Ferraris International Business - Research Paper Example

Ferrari’s International Business Ferrari S.p.A is a sports car manufacturer based in Maranello Italy (Wikimedia Foundation, Inc It was founded by Enzo Anselmo Ferrari in 1928 as Scuderia Ferrari, though he never planned to manufacture a road car (Wikimedia Foundation, Inc.). Today, Ferrari S.p.A stands as a subsidiary to the Fiat S.p.A, the company who bought Ferrari’s sports car division when it struggled financially in 1969 (Wikimedia Foundation, Inc.). Ferrari S.p.A values exclusivity. Priced at around $140,000 the least, Ferrari usually sells to only 4000 customers per year. Usually, these are customers who wait for a year or two before their order can be delivered (Matt Stone). Asked why people would want to be on the waiting list for just a car, Amadeo Felisa, Vice General Manager of Ferrari S.p.A commented that it is because people know that they are buying something special and not just an ordinary car as Ferrari promises not just an Italia-styled car, but also innovation, technology and performance (Matt Stone). Ferrari S.p.A started as a car-racing company, so that its owner, Enzo Ferrari never expected that it will sell something like a road car. The brand became so much popular after it has won several car racing competitions including the Formula 1. Priced at $140,000 the least, Ferrari’s customer are the obviously affluent and passionate about car racing. The Ferrari road cars were actually offered due to car-racing fans who do not necessarily play the game but enjoy watching Ferrari drivers speed up the race. As the Motortrend article mentioned, they are the Type A personalities (Matt Stone). In the same interview with the Vice general Manager Amadeo Felisa, he mentioned, “But keep in mind we dont have only one type of customer; we have many different types. And we admit we dont yet know everything about all of them. Look at the success, for example, of the 360 Challenge Stradale. The idea was to have something similar to the [Challenge series] racing version for the road. We worked with the marketing department and developed the original plan around building 700 cars. We ended up doubling that number, more or less, and we obviously underestimated the demand for it. In the early 1990s, we began adding comfort, roominess, luggage space, engines that are more user friendly, and so on, while at the same time maintaining traditional Ferrari characteristics--performance, style, exclusivity. This is the main reason for Ferraris success over the last 15 years. We enlarged our customer base, because we offered things that previously we did not” (Matt Stone). He also added, “As far as why they allow us to deliver a car a year or two after they order it? As with customers, we also have different types of cars. For the 12-cylinder cars, we have a nine-to-12-month waiting list, and in our experience this is the maximum allowable. An 18-to-22-month maximum wait for the newest eight-cylinder cars seems more acceptable to those customers and also maintains the value of the existing model” (Matt Stone). Obviously, Ferrari’s number one clients are the affluent car racers and car-racing fans. These are also their best customers as these are the ones who could wait for one or two years for a pre-ordered car. None has been recorded as Ferrari’s worst customers. The cars are usually pre-ordered so that exclusivity is maintained. The only thing that affects the sale of the company is its performance inside the car racing circuit. This is what happened with Ferrari’s partnership with Force India. The Force India Formula One team parted ways with Ferrari after the 2008 season and tie-up with another car company. It was because Force India F1 team did not manage to have a top 10 finish all season with 0 championship points (Joseph). This is the only reported transaction of Ferrari that went bad. On the other hand, the company has eyed Abu Dhabi as its location for the future Ferrari theme park. In fact has celebrated its 60th year anniversary in 2007, with Ferrari cars gracing the roads of the Middle Eastern Countries in a road rally (Filipponio). It has started in Abu Dhabi, and will continue through Dubai, Oman, Qatar, Bahrain, Kuwait, and Saudi Arabia. The theme park in Abu Dhabi is very significant as the Middle East countries house some of the most affluent individuals as it is known for wealthy oil and jewellery merchants. After the Middle East, it passed through rich Asian countries such as Singapore, Malaysia, Hong Kong, China, Japan, Thailand and Indonesia (Filipponio). Ferrari may have planned to limit their sales to around 4000 per year but they have such a vast of countries to grace still, meaning they have such a large market base to develop for their brand. To reach the less affluent market, Ferrari S.p.A has introduced the Maserati cars which can be compared to Mercedez Benz and Porche. Maserati can be bought at around $80,000 at the least and it has also been re-introduced in the American market. Ferrari S.p.A now has the 100% of the Maserati business after it has purchased it from its mother company Fiat S.p.A. Ferrari and Maserati cars are usually sold not in Italy and in the U.S although it has identified Japan as a potential big market as well. It has been recently introduced in China. To increase their popularity, the Ferrari brand now comes in watches, cell phones, shoes and T-shirts. These products increase the popularity of the brand, although they are primarily designed to grace their F1 fans, both those who own and those who do not own Ferrari. It has also consistently achieved popularity through championships in racing competition such as Formula One Championships. Although Ferrari has is extending its reach to far countries such as Asia and Middle East and has consistently held business in The America, it currently has limited distribution networks as it maintains exclusivity. Ferrari is not found in the most of the Third World countries as such do not house their target customers. In the Europe, Middle East and Africa region, it has its focus on the Europe and Middle East countries while not much African countries are present. Although the Vice General Manager said that they are expanding their market base such as the strategy that they have done with Maserati, we expect a rather limited network for the company. As to the future plans of the company, Ferrari wants to maintain its exclusivity so that stretching the brand to production of entry-level, less-expensive car is not would be a wrong move (Matt Stone). Evidently however, it has the move to capture the Middle east market as more of its countries are becoming more comemricalized and are booming economically, such as Dubai. Ferrari S.p.A has a very nice dealing with its employees. It has particularly, renovated its production area so that “that the buildings and their functions should be designed with the employees in mind” (Ferrari.com). The philosophy is known as Formula Uomo in which “the Ferrari complex now combines carefully designed lighting systems, green and restaurant areas, climate control, noise damping, and special measures aimed at reducing environmental impact, using advanced technologies” and also included “The Wind Tunnel, the Nuova Meccanica, the Nuova Logistica, the Centro Sviluppo Prodotto, the Nuova Verniciatura, the Nuove Linee and the Company Restaurant” (Ferrari.com). Ferrari is known to have established good partnerships with any company from other countries even with the Force India team. Works Cited Ferrari.com. http://www.ferrari.com. 17 May 2009 . Filipponio, Frank. http://www.autoblog.com. 10 January 2007. 17 May 2009 . Joseph, Noah. http://www.autoblog.com. 11 November 2008. 17 May 2009 . Matt Stone. http://www.motortrend.com. 17 May 2009 . Wikimedia Foundation, Inc. http://en.wikipedia.org. 13 May 2009. 16 May 2009 . Read More