The Man Who Saved Ferrari

Ferrari, Competition, and the Italian Economy Ferrari is one of the world's most iconic brands in the high-performance luxury car sector. The brand has been associated with one of the most exotic and high-technology infused super car manufactures on the planet. As such, it requires a great deal of sophistication in the design and production of Ferrari's cars to maintain the bar it has set for themselves based on a rich heritage and dedication to racing that the company was founded upon.

However, the company has faced some troubled periods in its developments and has been on the threshold of failure at multiple occasions. This analysis will provide an overview of the company's leadership throughout the years and how it has been able to embrace new generations of technology to maintain the company's core competencies in light of the evolution of the environmental landscape in which the company has found itself over the years.

Ferrari's Modern Development Ferrari's story officially began in 1947 when the first Ferrari emerged from the historic factory entrance on Via Abetone Inferiore in Maranello which embodied the passion and determination of the company's first leader, Enzo Ferrari (Ferrari, N.d.). His vision and passion for motorsports set the foundation for the modern company that has become one of the world's most recognizable brand names. However, the company was failing to upholder this foundation during the 1980s and 1990s as it was fumbling on many major business metrics.

For example, the company's sales were mediocre at best and the company was not maintaining the quality standards that the company is known for today. At this point, a man named Luca Cordero di Montezemolo entered into the picture and is now referred to as the man who "saved" Ferrari in the early 1990s. When he rejoined Ferrari in 1991, several years after the death of legendary founder Enzo Ferrari, the company was floundering.

"all the cars had engines in the back, and were very difficult to get into and out of -- very uncomfortable and a bit old-fashioned," Montezemolo recalls (Levine, 2011). Montezemolo came from a wealthy family that was able to provide him with many opportunities that most people would not have; such as attending college internationally at Columbia University or racing cars (for Ferrari as well as others).

As he recalls a story about someone giving a hard time in a phone interview "he said I never would have amounted to anything if I didn't come from money, that car racing was a rich kid's sport and too dangerous and blah blah," recalls Montezemolo, " .. you've been to the States to become an international lawyer, and here you are playing with cars again!' (Levine, 2011)" Despite his seemingly lavish upbringing, Montezemolo has able to acquire an impressive business acumen.

Since he took the helm at Ferrari in 1992, Montezemolo has thoroughly transformed Ferrari, which was losing millions of dollars a year; for example, at its low point in 1993, it sold only 2,289 of the ultra-pricey roadsters -- just half of the cars it produced annually during the 1980s (Larner, 1999).

Before 1993, there was a 1985-89 boom period that was built on what was, in hindsight, faulty economics such as interest rates at a ridiculously low 2%-3% and massive liquidity flooded the market; at the time, in some global markets an investor could borrow staggering amounts of money, such as 115% financing against the appraised value of any real estate and perceived wealth affected many in high-end markets, such as the case with exotic cars (Speaks & Sheehan, 2007). After the market crashed, Ferrari found itself in a tough spot.

Montezemolo was appointed the new leader based on many factors, but mostly likely his previous successes in public relations and marketing.

Some of the changes he made include that he quickly rolled out the lower-priced and popular 355, made that and other models far more comfortable to drive and even put a back seat in the 456M -- unheard of in the older models, he also bucked a longstanding Ferrari tradition and ordered the engine moved from the rear to the front, "My technicians said I was crazy," he recalled, and he also offered the cars in a range of 16 colors and gave each new owner racing lessons on the company's private track (Larner, 1999).

However, despite the fundamental changes that shifted Ferrari's appeal in the competitive landscape, one of the biggest additions that Montezemolo was able to make to the company was the addition of a merchandizing. By 1999 Ferrari was selling close to four thousand cars per year and setting new records.