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supply chain management

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Towards the end of last year, I spent some time bumming around Italy, and one of my many stops was the Dainese headquarters in Vicenza, Italy. A company that is responsible for protecting many of the top motorcycle racers, as well as Yours Truly, Dainese is a company focused on safety, but this focus is really a bi-product of the Italian company’s thirst for competition.

Competition is of course about finding out who is the best, and at the pinnacle of that decision is finding out who is the Greatest of All Time, or G.O.A.T. And in motorcycle racing, when you think of the term “G.O.A.T.” two names come to mind: Giacomo Agostini and Valentino Rossi.

Motorcycle racing fans can debate well into the night as to which of these Italian racers is truly the greatest. Regardless who you pick though, both men are legends, and both men have been supported throughout their careers by Dainese.

That brings us back to my trip to Vicenza, because the battle between these two great riders continues, just not in the way you would suspect.

Ducati has reported that the first 500 initial pre-orders for the 2010 Ducati Multistrada 1200 have been filled, and there is now a 60 day waiting period for the new sport-tourer. Citing a strong reception to the Multistrada’s “four-bikes-in-one” capability, Ducati sees an additional 500 units to be sold in the coming months. This last statement seems sort of like a no-brainer, after-all another 500 bikes will be sold eventually, right?

Actually, the entire statement is sort of strange when you consider what 500 pre-sold orders really entails in a markets like the United States & Canada. With a plethora of dealers in these countries, the reality is that this statement amounts to dealerships pre-selling their initial inventory, which consisted of one or two motorcycles. Yes, the Ducati Multistrada 1200 is sold-out for the next two month, but when you ship only 500 units to the entire North American market, you can almost guarantee being sold out on a bike during its release, right?

35 motorcycles, 7 model lines, 4 chassis, 3 motor families, & 1 market segment, that’s Harley-Davidson’s product line by the numbers. Where many large production motorcycle companies might have 30 or so motorcycles that span the entire gamut of motorcycling’s different sub-markets, Harley-Davidson has put all of its eggs in the heavy cruiser market. This singular pursuit of one market segment has not only been the cause for Harley’s success, but also a significant contributing factor to the company’s recent downfall, which has led to a recently rumored leveraged buyout.

As the old idiom goes, one should not put all their eggs in one basket, which is exactly the faux pas being committed here by Harley-Davidson in its product offering. Businesses, especially public ones, should always have an eye on sustained long-term growth, and a key element to that goal is a well-diversified position in their appropriate industry. Taking this lens and applying it to Harley-Davidson, one can immediately see a portfolio that has been extensively mismanaged by focusing on only one segment of the total motorcycle industry: the heavy cruiser market.

What this has effectively created is a motorcycle company that looks like Alfred Hitchcock’s take on Baskin Robins: 31 flavors, but they’re all Rocky Road.