Piaggio, manufacturer of the Vespa motor scooter, must decide whether to outsource production of a new engine. The decision is surrounded by uncertainty about the achievable sales volume for the engine, particularly as competitors' new and less expensive products are gaining popularity. The A case (UVA-BP-0415) provides an overview of the competitive style of each of the major manufacturers and affords a discussion of their core capabilities. The B case describes what happens in the market and to Piaggio after the company has built the engine.
