Strategie opdracht voor Executive MBA (RSM)

1. Strategic Management Rotterdam School of Management EMBA 09 – Team B5 13 February 2009 Our F1 Team: Criticaster; kept team on track, took care for precise content and dared to challenge the drivers Pit babe 2 Antoinette Meys Introvert, but critical feedback, provided valuable insights which improved overall quality Pit babe 1 Atsuyo Kawaguchi-Van Mil Always delivering the tools needed for success, took care for short pit stops if process catched 1 st Mechanical Krzysztof Lewinski Creator, applied new models, good research, tested and challenged others Driver 2 Jassar El Jabouri Inspirator, from start to finish; from data research, to producer of rough structure and finished with layout Driver 1 Roel Kock Overall coordinator, time keeper, quality keeper and took care for logical flow Team Principal Martijn van der Knaap Nice to know: Title: Name:

2. JordanGP sees strategy through an experience lens but F1 is changing in a design lens. Value network: Jordan is mainly focussed on the channel and customer value chain and less on the supplier value chain which supplies competitive advantage. PESTEL: The environmental changes of F1 influences the critical succesfactors of F1 and the future performance of Jordan GP. Start Four future scenarios ’ for JordanGP. From ‘dead end’ to ‘bullet proof’. Strategic drift: JordanGP switches engines, drivers and fails for attracting long term sponsoring and cooperation. Strategic Capabilities and competitive advantages of JordanGP remained more or less the same and this was succesful during the 90’s. Rise Fall Exit Summary: Strategic position of Jordan Summary SWOT reveals the strategic position of JordanGP compared to its competitors. SWOT analysis indicates that JordanGP has several opportunities.

3. Overview of rise and fall of JordanGP 15 years of sport, motor racing, music, and element of adventure and a bit of irreverence. 1991: Team 7up Jordan debuts at a 5 th place in the Formula 1. Because of an unsigned contract Michael Schumacher could leave to Benetton after just one race. Because of a lower budget Jordan had to switch to the cheaper Yamaha engines. 1992: In the second year Jordan switches to two new drivers and a new engine supplier but only scored one point. They also had 59% retirements which was an all time high. 1993 Saw further changes; new engine supplier (Hart) and again new drivers. 1994: Signs of stability with the return of two of last years most winning drivers (Barrichello and Irvine) and the same engine supplier. With 28 points a second time on the 5 th place of the Formula 1. 1995: This earmarked a change for JordanGP. With again the return of Barrichello and Irvine, a new engine supplier (Peugeot) and a new sponsor gave JordanGP a 6 th place. In 1996 Jordan established the team as a solid mid-pack with a series of fourth places and another 5 th place. 1998: JordanGP again switches to a new engine supplier (Mugen-Honda) and due to reliability problems failed to score a single point. JordanGP established a 4 th position in the Formula 1. And the first time win of a Grand Prix. 1999: A former driver from Jordan F3000 (Frentzen) was an immense success with two wins in the GP. 61 points and a 3th position in the Formula 1. 1999 was the best year for JordanGP. After this successful year, Jordan slipped back to the mid-position by finishing 6 th and 5 th in resp. 2000 and 2001. During 2001 Jordan was battling with the BAR team over the long term use of Honda engines. The succes of Honda in 2000 made Honda want to return to Formula One with the intention of buying JordanGP. Jordan rejected the proposal. 2002: Due to a decrease of 30% of its sponsor budget, Jordan had to cut back on its development of its new car. The season showed many technical problems. The team changed to Ford Cosworth engines. 2003: Honda engines leaves Jordan to supply BAR and next to their old-time sponsor Benson & Hedges the team has a decrease in sponsors. Despite a win, under extraordinary circumstances, the team hardly scores any points. 2004: Cosworth was sold by Ford and switched to Toyota. Jordan scored only 5 points and finished second to last. One driver has sponsor problems and had to skip one race. 2005: The team was sold to Midland for $ 60 million. In their last year the team has only one moment of success 3tn and 4 th place in Indianapolis. 5 13 11 5 6 5 5 4 3 6 Finishes w/out point, Finishes with points, Retirements Total points per season Season Place Jordan timeschedule 5 6 9 9 9

5. Supplier value chains Engine supplier: 50% of costs is engine. Large critical success factor. F1 labour pole; drivers, technicians, engineers. The specific Jordan spirit attracts a special group of workforce; you have to be crazy about your sport as it is expected that a person spends a lot of hours. Sponsors provide budget if the team spirit is related to their preferred image and if the team is successful. High retirements rate does not match with a successful image. Eddy Jordan brings spirit to the Jordan team: enthusiasm, charm, sense of humor, winning spirit, fast, hard work and a lot of fun. Compared to parenting teams, Jordan is small and efficient, but lacks a parenting company who provides them with the latest technology and multinational support. This formula worked until ’99, but when teams became more professional and required higher budgets, Jordan failed in obtaining long sponsor contracts. Media / TV stations who pay broadcasting fees. F1 GP organization that awards winning team with prices. Channel value chains Thousands of fans who visit F1 races at grand prix’s. Millions of fans who want to be part of the ‘Jordan spirit’ buys shirts, caps, etc. Sponsors (companies) of F1 teams. Customer Value chains Shops that sell Jordan merchandising. Millions of fans who watch F1 races at home. JordanGP value chain Strong connection Weak connection Most important Less important The value network of Jordan shows that Jordan is mainly focused on the channel and customer value chain and less focus on the supplier side. The supplier side is more important in order to achieve good racing results. The channel and customer value chain side is nice and glamorous, but is quite superficial and does not deliver results. PESTEL vs JordanGP

6. Impact on JordanGP Tabaco advertsements are being forbidden so may teams has to look for a new, global sponsor contract. Tabac sponsors are underpressure Politic Change from gas-guzzling image into high-tech pioneers and leaders in fighting climate change with a series of rule changes that would include a switch to smaller engines running on bio-fuel. Also to keep the F1 relevant for the automobile industry. change to ‘greener’ sport Environment Change from focus on engine power to high tech.machines with focus on e.g. engine power, weight, bio-fuel, downforce and safety. At full speed, downforce of two and a half times car’s weight can be achieved; principle is enough downforce to ‘drive on the ceiling’. From power to computer Technological Shifted from a European / Western focussed sport to a more international sport. New races are added e.g. Singapore (first night race in history) and India in 2010. From local to worldwide Social Formula one has grew is several years from a multi million business into a multi billion business and therefore ‘corporate politics’ as entered the racing sport. Turning millions into billions Economic More safety, environmental and advertisement regulations. The FIA worked to improve the sport's safety standards since that a driver lost his life in an accident. More focus on safety Legal JordanGP lost their sponsor. So poolitics forces them to look for new cash. Time and money not spend on R&D and testing. … again looking for cash Politic Jordan is an ‘enterpreneurial’ team. Jordan is in the Formula One for the Formula One racing fun. Large other teams are in the Formula One to gain ‘car’ knowledge for their core business. This does not apply for JordanGP. No push for ‘greener’ sport Environment JordanGP is facing fewer sponsor and lesser budget. This will negativily influence enginge development and testing results. Survive vs. improving Technological The change from a more or less European/Western sport to a world wide sport made the Formula One a sport for the multi-nationals who want to have an world wide exposure. This increases the budgets; lowers the possibility of entry of new teams and lowers the chances of survival of smaller teams. Globalisation kills entrepreneur Social The image of JordanGP is still ‘rebellious’ which can attract new companies but they have lesser cash or can attract multi nationals which would like to obtain a ‘rebel’ image. The performance / future of JordanGP is uncertain and causes problems when attraction global, multinationals. Uncertainty all over the place Economic As stated above JordanGP has lesser cash to do R&D which also negativily influences safety R&D. Besides this the ‘sponsor’ of JordanGP does not benefit from safety R&D (Renault does). No benefit for JordanGP in safety Legal The environmental changes of F1 influences the critical succesfactorsof F1 and the future performance of JordanGP. PESTEL vs JordanGP

10. Positive Negative JordanGP has to move from the ‘dead end’ to the ‘bullet proof’-scenario, as this is the most sustainable. Doing this directly is a “mission impossible” as it is too complicated. There are two ways to move to ‘bullet proof’; via ‘Put aside ego’ and via ‘personal branding EJ’. Eventually, if JordanGP wants to reach the bullet proof scenario, Eddy Jordan needs to step back, share power, be flexible, focus on the core business racing and commit to strong financial long term partners. Ferrari Future of JordanGP (after 2003) depends on the ability of bending a demaged image into a top racing image and the ability of changing a personal leaded team into a team with a structure which is not sensitive for succession problems. Future scenario’s of Jordan Scenario 1: ‘ Dead end ’ This represents the situation of JordanGP in 2003, which is a ‘dead end’ scenario. Because of the strong linkage between owner and brand, taking out the owner might damage the brand. Eddy Jordan is the brand. The brand value is also low as it is perceived as not very serious or sustainable. Scenario 2: ‘ Put aside ego’ This scenario shows the combination of a weak brand value and a weak linkage between brand name and the owner. This scenario displays what really happened with the Jordan team; JordanGP was taken over by Midland in 2005 (team still called Jordan) and in 2006, Eddy Jordan and the brand Jordan disappeared from the F1. Scenario 3: ‘ Personal branding Eddie Jordan ’ JordanGP can move into this box by improving Eddy Jordan's reputation. By improving Eddie Jordan reputation the brand value will be improved. Dependent on the dominancy displayed by the owner, succession will be less or more an issue. For Eddy Jordan, sharing power and put aside his ego, would be a difficult thing to do. Scenario 4: ‘ Bullet proof ’ This scenario decouples Eddie Jordan’s personal image from the brand name and creates an independent brand identity and is independent from any individual. On the long term, success cannot sustain without a strong brand value, because it attracts sponsors and needs some sort of independency regarding their leader if succession will not become a major problem. Strong Weak Williams JordanGP Linkage between brand and owner Mclaren (2007) Brand perception Armani IKEA Google Apple Mercury 1 3 2 4