An Analysis into the extent of Financial Leverage within UK Innovational Industry DECLARATION Date (Month/Year)

An Analysis into the extent of
Financial Leverage within UK
Innovational Industry

DECLARATION
Date (Month/Year) This dissertation is my original work and has not been submitted
elsewhere in fulfilment of the requirements of this or any other award. In accordance with
academic referencing conventions, due acknowledgement has been given to the work of others.
[word count]
Signature_____________________________________________ Date ____________

ABSTRACT
This research paper offers a detailed account regarding the identification of
communication problems between innovators and investors. Communication holds the key to
driving growth, performance and profitability within all organisations irrespective of their size,
nature and complexity. The research aims to provide a detailed account regarding what
communication problems arise innovators and investors. In order to facilitate a clear
understanding of the research aim, Rolls Royce has been taken into account. This business is a
part of automotive industry which is considered to be one of the most innovation-inducing
segment all around the world.
Research Objectives:
In order to conduct this research, the following research objectives have been identified:
 To evaluate the importance of innovation from investor's perspective;
 To understand the relationship between innovators and investors;
 To assess the importance of communicating innovation strategies to investors;
 To identify potential barriers that may disrupt communication between owners and
innovators;
 To determine the ways which may facilitate rectification of communication problems in a
significant manner.
Methods and Findings:
For the successful completion of this research, the research design is in the form of a
Business Consultancy project and is inclusive of qualitative approach which is widely based
upon the primary data. The sample has been chosen using Random Sampling technique and
includes 30 employees working full-time with Rolls Royce for which the primary data has been
collected by way of Questionnaire. Based on this the findings indicate that passive innovation
resistance and ambiguity present while formulating innovative strategy are two of the most
impactful barriers that hinder the communication between innovators and investors. It is also
discovered that there resolution is possible by improving investor engagement as it helps in
creation of an environment of mutual respect and trust between innovators and investors.

Table of Contents
DECLARATION.............................................................................................................................2
ABSTRACT.....................................................................................................................................3
TITLE..............................................................................................................................................1
CHAPTER 1: INTRODUCTION....................................................................................................1
OBJECTIVES..................................................................................................................................3
CHAPTER 2: LITERATURE REVIEW.........................................................................................5
Systematic Identification of Gaps from Literature Review Analysed above.......................14
PROPOSED CONSULTANCY APPROACH AND OUTPUT...................................................15
Proposed Approach..............................................................................................................15
Output...................................................................................................................................16
CHAPTER 3: RESEARCH METHODOLOGY...........................................................................18
Time Horizon........................................................................................................................18
Research Philosophy..............................................................................................................5
Research Approach.................................................................................................................6
Research nature......................................................................................................................6
Research Design.....................................................................................................................8
Data Collection.......................................................................................................................9
Data analysis ........................................................................................................................10
Research Ethics....................................................................................................................10
CHAPTER 4: DATA ANALYSIS AND FINDINGS...................................................................11
Limitations of the Study.......................................................................................................23
CHAPTER 5: CONCLUSION......................................................................................................24
REFERENCES..............................................................................................................................25
APPENDICES...............................................................................................................................28

TITLE
“Identifying Potential Communication Problems between innovators and investors- A
case study on Rolls Royce”
CHAPTER 1: INTRODUCTION
Overview
This particular research is based on the analysis of extent to which financial leverage is
present within the UK Innovational industry. Financial Leverage can be defined as the level of
debt which a particular organisation has utilised in order to finance its assets. It is important to
note that this unit of measurement differs between companies (Clinton and Whisnant, 2019).
This is largely due to the fact that every firm has different anomalies which create a variation in
the degree of complexity and financing needs of the business. From investors' perspective, the
more investment they have in a given business, the more leverage they hold over the firm's
operations. This is due to the fact that when a business enterprise wants to undertake a capital
project or expansionary activity, it may require additional funds that may be sourced by it from
external organisations or investing parties. As a result, an entity providing more number of funds
to that particular enterprise would become an investor of the business which holds a considerable
amount of leverage over the operations as well as strategic decisions undertaken by the business.
On the other hand, innovation can be termed as the application of better solutions which
are generated through the introduction of new ideas or creative thoughts that help in the
achievement of new new requirements, uncommunicated or existing needs of the markets. In
UK, this phenomenon has become a hub for many aspirants, organisations and researchers. As a
result, innovation has become a key for this economy that contributes towards national growth in
a sustainable manner both in the past as well as in current-day scenario. Today, some of the most
prominent and active innovation industries found in the economy relate to automotive,
telecommunications, pharmaceutical, retail and electronic industries among others (Akhmetshin
and et.al., 2017). The present study entails the identification of potential communication
problems which arise between innovators and investors. Currently, almost every organisation has
identified the usefulness of innovation in terms of future growth and enhancement of corporate
performance as well as profitability. Although this is true, it is equally crucial for the
organisations to communicate such intentions to the investors as they are true owners of the
1

business. Here, a problem may arise between the company and investors based on the difference
in perceptions. If the investor relations among businesses are not aligned in a manner that fosters
healthy communication among the two, a problem may arise between the company and investors
based on the difference in perceptions. This means that what an organisation may perceive as a
profitable investment may not be considered the same by its owners. As a result, communication
problems arise between innovators and investors.
Background
Rolls Royce is a luxury automotive manufacturer based out of Derby, England, United
Kingdom. The company was founded by Henry Royce in 1884 which mainly dealt in the
electrical and mechanical business. However, by 1960s the company's performance declined due
to mismanagement of its RB211 Jet Engine, thus, resulting in creation of heavy cost over-run
situations for the organisation. The company remained nationalised until 1987 and currently
operates as a subsidiary of Rolls Royce Holdings PLC. Rolls Royce envisions continuous
innovation of their products in order to facilitate best market solutions to their customers. Based
on this, its management believes that the following three trends are most crucial in the present
day scenario to successfully compete in the global automotive market:
 Increasing demand for cleaner, safer and improved competitive power;
 Electrification; and
 Digitalization.
The company's innovators aim to provide highly customized and tailor-made products to
their customers. However, the investors are of the view that excessive innovation may result in
erosion of competitive advantage which is usually found in the form of cheap labour. Also, there
seems to be a disagreement between the investors and innovators due to various reasons such as
misunderstanding of message and educational or intellectual differences among others
(Dickinson, Kassa and Schaberl, 2018).
Rationale
The rationale behind selecting Rolls Royce for this study is the fact that when it comes to
innovation, automotive sector as a whole is one of the most affected industries. In addition to
this, Rolls Royce has been known for differentiation. With high degree of exclusivity combined
with customization and innovation, this company is most suitable for the purpose of successfully
investigating the aims and objectives proposed under this study. Through its analysis, this
2

research will be highly beneficial in determination of how communication problems between
such parties can be easily identified and what are the steps that may be taken so as to reduce the
gap between the two. This study will also enable the readers to recognise the issues which may
arise due to such communicative problems and help the users to derive valuable insights in
regards to the problem identified.
Research Aim:
“To identify the potential communication problems among innovators and investors”
OBJECTIVES
In order achieve the aforementioned research aim, it is crucial to understand the concept
of innovation from investors perspective so as to know what kind of expectations do these type
of stakeholders have from the businesses they invest in (Barile, Saviano and Simone, 2015).
Apart from this, the research aims to identify potential communication problems between
innovators and investors, for this purpose, the relationship shared between them is also of critical
value for this particular study. Once this is established, identification of potential communication
problems can be carried out effectively along with the ascertainment of possible ways to address
such problems. Keeping this flow in mind, the following objectives have been formulated to
successfully fulfil the Research Aim:
 To evaluate the importance of innovation from investor's perspective;
 To understand the relationship between innovators and investors;
 To assess the importance of communicating innovation strategies to investors;
 To identify potential barriers that may disrupt communication between owners and
innovators; To determine the ways which may facilitate rectification of communication problems in a
significant manner.
Research Questions
Based on the established objectives, the following Research Questions have been
formulated and addressed throughout this study:
 What is importance of innovation from investor's perspective?
 What kind of relationship exists between innovators and investors?
 Why it is important to communicate innovation strategies to investors?
3

 What are the potential barriers that may disrupt communication between investors and
innovators?
 What ways which may facilitate rectification of communication problems in a significant
manner?
4