Technology and Operation- The Drivers of Strategic CompetitionWhile technology & innovation continues to create incremental value in terms of performance,reliability, weight and efficiencies (in terms of fuel and emissions) the primary area of opportunity for innovation appears to be operational systems and processes. Theseadvantages are all too familiar to the Japanese competitors who leverage economies of scopeand benefit from the experience curves that accompany manufacturing millions of annual units.Ducatis internal R&D group has renowned expertise in motorcycle design and mechanicshowever, which has yielded great performance results in terms of bike speed and streamlinedproduction. Ducatis aggressive outsourcing strategy must continue to be a focus if the firm isgoing to be able to compete with Harley Davidson whose brand recognition and equity requiredsignificantly less fixed sales costs than Ducati. It is imperative that Ducati 1) maintain its R&Dteams focus on product standardization and 2) that Ducati continue to manage supplier (andcollaborator/potential supplier) relationships closely to ensure stability in product quality andprice. That said, the production advantage that Ducati has created through outsourcing andstandardization will not necessarily be immediately translatable to the Cruiser market; newparts will be needed as informed by the different bike design, functionality and use-case.Additionally, R&D for this product will need a greater focused on customer feedback instead of performance (Exhibit 6). Both of these and Harley Davidsons experiential productionadvantage could significantly alter the cost structure presented in Exhibit 12.
The Dynamic Nature of Competition and Competitive StrategyIn 2000, the dynamic of competition within the market is fairly well established, with onedominant firm (Honda) serving the mass market while a number of niche players (Harley, BMW,Triumph,...