Case Study 3 - Williams GP Engineering

Case Study 3 – Williams GP Engineering

Mansell-ProstThe year was 1992, Nigel Mansell had just become the Formula 1 world champion.
In the same year Nigel Mansell was sacked from his drive at Williams Grand Prix Engineering,.
There have been many explanations as to why.

However, the real reason was that Williams decided that there was little sense in paying the high fees Mansell was now able to command. It was a hard decision for Williams to make, but there was a good business sense in it.

Nigel Mansell was being paid a retainer of several millions pounds by the Williams team, and his clinching of the world championship meant that this was going to increase yet again. Sir Frank Williams, the team boss, realised that this could push his team into making a loss and knew that if he could sign up Alain Prost, a previous world champion, for less, he could save his company several millions. The business would stay in profit and with a driver of Prost’s calibre would still have a chance of winning the next world championship thereby keeping his sponsors happy, who were the main source of his working capital.

This is exactly what he did. Expenses were reduced, profits stayed stable and the team kept winning — and, in fact his team won the world championship again! So it can be done.
The reason for this case study is to show that in business to keep cash positive you must eliminate all emotion and make each decision for good sound business reasons.

It also shows the effect of a key principle of effective cash management: to increase the cash in your business reduce your on expenses.