Presented by: ____________

PIAGGIO Case Analysis

Established in Italy in 1946 with Vespa Best Selling
Scooter
Leading manufacturer for European scooters
Close to Bankruptcy during 1980s till 1993 due to
Lack of Focus
Expanded in India and China with 35 new models
Product Line: 50cc Scooter, trendy Typhoon
Benetton, 50cc and 125cc Vespa
About Piaggio
About Piaggio (cont.)
Strengths
Exemplary Leadership
Cult Image
Bargaining relationship
with Suppliers
Skilled Technicians
Long lasting products
Weaknesses
Structural Overcapacity
Less global penetration
Suppliers with limited
capacity
Heavy investment in
design
Market Characteristics (Europe)
Mopeds and Small Motorcycles (including scooters up to 125cc)
Target teenagers + urban commuters
Demand depends on:
Demographics
Economic conditions
Weather patterns
Regulations and emission norms
Large motorcycles (125cc+)
Target for sports and touring, people with high purchasing power
Demand is linked with the economic conditions
Environmental Analysis
Europe
Increasing demand for inexpensive and manoeuvrable vehicles
Increasing demand for classic scooters
Growing interest among the urban population
Asia
High population
Increasing purchasing power
Low penetration
Demand for PTWs
In Europe 12% of the global demand or 1.7 million vehicles
In Asia 70% of the global demand (30% solely from China)
Environmental Analysis
Main Competitors
Aprilia (Italy)
Second largest motorcycle, scooter and moped manufacturer in Europe
Positioning - Sense of Wonder
Strengths-
Only European firm to cover the entire range of two-wheelers
Creativity, innovation, flexibility, speed
Purchased engine from Minarelli (reliable and cheap)
Star Scarabeo
Fashionable retro look
Functionality
Weaknesses-
Heavy reliance on suppliers
Environmental Analysis
(Competitor Analysis Cont.)
Honda, Yamaha, Suzuki (Japan)
Strengths
High-tech global products
Built on homogenous needs across world markets
Superior quality
Economies of scale leading to competitive prices/higher margins
Longer product life as compared to niche products
Decentralised operations to save the costs further
Strong foothold in South Asian newly industrialised countries
Environmental Analysis
Environmental Analysis
Opportunities
Increasing demand due to
population
Penetration into Asian
Markets
Potential introduction of EU
regulations
Threats
Competition from Japanese
companies
Competition from European
Companies
Two wheelers were not
considered primary vehicles
Fast changing consumer
preferences
Market saturation in
developed countries
Dominance by Japanese Companies
Less Economies of Scale
Structural Overcapacity
Issues
Alternative1- Maintain focus on Europe
Strong suppliers relationship-High bargaining Power
Piaggios niche competency in Europe
Changing emission norms- First mover advantage
Reason
Gain first mover advantage
Increased market share
Benefits
Saturation in offing in European market
Higher cost
Constraints
Increase price incrementally-Green Engine
Widen the product line high margin products
Acquire Aprilia- Sports bikes
Recommendations
Alternative 2 Supply Green Engines
High manufacturing cost, Vespas sales forecast at 3,50,000 annually was
not enough to breakeven.
Reason
Only European company with expertise in Green Engine
Higher profit margins
Benefits
Competition with the Yamaha
Risk of duplicity
Constraints
Identify Markets
Pricing Strategy
Recommendations
Alternative 3 Expand Globally
Opening of new plants in Asian countries by Japanese
Reason
Direct competition to Japanese manufacturers
Cost Advantage Economies of Scale, Local Resources
Meeting Structural Overcapacity
Benefits
High Investment
Local laws
Challenges in current Product Line
Constraints
Identify rapidly developing economies
Decentralization
Mass production- common product
Recommendations
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