This detailed article unlock the strategic opportunities and challenges within the industry with PESTEL analysis of Formula One. Gain valuable insights into the macro-environmental factors impacting the world of Formula One.
Formula One is world’s most prestigious form of motorsport. The drivers drive high-tech cars following a certain formula and they have these races all around the world. They have diversity of race location as well as racers so considering the six external factors acting in different locations gives us an insight of their effect on Formula One.
Political Factors
Like any other organization, Formula One has to look into political factors and political conditions of a certain country to calculate how they can affect their operations and revenues. For instance, if the government of a certain country is unstable and uninterested in racing industry, then Formula One might not have any prospects in that country. Moreover, tax policies, tariffs, trade controls and copyright laws will affect the business of Formula One so these factors are to be considered before taking their business to a certain country.
Economic Factors
Economic factors are very important for Formula One as the economy of a certain country has an effect on the growth of the company. For instance, exchange rates decide whether Formula One will operate in profit or loss in that certain country. Similarly, if the economic condition of a county is declining, then the cost is increased and Formula One will face a higher cost in that country. Increase in fuel prices have a huge negative affect on profits of Formula One. On the other hand, if the economy of a country is flourishing, Formula One will also have huge advantages in that country.
Socio-Cultural Factors
These include the cultural variations in a certain country. The preferences of the majority of the population of a certain country will have an effect on the buying patterns of the consumers, thus having an effect on the business of Formula One. Also, if Formula One targets population from age group 25-40, and the population falling in this demographic is less, then profits for Formula One might decrease in that country.
Technological Factors
Technological trends keep evolving all the time and technology is one of the primary aspect of Formula One’s success. It is imperative for Formula One to keep on improving their projects technologically so that people find it more accessible as well as convenient. Following up with the technology has helped increase business for Formula One and will keep on helping it with its growth in all countries.
Environmental Factors
With the increasing awareness about the environmental issues, it is important for Formula One’s brand name as well as growth to keep on developing eco-friendly methods of operations. This will help them contribute positively towards the environment as well as gain a good brand name and increase their market share in different countries, eventually.
Legal Factors
For Formula One, it is legally necessary to follow the legal requirements of all the countries that they operate in. Mostly the governments will have certain requirements of their own before they allow Formula One to operate in their country. They become legally bound to follow these rules and regulations so that they can continue with their business smoothly and avoid any kind of legal problems in the future as well.
References
Harris, W. (2007, November 13). How Formula One Works. Retrieved October 15, 2017, from http://auto.howstuffworks.com/auto-racing/motorsports/formula-one.htm
Sylt, C. (2016, October 18). The economic benefit of hosting a F1 race. Retrieved October 15, 2017, from https://www.raconteur.net/business/power-behind-f1s-winning-global-drive
Office Kitten on Tuesday, Aug 28th, 2012. (2012, August 28). Formula One Environmental Impact. Retrieved October 15, 2017, from http://www.triplepundit.com/podium/formula-environmental-initiatives/