Trategic Management Ferrari - Case Study Example

trategic Management Cae trategic Management Cae Ferrari i a myth and a legend in the automotive indutry. The Ferrari tale i one of an atounding and unique worldwide ucce.An unparalleled one. Ferrari ucce cannot be meaured in term of revenue and ale, or in term of market capitalization. Ferrari never made an IPO an i not even quoted in any tock exchange market. Ferrari ucce ha to be meaured only in term of Brand Value and Product Value. Probably the Ferrari brand i worth more than the Google brand, the Apple brand, Nike, GE, IBM, BMW, Mercede, Exxon, hell, or any other brand.No other brand ha the allure of the Ferrari Brand. Ferrari i known and i highly valued everywhere in the world. From the U to Japan, from Germany and witzerland to India, to France, Autralia, New Zealand, Ruia, Brazil and Argentina. The term 'Contructor' applie in F1 for a corporate or any well-organized body which contruct the car, engine or chai. The contructor of an engine or chai own the intellectual right to it. (Porter, 1985, 44) The title of Formula 1 World Champion Contructor i given to the car that ha drawn the mot point during the coure of the eaon. A car' engine and chai, both are taken into account while deciding on it point. If a car' chai and engine contructor i the ame, the title imply goe to that contructor. But, if the maker of the chai and engine are different, the title i given jointly, like Ferrari-Honda, Renault-Mercede etc. The name of the chai contructor come before that of the engine contructor. The term 'contructor' and 'entrant' have different and pecific meaning. An entrant i the peron or corporate entity that regiter a car and driver for a race eaon. Thereafter the reponibility of preparing and maintaining that car during the race weekend lie with them. The term 'team' i uually applied to an entrant organization. A team need not be a contructor. It could ource it engine and chai from the companie which manufacture it. Ferrari' ucce in the Mid-1970 In 1970 Jacky Ickx rejoined the team and won the Autrian, the Canadian and the Mexican Grand Prix to become econd in the driver championhip. The 1970 were the lat decade Ferrari entered a a work effort in port car racing. After an uninpired performance in the 1973 F1 World Championhip, Enzo Ferrari topped all development of port car in prototype and GT racing at the end of the year, although, Enzo planned to pull out of F1, that year which wa the year of the lat "official" Targa Florio road race Enzo regarded a more important to him. After three poor year, Ferrari igned Niki Lauda in 1974, and made the momentou deciion to pull out of portcar racing to concentrate upon F1. However, poor reliability with the 312B3 kept them from taking victory that year. The new Ferrari 312T, developed fully with Niki Lauda, introduced in 1975 brought Ferrari back to winning way. Niki taking the driver' crown and Ferrari the contructor'. (Mazzucato, 2002, 55-88) In 1976 Lauda crahed at the German Grand Prix. Carlo Reutemann wa hired a a replacement, o with Clay Regazzoni driving the other car, Ferrari had to run three car in the 1976 Italian Grand Prix when Lauda returned unexpectedly oon (only 6 week after hi accident). Lauda cored point, but retired from the lat race in Japan in heavy rain, thu allowing Jame Hunt to take the title by jut a ingle point. In 1977 Lauda, having come back from hi near fatal crah the previou year, took the title again for Ferrari (and the team won the cotrucutor' championhip), overcoming hi more fancied, and favoured, team mate. Hi relation with the team, epecially the team manager Mauro Forghieri continued to deteriorate, and he decided finally to leave for Brabham. (Mazzucato, 2002, 55-88) In 1978, Ferrari raced with Carlo Reutemann and Gille Villeneuve, and while they managed to produce a olid car it, like everyone that year, wa outclaed by the ground effect Lotu 79. (Mazzucato, 2002, 55-88) Jody checkter replacing the Lotu bound Argentinian in 1979, took the title, upported by Gille Villeneuve (who dutifully followed the outh African home at Monza, having been ordered to do o), won the lat World Driver' Championhip in a Ferrari until Michael chumacher many year later. The car wa a compromie ground effect deign due to the configuration of the Ferrari wide angle V12, which wa overtaken in due coure by the extremely ucceful William FW07, but not before racking up the neceary point to take both title that year. Mclaren' Domination In The Late-1980 Equipped with Honda power and the driving trength of Prot and Ayrton enna for 1988, McLaren dominated the eaon, winning all but one race. enna won hi firt world championhip after a eaon-long battle with Prot. enna won hi third and final world championhip for McLaren in 1991. The current McLaren F1 team reulted from a merger of the McLaren team and Ron Denni' peronal Formula 2 team, called Project Four Racing, in 1980. Project Four wa alo backed by Marlboro, and had deigner John Barnard and an innovative carbon-fibre F1 chai deign but no money and inadequate facilitie for F1; McLaren had the facilitie but were at the end of a long loing treak. John Hogan, a Philip Morri executive, forced McLaren chairman Teddy Mayer to accept the merger with Denni' team. Thi wa in effect a revere takeover with the Formula One contructor becoming McLaren International. (Mintzberg , Quinn and Ghohal, 2002, 111-134) In 1981 Denni and hi buine partner bought out the other McLaren hareholder, Mayer and Tyler Alexander. In 1983 Denni peruaded then William backer, Manour Ojjeh to become a partner in McLaren International. Ojjeh inveted in Porche built turbocharged engine which carried the name of hi company, Technique d'Avant Garde (TAG). The nomenclature for McLaren' F1 car ince the merger ha caued ome confuion among fan of the port, a all McLaren car ince 1981 have carried deignation of the form "MP4/x", or ince 2001 "MP4-x", where x i the generation of the chai (e.g. MP4/1, MP4-22). In fact, "MP4" tood initially for "Marlboro Project After loing the previou two Contructor title to William in 1986 and 1987, McLaren wa able to convince Honda to witch it backing from William tarting in 1988. The McLaren-Honda MP4/4 won an amazing 15 of 16 race that year and leading all but 27 lap, achieving a taggering and unbeaten record to thi date. (enna had been leading comfortably at Monza, but collided with back-marker Jean-Loui chleer' William.) Ayrton enna took the driver' title that eaon, hi firt with the Woking marque. (Mintzberg , Quinn and Ghohal, 2002, 111-134) The next year, uing a new 3.5L naturally-apirated engine deigned by Honda, McLaren again won both title with the McLaren MP4/5, with Alain Prot clinching it at the Japanee Grand Prix after a highly controverial colliion with hi teammate enna. Thi wa the culmination of a vitriolic feud between the two men. Believing that Honda and Ron Denni viewed enna a the future of the team, Prot announced on July 1989 that he would not reign with the team. By uzuka, the Brazilian had two car and 20 people around him, while the Frenchman had one car with maybe four or five mechanic. In upport of enna, who had finihed the race firt but wa ubequently diqualified, McLaren appealed unuccefully. (Mintzberg , Quinn and Ghohal, 2002, 111-134) Alain Prot left to join the Ferrari team in 1990. Neverthele, McLaren continued to top Formula One for the next two eaon. Depite tiff challenge from Prot' Ferrari and Nigel Manell' William, enna won the World Driver' Championhip in 1990 and 1991, repectively, uing the MP4/6 V12. McLaren alo won the contructor title in both of thoe year. New teammate Gerhard Berger helped to enure thi double ucce and the McLaren driver often played prank on each other to lighten the atmophere. William' ucce in the mid-1990 In 1990, William kept Patree and Bouten a the team' driver. Although Patree won the an Marino Grand Prix and Bouten won pole poition and the race at the Hungarian Grand Prix, the team cored 30 fewer point than the previou year and finihed the contructor' championhip two poition lower, in fourth. In the driver' championhip, Bouten finihed ixth with 34 point and Patree eventh with 23 point. 1991 Britih Grand Prix: Nigel Manell give Ayrton enna a lift back to the Paddock at ilvertone. enna had run out of fuel and Manell won the race. Bouten left William and joined Ligier at the tart of 1991. Hi replacement wa Britain' Nigel Manell; William alo recruited future 1996 world champion, Damon Hill, a one of their new tet driver. William failed to finih in the firt Grand Prix of the eaon at Phoenix, both driver retiring with gearbox problem. Patree got back on track for the team in the next Grand Prix at Interlago, coming econd behind McLaren' Ayrton enna. The 1991 an Marino Grand Prix aw both car retiring again: Manell after a colliion and Patree with an electrical failure after 17 lap. The Grand Prix at Monaco aw Manell finally finih in a point-coring poition, coming econd, 18 econd behind race winner Ayrton enna. Two Grand Prix later in Mexico, William got their econd one-two with the Renault engine, Patree finihing ahead of Manell to core 16 point for the William team. William then had two conecutive victorie, with Manell winning the French Grand Prix, five econd ahead of Alain Prot' Ferrari. Manell then won again at the Britih Grand Prix; it had been four year ince a Briton had won the grand prix, Manell having won it in 1987. Three conecutive victorie became four when Manell won again in 1991, Patree wa about 10 econd behind him in econd place. enna ended William' run of victorie by winning in Hungary, finihing five econd ahead of Nigel Manell. Manell later won the Italian Grand Prix and the panih Grand Prix, while Patree won the Portuguee Grand Prix after Manell' race wa ruined by a botched pittop in which only three wheel nut were fitted. William finihed econd in the contructor' championhip, coring 125 point in total, 14 point behind McLaren. Manell finihed econd in the driver' championhip, coring 72 point, 24 point behind enna. (Mintzberg , Quinn and Ghohal, 2002, 111-134) The William FW14B of Nigel Manell, which wa ued for the 1992 eaon. The team won the contructor' championhip that year, and Manell won the driver' championhip From 1994 to 1997 the car ran in the highly ditinctive blue and white Rothman livery, widely regarded a one of F1' mot popular colour cheme. William ecured the igning of enna in 1994. Given thi wa the ame team that had won the previou two World Championhip with vatly uperior car, enna wa a natural and preumptive pre-eaon title favorite, with econd-year driver Damon Hill intended to play the upporting role. Between them, Prot, enna, and Hill had won all but one race, which wa taken by Benetton' Michael chumacher. Pre-eaon teting howed the car had peed but it wa difficult to drive. The FIA had banned electronic driver aid, uch a active upenion, traction control and AB, to make the port more "human". It wa thee technological advancement that the William chai' of the previou year had been built around. With their removal in '94 William had not been a good-handling car, a oberved by other F1 driver, having been een to be very looe at the rear. enna himelf had made numerou (politically careful) comment that the William FW16 had ome quirk which needed to be ironed out. It wa obviou that the FW16, after the regulation change banning active upenion and traction control, exhibited none of the uperiority of the FW15C and FW14B car that had preceded it. The urprie of teting wa Benetton-Ford which wa le powerful but more nimble than the William. The firt four round were won by Michael chumacher in the Benetton-Ford. enna took pole in the firt three race but finihed none of them, mot infamouly at Imola after a fatal crah at the firt corner after completing five lap, thi day wa decribed by many a "F1' darket day".(Mintzberg , Quinn and Ghohal, 2002, 111-134) For 1996, William clearly had the quicket and mot reliable car. Coulthard had left William to join Mika Hkkinen at McLaren, William replaced the cotman with Canadian Jacque Villeneuve, while Hill remained with the team. chumacher left Benetton to join Ferrari. William won the firt five Grand Prix, Hill winning all but one of them. Olivier Pani would take victory at the ixth round in Monaco after eriouly wet condition forced both William car to retire. Hill would retire for the econd time in a row after he pun off in pain, while hi team mate, Villeneuve, took third place. Hill and Villeneuve dominated the next Grand Prix in Canada, with a 1-2 in qualifying and a 1-2 in the race. William made it a econd 1-2 after Hill won the French Grand Prix. Villeneuve won hi econd race in F1 at ilvertone after Hill retired with a wheel bearing failure on lap 26. The Brit would be victoriou in the next Grand Prix in Germany while Villeneuve would win the race after that in Hungary. chumacher' Ferrari would then take the next two Grand Prix at pa-Francorchamp and Monza. Villeneuve mounted a title challenge going into the final race of the eaon at Japan, but Hill reaerted hi dominance to take the race and the 1996 title, while Villeneuve lot a wheel and retired. (Mintzberg , Quinn and Ghohal, 2002, 111-134) William' dominance wa uch that they had clinched the contructor' championhip and only their driver had a mathematical chance of taking the title, everal race before the eaon concluded. Around that time, Frank William announced that Hill would not be re-igned after hi contract expired, depite Hill' uccee and eventual driver' championhip, o he joined Arrow for 1997. Alo, Adrian Newey had ambition to ucceed Patrick Head a technical director, but thi wa blocked a Head wa a founder and hareholder of the team. McLaren lured Newey away, though he wa forced to take gardening leave for the 1997 eaon. For what would be the final eaon of William-Renault and a car deigned with Newey' input, Frank William brought in German Heinz-Harald Frentzen, under the impreion that he could perform better than Hill. Frentzen, however, proved to be a diappointment and won only one race in hi two year pell at William, which wa at 1997 an Marino Grand Prix. Jacque Villeneuve won even race during the eaon, with hi main rival, Michael chumacher of a reurgent Ferrari, winning five. William alo achieved the 100 race win miltone at the Britih Grand Prix. Coming to the final round of the eaon at Jerez, chumacher lead the Canadian by 1 point, however on lap 48, chumacher and Villeneuve collided. chumacher wa diqualified from econd place in the championhip a the accident wa deemed by the FIA a "avoidable", William won the contructor title for the econd time in a row, coring 123 point, while Jacque Villeneuve won the driver' championhip by three point to Michael chumacher, who kept hi point total depite being removed from econd place, with William team-mate Frentzen a further thirty ix point behind. (Mintzberg , Quinn and Ghohal, 2002, 111-134) Ferrari' Return To Winning Way After 1999 Ferrari ended the 20th century with it ixth conecutive year of growth and conolidation, reflected in a total number of 3775 car delivered to cutomer. ince 1993, Ferrari ha een a trong and conitent upward trend in ale and from January 2000, with the addition of Qatar, it i now repreented in 43 market worldwide. The 4% ale growth in 1999 (v 1998 ) wa due in part to the launch of the all-new and highly ucceful Ferrari 360 Modena. In the pring of 1999, the 360 Modena replaced the F355, the bet ever elling Ferrari model of all time. A total of 1418 360 Modena were produced lat year and currently there i a waiting lit around the world. The 8-cylinder 1999 deliverie to cutomer wa 2667 (F355 and 360 Modena) while the 12-cylinder 550 Maranello and 456 M accounted for the remaining 30%. Depite the economic problem in the Far Eat, Ferrari bucked the trend with only a light decreae (-4.5%), but Japan managed to increae deliverie to 263 car, while Autralia performed extremely well with 73 car. However outh America alo experienced economy problem and 56 car were delivered in 1999. Elewhere around the world, in the UA - Ferrari' larget market - ale were up by 22% with 1003 car delivered to cutomer in 1999. Germany, the econd tronget Ferrari market aw 620 car, while the UK aw a 1.3% growth with 453 car and Italy cloed the year with 374 deliverie to cutomer. Other growth area for Ferrari included witzerland up by 2.3% to 219 car while the Middle Eat, which aw a remarkable year in 1999 with a 24% increae (67 car). Why were the Ferrari, McLaren and the William' team unable to utain thi ucce Ferrari 2005 aw a change of fortune for the previouly dominant Ferrari. The team' practice of tarting a new eaon with a modified verion of the previou year' car (F2004M) pending full development of their new car (F2005) wa one of the main caue for a poor tart to the eaon. While thi worked well in previou year, it eem Ferrari underetimated both the full effect of the new 2005 regulation and the pace of development of other team (particularly McLaren and Renault who tarted the year with brand new car). Alarmed by poor performance in Autralia and Malayia the new F2005 wa ruhed into ervice in Bahrain (the introduction wa previouly cheduled to be race 5 in Barcelona). Thi move aw chumacher retire for the firt time due to mechanical failure ince Hockenheim 2001 ending a run of 59 Grand Prix without technical failure. Another factor wa the poor relative performance of the team' Bridgetone tyre, which failed to give performance for ingle lap qualifying and were not a durable a their Michelin rival during race. However, the tyre provided for an Marino Grand Prix were more competitive, and the Bridgetone tyre upplied for the United tate Grand Prix allowed the three Bridgetone team to race, while the even Michelin team were forced to retire due to Michelin' advice that the tyre would not lat the race ditance. Near the end of the 2005 eaon, Ruben Barrichello announced that he wa leaving the team at the end of the year and joining the Honda F1 team. Barrichello' departure wa partly due to hi diatifaction with hi continued "Number 2" tatu at Ferrari. At the 2005 Monte Carlo Grand Prix chumacher forced hi way pat Barrichello (on a track where overtaking i highly difficult and dangerou) near the end of the race. Thi only netted the German one extra point during a eaon where Ferrari were uncompetitive. Ferrari named former auber-Petrona driver Felipe Maa a Barrichello' replacement for the following eaon. McLaren' Beginning in 1992, McLaren' dominance began to be eroded by the acendant Renault-powered William, a drop in form that wa compounded by the departure of Honda from Formula One at the end of that eaon. McLaren witched to cutomer Ford engine for the 1993 eaon. While thee proved competitive in the hand of enna, American Michael Andretti' eaon wa a diater, coring only a handful of point. He wa replaced before the end of the year by Finnih youngter Mika Hkkinen. enna had played a game of brinkmanhip with Denni over hi contract at the tart of the eaon, but a it became obviou that the MP4/8 wa competitive he agreed to complete the eaon. During 1993 McLaren experimented with a Lamborghini V12 which enna reckoned wa worth racing; Denni choe a work deal with Peugeot intead, Lamborghini' owner Chryler pulled the plug on the F1 programme and enna departed for William at the end of the eaon after winning the final two race of the year. Concluding the eaon on a high, McLaren announced they were to begin a challenge for the land peed record. However, a reult began to decline in the following eaon the plan wa quietly helved. For 1994 Martin Brundle joined Hkkinen in new Peugeot-powered car. The reult and the engine were unimpreive, and Peugeot wa dropped after a ingle year in favour of the promiing new Mercede-Benz (Ilmor) engine. But 1995 wa even wore, with the radical MP4/10 proving to be too heavy and low. Former world-champion Nigel Manell came to the team, but had a torrid time - he wa unable to fit into the car at firt-and retired after jut two race with Mark Blundell taking hi place. 1996 wa the end of an era for McLaren, a they parted company with long-term ponor Marlboro, and the famou red and white McLaren livery diappeared from Formula One to be replaced with Reemtma' Wet branding and a ilver Mercede livery in 1997. (Bower and Gilbert, 2005, 55-99) William' Team After 1997, the team were unable to maintain their dominance in Formula 1 a Renault ended their full time involvement in Formula 1, and Adrian Newey moved to rival team McLaren. William then had to pay for Mecachrome engine, which were old; rebadged Renault engine. Both thee meant that the car not only featured a very imilar aerodynamic package to their 1997 car, but alo virtually the ame engine, leading to ome to comment that they ran what wa virtually the ame car, adjut for the 1998 regulation. There were change on the ponorhip front however a Rothman opted to promote their Winfield brand, which ended the popular blue and white livery. For 1998, William kept the two driver from the previou eaon. While Ferrari and McLaren battled for the contructor' and driver' title, William fell to the mid of the field. The team won no race and took 3 podium during the eaon, with Frentzen finihing in third at the firt round in Autralia and Villeneuve finihing third in Germany and Hungary. William finihed third in the contructor championhip, coring 38 point, while Villeneuve finihed fifth in the driver' championhip with 21 point and hi German team mate, Frentzen, finihed 4 point behind him in eventh. (Bower and Gilbert, 2005, 55-99) In 1999, William employed a completely new driver line up, Villeneuve moved to new team, BAR and Frentzen moved to Jordan. William brought in German Ralf chumacher and Italian Alex Zanardi. The team managed three podium, all cored by Ralf chumacher, with third place in Autralia and Britain, along with a econd place in Italy. The team finihed fifth in the contructor' championhip, the lowet finih for William in the 1990; the team finihed behind tewart and Jordan; coring 35 point (all by chumacher), 3 le than the previou (Bower and Gilbert, 2005, 55-99) Reference Porter M E, (2005) Competitive Advantage, Chapter 2 and 3. Mazzucato M (ed) trategy for Buine: A Reader, age, 2002. Mintzberg H, Lampel J, Quinn J B and Ghohal , The trategy Proce Global Edition, Concept Context Cae, Fourth Edition, Prentice Hall, 2002. Mintzberg H, Quinn J B and Ghohal , The trategy Proce, Revied European Edition, Prentice Hall, 1998. 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Tampoe M, "Exploiting the core competence of your organiation", Long Range Planning, Vol 27, No 4, 1994, pp 66-77. Teece D, Piarri G and huen, "Dynamic capabilitie and trategic management", trategic Management Journal, Vol 18, No 7, 1997, pp 509-33. Wernerfelt B, "A reource-baed view of the firm", trategic Management Journal, Vol 5, No 2, 1984, pp 171-80. Bower J and Gilbert C (ed) From Reource Allocation to trategy, Oxford: Oxford Univerity Pre, 2005. Helfat C E, Finkeltein , Mitchell W, Peteraf M A, ingh H, Teece D J and Winter G, Dynamic Capabilitie: Undertanding trategic Change in Organization, Oxford: Blackwell, 2007. Penroe E T, The Theory of the Growth of the Firm, New York: John Wiley & on, 1959. Read More