F1 race in Beijing, China is one of the popular businesses. It is gaining its popularity day by day. Business houses involved in this kind of deals, earn revenue of over $1 billion. Starting from car manufactures to the drivers, many people are part of this business. This business may look lucrative and entertaining; however there are certain kinds of risk in it. Henceforth, the strategic management of F1 racing should be planned accordingly.
What do you mean by Strategy?
Strategy means something which is planned or designed in order to achieve a long term goal. It is changed and improved depending on a company’s products and services from time to time.
The strategies followed for motor racing vary from the other type of businesses. Companies who are involved in this type of business focus only on one point that is winning. If a company fails to improve on its strategies then it is quite obvious that its competitors will overpower them.
Strategic management is a process which is used by a company in order to analyze the performances and resources of the internal as well as the external environments. This management process helps to evaluate an organization’s mission, goals, and objectives, polices and plans taking a company’s resources in consideration. In case of F1 race in Beijing, China, the strategic management will center on one particular point that is winning of the race. However, winning has two sides – it is associated with success as well risk took. The risk part is mostly associated with the driver’s life who is involved in this type of motor racing. At times it can also lead to death due to car accidents.
Strategic Management Tools play a very important role for the overall development F1 Racing. Some of the tools which can be used are listed below:
- Porter's Five Forces tool – this is a tool which helps to analyze an organization’s present position according to the market conditions. This is basically a simple tool. F1 racing is all about speed. By applying this tool, the company dealing with motor racing gets an idea which helps to understand a company’s strengths. At the same time, it also allows an individual company to analyze its current competitor’s strengths. There is not one particular business house who is involved in this business. No competitor can be taken lightly. Each day new cars are coming with better mileage, speed and such other things. To stay in the top slot in the case of F1 racing business, understanding the present position and developing a company’s goals and objectives is very important. Porter's Five Forces tool helps to improve a company’s weakness as well. This tool stops a company from taking any kind of wrong steps. By applying this tool, a company can get a fair idea about whether introduction of new type of racing cars will make profit for the company or not. At the same time, companies can also think of new ways to deal with the challenges of racing business. Porter's Five Forces tool is based on five forces which are explained as follows:
- Supplier Power: This helps to assess whether it is an easy process for the suppliers to drive up the prices or not. This factor revolves around by the number of suppliers, their products and services as well as their control over the F1 racing.
- Buyer Power: This revolves around the buyer’s way to drive down the prices. A company should remember that each single buyer is important for them. If a buyer stops buying the cars or the petrol from one particular company and moves on to some other company, it may be counted as a drawback. The less number of buyers for a company, it becomes quite obvious the buyer will try to dominate the company.
- Competitive Rivalry: Each day new people are getting attached with the racing business. They are ready to invest huge amount money and there are good revenues in return. Therefore, one the company involved with F1 racing in Beijing, China should be well aware of the competitor’s strength and capabilities. If there are more competitors for a particular company who present same type of products and services, then it becomes difficult for the concerned organization to exist. Competitors play a very important role, hence they should be considered seriously.
- Threat of Substitution: A company must make sure that whatever product or services it presents should not have any kind of substitute in the market. In terms of F1 racing, two things that play a very important role are the cars and the drivers. It may happen that a car has gives superb mileage but the person driving it may not be that capable to handle it. Here other substitutes (drivers) may take the lead. If substitutes are available easily, then it weakens a company’s position.
- Threat of New Entry: Entry of new companies investing in cars can be threatening for an organization that is already in this business for a long time. Even new drivers can be threat for the old ones.
- The PESTLE analysis is another tool of strategic management. It analyses an organization’s present position in context to the external environment. PESTAL stands for Political, Economic, Social, Technological, Legal and other Environmental factors. It centers on covering all these areas. F1 racing business is something that is known to the whole world. China has been in this type of business from very early days. Motor car racing is evolving each day as new technology is coming up. For companies as well as for the drivers to stay in this business, updating themselves with the new techniques is very important. To earn good revenue, investors also have to invest in the business. There are some companies who provide subsidy for the some cars, hence this also play a major role. Countries which are involved with F1 racing business, its political condition also matters a lot. Drivers who do not have proper license should not be made part of this business as it can increase the level of accidents. At the same time, it is illegal too. Environmental condition of the place where the F1 racing is being held also is very important. Places where it is too hot climate, hosting this kind of event there becomes a loss. This is because; drivers face a lot of problem driving the cars as they have to wear helmets, gloves and other accessories. Hot weather can cause too much sweating which may result in disturbance while driving. F1 racing is not only about money and glamour; there are other things which also come in to play.
Key Benefits of Strategic Management in F1 Racing are as follows:
- Strategic Management emphasize on developing business objectives. Therefore management team of a car company tries to develop objective based goals and tries to fulfill it by the scheduled time period. Their main aim is to sell cars as much as they can. People who invest money in car racing must do a proper research before investing in the business. Drivers who have a good record of winning are mostly wanted by every company. However, it may not lead to success always. Henceforth, at times risk must be taken with new drivers also.
- Strategies make day to day work easier for the team members. However, it does not mean that that the work becomes boring for them, rather strategies make work more challenging. There should be a vision behind every strategy developed.
- Strategic management is a developmental process which keeps on developing the methods, technologies and other improvements which can make a company grow. Adaptation of new technology in terms of F1 racing is very important.
- Practice makes things perfect. Therefore, drivers must have a good practice of racing and driving too.
- One very important factor of strategic management is that it forces a company to do a steady research work. In case of F1 racing, gathering information about the competitors is very important. This will allow the host company to produce better results.
- Strategic management helps a company to set deadlines and at the end measure the level of success achieved. It is the most important duty of a company to find out that whether it is running on success or leading to failure.
Strategies should be developed in a manner which cannot be easily identified by the competitors. It should be changed from time to time. Strategies regarding motor racing should revolve around the winning strategies beside anything else.
