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Formula 1
By
Varun Balakrishnan
ABOUT THE CASE STUDY
Cover the resources, capabilities and attributes required

by F1 constructors.
Analyses the reason ...
1945

1950

Started by Driver’s
FIA as
world
Formula A Championship

1960s

1990s

Third
highest
TV
audience

Top
FOUR
TEA...
SOURCES OF REVENUES
Commercial Sponsorship from non related companies

(clothing, cigarettes)

Support through provision...
System support (Andersen Consulting, Bulls and

Sun Microsystem)
Auto motive manufactures (Honda, BMW,

Toyota)
Equity ...
FERRARI
Founder-Enzo Ferrari

Ferrari viewed as National Icon in Italy

1964-won world championship
They build their own engines, gearbox,

suspension, chassis at Maranello factory the
most up-to-date facilities in terms ...
1971-opened their own test track at Fiorina near

Maranello Factory.

1972-73 cars were fast but not reliable

1974-cha...
1974- Ferrari offered Niki Lauda to join

They designed a new car 312B but lost because of
technical difficult.
1975-tab...
1977-won both the championships
Lauda left
1979- was the last time they won the championship

for next 21 years
mid 80...
1982-83 finally investment paid off as they won

constructor’s championship
1988-Enzo Ferrari died
1992-luco Montezomol...
MCLAREN
➤Founded by New Zealand F1 Driver Bruce McLaren in

1966
➤Had their first major victory in Belgium Grand Prix of
1968
➤ Mc...
EMINENT MCLAREN DRIVERS

EMERSON
FITTIPALDI
(1974)

MIKA HAKKINEN
(1998,99)

JAMES HUNT
(1976)

NIKI LAUDA
(1984)

ALAIN P...
TIMELINE
1966
BIRTH

1968

1974

1980

1986

1987-88

RON
BARNARD
FIRST
Prost
1ST
OUT,
MAJOR SPONSORSHIP DENNIS
& Senna
CO...
GOLDEN PERIOD FOR MCLAREN
1988

1989

➤ McLaren Won The
Championship From
1988-91
➤ They Won 38 Out
Of 48 Races
Between th...
GOLDEN YEARS OF MCLAREN
➤In 1988, McLaren won 15 out of 16 Grand Prix

➤In 1988, Dennis began a project on McLaren road-

...
PILLARS OF MCLAREN
➤John Barnard was considered to be the reason for

McLaren’s developing dominance
➤The partnership betw...
V/S
PROST

SENNA

➤Prost & Senna were real contrasts
➤Senna was fast & had unparralel commitment to win
races
➤Prost was f...
SUCCESS OF MCLAREN
➤McLaren was successful because Ron Dennis had

negotiated exclusive for Honda Motors
➤Ron Dennis’s neg...
McLarens Decline
➤ In 1992, McLarens slippage came
➤ Renault engines in Williams started gaining pace
➤ In September, Hond...
RISING FROM THE ASH
➤In 1997, McLaren acquired the services of Williams

designer Adrian Newey for a reputed 2 million con...
WILLIAMS
1968

• FRANK WILLIAMS(RACING CARS) ESTAB.

1977

• WILLIAMS GRAND PRIX ENGG. ESTAB.

1980-81

• ALAN JONES –DRIVERS TITLE...
1988

• HONDA MADE ENGINES AVAILABLE TO McLaren
• NIGEL MANSELL JOINED FERRARI

1990

• TIED UP WITH RENAULT

1991

• NIGE...
STRATEGY OF WILLIAMS
More functional than innovative

LOTUS – Ground Effect and Active

Suspension
McLaren – Carbon Com...
HOW DOES THE RESOURCE
BASED VIEW APPLY TO
WINNING FORMULA ONE
CHAMPIONSHIP???
FERRARI AND ITS RENAISSANCE IN THE MID
1970S
Availability of technical expertise and

resources

Cash flow from Fiat and...
Management style of Team – Driver Niki

Lauda, Designer Mauro Forghieri and manager
Luca Montezemolo

Own test track a f...
MCLAREN
Put together best of everything
Secured exclusive use of Honda

Sponsorship from Philip Morris
Secured the services of the best driver around (Senna

and Prost)
Commercial and leadership skills of Ron Dennis

Ron D...
WILLIAMS
Focus on engineering
FW06 Patrick Head with Saudi Airlines helped

winning constructors

Car development proce...
Development of powerful and reliable engine

perfectly complemented by chassis
Long standing partnership of Frank Willia...
WHAT CORE COMPETENCIES
WERE KEY TO EACH OF THE
MAIN WINNERS???
CORE COMPETENCY:
➤ The main strengths or strategic advantages of a business.
➤ Pooled Knowledge + Technical Capacities = C...
MCLAREN
➤ Partnership with Philip Morris and appointment of Ron

Dennis

➤ Innovative skills of John Barnard
➤ Collaborati...
FERRARI
➤ Maranello Factory

➤ Identity
➤ Takeover By Fiat
➤ The Trinity of Mauro Forghieri + Luca

Montezemolo + Niki Lau...
WILLIAMS
Collaboration with Renault RS3 V10 and FW15 chassis
PATRICK HEAD’S innovation namely semi-automatic

gear box, ...
TO WHAT EXTENT DID THE
KEY COMPETENCIES VARY
OVER TIME IN THE FORMULA 1
CHAMPIONSHIP???
FERRARI
The renaissance of Ferrari in mid 1970’s

Their unique approach- creating everything of

their own- gearboxes, e...
They also were very rich in the technical

expertise and recourses
They returned to stage 1999-2003: Worked

together -d...
Later in 1999-2003, Ferrari was back to their stage

and glory and they were working with Michael
Schumacher, a key eleme...
MCLAREN
McLaren and Honda domination in the late 1980s

McLaren were successful because they were able to put

together ...
They were also able to secure the services of the

best drivers around (Senna and Prost).
This was due to the high level...
WILLIAMS
Williams and the technological revolution: the mid

1990s

Williams’ success was due to their engineering focus...
This engineering focus can be attributed to the

long-standing partnership of Frank Williams and
Patrick Head.
Collabora...
THE VARYING FACTOR IN THEIR
COMPETENCIES ARE
9
9
8
7
6
5
4
3
2
1
0

9
7

7

9

7
6

FERRARI

MCLAREN
CAR

DRIVERS

6

6

W...
F1
F1
F1
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  • The main strengths or strategic advantages of a business. Core competencies are the combination of pooled knowledge and technical capacities that allow a business to be competitive in the marketplace. Theoretically, a core competency should allow a company to expand into new end markets as well as provide a significant benefit to customers. It should also be hard for competitors to replicate. 
  • Masterminds : Ron Dennis and John BarnardRon Dennis:Mechanic,team principal, a master negotiator,promgmt style
  • Ferrari are distinctive- they always have done everything themselves : Engine,Gearbox,suspension and chassis..upto date facilities in terms of designing,developing and building all necessary components for a race car.Resources,technicalteam,own race track.2. Identity :Ferraris have always been red,the national racing color of Italy.Black Prancing horse.Very little sign of sponsorship.Difficult for others to imitate themEnzo Ferrari allowed takeover from Fiat,huge cash injection..allowedenzo to conc on his first love,motor racing.Forghieri : Brilliant technician,Ferraris of the 60s. Designer..creative ideas and intensive testing.Montezemolo : qualified lawyer,manager…kicking enzo’s ‘divide and rule’ out.312T : 12 cylinder engine and a revolutionary transverse(sideways mounted),which offered better balance
  • Transcript of "F1"

    1. 1. Formula 1 By Varun Balakrishnan
    2. 2. ABOUT THE CASE STUDY Cover the resources, capabilities and attributes required by F1 constructors. Analyses the reason for the dominance of different constructors during different periods. It will analyze the reason behind their inability to sustain their dominance and also suggest ways by which these constructors could have sustained their competitive advantage. Describes three examples of the creation of competitive advantage in a highly technological context of F1.
    3. 3. 1945 1950 Started by Driver’s FIA as world Formula A Championship 1960s 1990s Third highest TV audience Top FOUR TEAMS Williams, McLaren, Ferrari, Benetton
    4. 4. SOURCES OF REVENUES Commercial Sponsorship from non related companies (clothing, cigarettes) Support through provision of free product and services such as engines, fuel and lubricants (Renault, Ford, Shell, ELF)
    5. 5. System support (Andersen Consulting, Bulls and Sun Microsystem) Auto motive manufactures (Honda, BMW, Toyota) Equity holder Prize money
    6. 6. FERRARI
    7. 7. Founder-Enzo Ferrari Ferrari viewed as National Icon in Italy 1964-won world championship
    8. 8. They build their own engines, gearbox, suspension, chassis at Maranello factory the most up-to-date facilities in terms of designing, developing and building all the necessary components. 1969-merger between Fiat and Ferrari; huge cash injection Early 1970s-Fiat influence meant increase pressure and resources
    9. 9. 1971-opened their own test track at Fiorina near Maranello Factory. 1972-73 cars were fast but not reliable 1974-change of team members Forghieri recalled as technical director New Team Boss-Luca Montezomolo
    10. 10. 1974- Ferrari offered Niki Lauda to join They designed a new car 312B but lost because of technical difficult. 1975-tables turn 312T won both Driver’s and Constructor’s Championship 1976- Niki Lauda met an accident but managed to grab constructors championship
    11. 11. 1977-won both the championships Lauda left 1979- was the last time they won the championship for next 21 years mid 80s-more investment into facilities but no result appeared
    12. 12. 1982-83 finally investment paid off as they won constructor’s championship 1988-Enzo Ferrari died 1992-luco Montezomolo took over as CEO 2000- return of glory with Schumacher's victory
    13. 13. MCLAREN
    14. 14. ➤Founded by New Zealand F1 Driver Bruce McLaren in 1966 ➤Had their first major victory in Belgium Grand Prix of 1968 ➤ McLaren was killed two years later while testing the American Sports Car ➤Lawyer & friend Teddy Mayer took over as team Principal & team continued to develop ➤In 1974, sponsorship from Philip Morris, for Marlboro brand which lasted till 1996 ➤In 1980, Ron Dennis became joint team principal ➤McLaren Have Taken Part In 440 Grand Prix
    15. 15. EMINENT MCLAREN DRIVERS EMERSON FITTIPALDI (1974) MIKA HAKKINEN (1998,99) JAMES HUNT (1976) NIKI LAUDA (1984) ALAIN PROST (1989) AYRTON SENNA (1988,89,90,91)
    16. 16. TIMELINE 1966 BIRTH 1968 1974 1980 1986 1987-88 RON BARNARD FIRST Prost 1ST OUT, MAJOR SPONSORSHIP DENNIS & Senna COMES WIN (MARLBORO) MURRAY IN were IN recruited, HONDA CAME IN
    17. 17. GOLDEN PERIOD FOR MCLAREN 1988 1989 ➤ McLaren Won The Championship From 1988-91 ➤ They Won 38 Out Of 48 Races Between these years 1990 1991
    18. 18. GOLDEN YEARS OF MCLAREN ➤In 1988, McLaren won 15 out of 16 Grand Prix ➤In 1988, Dennis began a project on McLaren road- going car- McLaren F1 was launched in 1994 and with a price tag of ₤ 634,000 and a top speed of 231 mph became the most expensive and fastest road-going car in the world. ➤The design skills of Gordon Murray was mainly used in this car.
    19. 19. PILLARS OF MCLAREN ➤John Barnard was considered to be the reason for McLaren’s developing dominance ➤The partnership between Dennis and Barnard had been stormy but they achieved many targets ➤Dennis providing the managerial and commercial acumens ➤Barnard highly innovative design skills RON DENNIS JOHN BARNARD
    20. 20. V/S PROST SENNA ➤Prost & Senna were real contrasts ➤Senna was fast & had unparralel commitment to win races ➤Prost was fast too, but a great tactician, making sure the whole team was behind him ➤Senna’s brilliance was undisputed at Japanese Grand Prix when he pushed Prost’s Ferrari off road to win the race ➤Senna passed away in 1994
    21. 21. SUCCESS OF MCLAREN ➤McLaren was successful because Ron Dennis had negotiated exclusive for Honda Motors ➤Ron Dennis’s negotiating & marketing abilities were remarkable throughout F1 ➤Barnard once likened working with Dennis as 'being in a room with a hand grenade rolling about without its pin, about to go off and make a horrible mess.‘
    22. 22. McLarens Decline ➤ In 1992, McLarens slippage came ➤ Renault engines in Williams started gaining pace ➤ In September, Honda made it clear that they are backing out of F1 because of achievements of goals & finding new challenges ➤ Dennis’s lame reaction to this setback made them move towards- Ford engines, which were easily available ➤ Senna still managed to win some races but eventually moved on to Williams in 1993 ➤ Having tried Peugeot engines in 1991 then moved to Mercedes in 1995 ➤ In 1996, relationship between McLaren & Philip Morris came to an end, Philip Morris moving support to their Marlboro brand to Ferrari driver Michael Schumacher 1992
    23. 23. RISING FROM THE ASH ➤In 1997, McLaren acquired the services of Williams designer Adrian Newey for a reputed 2 million contract. He designed talents coupled with a more powerful and reliable Mercedes engine meant that McLaren again became the team to beat
    24. 24. WILLIAMS
    25. 25. 1968 • FRANK WILLIAMS(RACING CARS) ESTAB. 1977 • WILLIAMS GRAND PRIX ENGG. ESTAB. 1980-81 • ALAN JONES –DRIVERS TITLE • WON CONSTRUCTORS CHAMPIONSHIP 1986 • FRANK WILLIAMS ACCIDENT 1987 • HONDA MADE ENGINES AVAILABLE TO LOTUS
    26. 26. 1988 • HONDA MADE ENGINES AVAILABLE TO McLaren • NIGEL MANSELL JOINED FERRARI 1990 • TIED UP WITH RENAULT 1991 • NIGEL MANSELL RETURNED 1992 • NIGEL MANSELL WON F1 CONSTRUCTORS • HE LEFT AT YEAR-END 1993 • ALAIN PROST WON F1 CHAMPIONSHIP
    27. 27. STRATEGY OF WILLIAMS More functional than innovative LOTUS – Ground Effect and Active Suspension McLaren – Carbon Composite monoceque FERRARI – Semi-automatic Gearbox
    28. 28. HOW DOES THE RESOURCE BASED VIEW APPLY TO WINNING FORMULA ONE CHAMPIONSHIP???
    29. 29. FERRARI AND ITS RENAISSANCE IN THE MID 1970S Availability of technical expertise and resources Cash flow from Fiat and Ferrari Merger
    30. 30. Management style of Team – Driver Niki Lauda, Designer Mauro Forghieri and manager Luca Montezemolo Own test track a few yards away from the factory
    31. 31. MCLAREN Put together best of everything Secured exclusive use of Honda Sponsorship from Philip Morris
    32. 32. Secured the services of the best driver around (Senna and Prost) Commercial and leadership skills of Ron Dennis Ron Dennis and John Barnard partnership stormy but useful
    33. 33. WILLIAMS Focus on engineering FW06 Patrick Head with Saudi Airlines helped winning constructors Car development process was top priority supported by team of designers
    34. 34. Development of powerful and reliable engine perfectly complemented by chassis Long standing partnership of Frank Williams and Patrick Head Wide ranging relationship with engine supplier Renault
    35. 35. WHAT CORE COMPETENCIES WERE KEY TO EACH OF THE MAIN WINNERS???
    36. 36. CORE COMPETENCY: ➤ The main strengths or strategic advantages of a business. ➤ Pooled Knowledge + Technical Capacities = Competitiveness ➤ It has to fulfill three key criteria's : ➤ It is not easy for competitors to imitate. ➤ It can be reused widely for many products and markets. ➤ It must contribute to the end consumer's experienced benefits and the value of the product/service to its customers.
    37. 37. MCLAREN ➤ Partnership with Philip Morris and appointment of Ron Dennis ➤ Innovative skills of John Barnard ➤ Collaboration with Honda ➤ Signing of Prost and Senna
    38. 38. FERRARI ➤ Maranello Factory ➤ Identity ➤ Takeover By Fiat ➤ The Trinity of Mauro Forghieri + Luca Montezemolo + Niki Lauda ➤ 312T
    39. 39. WILLIAMS Collaboration with Renault RS3 V10 and FW15 chassis PATRICK HEAD’S innovation namely semi-automatic gear box, drive by wire and active suspension system Exploiting the technology available Combination of ten things which gave them a couple of seconds of advantage
    40. 40. TO WHAT EXTENT DID THE KEY COMPETENCIES VARY OVER TIME IN THE FORMULA 1 CHAMPIONSHIP???
    41. 41. FERRARI The renaissance of Ferrari in mid 1970’s Their unique approach- creating everything of their own- gearboxes, engines, suspensions, chassis- made in their home town Maranello factory
    42. 42. They also were very rich in the technical expertise and recourses They returned to stage 1999-2003: Worked together -driver Niki Lauda, designer Mauro Forghieri and team manager Luca Montezemolo
    43. 43. Later in 1999-2003, Ferrari was back to their stage and glory and they were working with Michael Schumacher, a key element, and also their focus was support team which was a very efficient one.
    44. 44. MCLAREN McLaren and Honda domination in the late 1980s McLaren were successful because they were able to put together the best of everything. They secured exclusive use of the Honda engine at a time when it was the most powerful and reliable- Honda engines won for 6 consecutive years- one for Williams and 4 for McLaren
    45. 45. They were also able to secure the services of the best drivers around (Senna and Prost). This was due to the high level of funds made available by sponsor Philip Morris, Marlboro.
    46. 46. WILLIAMS Williams and the technological revolution: the mid 1990s Williams’ success was due to their engineering focus. Frank Williams was very dedicated to his passion and bought many new changes in the team.
    47. 47. This engineering focus can be attributed to the long-standing partnership of Frank Williams and Patrick Head. Collaboration with Renault RS3 V10 and FW15 chassis
    48. 48. THE VARYING FACTOR IN THEIR COMPETENCIES ARE 9 9 8 7 6 5 4 3 2 1 0 9 7 7 9 7 6 FERRARI MCLAREN CAR DRIVERS 6 6 WILLIAMS SUPPORTING TEAM
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