuity in the premium Superbike category; trouble with the customer acquisition model since Japanese competitors upped the technological content of their entry-level bikes putting price pressure level on Ducati's entry-level bikes; the halving of U.S. volumes due to internal changes in Ducati's U.S. organisation; and unfavorable exchange rates.

In this case setting, just like in early on 2006, Ducati is faced with the job of creating strategic options to put the company dorsum on a runway of aggressive growth. While some of the options seem readily apparent such as ramping up the number of new designs or entering into the cruiser segment, other options may seem less obvious such as vertically integrating with select accompaniment suppliers or forming alliances with other complimentary motorbike brands to share distribution points in major markets. The strategic options are only subject area to ane's creativity. However, where the existent skill comes into play is how they are evaluated and ultimately which are pursued.

Throughout the example, Minoli mentions the word "magic" and compares the notion with the fashion industry: "There are two approaches in fashion right now. One is what Zara and H&M are doing, which is to reduce the fourth dimension to market. This is pure process and they have been very successful. The other way is what I call the Italian fashion, which is a visitor like Dolce & Gabbana. I don't know why but for some reason, they are able to know what people desire in the time to come. How do they do it? It's a mystery. They have something within and it's what I call `the magic.´ We need that magic at Ducati."

The case invites y'all to find the formula of sustainable magic at Ducati... if there is ane.

This article is based on: Ducati: In Pursuit of Magic (A)
Year: 2007
Language: English

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Source: https://www.ieseinsight.com/doc.aspx?id=673&ar=16

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