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Profits Of Ducati Essay

2694 words - 11 pages

Hi-Res Case Study: Ducati Motor Holding

HIGH ROAD TO WORK ORGANISATION CASE STUDY

Ducati Motor Holding (Bologna, ITALY)

Alessandra Pistani & Matteo Boemi Nomisma December 2001

Abstract
Ducati is a world leader in the production of high-powered sport motorcycles. Since 1996, following acquisition by the Texas Pacific Group, an American investment fund, the company has undergone an intense relaunch process involving several aspects of its organisation. This case aims to describe the change that has occurred in the reorganisation of production and the benefits that the new system has brought to the company.

Hi-Res Project 2001. Page

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In 1985, the Cagiva Group, a private motor-industry group controlled by the Castiglione family, acquired the company and the Ducati brand name. Under the management of Cagiva, Ducati operated its own production facilities and its autonomous research and development division, while product development, financial management, marketing and the sales network where shared with other companies within the Cagiva Group. The Cagiva Group contributed to the strengthening of the Ducati brand by refocussing the company's activities on its traditional competitive advantage in high performance competition motorcycles and, as a consequence, it was able to consistently increase the annual sales volumes of the firm. Under the control of the Cagiva Group, Ducati motorcycles further increased their reputation both in the competitive and commercial fields. As mentioned, the financial management of Ducati was shared with the other companies of the Cagiva Group, and, as a result, cash flow problems generated by within the group deprived the company of the necessary liquidity to pay suppliers. Despite product innovation and racing success, Ducati entered into a deep financial crisis as its financial resources were drained by unsuccessful ventures of sister companies within the Castiglioni-controlled Group. As a consequence of these liquidity problems, many suppliers reduced their component flows, causing serious production delays for Ducati. This situation was reversed in 1996, when Ducati was taken over by the Texas Pacific Group, an American investment fund, that brought in the needed cash and a new group of international managers. Today Ducati Motor, totally controlled by Ducati Motor Holding SpA, designs, builds and distributes motorcycles and components under the Ducati brandname. Ducati Motor owns
© Nomisma 2001 Hi-Res Project 2001. Page 3

Hi-Res Case Study: Ducati Motor Holding

Ducati North America, Ducati France S.A, Ducati Motor Deutschland GmbH, Ducati Japan KK, Ducati Benelux and Ducati U.K., the Ducati Group distributors in each of these countries. Ducati Motor also owns 99% of Ducati Corse S.r.l., known also as Ducati Corse, which was constituted in 1998 in order to carry out the organisation and management of the activities of the Ducati racing team. Ducati represents a well-known historical brand in the motorcycle sector and is known for high-level motoring solutions, high technical quality and innovative design in addition to its success in racing competitions. The combination of these factors has allowed the group to address its products to a high price target group of consumers in the sport segment of highpowered motorbikes. The sport segment constitutes a niche segment including motorbikes conceived for competitions and afterwards adapted for street circulation. Ducati’s motorcycles are currently sold in more than forty countries world wide, mostly in Europe and North America, where the Group has realised 90% of its motorcycle and...

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