Inner workings of ducati and the mind

For the exclusive use of N. MEERSMAN

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 aglobal 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% in2000 (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 the first motorcycle with an internal-combustion,two-cylinder gasoline engine. The motorcycle quickly became a cultural icon. As T. Krens, the curator of “The Art of the Motorcycle” exhibition at the Guggenheim Museum in New York, observed: The motorcycle is a perfect metaphor for the twentieth century. Invented at the beginning of the industrial age, its evolution tracks the main currents of modernity. The object and its history represent the themesof technology, engineering, innovation, design, mobility, speed, rebellion, desire, freedom, love, sex, and death. Park the latest Ducati, Harley, Honda, or BMW ii on a street corner in any city or town in the world, and a crowd will gather .

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Professor Giovanni Gavetti preparedthis case solely as the basis for class discussion. Professor Andrea Lipparini of the Cattolica University of Milan contributed to prepare the industry overview. The author wishes to acknowledge Professors Tarun Khanna and Jan Rivkin for comments on an earlier draft. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.Copyright © 2001 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic,mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

This document is authorized for use only by Nicolas Meersman in MGT 491 - 2011 Spring B taught by Doug Johnson from January 2011 to July 2011.

For the exclusive use of N. MEERSMAN
701-132 Ducati

Products
Approximately 1.6 million motorcycles were sold around the world in 2001 (see Exhibit 2).Industry experts divided the market for lage-displacement motorcycles into four segments: off-road, cruisers, touring and sport bikes. The off-road segment typically included both motorcycles for purely off-road use, and motorcycles designed for both on-road and off-road use (dual purpose bikes). These motorcycles were characterized by an upright ergonomics, thickly padded seats, soft shocks,...