Reference no: EM132877113

Farari Automobile

In sports car racing the colour red is generally associated with one specific brand: Ferrari. Though other colours are used for Ferrari cars, such as the black Ferrari Daytona Spyder 365 GTS/4 in the popular 1980s television series Miami Vice (later on replaced by the white Testarossa), there are people who argue that only rosso corsa ('race red') matches a Ferrari car. The Italian organization was founded by Enzo Ferrari in 1929 and there has always been a close link between the production cars and racing, in particular Formula 1 racing. It is the oldest team in Formula 1 racing and has won more than 14 World Drivers' Championship titles, including huge success with Michael Schumacher until he retired in 2006. Since 1969 Ferrari has been part of the Italian Fiat Group. Ferrari's success as an organization is much more than selling sports cars and participating in race events. The merchandising of Ferrari products, including earwear, pencils, cell phones, clothing and perfume, all contribute to the secret of the organization's success.

The organization was ranked number one on the 2007 list of a hundred best workplaces in Europe by the Financial Times. The Ferrari brand itself definitely attracts employees with a passion for cars (annually about 4000 application letters for less than 200 vacancies; on average 20 candidates for every vacancy). The close interplay between racing and sports car production has strengthened the company's image, but that is surely not enough to become successful. Building high performance cars for decades is only possible in a high performance organization where people management is aligned with the high standards of the products: very expensive and powerful automobiles (prices between €200, 000-400, 000 for production cars; over 600 horsepower in one engine). However, with a four or six-litre engine, these monsters consume about one litre of gasoline every five kilometres, which is almost five times higher than the consumption of the hybrid Toyota Prius. From an environmental pollution point of view the Ferrari car is an absolute nightmare.

In 2007 the company employed about 2800 people producing nearly 6000 cars on a yearly basis. Selective recruitment and selection, continuous extensive employee development of both employees on the shopfloor and managers, employee involvement in product development (e.g. with the Creativity Club project that mixes employees from different units and different hierarchical levels), employment security practices (e.g. linking the employee' well-being to personal growth in the Formula Uomo project), performance related pay (PRP) and information sharing. The company can also be characterized by some degree of hierarchy and status differences between employees, probably linked to the premium position of the product (status) and the hierarchical family tradition implemented by Enzo himself. In general, employees are proud of their work. However, just a few months after the award by the Financial Times for its great workplace, Ferrari employees went on strike.

Questions

1. Explain how Porter (1985) emphasis of differentiation was deployed to give the organization a competitive advantage thereby leading to its success.

2. Can you say Ferrari adopted an HPWS strategy? Why?

3. As the HR Manager of Ferrari, what strategic role do you play to promote the achievement of the organization's business goals?

4. Employees of Ferrari are 'proud of their work'. What accounted for this?

5. Recommend any four (4) ways Ferrari can prevent future strike in the organization.