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Case Study

Pirelli tyres in the Formula 1 (cartoon case)

By Stefan Michel and Sarah Von Blumenthal

4 pages

December 2014

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Reference: IMD-7-1536

This case study describes the implication of an important change in the Formula 1 rules for the 2012 season. Pirelli was chosen as the sole supplier for all Formula 1 tyres, and the six types of tyres forced racing teams to make some tough choices in every race. For example, tyres are either durable or have a good grip, but not both.The background for this change is provided in the case: the Formula 1 is a complex ecosystem (or value constellation) with decreasing revenues. The reason for the decreasing revenue could be the dominance of one driver, Sebastian Vettel. It is assumed that if one driver wins too many races, some of them from start-to-end, TV viewers tune out. So the new tyres rules should make the races more strategic, because it requires more pit-stops. Pit-stops are interesting for two reasons. First, they are a “race in the race”, secondly, every pit stop changes the ranking of the drivers. The case concludes that, despite all these changes, the revenues for 2013 went further down.

Learning Objective

The case helps to understand the interplay between different actors in a value constellation. Participants learn to identity critical success factors (CSF) in a given industry (i.e. interesting races) and to link those CSF to resources (i.e. rules of the race, the tyres used, etc.).

Keywords

Value Constellation, Strategy, Business Model, Television, Sports, Entertainment

Settings

World/global, Italy
Travel and Leisure, Entertainment, Travel and Leisure, Sports
2012-2013

Type

Published Sources

Available Languages

English

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