The paper "Formula One’ s Industry Life Cycle" is a perfect example of a marketing case study. From the case study, it appears that though the race cars are not meant for the mass market, several buyers are targeted through the publicity created by F1. Such buyers include the race sponsors, the media and the fans. Arguably, the buyers’ bargaining powers are relatively low considering that the racing teams are few, and as such, buyers compete for the attention of the few teams that participate in formula 1. Suppliers’ bargaining powers The suppliers of F1 appear to be the constructors and the technology companies they work with to make sure their racing cars are competitive enough.
Arguably, suppliers have a relatively high bargaining power considering that they play an important role in the development of ideal racing cars. The situation is worsened by supplier concentration because as Groucutt, Leadley and Forsyth (2004, p. 22) indicates only two tyre manufacturers dominate the F1: Michelin and Bridgestone. However, their bargaining powers may be toned down by the availability of willing suppliers who might be willing to contribute to the development of racing cars for F1 events, but who are denied chances because of the few numbers of participants. Threat of substitutes Arguably, F1 seems to be competing for funding, popularity, sponsorship and media coverage with other sports.
In that case, the threat of substitutes is high since other sporting events such as the Olympics, or individual games such as cricket, football, athletics and others are pursuing the same resources that F1 is pursuing. The only solace for F1 is that it attracts the attention of motoring enthusiasts, who might not necessarily be attracted to the other sports named above.
However, the racing industry also contains the formula two and formula three races, which may provide substitutes for racing enthusiasts. Based on the foregoing arguments, therefore, it is evident that the threat of substitute products to F1 is average. Competitive rivalry in the industry From the case study, it is evident that the competitive rivalry in F1 is high. Specifically, it would appear that the teams compete with each other for aspects which include technology uptake and utilisation, the design and engineering capacity, sponsorships, drivers and the management teams.
Notably, the F1 teams always need the best combination of capacities for them to win. This means that each teams purposes to have the best constructors (engineers and designers); the best technology; the best management; the most competent drivers; the most sponsorship revenues. The latter is especially important since it enables teams to finance whatever engineering or designing technologies that they feel would enhance their chances of attaining a competitive edge over other industry players. The threat of new entrants From the case study, it is evident that F1 is a costly affair for any team.
Additionally, it appears that teams need to invest substantial revenues in the acquisition of resources that are needed to make the team successful. Based on the foregoing factors, it is quite evident that the threat of new entrants is minimal.
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