Rolls Royce Report 2019

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This research pertains to the company Rolls Royce that is a part of the Renewable energy and Electric utilities sector. It combines my analysis of the company through the Pestle, Porter’s 5 models; VRIO and SWOT framework to understand its corporate strategies, its areas for further development and what its internal and external business environment factors are.

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ROLLS ROYCE REPORT 2019
Name
Institutional Affiliation

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EXECUTIVE SUMMARY
This research pertains to the company Rolls Royce that is a part of the Renewable energy
and Electric utilities sector. It combines my analysis of the company through the Pestle,
Porter’s 5 models; VRIO and SWOT framework to understand its corporate strategies, its
areas for further development and what its internal and external business environment factors
are.
The research pertains to the analysis through the following areas of description;
1. Current standing and statistics of the company.
2. Analysis of the External business environment through the PESTLE framework.
3. Analysis of the Industry/sector of the company’s operations through Porter’s 5
Model framework.
4. Analysis of the Internal Business environment through the VRIO framework.
5. Identification of the company’s strategic position through the SWOT analysis
framework.
I have tried my best to concisely add all the points of importance in these 5 aspects to
brief on the subject matter. Each of these aspects analyses the company in a different light for
better description and identification of the core principles, values, market entry barriers, and
other factors that relate to the success of Rolls Royce.
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CONTENTS
INTRODUCTION......................................................................................................................4
EXTERNAL BUSINESS ENVIRONMENT ANALYSIS-MACRO FACTORS (PESTEL)...5
1. POLITICAL FACTORS....................................................................................................5
2. ECONOMIC FACTORS....................................................................................................6
3. SOCIAL FACTORS...........................................................................................................6
4. TECHNOLOGICAL FACTORS.......................................................................................6
5. LEGAL FACTORS............................................................................................................6
6. ENVIRONMENTAL FACTORS......................................................................................7
INDUSTRY/SECTOR ANALYSIS (PORTER’S FIVE FORCES MODEL)...........................7
1. The threat of New Entrants.................................................................................................7
2. Competitive Rivalry...........................................................................................................7
3. The threat of Substitute Products.......................................................................................8
4. Bargaining Power Of Suppliers..........................................................................................8
5. Bargaining Power of Customers.........................................................................................8
INTERNAL BUSINESS ENVIRONMENT ANALYSIS-CAPABILITIES (VRIO
FRAMEWORK)........................................................................................................................8
1. Value...................................................................................................................................9
2. Rarity..................................................................................................................................9
3. Imitability...........................................................................................................................9
4. Organization.......................................................................................................................9
STRATEGIC POSITION OF ROLLS ROYCE (SWOT ANALYSIS)..................................10
1. Strengths of Rolls Royce..................................................................................................10
2. WEAKNESSES OF ROLLS ROYCE.............................................................................10
3. OPPORTUNITIES FOR ROLLS ROYCE......................................................................10
4. THREATS TO ROLLS ROYCE......................................................................................11
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................13
APPENDICES..........................................................................................................................14
1. PESTLE ANALYSIS....................................................................................................14
2. PORTER’S FIVE FORCES MODEL...........................................................................14
3. VRIO FRAMEWORK.....................................................................................................15
4. SWOT ANALYSIS..........................................................................................................15
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INTRODUCTION
Rolls Royce is a company dealing with the designing, manufacturing, and distribution
of the power and propulsion systems for automotive, aviation, marine and energy sectors with
the headquarters in London. Rolls Royce is an organization that represents a structure having
close reflections of the markets in which it operates (Connor et al., 2012). It was founded in
the year 1906 and is a publicly owned company working in the Renewable energy and
Electric utilities sector. The company's current CEO is Warren East, and it has an annual
revenue of $ 20.4B. 50,000 employees work at Rolls Royce currently. As of now, BMW has
acquired the assets and managed the manufacturing plants of Rolls Royce in the recent
developments (Gong, 2013).
The company's initial outline was dealing with automotive products and industry after
which they expanded to the marine, aviation, and energy sectors in time. Their main
highlighted product is the Rolls Royce Trent 1000 engine, used for powering the Boeing 787
dream liner that has recently replaced Boeing 767, providing the added technology and
experience of the four previous generations of Trent engines. Some of many advantages of
the Trent 1000 engine are given as follows;
It has an IP power off-take which helps it in efficiently driving the aircraft’s
electrical systems while also improving the operability and handling of engines at
low power.
It is the quietest engine on the Boeing aircrafts today with a 10.1 bypass ratio.
Delivers superior performance retention through improved FOD protection and
maximizing of the airflow through its low hub tip ratio.
It reduces the operational burden in cold climates or high moisture environments
through a heated ESS (Engine Section Stator) system.
It has an adaptive HP cooling system that lowers fuel burn in general.

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The new HP turbine system with an advanced cooling system helps in providing
more thrust and efficiency (Rolls Royce, 2015).
The key competitors of Rolls Royce include General Electronics, United
Technologies, and Honeywell in the proper order of most threats to the company, with GE as
its top competitor. The goals of the company include gaining a competitive edge through
innovation in the energy and aviation fields, expanding their portfolio, seeking to increase the
skills and motivation of the company's workforce and working towards growth in the new
markets. The business strategy of the company includes maintaining the reputation of the
company as the most skilled and experienced British manufacturing company that continues
to produce unique and innovative products for the global markets. The company also focuses
on excellence, evolution through R&D and motivation of the employee workforce to remain
at its current position as engineering pioneers of the world, all of which are factors that
contribute to its enviable position (Beale, 2012).
EXTERNAL BUSINESS ENVIRONMENT ANALYSIS-MACRO FACTORS
(PESTEL)
The analysis of the External business environment of Rolls Royce can be done
through the PESTEL framework for macro factors involved as follows;
1. POLITICAL FACTORS
Factors: - Business based in the UK, International agreements, and Nuclear power in
the UK.
Business Impact: - The political factors have resulted in the departure of Rolls Royce
from the EU Department and have led them to nationalization. Change in the
company policies and adaptation to the rules made by the government of the countries
that the company operates in.
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2. ECONOMIC FACTORS
Factors: - Apprenticeships, the 6th largest Defence provider.
Business Impact: - The economic factors have resulted in the stagnant Defence
budget set by the company and have also impacted the demand, reducing it further,
and creating an increase in the fuel costs for the company.
3. SOCIAL FACTORS
Factors: - Labor that is outsourced and workforce from the off-shore.
Business Impact: - The social factors have impacted Rolls Royce through the
workforce that is influenced by Politics and various unions. It has also increased its
UK Redundancy Uncertainty factor through this aspect.
4. TECHNOLOGICAL FACTORS
Factors: - A Global reach, Reputation for funding R&D practices and nuclear
investments in the UK that are long term contracts.
Business Impact: - The Technological factors have impacted Rolls Royce through
the increased Cyber threats of various types and the tough competition in the same
industry that use its R&D findings to create their advanced products. Another factor
associated with this aspect is the dependence on technology to provide not only
products and services to the customers but complete business solutions that cater to
the whole community (Smith, 2013). The information systems can be made use of to
contribute to innovation in the company’s technological processes (Barrett et al.,
2015).
5. LEGAL FACTORS
Factors: - Joint contracts (UK/Fr, US/UK), and 5EYES.
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Business Impact: - The Legal Factors have impacted Rolls Royce through the
Legislative changes that are specific to the countries that the company operates in.
6. ENVIRONMENTAL FACTORS
Factors: - Sustainability focused on fuel technology and nuclear through life-control.
Business Impact: - The Environmental Factors have impacted Rolls Royce through
Climate change's increasing demand for products with fewer emissions (RR) and
Green energy.
INDUSTRY/SECTOR ANALYSIS (PORTER’S FIVE FORCES MODEL)
The analysis of the Industry/sector that Rolls Royce works can be done through
Porter’s five forces model as follows;
1. The threat of New Entrants
The emerging markets and segments in the Global industry pose a huge threat to the
stability of the company as new markets will pave the way for new businesses that have more
advanced and developed products and services available. International companies in the same
sector pose a dangerous threat to the success of Rolls Royce as they are capable of better
functioning engines and energy efficient systems. Compliance legislation can become a
barrier to entry in the new market for Rolls Royce and its aviation-related products.
2. Competitive Rivalry
Rolls Royce is differentiated by being British and has an overall good reputation in
the Global market. This gives it a competitive edge over the other companies as British born
and operating companies are trusted and relied on all over the world for having good quality
and cost-effectiveness along with heritage and innovation. The lack of research &

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development in some areas puts it behind some companies in terms of growth and
sustainability, as well as the introduction of new advanced products with better technology.
3. The threat of Substitute Products
Rolls Royce manufactures and distributes the Trent 1000 engine for aviation
companies all over the world. Continuous research and development in this area have to lead
to other companies/competitors developing the engines that can tackle the advantages of this
product and can be more advanced as well. 3D printing, Quantum computing, Scramjets,
UAV, and other energy sources also pose a threat to the company as substitute products. The
company should, therefore, focus on developing new products from time to time to stay in the
market.
4. Bargaining Power Of Suppliers
The bargaining power of the suppliers can be highlighted through the strengths of the
international competition, limitations of resources availability, and the knowledge of the
demand for such products that the suppliers have.
5. Bargaining Power of Customers
The bargaining power of the customers can be highlighted through the increase in
knowledge and awareness of the demand for such products that Rolls Royce provides, the
International Defence Agreements; the information strategy demands the capability and
Defence activities/strategies.
INTERNAL BUSINESS ENVIRONMENT ANALYSIS-CAPABILITIES (VRIO
FRAMEWORK)
The analysis of the internal business environment of Rolls Royce and its capabilities
can be done in the light of the VRIO framework as follows;
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1. Value
The value of Rolls Royce lies in its main product and prototype the Trent 1000
engines that come with multiple engineering and technological advancements such as the title
of being the least noise engine in the world, the ability to deliver superior performance
retention through maximizing of the airflow and a new HP turbine system that efficiently
provides more thrust for the flight among many.
2. Rarity
The rarity lies in the combination of heritage, R&D, staying true to the roots and the
overall focus on excellence that the company has focused on since its formation. Another rare
factor is the equal share of quality when it comes to any department, product, or sector of the
company as they are all monitored closely for enhancements and development. The resources
used for this aspect of production, however, are not limited to only this company as suppliers
are making the materials available to its competitors across the globe.
3. Imitability
Rolls Royce is known for products and services that are genuinely constructed and
designed through research and development practices and also the fact that most of their
products are the ones that were made for the first time in history for a certain purpose. The
products will be unique, but there is little guarantee that there will be no imitation prospects
because many of its competitors are coming up with technology and engineering marvels that
are capable of performing the same tasks through even more efficiency at times.
4. Organization
The amounts of funds from Rolls Royce that go into the company’s department for
R&D are limited, hence restraining the quick development of new prototypes and products
that are more advanced. It shows that the company is not ready to invest heavily in new
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products and wants to keep developing its existing ones, which might put it behind its
competitors in terms of innovation and variety.
STRATEGIC POSITION OF ROLLS ROYCE (SWOT ANALYSIS)
The strategic position analysis of Rolls Royce can be done in the light of the SWOT
analysis framework as follows;
1. Strengths of Rolls Royce
The strengths of the company can be given as follows;
Reputation for heritage and quality of products/services.
British origin of the company.
Skills and experience of the management and workforce of the company.
Successful business in the International markets.
An established name in a variety of sectors.
The international wide investment portfolio of the company.
2. WEAKNESSES OF ROLLS ROYCE
The weaknesses of the company can be given as follows;
The expensive workforce that is out-sourced.
Lack of morale and motivation of the workforce.
Increased competition due to market evolution.
3. OPPORTUNITIES FOR ROLLS ROYCE
The opportunities for the company can be given as follows;
Investment in the education sector.
Much more focused International partnership for entering new markets.
Ability to operate offshore successfully.

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Advancements in technological abilities through R&D and IS.
Growth prospects in the Nuclear Industry worldwide.
4. THREATS TO ROLLS ROYCE
The threats to the business conducted by the company can be given as follows;
Formation of competitors companies that attract the workforce of Rolls Royce
Workforce trade unions
Oil developments and other global trends in the market that other companies
gain success through
The opinion of the general public regarding the nuclear sector and industry
and involvement (Do Quang, 2017).
CONCLUSION
Through the study of the Rolls Royce Company, the following conclusions can be
driven to narrow down the understandings regarding the analysis;
Limited products that are updated but still lacking when compared to products
made by the competitors.
Lack of investment in the research and development sector.
Increase in the strength and number of competitors that Rolls Royce has in the
same industry.
An expensive workforce that is highly skilled but not motivated.
The company lacks in highlighting its main product, the Rolls Royce Trent 1000
engine which is the backbone of its aviation department for manufacturing.
Rolls Royce is a heritage company with shared values and one that focuses on excellence
and quality. Some factors discovered through this research the areas of development where
some work can increase the efficiency of the company and make it stand out from its
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competitors by gaining competitive advantage and sustainability as well. This study also
narrowed down the analysis through different frameworks to ease in the understanding of the
current position of the company and what prospects can help it with its image and revenue.
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REFERENCES
Barrett, M., Davidson, E., Prabhu, J., and Vargo, S.L., 2015. Service innovation in the digital
age: key contributions and future directions. MIS Quarterly, Vol. 39(1), pp.135-154.
Beale, S., 2012. Precision engineering for future propulsion and power systems: a perspective
from Rolls-Royce. Philosophical Transactions of the Royal Society A: Mathematical,
Physical and Engineering Sciences, Vol. 370(1973), pp.4130-4153.
Connor, G., McFadden, M., and McLean, I., 2012. Organizational design. Developing people
and organizations, pp.1-35.
Do Quang, H., 2017. Marketing SWOT Analysis of Rolls-Royce Motor Cars (Doctoral
dissertation, Empire State College).
Gong, Y., 2013. Globalization of Operations. In Global Operations Strategy (pp. 43-68).
Springer, Berlin, Heidelberg.
Monroy, C.R., and Arto, J.R.V., 2010. Analysis of global manufacturing virtual networks in
the aeronautical industry. International Journal of Production Economics, Vol. 126(2),
pp.314-323.
Rolls Royce, P., 2015. The jet engine. John Wiley & Sons.
Smith, D.J., 2013. Power-by-the-hour: the role of technology in reshaping business strategy
at Rolls-Royce. Technology analysis & strategic management, Vol. 25(8), pp.987-1007.
Teece, D.J., and Linden, G., 2017. Business models, value capture, and digital
enterprise. Journal of Organization Design, Vol. 6(1), p.8.

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APPENDICES
1. PESTLE ANALYSIS
2. PORTER’S FIVE FORCES MODEL
POLITICAL
FACTORS
ECONOMIC
FACTORS
SOCIAL FACTORS
TECHNOLOGICAL
FACTORS
LEGAL FACTORS
ENVIRONMENTAL
FACTORS
THREATOFNEWENTRANTSTHREATOFSUBSTITUTESCOMPETITIVERIVALRYBARGAININGPOWEROFSUPPLIERSBARGAININGPOWEROFCUSTOMERS
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3. VRIO FRAMEWORK
4. SWOT ANALYSIS
VALUE RARITY IMITABILITY ORGANIZATIO
N
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
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