Ducati Five Forces

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How did Ducati become a profitable motorcycle maker despite its small scale? Ducati, founded in 1926, was originally a manufacturer of radio and electrical components. It was not until the post-war era that Ducati began production of its first motorcycle. Ducati enjoyed comfortable levels of growth in its early stages. However, in the mid 1990s Ducati found itself on the brink of bankruptcy. At this point Ducati decided to bring in new CEO Federico Minoli, a former CEO at Benetton with a proven track record. Under Minoli’s guidance Ducati shifted its strategy and as a result was able to avoid bankruptcy. Using the Porter 5 Forces framework we will examine the sport bike industry structure to understand how Ducati was able to prosper within the same industry as giants Honda, BMW, etc. We begin the Porter 5 Forces analysis by examining the level of power Ducati’s suppliers have. Because the manufacturing of sport bikes was fairly standardized(bikes consist of an engine, frame, fairing, and front forks) and there were many producers of individual motorcycle parts this left suppliers with little power in terms of price bargaining. The standardization of bike manufacturing also meant that Ducati would be able to switch suppliers without experiencing any significant costs(real or opportunity) on its assembly line. Ducati was also able to switch between suppliers without experiencing significant switching costs due to the company’s geographical proximity to the Emillian District, a densely populated area of mechanical manufacturers in Bologna. Therefore, we conclude that the suppliers for Ducati’s sport bikes have low bargaining power. The next Force within Porter’s framework we will examine is the bargaining power of Ducati’s consumers(buyers). Part of Minoli’s new strategy was to take greater

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