Formula One: The racing companies
ABOUT FORMULA ONE
Formula One companies are the highest class of single-seat, open wheel, formula auto racing in the world as such car designers and manufacturers on the circuit work under continuous and intense pressure to design and race the fastest car. Thus, established during the year 1977 as Williams Grand Prix Engineering, Williams F1 is an independent organization that has won sixteen World Championships and is one of the sport’s most successful teams alongside Ferrari and McLaren, having achieved over 100 race victories and today, it is one of few wholly independent teams in the sport.
INTRODUCTION
The Formula 1 teams particularly, Williams and McLaren have invested great deal of money in building the infrastructure necessary to compete at the top of Formula 1. The investment in most of the teams runs to a minimum of $300m and in most cases considerably more as much of money has gone into wind tunnels. Thus, Ferrari believe FIA's latest rule proposals mean that large part of this investment will have no real value for the racing teams. They will be able to lease out the facilities to other people and thus get some return on the investment but they will not be using the facilities for what they were intended. It is true that too much money is wasted on unimportant things and it is true also that the automotive industry is now worried about the costs of turning the industry into environmentally-friendly one. It is also worried about the number of engineers who are available for the development of new environmental sound systems. F1 programs can be less important when one considers these things. The problem nowadays is that innovation is very hard because the rules are so restrictive and the value of new ideas has increased. The sport is hurtling towards day when rapid prototyping turns into rapid manufacturing. There is permanent off-track race to design new parts, to create them, to test them, and beyond that to come up with faster systems so that new ideas go from concept to racing car with the smallest possible delay. Car design only stands still because there has to be moment at which a car is built and raced. Perhaps the FIA should create structure to require the teams to make full financial disclosure about how budgets were spent and if there were any anomalies there could be investigations by accountants and lawyers versed in such matters, backed up by suitable administrative and civil punishments as necessary.
Source of Information: Strategies, philosophies and the use of power (updated, December 7, 2007, Available at: http://www.grandprix.com/)
DISCUSSIONS
1. Importance of specific resources
The importance of specific resources will determine crucial points and imply to such relevant information and knowledge assimilation used in understanding the case study pointing towards Formula One Companies namely: Ferrari, Honda, Williams and McLaren, these are car racing companies as they evolve from 1970’s up to this time and how such constructors do apply and utilize such ideal posits in support to such integration of resources being understood from such case situations and its underlying issues and assumptions for gaining strategic awareness and value found from within standards and principles behind these F1 companies in particular. These specific resources will bring about balance and coordination in such processes imperative to the case study situation and its general circulation, as there allows critical discussions of certain valuable points such as sustainable competitive advantage down to strategic fit that are deemed desirable and reliable for the F1 companies.
2. Competitive Advantage
Strategically, F1 companies may be distinguished from another by the fact it proposes products that have similar sources of competitive advantage. The companies in view here are Ferrari, Honda, Williams and McLaren within the essence of its competitive advantage these companies should and must define and elaborate profitable approach of the car racing industry.
For the Ferrari, upon their renaissance and glorious times, can possibly impose such better application of communication channels as good approach to utilize strategy in order to be successful in their car operations and Ferrari by then should be aware that changes do happen and that the competitive advantage that they have over others is that, Ferrari is focused and more inclined to research and development in which knowing how they can improve more on business through better market promotions and offerings.
Thus, Williams company in technological revolution in such action does possibly conceive innovative ways to manage its racing activities for instance and then, use modern technologies for promotion or online advertisements as possible and thus, requiring these racing companies to have better and desirable milieu of its competitive advantage. For example, the company can reduce cost of such car services by means of investing much on its communication approaches and by integrating enough service quality within such involved activities that may bring the process of good management and its system putting real source of competitive advantage that can be decisive on the part of F1 constructors. Thus, competitive advantage is born as technology at Williams discover is more efficient way to come into the car racing industry and put it into concrete basis as on top of their competitors.
Aside, for McLaren and Honda, in their dominance reality in racing industry as there can be signs of over-empowering roles within the management, it is important for them to adopt certain sources of their innovative value and substance in, modern application of technology for racing business, modification of racing demand such as in the US and Europe, changes in business environment and such strategic integration and present racing industry regulations into strategic force accumulation.
As matter of reality, the creation of competitive advantage within these F1 companies can be tough task and such maintenance of its strategic operations is much harder to act than to plan out. Ferrari company can utilize such competitive advantage through its hierarchy in lieu to technology ways obtaining high level of skills within the company as being related to continuous effort of modernizing and perfecting noting that company advantage is just susceptible of being preoccupied in such industry behavior by keeping and or changing their strategic options for such racing activity for example. Then, in creating better competitive advantage, McLaren and Honda as well as Williams will be required to progress, to innovate as well as to discover the best competitive opportunities and exploit each of them and that, these companies should not stop improving the quality of their services and its approaches to racing business. When the capacity is given to be strategically aggressive and to react well, the competitive advantage of these four companies do necessitate improvement into ideal policy of sustained investments in better business evolution, globally for the companies to succeed, there should be transformation from such local perspective down to global shift and focus of such advantage and make it sustainable along the way.
3. Sustainable Competitive Advantage
The search for sustainable competitive advantage has been the dominant theme in study of strategy for years. In such context, the concept of core competence is presented as good solution thus, permeating business such as those in F1 companies’ stance (Cited from, Collis and Montgomery, 1995; Prahalad and Hamel, 1990) within the understanding of the racing industry in complete nature and dynamics of Ferrari, Honda, Williams and McLaren strategy as applied in such ideals that:
The sustainable competitive advantage can be truly implying journey and not destination which is inescapable but never arrives. Sustainable competitive advantage only becomes meaningful when this journey is experienced. In moving competitive environments, the nature of journey itself keeps changing in an unpredictable fashion. The primary focus is on the existing resources which are treated as being largely static and unchanging. The problem can be that dynamic environments ceaselessly call for generation of resources as the context constantly shifts.
Thus, it is necessary to develop the competitive advantage and the resources of Ferrari being dynamic concept in rediscovering sustainable competitive advantage through exploring such business ways that make it happen. Ferrari has to focus on its existing resources in exploiting existing business opportunities and then, to develop generation of resources in order to sustain its competitiveness as determined by effectiveness of such strategic performance as achieved when there is sustainability and competitive advantage all in one good source of racing convenience.
Within context, Honda and McLaren for their sustainability assume meaning depending on the frame of reference through which it is viewed. For example, if McLaren is to protect its existing value added against its competitors then by being sustainable associate them having endurance and strength in its strategic drive. Thus, durability at Williams determines how long the competitive advantage can be sustained and put into consideration in terms of Williams company ability to compete and imitate through gaining access to the resources on which the competitive advantage is built. This can be considered in terms of mobility, referring to the extent to which resources can be transferred between competitors together with replicability which describes the ease with which resources can be copied by competitors. While the importance of strategies found at Honda, in protecting and exploiting such resource strengths cannot be underestimated, securing the long term future of an organization must consider how to derive unique areas of value added in the future.
Strategic advantage encompasses better perspective whereby it:
- provides F1 companies with the unique ability to develop strategic direction that creates new opportunities and shapes the future of its competitive environment
- represents the source of resource leadership in one or more product markets
The mindset at McLaren are being driven by particular technology such as those found in the car and chemical industries and in the many manufacturing plants which usually do not lend themselves to radical change and company’s aim should be to develop new resources that lead to new performance standards and hence the establishment of new business opportunities. While it can be argued that the resources at Ferrari are quite complex that there can be no staff substitutes, even unique resources are created by their people. It challenges the Ferrari company to direct their attention towards the substantive changes necessary for their future viability and to build these by developing new strengths.
4. Role of people and their contribution to the strategic performance of the organization
One way for organizations to become more innovative is to capitalize on the role of their people with certain ability to innovate and contribute into strategic performance cycles. As the key people around Williams as well as in McLaren and Honda can help to improve strategic performance in the racing business within the ability to generate ideas and use these as building blocks for better services and market related processes as there is presence of individual innovation that helps in attaining car racing success. In order to realize good flow of performance worth, the people at Williams company should be willing and able to strategically innovate into desirable management principle, continuous business schemes and learning in business operations. However, when and how creative ideas are implemented, there is crucial part of innovation process to be executed well at Ferrari and McLaren. In general, people in these F1 companies have powerful source of influence on racing business behaviour and attitude (Cited from, Yukl, 2002) within the process of applied creativity in action.
5. Key themes:
a. Complexity of Relationships
For the Ferrari in their glory years, there is no single measure concerning strategy development that determines the level of success in relation to the level of dynamics in the competitive environment.
Ideally, Williams and McLaren maintain balance in its complex relationships as shown within such key players of the industry into main dimensions of strategy development together with relationship dynamics in business communication and its underlying values as adopted.
Through complexity of relationship at Honda, it can be that such environment does exhibit just enough level of dynamics rather than static approach relating to such complexities in management and strategic decisions being made and it is necessary to take simple approach for example in racing promotions in order to ensure ideal strategic performance from building desirable relationships that may impose better change realism.
b. Dynamic Environments
Furthermore, such realization of acceptable relationship within Ferrari is necessary as change in the dynamics within business environments may require corresponding change in strategy capabilities with ample stage of dynamics in business structure, strategic processes and core values.
Aside, competitive environments are changing at Williams within accelerating rate, culminating in such level of uncertainty and growing uncertainty at Williams can possibly be the outcome of higher team expectations, in moving towards global competition. The level of dynamics at McLaren and Honda company environment increases, the development of strategies that will differentiate the team from its competitors becomes core factor of success so, parameters affecting strategy realization becomes the focus of such key business partnerships and collaborations.
c. Synergistic Potential
F1 companies assessment can be comprehensive process that begins when come together to develop statements of what the team should know and value such process (Cited from, Palomba, 2001, p. 13). To be effective, there needs for Ferrari to attain strategic evidence as generated in the ways Ferrari embraces competence and use strategic potentialities improve in the car racing business. Then, valuation of strategic potential at McLaren and Honda need to describe core competence into consistent picture of what success looks like for their team and how they will measure that success as a whole. Over the years, Williams’s company intended to focus on knowledge rather than great thinking skills for the staying power and influence in today’s epoch (Cited from, Diamond, 1998; Huba and Freed, 2000). In realization of portfolio, these F1 companies do develop clear notion of uncertain nature of business within strategic spirit and thus, portfolio of competence may serve as integral part of better operation process for monitoring stability and growth in the racing industry. At Ferrari, Honda, Williams and McLaren, there insures portfolio quality and provides valuable feedback to people as well as to the department and program as participation of stakeholders intensifies the nature of ideal advantage over F1 rivals and build the fact that such knowledge is amiably construed into a more useful competitive tactics being utilized. Thus, reviewing of portfolio engages meaningful dialogue within F1 teams and the management formation leading to strategic development of desired operations as possible.
d. Flexibility
Flexibility is imperative at all of the four racing companies as there demand faster response and variety of updated services and as competitors achieve levels of performance which was feasible into solving issues from within the team. More flexibility at Ferrari operations would mean ample ability to move with business needs, respond to competitive pressures and be closer to the racing industry market. Yet, flexibility is used by Williams and McLaren team to mean diverse things, there existed for assessing company flexibility needs, auditing also Honda’s flexibility capability in broad sense change involving enhancement of flexibility into its corporate business systems and there is need for those F1 companies to consider understanding such flexibility hierarchy as illustrated below.
The flexibility hierarchy
e. Innovation
The need for technological innovation is imperative at Ferrari, Honda, Williams and McLaren and that such major innovation is greatly improved such as at Ferrari and Williams and McLaren, they were making design varieties in their racing cars and when most of variations have been explored, business process will be centering on such ideal details like in specialization of technology process and at Honda, continuous innovation is essential to the business life cycle. Thus, these F1 companies can acquire certain key responsibilities there effective adaptation to innovative process and the integration of involved people within the company and such framework is considered below.
6. Strategic Fit
Strategic fit are truly adapted at F1 companies involving degree of consistency among certain competitive priorities and delivery system as amiably design for appropriate strategic operation (Cited from, Leong et al., 1990; Hill, 1994). There is need for management tools to be visible at Ferrari also at Williams and McLaren in order to help racing business to be more competitive driven and with such ideal outcomes and the need for Honda racing team to develop and represent better alternatives valuable for racing options in understanding the level of their strategic fit utilization respectively. Aside, there can be essential posits for Ferrari as well as McLaren development to execute better paradigms in giving assistance for strategy formation in ample service to customers, the people believing in their services as powerful if presented in precise indication to the industry. Then, it is easy to understand the position of Honda company as wishing to achieve strong fit in lieu to strategic action required to improve its position and for desirable position to be achieved. The F1 companies, for strategic process will represent how external and internal factors constrain some of the strategic choices they decide but may be limited in terms of strategic presentation.
CONCLUSION
Formula One companies may rely on budgeting system based on spreadsheets which was time consuming and cumbersome to use and update. In racing industry dominated by speed, when keeping up with the competition is critical, slow decision making do have serious impact on race performance. In conclusion, Ferrari, Honda, Williams and McLaren in their design project, budget limitations mean that careful consideration is vital when deciding on which areas of car design and testing to focus on, in order to generate the best results. Therefore, it can be that the innovation in budgeting and spending are welcome as innovative techniques for such promotional tools and communication materials. There utilizes the activity based costing model to set budgets and allocate spending for the different areas of car design and testing in order to make the most efficient investments.
Additional Analysis
Amicably, Enzo Ferrari, being one of the greatest technical director’ was devoted in serving F1 team particularly, Ferrari ways and because of his undying dedication and commitment to the racing business there evolves Enzo Ferrari project in his name as it include pinnacle of excellence drawing on the experience of victories in the last years of Formula 1 World Championship, and being endowed with automotive technology. Furthermore, Enzo Ferrari felt that the design of road cars should stem from the racers and believed that it was logical that the latest creation bear his name as outstanding expression of concept of extreme sports yet epitomizing advanced concepts of Formula 1 racing technology. Then, Ferrari set out to develop the Enzo as an integrated system designed for extreme performance, in which even the limits of performance achievable by the driver were enhanced.
Moreover, there was then the presence of John Barnard in the F1 picture as he began doing industrial design work for GEC, designing machines for making light bulbs as Barnard moved to McLaren as well as F1 World Championship-winning M23 and the Formula 5000 M25. Thus, becoming part of Ferrari, Barnard then, was able to dictate his terms to the Ferrari Company and from here he masterminded his next technical breakthrough which indicate semi-automatic gearbox. Soon afterwards he was lured to Benetton and established the Benetton Advanced Research Group at Godalming and designed the B191, which formed basis for 1994 World Championship-winning B194. Thus, being part of the huge F1 team family, McLaren became the dominant force within Formula One and when Barnard left McLaren for Ferrari his cars had won 31 Grands Prix for the team.
There was also the booming presence of Niki Lauda as his social status proved both nuisance and good fortune as Lauda became interested in motor racing not from attendance at events or boyhood idolization of racing heroes, but rather from an innate interest in automobiles dating to young age. Lauda did not hang around long after taking his third championship as second and final departure from F1 was typical of his whole approach to racing and to life - quick, with no frills and no glance over the shoulder. One moment he was flying his McLaren down the long straight. The next his front brakes had failed him and he was skittering into the runoff area and up against the wall. The next after that he was out of his car disappearing behind the barrier without a look back and with the next flight out on his mind.
One great driver of the F1 team was Ayrton Senna and believed to be acquainted to the F1 team as joined McLaren and Honda and won Formula One Championship despite driving inferior car, Senna won eight races and finished runner-up for the world title. Thus, switched to Williams F1 team, taking three poles but never finishing becoming concerned with the potential dangers of his sport, he helped to push for the organization of driver safety group. Senna was renowned for his qualifying skill, discipline along record breaking performance surpassed by F1 racer, Schumacher in the modern days. The skills prowess of Senna then resulted into new partnerships and technology emergence on positive track for delivering ideal outcomes in the F1 racing.
Speaking of technology and engine, Enzo Ferrari can be ideal example, being 12-cylinder aspirated unit in 65° V, cylinder capacity of 5,998 cc, with completely new design that draws on experience gained in Formula 1 and number of unique technical features. The con rods are made of titanium, the piston design is new, the crankshaft is lighter and the cylinder heads have four valves with high fluid dynamic efficiency, new structure to increase rigidity and different oil discharge layout. In spite of the large capacity of the engine, the applications derived most directly from Ferrari's Formula 1 experience have made it possible to keep the specific power of the engine. The use of CAE optimization methodologies was extended to the engine support frame and particularly to the distribution of thicknesses in the suspension casting.
Aside, certain WilliamsF1 BMW FW26 car represents the culmination of development at WilliamsF1 and numerous test circuits throughout Europe.
Then, team of designers, developers and aerodynamicists were charged by the Technical Director of WilliamsF1, creating step change in design philosophy of the F1 team. The primary application of the Alpha supercomputer's success is in Computational Fluid Dynamics (CFD) as CFD technology has become progressively more important to the efficiency of Formula One car design and the relative success of the teams. It is an intensely processor and memory hungry application.
NOTES
Jenkins, Mark. The Formula One constructors: Case Study. Pages 673-683
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Yukl, G. (2002), Leadership in Organizations, 5th ed., Prentice-Hall, Englewood Cliffs, NJ
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