Formula 1 Constructors

Introduction The statute ace World Championship was started in 1951 by private sportspersons. Today, linguistic rule One is the worlds biggest tug sports event and is arguably the second most popular sport in the world. It consists of ten aggroups, with two cars distributively, con mental testinging a 17- flight series. It involves two titles, the Drivers Championship and the Constructors Championship. Formula One today is a super pendent on engine room (Denison and Henderson, 2004). This condition will discuss the resources, capabilities and attributes ask by Formula One constructors.This article will in like manner analyse the causalitys for the ascendancy of different constructors during different full points, by using i of the methods of identifying militant proceeds. It will analyse the reasons behind their in major power to sustain their dominance and also suggest ways by which these constructors could establish sustained their matched reinforcement. A unbe nd fit is tell to take for hawkish emolument when it is implementing a value creating strategy non simultaneously being implemented by any current or potential competitors. (Barney, 199199) imaginativenesss, capabilities and attributes required by Formula One Resources burn d knowledge be classified as financial, physical, human, technical and organisational (Grant, 1991). The financial resources required by Formula One constructors atomic number 18 vast (close to $1 bn), the human resources required are a staff of around 450-800. They need highly qualified staff like race locomotive engineers, designers, aero high-poweredists, composite experts and system specialists. They require physical resources including their own testing and snap offment equipment like wind tunnels, test tracks and other equipment.They also need to constantly change their strategies to counter strategies of the other teams. All the teams and members need to operate as a cohesive unit. Based on Po rter (2004) we keister identify factors in-chief(postnominal) for war-ridden utility in the Formula One industry. Technology development is decisive to war-ridden favor in the racing industry. Technology development involves steps to improve the racing car in aspects like power, stability and drag. It involves steps like research, product design and servicing procedures.Human resource management is also key to warlike advantage in the racing industry. Human resource management involves activities like recruitment, training, and development of employees. In Formula One human resource management involves choosing the right drivers, engineers and designers who are expertds in their fields and also beneficial team players. It also involves training new drivers, engineers and designers and keeping them satisfied and motivated so that they dont leave and join other competitors. Firm infrastructure involves activities like general management, planning, finance and accounting.This can also be an important source of belligerent advantage as management and planning are decisive to success in the racing industry. Value linkages are also an important source of competitive advantage in the racing industry. Linkages can be both internal and outer. Internal linkages include co-ordination amongst several(a) de plane sectionments within the quick like the design team, racing team and the technical team. External linkages include co-operation and co-ordination with persona suppliers and sponsors(Porter, 2004). Attributes are qualities or skills possessed by constructors.Attributes include trust, congenerships, history and management structure within a firm (Barney, 1995). These skills relate to ways in which they do things. These skills and qualities are not considerably transferable, as they cannot be easily copied. These skills and qualities are generally authentic over a long period of time. Formula superstar constructors require attributes like friend ship, experience and flair for innovation. A firms capabilities are establish on the resources it has. Capability mode the ability of a firm to perform certain tasks base on the resources it has.Capability is created by the integration of galore(postnominal) key resources and attributes. Resources and attributes alone do not contribute to competitive advantage, but capabilities are a source of competitive advantage. The key resources of an organisation need to be identified, and capabilities, payable to a confederacy of particular resources that need to be identified. Capabilities involve efficient fundamental interaction between people and other resources. Formula One Constructors require engine manufacturing, car design and technological capabilities. Key capabilities are those that are not shared by the firms competitors.Strategy of an organisation has to be establish on its resources and key capabilities to growth a competitive advantage (Grant, 1991). For example, Ferrar i had the unique(p) capability of manufacturing engines, which its other competitors did not wee-wee. Hamel and Prahalad, (1990) describe key capabilities, which lead to competitive advantage as core competencies. Ferraris success in the mid 1970s Ferrari was the supreme Formula One Constructors Championship in the mid 1970s. Using one of the many approaches to determine competitive advantage, the reasons for Ferraris dominance can be identified.Some approaches to determine competitive advantage are explained below Porters (1980) five forces model help oneselfs to position a firm in the take up way to tackle competitors. This model helps in understanding the competition and formulating strategy accordingly. Carl Shapiros (1989) approach is based on making competitive firms act in unproductive ways. This conjecture can only be utilized where competitors are closely placed. Barneys (1995) resource based approach believes that competitive advantage is due to unique resources. T he capability of the firm is based on its unique resources.He suggests that it is important to understand the firms internal metiers and helplessnesses to understand how exactly competitive advantage can be gained. Barneys (1995) approach is based on SWOT (Strengths, weaknesses, Opportunities and Threats) analysis. Barneys (1995) approach implies that only those firms that example their internal authorisations to make drug abuse of the addressable opportunities gain competitive advantage. Strengths and weaknesses can be understood by 1. Continuously checking whether resources and capabilities of a firm help it in the changing environment. 2.Checking whether these capabilities and resources are unique to the firm. 3. Understanding if the resources and capabilities of the firm are difficult to imitate. 4. Checking if the firms processes make use of the resources and capabilities effectively. Teece (1997) suggests that moral force capabilities are a source of competitive advantag e. Dynamic refers to capacity to regenerate resources so as to achieve congruence with the changing business environment. (Teece et. al, 1997515). According to Teece (1997) dynamic capabilities of a firm depend on its processes, position and path.Processes mean the way things are done in the firm, position means the technology, assets and customer base the firm has, path means the ways available to the firm to do things. These dynamic capabilities of the firm lead to competitive advantage. Porter (2004) introduced the concept of value chain to determine competitive advantage. It was based on identifying the primary and secondary activities of the firm. Primary activities include activities like inbound logistics, operations, outbound logistics, marketing and gross sales and service.Secondary activities include firm infrastructure, human resource management, technology development and procurement. It then identifies and separates activities that are unique strengths of the firm in affinity to the competition. Spanos and Lioukas (2001) argue that Porters value chain is based on external factors of competition and ignores the crucial internal resources and capabilities of the firm. Rumelt (1984) also argues that strategy of a firm should be based on its unique resources and capabilities.McWilliams and Smart (1993) argue that Porters value chain theory lead managers the incorrectly way by suggesting to develop unique activities based on the resources, even though the activities may not be beneficial to the firm. From the various views it can be seen that Barneys (1995) approach, based on identifying and focusing on unique resources and capabilities, based on SWOT analysis, is more relevant in analysing competitive advantage in Formula One. Using SWOT analysis we can identify that one of the strengths of Ferrari was the use of portion know guidege as a source of competitive advantage.Component knowledge means skills, resources and knowledge related to particu lar split of a system. For example, in Formula One it means technical and design skills related to engine, chassis and gearbox. (Pinch et al, 2003). The Ferrari 12-cylinder engine and 312-T car was a result of component knowledge. In 1975, Ferrari designed a new car 312T, which had a wide low body, powerful 12-cylinder engine and a revolutionary transverse gearbox. All these improved the relaxation and handling of the car. 312T had a chassis, engine and gearbox combination, which could not be matched by the engine, gearbox combination of the competing cars(Johnson, G et. l, 2008). The component knowledge behind this engine and car could be easily understood, but could not be easily transferred because it was based on firm item component knowledge and because it didnt fit in with the systems of other manufacturers hence it was not used widely. The other strength that was the reason for Ferraris success was the use of architectural knowledge as a competitive advantage. Architectur al knowledge considers the whole system and the interaction between component knowledge of its various parts (Matusik and Hill, 1998).It is difficult to transfer architectural knowledge between organisations because it is distinct for each organisation and develops over time. The highly efficient practices introduced by Montezemolo were the architectural knowledge of Ferrari. Montezemola ensured that each team concentrated on a specific task, for example, chassis, gearbox, engine and suspension. This helped obviate conflicts and helped in getting a peachy car make. The system of having each team concentrating on a specific task to avoid conflicts was also a part of architectural knowledge of Ferrari.Architectural knowledge also helps in determining the ability of organisations to acquire new knowledge. (Zahra and George, 2002). Human resource management was other strength, which was a factor of competitive advantage in Ferraris success, as Montezemola recruited the right driver i n Nicki Lauda, who could communicate effectively with the technical team. some other of Ferraris strengths were the unique resources that it had, like its Maranello factory where it made its own engines and the test track in Fiorano, which is one of the most advanced and sophisticated test tracks in the world, which enabled it to test and develop cars.All these strengths were the reason for Ferraris dominance in the 1970s. McLarens domination in the late-1980s In September 1980 Dennis was appointed as the team principal. Dennis bought in Barnard as a car designer. Barnard had ideas of making the racing car chassis of carbon fibre, kinda of metal. Barnard left in 1986 but a lot of progress in car design had been made by then. By SWOT analysis we can identify the strengths of McLaren, which endowed it with competitive advantage. One of McLarens strengths during this period was the efficient and disciplined way in which the organisation was run.They prepared carefully for all the rac es. umpteen elements that contributed to McLarens success are still unknown. This is an example of architectural knowledge being used for competitive advantage. (Pinch et. al, 2003). Good human resource management can be seen to be another strength, which was the reason for McLarens success as McLaren had the right people for the job in Dennis and Barnard. Dennis had earnest managerial skills while Barnard had highly innovative design skills. Dennis, in turn, recruited the best drivers in Senna and Prost, who were crucial to McLarens success.Senna was tight and determined whereas Prost was fast and good at tactics. Another of McLarens strengths was the use of external linkages of value chain as a competitive advantage, by its collaboration with Honda for engines. All these strengths helped McLaren dominate F1 from 1988 to 1991. Williams success in the mid 1990s Williams developed on the ideas of show effect, carbon composite monocoque, semi-automatic gearbox and active suspensio n. Williams considered the driver to be only part of the system.Using SWOT analysis we can determine that one of the strengths of the Williams team can be attributed to use of bunch up train architectural knowledge as a source of competitive advantage. Cluster level architectural knowledge refers to knowledge shared by groups of organisations in a particular geographical area. Cluster level architectural knowledge also involves common ways of thinking and habits among organisations in the cluster. Hence it becomes difficult for organisations foreign the cluster to copy the technologies developed in the cluster.An example of cluster level architectural knowledge can be seen in UKs Motorsport Valley. Many technologies used in Formula One cars have been developed here, for example, the use of carbon composite materials, traction controls and active suspension systems (Henry and Pinch, 1999). Brown and Duguid (2001) argue that component knowledge is the cargo that is moved around on the rails of cluster level architectural knowledge. The terra firma effects technology was developed in Motorsport Valley and was first used by Lotus.The Williams team that was in the same area was the one that applied the ground effects technology efficiently. Thus, all the technologies developed in the Motorsport Valley were transferred to and adopted by Williams, this contributed crackingly to its success. (Pinch et. al, 2003). Thus it can be seen that Williams developed strong and unique capabilities in the designing of the car body, chassis and gearbox. Human resource management was another strength, which also acted as a source of competitive advantage. Frank Williams was the founder of Williams and he appointed Patrick Head as the skilful Director.The attributes of entrepreneurial energy and technical excellence helped them to succeed. Patrick Head appointed good drivers like Senna and Prost. Another strength of Williams was their external linkages. Their linkage with Rena ult helped them use the powerful and reliable Renault engine, which complemented their FW15 chassis. All these strengths that acted as sources of competitive advantage led to Williams domination from 1992 to 1994. Ferraris return to winning ways after 1999 Montezemela was brought back to Ferrari, as chief executive officer in 1992. He set up a new design department with 50 people.Ferraris focus shifted from engine to integration of main parts. The strengths of Ferrari, identified using SWOT analysis, was that value linkages (Porter, 2004), both outwardly and internally became a source of competitive advantage for Ferrari. Internal linkages were the co-operation between the departments manufacturing engine, chassis and the aerodynamics department. These were crucial in integrating all components of the car efficiently. External linkages were the collaboration with Bridgestone for making customised tyres for Ferrari and with Shell for financial and technical support.Another strength identified was good human resource management, which also acted as a competitive advantage by Ferraris appointment of Montezemela as chief executive and Schumacher as the driver. Ferrari recruited Schumacher in 1996, who was a great driver and motivator. He communicated well with the engine technicians. The core competency (Hamel and Prahalad, 1990) of Ferrari was the capability of manufacturing powerful engines. Since Ferrari manufactured its own engines they were able to integrate engine, chassis and aerodynamics early in the process. This was the most pregnant and unique strength of Ferrari.All these factors helped Ferrari win the constructors championship in 1999, after a gap of 12 years. Reasons for Ferrari, McLaren and the Williams teams not being able to sustain their success Using SWOT analysis we can see that one of the major weaknesses of Ferrari, due to which they could not sustain their success, was their lack of dynamic capabilities. Dynamic capabilities mean the abili ty of firms to adapt their competencies to the changing time and changing external environment. Ferrari needed the dynamic capability to create newer cars, which were more powerful, had better balance and had great aerodynamic properties.Penrose (1959) and Teece (1982) were the first to suggest that, to sustain competitive advantage, firms will need to utilise their firm specific capabilities and also develop new capabilities. Deeply ingrained ideas of architectural knowledge prevent the organisation from getting new knowledge. (Henderson and Clark, 1990). Another weakness of Ferrari was their strongly ingrained architectural knowledge that prevented them from initially accepting the ground effects technology, as it was concentrating only on engine design. (Pinch et. al, 2003). Lack of dynamic capabilities to adopt the ground ffects technology and bad human resource management that led to loss of Nicki Lauda from Ferrari, were major reasons due to which Ferrari was unable to view as its success after 1979. One of the weaknesses of McLaren, identified by SWOT analysis, due to which they were unable to advance their competitive advantage, was the pulling out of Honda from Formula One. McLaren were not prepared for this and did not have any other good engines to set back Honda. Thus the lack of ability to maintain external linkages as a source of competitive advantage was the one of the reasons for the failure of McLaren.The other significant weakness identified was their not continuing to use human resource management as a source of competitive advantage. The loss of Senna to Williams in 1993 was a big blow to McLaren and they had not developed any new drivers to replace him. The main weakness that was the reason for the decline of Williams was the use of technologies developed by them by other competitors, like Benetton. Their competitors easily replicated their component knowledge. Since their capabilities could be easily copied they could not maintain co mpetitive advantage in the long term.The death of Senna in an disaster left Williams without a good driver. Another weakness was the lack of dynamic capabilities that led to their not having a good replacement for Senna. Renaults decision to supply engines to Benetton also meant loss of competitive advantage. The inability of Williams to maintain external linkages as a source of competitive advantage was another weakness identified. The main weakness that was the reason for the decline of Ferrari after 2004 was they were not able to adapt their capabilities and external linkages to the changed rules.The strategies that could have been developed by each of these teams to further sustain their period of dominance. Spanos and Lioukas (2001) and Wenerfelt (1984) suggest that Porters value chain and the Resource based view are complementary and considering both together can help in sustaining competitive advantage. But from empirical studies conducted by Spanos and Lioukas (2001) it was found that focusing on unique resources and capabilities was more beneficial in sustaining competitive advantage than focusing unique activities in relation to competition.Thus it can be concluded that it is important to consider both your firm specific unique resources and capabilities and to develop activities that are unique in relation to competition in developing strategy, to sustain competitive advantage. Capabilities that are not easily transferable, that cannot be easily copied, that are not transparent and those that last a long time act as significant sources of long-term competitive advantage (Grant, 1991). Walker, (2007), suggests that to sustain competitive advantage a firm must use tactics of offence and defence.Offence involves working towards dominating the competition and defence involves taking steps to maintain the dominant allele position. Ferrari could have continued their dominance from the 1970s if they had used opportunities identified using SWOT analysis to develop dynamic capabilities to adopt new technologies like ground effects and to recruit other good drivers to replace Nicki Lauda. Miller (2003) suggests that the differences between firms are a source of sustained competitive advantage.Hence it can be said since from all the racing constructors only Ferrari made their own engines and other parts, they could integrate the parts much better. This was another opportunity for Ferrari to use this capability as a long-term competitive advantage and helped extend their period of dominance. McLaren could have used opportunities identified to maintain external linkages as a source of competitive advantage by persuading Honda against quitting Formula One or by developing other external linkages for supplying engines, as a replacement for Honda. They needed to develop dynamic capabilities to have good alternative drivers for Senna.Teece et. al (1997) suggests that competitive advantage can be sustained by improving efficiency. Hence, consi dering this theory McLaren could sustain their competitive advantage by improving their efficiencies continuously. Williams could have used the opportunities identified to develop strong architectural knowledge, which would not have been easily replicated by their competitors. The fact that all new technologies like ground effect, active suspension and semi-automatic gearbox were first developed by Williams was the differentiating factor from other racing constructors.Hence by Miller (2003)s theory Williams needed to use that capability to sustain their competitive advantage. They needed to develop their innovative capabilities in a way that they could not be easily copied. They also needed to develop dynamic capabilities, in monetary value of other drivers, so that they had a replacement for Senna. To sustain competitive advantage after 2004, Ferrari needed to have dynamic capabilities, which would help adapt their capabilities to the new rules. ConclusionFrom the study of the per iods of dominance of various Formula One constructors, it can be concluded that each of the constructors had individual strengths, which they could have used as their core competencies and developed dynamic capabilities to be ahead of the competition. They need to focus on their unique resources, capabilities and develop unique activities, in relation to the competition, to gain competitive advantage. Success in Formula One is dependent on a flesh of factors like the cars, the drivers, the management etc. Hence the constructors need to continuously improve their cars and retain their good drivers, to succeed.