Discussion
In the following sections, the situational analysis of the company Rolls and Royce will be discussed to find out the macro environment of the company, the stakeholder and the interest and lastly, the internal analysis to find out the capabilities and resources of the company.
Rolls and Royce is a British multinational company enlisted under the London stock exchange, mostly famous for manufacturing, designing and distributing systems for aviation and other industries. Being Established in 1884, the company has achieved many milestones toward the vision and mission statement which clearly explains its dedication to its goals. The vision of the leader and the company is to deliver “better power for a changing world”. They have been able to make changes in the performance and cost and make improvements in the quality of the production. Its main mission is to hold consistency in their performances, which can help achieve the company’s vision.
The PESTLE analysis of Rolls Royce will help in elaborating the macro environment of the company based on the factors: political, economic, social, technological, legal and environmental in the UK business sector.
- Political factors: The lack of stability can be observed a lot in the European market than in the Asian market which affects the import-export of the other operations of the company. Apart from that UK Brexit caused an increase in the cost and lowered the sales of the company which affected the operation of the company (cs.york.ac.UK. 2022). A part of the Rolls Royce operation is related to the army and aircraft. Thus lobbying with the other countries makes the company bend in action and influence various political matters.
- Economical factor: Being active in the global platform, Rolls Royce plays a major role in economic development. The premium buyers of the company help in mitigation of the change in the exchange rate. Apart from that, the inventory cost is high since the company produces more than the market requires as the demand is always unpredictable and depends on the season.
- Social factor: In the recent rise of air travel, being a manufacturer of civil aircraft engines, the company can profit from the market. On the other hand, beautiful automobile production helps make an impact on society so the demand from the premium customers is beneficial for the company (Rees and Smith, 2021). However, one of the company’s biggest challenges is the competition in the aerospace market. So regular production and innovations are very necessary for the competition.
- Technological factors: Rolls Royce has one of the most efficient R&D departments where the company invests a lot in the development of the production and makes upgrades with the help of technology. The recent trend of going emission less is that one company is focusing on developing electrical cars for the customers (Harrison, A., 2017). With the help of skilful employees of R&D, the company is about to have their recent launch which will help the company gain a huge profit from the market.
- Legal factors: Because of the global presence, there are certain laws and regulations, such as environmental laws and rules regarding hybrid electric vehicles, which are the main threat to the company and can harm the production and the profitability of the company. The case of bribery about Rolls Royce has affected the company’s reputation (Watt, Pegg and Evans, 2017). These need to be mitigated for the brand value as well.
- Environmental factors: Several factors, such as the deduction of fossil fuels or emissions from the engines, are the main concerns that need to be taken care of by the company to have proper profit and earn the brand reputation (Bennett, J.C., 2021).
Porter’s five analyses of the company Rolls and Royce will help understand the company’s strategy. The following table will elaborate the same:
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Threats of the New entrants |
The new entrants can bring innovation with lower costing which can put pressure on Rolls Royce (Smith-Gillespie et al., 2020). So it is important to invest more into R&D for more variation in productivity. |
|
Bargaining power of the suppliers |
The raw materials are dominant in the company which might decrease the margin of the company and extract higher prices from the firm which is impactful for the firm. Thus Rolls Royce can build up an efficient supply chain with multiple suppliers which will help them to shift when the price goes higher. |
|
Bargaining power of the buyers |
The small and powerful customers of Rolls Royce have been a threat to the company. Building a huge customer base is very necessary to increase profitability as well as innovation is necessary to restrict them from the deflection of the customers towards the competitors (Ford, J.B., 2020). |
|
Threats of substitute products or services |
Customers always need a simple product in different ways, but the industry suffers. If the other companies can make changes in their services and are product-oriented, they might get the chance to achieve profitability. |
|
Rivalry among the existing companies |
Rolls Royce belongs to a very competitive industry, so to maintain profitability, the company can build up sustainable development. In this way, they will be able to compete better. |
The VRIO analysis is a kind of technology that helps in evaluating the resource, internal factors and competitive advantages of the company. The four dimensions of VRIO are value, rareness, Imitability and Organization. The following table will represent the VRIO analysis of Rolls Royce.
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Value |
The main value of Rolls Royce is the main product and the prototype with multiple engineering products with technological advancement. |
|
Rareness |
One of the rarities of the company is their main focus for the equal share of the quality for the R & D department, product or the innovation of the company (Royce, 2018). |
|
Imitability |
Rolls Royce has successfully innovative ideas for production through deep research and development (Yun et al., 2018). Even if it is impossible to deny that the other emerging company cannot imitate the production of Rolls Royce, with the help of new technology and more skilful engineering, the manufacturers can have the potential to compete with Rolls Royce. |
|
Organisation |
The funding of Rolls Royce is limited for the R&D department; however, the department can restrain new ideas and innovations by skilful engineers. The constant changes in the existing products might put them behind the competition in the business market (Royce, 2018). The emerging companies can easily stay way ahead of Rolls Royce with the help of new products launched with the help of latest technologies. |
Identification Of The Stakeholders (Evaluation Using The Power And Interest Grid)
The stakeholders are the one who shows interest in any kind of operation within the organisation. Similarly, the British company Rolls Royce has stakeholders who are directly or indirectly involved with the company’s operation.
The following are the active stakeholders of the company:
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Customers |
Focusing on the needs of the customers and engaging them in the business process helps in identifying the need and demand as well as the challenges (Rolls-royce.com. 2022). Collaboration with the customers is useful for the required implications in performance and development. Issues: ? satisfaction level of the customers ? Product efficiency and performances |
|
People of rolls Royce |
For Rolls Royce, employee engagement is very important for ultimate success (Rolls-royce.com. 2022). The diverse and inclusive workplace helps them engage more employees by delivering their expectations. Issues: ? Employee development ? Retention and assessment of performances ? Practice for diversity and inclusive culture ? Health and safety environment |
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Governments |
The government’s engagement helps with the policies, acts and regulatories for the globalisation of the business (Rolls-royce.com. 2022). The government bodies are also involved as a source of the company’s founding. Issues: ? The transparency of the government regulations. ? Trust and ethics in the relationship ? Governance of the processes. |
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Partners and several industry bodies |
Rolls Royce partnered with several industry bodies and various groups to add value for the customers (Rolls-royce.com. 2022). Issues: ? Development Of the policies and contracts related to the partnership. |
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Suppliers |
Suppliers are one of the important stakeholders for Rolls Royce (Rolls-royce.com. 2022). The company encourages all kinds of open collaboration to ensure that they benefit the operations and the production. Issue: ? Trust and ethical relationship ? Improvement of the corporations ? Responsibilities for the procurement. ? |
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Investors |
With the help of the investors, Rolls Royce has been gaining many funds to keep its operations (Rolls-royce.com. 2022). The company has successfully ensured that investors have a clear understanding of the strategy, performance and ambition. |
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Media |
The vital channel to keep a flow of the information among all the stakeholders, which includes investors, and employees (Rolls-royce.com. 2022). Issues: ? STEM outreach ? Transparency in the process ? Performance regarding the financial aspects and the economic impact ? Innovation and leadership |
Figure 1: Power Interest Grid
(Source: www.mindtools.com)
Conclusion
After the entire study on the Rolls Royce Company, it can be concluded that
- There are very limited products launched by the company, which might put them behind in the competition, so the company needs to innovate more and launch new products.
- The company need to invest more in the R&D department
- They need to motivate their employees more to maintain a better workforce.
Rolls Royce is one of the heritage companies which never failed in sharing values and put focus on their operations and innovation. During the research, it has been understood how the company can make more implementations such as funding for the R&D or maintaining the ethics in the global marketplace; it can be helpful for them in undertaking the best operation and competing with the new entrants in the market. The changes in the strategies and stakeholder engagement can help be beneficial in gaining the best position in the global market and competing with efficiency, and developing new products which might help in standing out in the business marketplace.
References
Bennett, J.C., 2021. Analysis of the free-space acoustic signature of a BBMF Rolls-Royce Merlin engine from 842 rpm to 2740 rpm. Proceedings of the Institution of Mechanical Engineers, Part G: Journal of Aerospace Engineering, p.09544100211033403.
Ford, J.B., 2020. Competitive advantage. In The Routledge Companion to Strategic Marketing (pp. 141-150). Routledge.
Harrison, A., 2017. Design for Service: The Advanced Services Transformation Roadmap at Rolls-Royce The Advanced Services Transformation Roadmap ensures that service considerations are integrated into every step of the engine design process. Research-Technology Management, 60(4), pp.19-25.
Rees, G. and Smith, P. eds., 2021. Strategic human resource management: An international perspective. Sage.
Rolls-royce.com. 2022. [online] Available at:
<https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/about/stakeholder-engagement.pdf> [Accessed 18 March 2022].
Royce, R., 2018. Rolls Royce. Rolls Royce, Derby, UK, accessed Aug, 8, p.2018.
Smith-Gillespie, A., Muñoz, A., Morwood, D. and Aries, T., 2019. ROLLS-ROYCE: A Circular Economy Business Model Case.
users.cs.york.ac.uk. 2022. [online] Available at: <https://www-users.cs.york.ac.uk/tpk100/iced.pdf> [Accessed 18 March 2022].
Watt, H., Pegg, D. and Evans, R., 2017. Rolls-Royce apologises in court after settling bribery case. The Guardian.
Yun, J.J., Zhao, X., Yigitcanlar, T., Lee, D. and Ahn, H., 2018. Architectural design and open innovation symbiosis: Insights from research campuses, manufacturing systems, and innovation districts. Sustainability, 10(12), p.4495.
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