The Formula 1 challenge: sustaining performance in a highly

competitive and turbulent environment

Formula 1

In 1945 the Fédération Internationale de l’Automobile (FIA) established Formula A as the

premier level of motorsport. In the years that followed Formula A became referred to as
Formula One (F1) and a drivers’ world championship was introduced in 1950. By the mid-
1960s F1 had moved from being a basis for car manufacturers to promote and test their
products, to a highly specialist business where purpose built cars were developed through
leading edge technology. F1 had become a TV sporting event which enjoyed the third highest
audience in the world, surpassed only by the Olympics and World Cup Soccer.

There have been between 10 and 14 race car manufacturers or constructors competing in F1
at any one time. In 2018 the top three teams were Ferrari, Mercedes AMG F1 and BMW, all
medium sized businesses turning over between $250 million and $400 million per annum

The Formula 1 Constructors provide a unique context to consider the competitive advantage
of different multimillion pound organisations over time. The pace of change and the basis of
advantage are constantly changing, shown by the fact that since the start of the world
championships, only one constructors has won the championship consecutively more for six
years (Ferrari 1999–2004). In chronological order, Ferrari dominated in the mid 70s;
McLaren and Honda in the 1980s; Williams in the 90s; Ferrari between 1999 and 2004; Red
Bull in the late 2000s and early2010s: Mercedes AMG since the mid 2010s.

Mercedes AMG F1

Mercedes-Benz, through its subsidiary Mercedes-Benz Grand Prix Limited, is currently

involved in Formula One as a constructor under the name of Mercedes-AMG Petronas
Motorsport. The team is also known by their nickname, the "Silver Arrows".

1
The Mercedes name returned to Formula One for the 2010 season after their owners, Daimler
AG, bought the Brawn GP on 16 November 2009, with Ross Brawn continuing his duties as
team principal and the team retaining its base and workforce in Brackley. The team hired
German drivers Nico Rosberg, and seven-time world champion Michael Schumacher who
returned to Formula One after a three-year absence, and Nick Heidfeld as the test and reserve
driver. The team's performance during the early 2010s was not so competitive, with the team
behind the leading three teams of Ferrari, McLaren, and Red Bull.

On 28 September 2012, it was announced that McLaren driver Lewis Hamilton would join
the team from the 2013 season onwards, replacing Schumacher. In January 2013, Toto Wolff
left Williams F1 to become an executive director of the Mercedes AMG. In addition to
joining the team as managing partner. Wolff took over the co-ordination of all Mercedes-
Benz motorsport activities, a responsibility previously held by Norbert Haug. Ross Brawn left
the team on 1 February 2014. Paddy Lowe served as the senior technical figure until the end
of 2016, when he moved to Williams and was replaced by the former director of Ferrari,
James Allison.

In 2014, a new power unit regulations started. The new regulations reduced the size of the
internal combustion engine but allowed the development of hybrid technologies to capture
and reuse energy, thereby shifting the terminology from “engine” to “power unit”. Mercedes
adopted an innovative philosophy of integrating the power unit with the chassis and
aerodynamics aspects of the car. Together with Ferrari, Mercedes was the only main team
who designed and manufactured their own engines, as well as building their own chassis.

In 2014, it was clear that Mercedes and the new team (managers, technicians, and drivers)
had done the best job of interpreting the new power unit regulations. That year, Mercedes
AMG F1 won the F1 constructors’ championship, starting a dominance that is still lasting in
2019.

The team is based in Brackley, Northamptonshire, United Kingdom, situated 70 miles

northwest of London. Brackley has been the home of the modern-day Mercedes F1 team ever
since Mercedes-Benz returned to Formula One in 2010. Before that, the facility was home to
Brawn GP, who won the 2009 Formula One World Championships with Jenson Button and
Mercedes-Benz engines. After Brawn GP's takeover by Mercedes-Benz, the Brackley factory
subsequently became the home of the Mercedes AMG. Brackley houses cutting-edge
facilities including the wind tunnel, state of the art dynos and the team’s driver in loop
simulator as well as the production resources required to maintain season-long development
of the race car. This wind tunnel was modernised in 2012 as part of the restructuring of the
aerodynamics department, and since then, engineers have been able to use 60-percent models
that provide more information and give better feedback. In five shifts, more than 700
employees work 24 hours a day, seven days a week on design, development and
manufacturing activities. More than 250,000 working hours go into the design of a Formula 1
car, and a further 200,000 hours plus are spent on production.

Looking at the Formula One constructors raises some important questions around the
challenge of sustaining successful performance in a highly competitive context. How can
Mercedes AMG F1 team be able to sustain success over time?