Formula 1 Case - Bis model, Comp Advantages PDF

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The given case study presents an opportunity to discuss various strategic issues in Formula 1 Championship. In the presented four periods the interplay of managerial and commercial talent, technological and design advances, drivers’ and testers’ expertise and design as key success factors reflect the turbulent changes and elusive character of competitive advantages in this industry. In the first phase of McLaren and Honda dominance, the commercial and managerial acumen of Ron Dennis coupled with John Barnard technical talent plus two excellent drivers were of critical importance; in the second phase, the technological revolution touched upon the design and technical capabilities of the Williams cars that won the race. Ferrari re-emergence in the winner’s scene was based upon strong skills and talents of its leading driver (Schumacher), its technical focus on the integration of the constituent parts in the car and its commercial and technological arrangements with Shell. Back to the basics, the approach of doing the business was shaken by Dietrich Mateschitz, the entrepreneur and owner of Red Bull, who expanded revenue streams as he diversified the product line into more extreme sports. By ways of popularization, and marketing as well as “non-conformist” approach he created enough cash flow to invest heavily into the technological and design side of the business attracting first-class specialists and creating teams to win. The given historical perspective allows to see the importance of technology, capital and human resources in achieving the competitive advantage in focal firms, but the rapid change in the environment and in the companies internally confirms the validity of Barney’s framework where the inimitability is a factor of key importance and the hardest to achieve in the given circumstances. Be it a technological know-how or a commercial acumen or skills, the spreading of the best practices is rapid and allows for quick turnaround of winners and losers in the industry. Exactly the speed of changes and challenges calls for emergent approaches in formulating strategy of development whereas the deliberate component is always defined as gaining the highest score in two parts of the championship alike. Here, the apparent ambidexterity of the clear majority of teams in moto-racing sports is underpinned by their dynamic and sustaining capabilities. In terms of business models, various revenue streams speak of distinct value creation, configuration and capture possibilities. The split system of the Championship for drivers and constructors divides business models into two groups. For drivers and the sports part, most revenue come from television rights, promotion fees, advertising etc, where direct selling and affiliate marketing models for the sponsors (multinationals) or pure racing companies dominate; but sports expenditures per se could be higher than the revenues coming from the direct selling. For constructors, cooperation / alliance with auto manufacturers, testing and technical developments done for and in the racing are the basis of their revenue streams. The results of drives and technical data are translated to the manufacturers according to agreements and used in automotive production1.

1 Nowadays, the differences between the pure racing companies and those having multinationals as the backup for investments become more prominent....