Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet
This case discusses the e-business strategy of Ducati, an Italian manufacturer of high-performance motorcycles. It describes how, on January 1st, 2000, Ducati exclusively sold through the Internet its new MH900e motorcycle at 15,000 Euros per unit. It was the first motorcycle ever sold through the Internet and the first-year production of the MH900e was sold out after just 31 minutes! The case also presents the way the company created the physical and the virtual World of Ducati.
Swot Analysis of "Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet" written by Tawfik Jelassi, Stefanie Leenen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ducati Motorcycle facing as an external strategic factors. Some of the topics covered in Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet case study are - Strategic Management Strategies, Internet, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, technology disruption, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, increasing transportation and logistics costs,
there is backlash against globalization, geopolitical disruptions, etc
Introduction to SWOT Analysis of Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ducati Motorcycle, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ducati Motorcycle operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet can be done for the following purposes –
1. Strategic planning using facts provided in Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet case study
2. Improving business portfolio management of Ducati Motorcycle
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ducati Motorcycle
Strengths Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ducati Motorcycle in Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet Harvard Business Review case study are -
Successful track record of launching new products
– Ducati Motorcycle has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ducati Motorcycle has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Strategy & Execution industry
– Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet firm has clearly differentiated products in the market place. This has enabled Ducati Motorcycle to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Ducati Motorcycle to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Ducati Motorcycle is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ducati Motorcycle in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Ducati Motorcycle digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ducati Motorcycle has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Ducati Motorcycle in the sector have low bargaining power. Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ducati Motorcycle to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Ducati Motorcycle is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Tawfik Jelassi, Stefanie Leenen can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Ducati Motorcycle are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Ducati Motorcycle is one of the most innovative firm in sector. Manager in Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Ducati Motorcycle
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ducati Motorcycle does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Ducati Motorcycle has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Ducati Motorcycle is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Ducati Motorcycle is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet are -
Capital Spending Reduction
– Even during the low interest decade, Ducati Motorcycle has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ducati Motorcycle is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet, it seems that the employees of Ducati Motorcycle don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow decision making process
– As mentioned earlier in the report, Ducati Motorcycle has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ducati Motorcycle even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Ducati Motorcycle has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Ducati Motorcycle products
– To increase the profitability and margins on the products, Ducati Motorcycle needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Ducati Motorcycle, firm in the HBR case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Ducati Motorcycle has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Need for greater diversity
– Ducati Motorcycle has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet, in the dynamic environment Ducati Motorcycle has struggled to respond to the nimble upstart competition. Ducati Motorcycle has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Ducati Motorcycle is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Ducati Motorcycle needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ducati Motorcycle to focus more on services rather than just following the product oriented approach.
Opportunities Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet are -
Buying journey improvements
– Ducati Motorcycle can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ducati Motorcycle can use these opportunities to build new business models that can help the communities that Ducati Motorcycle operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Ducati Motorcycle to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ducati Motorcycle is facing challenges because of the dominance of functional experts in the organization. Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ducati Motorcycle to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ducati Motorcycle can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Ducati Motorcycle can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Ducati Motorcycle has opened avenues for new revenue streams for the organization in the industry. This can help Ducati Motorcycle to build a more holistic ecosystem as suggested in the Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet case study. Ducati Motorcycle can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ducati Motorcycle can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ducati Motorcycle can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ducati Motorcycle can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ducati Motorcycle can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ducati Motorcycle in the consumer business. Now Ducati Motorcycle can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Ducati Motorcycle can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet are -
Shortening product life cycle
– it is one of the major threat that Ducati Motorcycle is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Ducati Motorcycle business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ducati Motorcycle in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Ducati Motorcycle will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ducati Motorcycle needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Ducati Motorcycle needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ducati Motorcycle can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Ducati Motorcycle can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Ducati Motorcycle
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ducati Motorcycle.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet, Ducati Motorcycle may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ducati Motorcycle.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ducati Motorcycle can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Ducati Motorcycle in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Ducati Motorcycle (Italy): Riding Traditional Business Channels or Racing through the Internet is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ducati Motorcycle needs to make to build a sustainable competitive advantage.
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