Business Strategy for Formula 1 Racing: Porter's Five Forces Analysis and Resources

Running head: BUSINESS STRATEGY
BUSINESS STRATEGY
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BUSINESS STRATEGY
1. Porter’s Five Forces Industry Analysis
The five forces of Michel Porter are used to analyse the external environment of a
company to help them form a strategic decision for the successful operation of the
organisation. The five forces analysis of Formula 1 Racing is as follows:
 Competitive Rivalry – The competition in the Formula 1 racing is intense. This high
competition creates a great impact on the profitability of the company. The other
competitors in the same racing industry proves to be a danger for the event, however, due
to the uniqueness of their technology, drivers and engineers the event inculcates has an
upper hand in the market (E. Dobbs 2014).
 Threat of new entrants – The threat of new entrants in this industry is moderate since
the event already has a strong foothold which makes it impossible for other racing events
to emerge and establish themselves in the same market (Porter and Heppelmann 2014).
However, the event would have to keep their operations and technology evolved and
make use of their expertise and years of functioning.
 Threat of substitutes – The threat of substitutes for Formula One is moderate since there
are not many racing events with the same popularity and the experience that they have
since so many years (Rothaermel 2015). However, there could be other racing events in
the vicinity which could gain more popularity if the audience finds that the event is more
interesting than Formula One. Some substitutes could be the Olympics, Soccer games and
other sports events.
 Bargaining power of buyers – The bargaining power of the buyers in this race is high
since the game is of a high power. The buyers are the ones who contribute to the funding
of the teams which compete in the game. Buyers include the fans, the media and the
sponsors who pay a certain amount of money to their desired players or teams (Burns and
Dewhurst 2016).