C A S E T E A C H I N G N O T E S
The Formula 1 constructors: capabilities for
success
Mark Jenkins
1. Introduction
This case enables students to explore sources of competitive advantage using the context of
Formula One (F1) motorsport. The case highlights the ways in which four particular F1 teams
created situations of competitive dominance for a sustained period. It allows the students to
forward.
The introduction to the case describes the overall nature of Formula One motor-sport and its
origins in Europe after World War II. It identifies some of the central aspects of being an F1
constructor, such as the need to generate sponsor revenues through increasingly sophisticated
marketing strategies, and also the need to design, develop, manufacture and race open-wheel
This is followed by four accounts of sustained competitive advantage (here we define sustained
as three or more consecutive years of dominance) featuring McLaren in the late 1980s, Williams
in the mid-1990s, Ferrari from 19992004, and Red Bull Racing 20102012. Each account
explores the background to the constructor, from the formation of these entrepreneurial
2. Position of the case
This case can be used to explore the issues raised by the resource-based view of strategy. It
provides a basis for students to develop causal linkages between particular resources and their
effect on achieving competitive advantage. The context particularly emphasises the relative
3. Learning objectives
The overall learning objectives can be summarised as follows:
To understand that, although strategy can be seen as generic at a high level, it will always be
idiosyncratic at the organisational level, even where organisations are in the same industry
and all have the same goal. Therefore, strategic management has to focus on the
While highly complex and idiosyncratic resources are particularly difficult to imitate (e.g.
Ferrari) they are also difficult to manage and vulnerable to changes in the environment or a
loss in any of the elements.
Sustained advantage is often achieved through the linkages between resources rather than
the resources themselves (e.g. the way drivers link with the design engineers).
4. Teaching process
There are a number of different ways in which the case can be used. It works particularly well in
situations where the participants spend some time in group work before discussing the case,
such as on a MBA programme. The usual way to apply the case would be to allocate separate
syndicate groups to consider one of the four teams and their competitive advantage. A series of
questions are used to guide the way in which the students approach the case.
5. Questions for discussion
1. What do you need in order to succeed in Formula One?
6. Case analysis
This section offers a number of suggestions for discussing the above questions and exploring
related issues.
Relevant sections in Exploring Strategy are indicated in brackets.
1. What do you need in order to succeed in Formula One?
This question is intended to get the students to identify the generic model needed to succeed in
successful team?
2. Why you think your team was successful during this period?
We now move from the generic level of success to consider the specifics of each team. The
McLaren and Honda domination in the late 1980s
McLaren was successful because they were able to put together the best of everything. They
secured exclusive use of the Honda engine at a time when it was the most powerful and reliable;
they were also able to secure the services of the best drivers at the time (Senna and Prost). This
Williams and the technological revolution: the mid-1990s
Williams success was due to their engineering focus, which enabled them to take many of the
innovations developed by other teams and turn these into a car that was both fast and very
reliable. This engineering focus can be attributed to the long-standing partnership of Frank
Ferrari: the return to glory, 19992004
This account is in marked contrast to the Williams approach in that Ferrari based their resource
strategy primarily around driver Michael Schumacher. The usual conclusion here is that, it is all
down to Schumacher, but closer examination reveals this not to be the case. Although
Red Bull Racing: a new formula for success
One of the interesting aspects of the Red Bull story is that they took over one of the most
expensive and least successful F1 teams of all time Jaguar Racing. It is worth a discussion as
to what the class feels was different about the way Red Bull went about doing things.
A video of the RBR story is available at:
3. Why were they unable to sustain this success? What could they have done to sustain their
success further?
Here the students will focus on the reason why the advantage was removed. This also allows
them to consider whether or not anything could have been done to prevent this loss of
advantage.
McLaren and Honda domination in the late 1980s
The reasons for McLarens demise were very simple. Honda pulled out of Formula One. This in
turn broke the virtuous circle that attracted the best drivers, and Ayrton Senna moved to
Williams and the technological revolution: the mid-1990s
In the case of Williams, their advantage was eroded through a series of events: first the loss of
exclusive access to the Renault engine when Renault decided to provide engines to the Benetton
Ferrari: the return to glory, 19992004
While Ferrari was still the leading contender for the F1 Championship in 2005 and 2006, they
were unable to secure the title. This situation is perhaps less clear cut than the preceding
Renault just did it better. It is perhaps the best example of the difficultly of sustaining the best
competitive performances, even when the best people are still there and all the resources are in
place. It is also worth noting that Renaults performance was achieved with a far lower budget
than that enjoyed by Ferrari in 2005 and 2006.
It also raises an interesting question for debate is there really such a thing as a sustainable
competitive advantage?
Red Bull Racing: a new formula for success
Red Bull Racing is still in a successful position (as of 2013), but it is worth reflecting on what
might undermine their strong competitive advantage. There are two main issues here: the first is
where they could lose Adrian Newey to a competitor in that case how could they ensure that
The changing face of Formula 1
This final section is designed to be used to generate a discussion around the role of the external
environment or firm level capabilities in creating change and shifting the basis of competitive
advantage. In particular, the likelihood of the effect of the regulatory changes for 2014 suggest