CASE TEACHING NOTES
The Formula One constructors
This case enables students to explore sources of competitive advantage using the context of Formula One (F1) motorsport. The case highlights the ways in which three particular F1 teams created four situations of competitive dominance for a sustained period. It allows the students to consider individual teams and the generic issues needed to succeed in this specialised context. The case is organised into five parts. The first is a brief overview designed to give those unfamiliar with F1 some understanding of its history and structure. This is followed by four detailed descriptions of particular periods of dominance by an F1 team. The introduction to the case describes the overall nature of Formula One motorsport and its origins in Europe after World War II. It identifies some of the central aspects of being an F1 constructor, such as the need to generate sponsor revenues through increasingly sophisticated marketing strategies, and also the need to design, develop, manufacture and race open-wheel single-seat racecars. Note: the term ‘constructor’ differentiates F1 from other racing series in which race teams compete with bought-in racecars. F1 constructors are effectively in the business of designing and constructing prototypes – each car being unique to each constructor but within a set of pre-defined rules that cover weight, dimensions and other basic parameters. The introduction also makes reference to the nature of the motorsport cluster in the UK, a phenomenon similar to that of Silicon Valley in California. In 2004, seven of the ten F1 teams were located within this specialised cluster, located roughly within a 50 mile (80 km) radius of Oxford. This provides an opportunity to connect to issues of location and national/regional competitive advantage. This is followed by four accounts of sustained competitive advantage (here we define sustained as three or four years of dominance) featuring Ferrari in the mid-1970s, McLaren in the late 1980s, Williams in the mid-1990s and Ferrari from 1999–2003. Each account explores the background to the constructor, from the formation of these entrepreneurial businesses through to their development into a world-class organisation. The focus is on the build-up to their period of competitive advantage, but each case also then relates to the loss of the advantage for the constructor in this period, with the exception of the final case where the discussion may usefully be directed as to what may cause the loss of competitive advantage. 231
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2. Position of the case
This case can be used to explore the issues raised by the resource-based view of strategy. It provides a basis for students to develop causal linkages between particular resources and their effect on achieving competitive advantage. The context particularly emphasises the relative nature of competitive advantage, i.e. that the resource-based view requires a constant reference to the resources and competence of competitors in order to define competitive advantage. These issues are examined in Exploring Corporate Strategy, chapters 3 and 5. The case was designed to be used on an MBA programme where students consider the application of the resource-based view in order to ‘unpack’ sources of advantage. The case has also been successfully used on final-year undergraduate programmes and also for executive development in helping managers explore the nature and location of sources of advantage. 3. Learning objectives The overall learning objectives can be summarised as follows: To understand that although strategy can be seen as generic at a high level, it will always be idiosyncratic at the organisational level, even where organisations are in the same industry and all have the same goal. Therefore strategic management has to focus on the idiosyncratic characteristics of every...