Formula 1 Constructor - Choose a Team - Ferrari

Topics: Strategic management, Formula One, Management Pages: 24 (7223 words) Published: March 22, 2013
The resources, capabilities and attributes that are required for the success in Formula One (F1) can be looked on a number of dimensions taking into consideration the unique and fast paced context of Formula One. F1 is a highly competitive industry and based in a rapidly changing environment, which has been defined by Porter’s five forces (Appendix One). Key resources within F1 are both tangible and intangible and can be considered under the following broad categories: Physical Resources:

The car and its components such as engines and chassis are vital resources but the technological advancement determines its ability to win races. Test Tracks are also vital physical resources both in the competitive context and in the ability to test cars, the location of such tracks may also be an important factor. Own testing and development equipment is also important for technological advancement and knowledge gain. Factories are also an important physical resource for constructors. Financial Resources:

High start up costs and continued running costs involved with the sport, result in the need for high capital investment, for example a medium sized constructor needs £30-£50 million capital investment as a basis for being competitive. The majority of team finance is generated through sponsorship - a lucrative sponsorship deal can help improve a team’s level of performance through cash injection alone. Fans are a huge resource for the sport as they act as a huge funding society for Formula One. At present tickets cost upwards of £330 per race and for VIP access £1700. Revenue is also provided by prize money from winning championship points and through shareholders within each constructor. Human Resources:

Team Principles are an important aspect to every constructor. Initially, teams were managed by the founders themselves, but as time has moved on the emphasis has shifted to managers and their ability to run the team in a business manner. The intangible resource of their skills and knowledge is incredibly important in F1 due to the highly competitive environment. For success a team needs a certain level of experience and expertise, either built up over time or recruited from elsewhere. To gather this expertise is expensive and requires investment in personnel as well as technology. Such gains are provided by the knowledge from other important employees including designers, engineers and drivers. “Another crucial factor is the motivation to carry-through the bright idea into detailed implementation” (Cross and Clayburn Cross). Drivers are a key human resource; important attributes of a driver include the ability to drive fast, think strategically while racing on the track, good communication skills, and motivational skills. Intellectual Capital:

Although patents are not allowed in F1, other intellectual capital includes the constructors brand and reputation - largely used to gain finances. A key brand in F1 is the Maranello Red used by Ferrari. Complex business systems are required by F1 teams for managing the large amount of data that flows in the organisation. These resources will not reach their potential purely from existence, the way in which they are managed, used or deployed is essential in understanding strategic capability. See Appendix Two for example of resources and the competencies gained. To be on the F1 grid and compete in the market, capabilities gained through the above resources must reach the threshold level. The F1 constructors generally function at the peak of resource utilisation and, therefore, manage resources very efficiently. Hence, almost every resource that becomes a capability for competitive advantage is converted into a competency for competitive advantage. Internal strategic capability allows for successful strategy and is required for survival and success (Johnson et al, 1998). To gain competitive advantage involves adjustment of capabilities, for example acquiring major improvements and advancements...
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