Analysis of the Global Business Environment: A Case Study of Rolls-Royce

This report analyzes the challenges and opportunities of the global business environment using Rolls-Royce as a case study. It includes SWOT analysis, Porter's five forces, value chain analysis, and competitive benefits on sustainability.

The Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Analysis of internal and external factors of business environment.............................................3
Analysis of the macro environment factors................................................................................4
Porter's five forces.......................................................................................................................6
Value Chain.................................................................................................................................7
Competitive benefits their core values on sustainability.............................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Books and Journals:....................................................................................................................9
Online:.........................................................................................................................................9

INTRODUCTION
The global business environment represents the environment in diverse autonomous
nations, with variables endogenous to the home environment of the business, affecting the
process of decision-making on resource utilization and capabilities. There are many components
in the global business environment such as cultural and social factors, geography, political
factors, economic conditions and legal factors (Gaganis, Pasiouras and Voulgari, 2019). Global
business environment has many positive and negative aspects in spite of many issues such as it
makes a contribution to the new technology, managerial skills, infrastructure development,
creating jobs and so on. Negative aspects are increasing competition, removal of protection,
expensive imports and many more. The following report is based on the Rolls-Royce Company.
It is a luxury automobile company in British administration. It is founded in 1998, with
headquarters in Goodwood, West Sussex, United Kingdom. It is known as the exclusive
producer of Rolls-Royce branded motor cars, since 2003 (Gorondutse and Hilman, 2019). In this
report, challenges of internal and external environments of business will be evaluated.
TASK
Analysis of internal and external factors of business environment.
In the context of Rolls-Royce, SWOT analysis refers the analysis of internal and external
factors in which strengths and weaknesses are internal and opportunities and threats are external
factors. It helps the business to benchmark its performance among other key players in the
automobile industry. SWOT analysis is discussed below:
 Brand image: Rolls-Royce motors have always been related with luxurious quality and
quantity and are regarded to be the sovereign word in the luxury world. In this way, the
brand is able to charge premium prices for their cars (Grenčíková and et.al., 2021).
 Luxury variants: There are lots variations such as Phantom Drophead Coupe, Phantom,
Ghost, Phantom Coupe and much more are well-known in the segment of luxury.
 Highly skilled workforce: The respective organization employs talent who pay a lot of
care and the workforce for Rolls-Royce are highly certified and skilled in their special
expertise.
Weaknesses:

 Status symbol: It is seen as the luxurious brand that is connected with a high-end dignity
and status. It visualises as the vehicle of the wealthy and hence, is regarded as the
impossible for masses of lower income.
 Over dependence on repeat purchases: Rolls-Royce motor cars are premium cars that
are marked to only a certain segment of customers. They rely on their customers' loyalty
and repeat business to attain their earnings.
Opportunities:
 Increase customer spending: The user has an scarcity of money and there is a rise in the
family percentage that have two incomes that means that they have more money to invest
in the most appropriate transportation selection of their preference (Hung and et.al.,
2021).
 Modifications: Customers are ready to pay on luxury motor cars they desire which will
result in an increasing demand for personalised cars and is a chance or opportunity which
the company can easily tap into.
Threats:
 Sustainability focus: The entire globe is facing grave problems and difficulties
considering sustainable transport options, as the existing transportation system is not
environmentally friendly. Addition to this, sustainable vehicles can be quite expensive.
 Competition is rising: Mercedes Benz, BMW, Lamborghini or Audi are main
competitions in the automobile industry (Rolls Royce SWOT Analysis, 2021).
By analysing all the above factors, it can be said that Rolls-Royce is a company which
gives luxurious cars to a special segment of customers who can afford the luxury lifestyle. On
the other side, it is challenging for the people who have low or middle income and cannot be able
to acquire such motor cars. Competitors are also high in the respective sector which is also a
great challenge. As the sustainability becomes the prior concern in the world, handling such
deals is another challenge.
Analysis of the macro environment factors.
A macro business environment can be related with the set of conditions that present in the
whole economy, rather in a specific region or sector. Factors in these environment are
uncontrollable in nature and can affect the decision-making of an organization.

 Political factors: Since Rolls-Royce is the multinational automobile brand, it operates
their business operations almost in every section of world, where different political
reasons directly influence their sales. In European market, the stability is not good after
Brexit news as there were several uncertainties had been created that the organization
faced, in terms of lower business sales and increased costing. It also had decreased the
ease of operations.
 Economic factors: Since, the respective organization operates their business around the
world, the level of economic condition in that region posses an important role. The
segment which company targeted is premium group of customers who can buy luxury
and premium automobile products (Kumar, Giridhar and Sadarangani,2019). The
modification in rates of exchanges might influence the organization, but, not so much,
since the consumers are already high end people.
 Social factors: Rolls-Royce is an organization that is highly known throughout the
world, for its premium and luxury automobiles. These motor cars are a piece of art and a
symbol of status. Owning Rolls-Royce signifies a lot and is recognised to make an
influence on the society. Though, the organization is now owned by BMW, but it is still
performs stand-out in the industry. It is more appreciated by the civil aircraft customers
who helps company to become more lucrative and influential in the market.
 Technological factors: Since the chosen organization is operating in the aerospace
segment, the advanced technology is compulsory to stay in the sector. The organization
is also anticipated to invest more in the R&D projects connected to growing new and
latest technologies. It is found that start-ups like Lunaz from UK is ready to work with
traditional models of automobiles and strip down to their external body while remodel
them electrified. Hence, this has an opportunity to go wholly electric and manufacture
hybrid vehicles in its advances section.
 Legal factors: It is another challenge as the working throughout the world enables
company to have an eye on the various legalities they require to follow. Different
environment laws alteration, which influences the automobile production. Moreover, in
various nations, the rules for hybrid and whole electrified cars have not yet been
explained suitably which carries a further challenge to the organization if it launches its
hybrid vehicles before such as rules are constituted. It also affects the profitability.

 Environmental factors: The chosen organization is making efforts to increase the use
of renewable sources. It has created a wider sustainable supply chain systems and willing
to offer more efficient goods and services across it all segment of business operations.
Also, the engines that the business manufactures have become more modernised with
hybrid technology, as well as low emissions.
Porter's five forces
Porter's five forces refers the model that identifies and assesses give key competitive
forces of industry that shapes every sector and supports determine strengths and weaknesses of
an industry. In case of Rolls-Royce, these forces are as follows:
 Competition: By analysing all the factors in business environment, it can be said there
are various companies in the automobile industry which gives stiff competition to the
Rolls-Royce. These key players are Audi, Mercedes Benx , Tesla and much more. These
are highly focused on innovation and tries to different themselves on customer
experience. Hence, the influence of this force is high in the industry.
 Threat of substitute: Taxis, public transport or taxi services can be regarded as
alternatives, but they do not come with the social and experiential benefits that the
organization gives. The new luxury electric cars might prove to be possible alternatives.
The deciding points such as affordability, switching costs or availability can be theat
from substitutes. These key points are readily available and are in the affordable segment
of customers of the chosen company. Switching costs are relatively high as well as the
value of proposition of some of the alternatives is vitally unique from Rolls-Royce.
Therefore, the threat from substitutes can be taken as low force.
 Threat of new entrants: While analysing internal and external factors, it is seen that
Rolls-Royce has number of key players in the market, cost of production is high which
becoming the challenges to the new entrants to enter into the market. Legal requirements
imposed by the domestic governments can add to the hurdles to entry. Thus, the threat of
new entrants is low (Shammugam and Marimuthu, 2019).
 Bargaining power of customers: It is observed that there are limited luxury and
premium brands where the customers can choose from, hence, mitigating their choices.
Also, they cannot request for lower prices. Therefore, the bargaining power of customers
is low to moderate.

 Bargaining power of suppliers: Suppliers offers the raw resources and final products
needed to manufacture motors for Rolls-Royce. They will acquire high power to limit the
availability of such inputs, thereby the competence to influence the production process. In
UK, there are number of suppliers such as Thyssenkrupp, Brembo and many more which
reduced the bargaining power of suppliers. On the other side of fact, the brand is not stick
to single supplier which helps in creating differentiation with high brand equity and high
R&D expenses and much more. Hence, this force is low to Rolls-Royce (Porter's five
forces analysis of Rolls-Royce Holdings, 2021).
Value Chain
Value chain analysis is very significant for the management and companies which want
to attain competitive benefits and value of customers. It refers as the series of activities that
contribute to the value of good more than its costs. In case of Rolls-Royce, this analysis is as
follows:
Primary activities:
 Inbound logistics: It involves in getting raw products from vendors and dispense them
through their production line to begin with the process. Rolls-Royce is maintaining their
healthy relationship with their suppliers to get the resources in lowest price possible.
 Outbound logistics: It involves in assembling, managing, sharing and dispensing the
product to its place. The company should focus on structure transportation as well as its
delivery are at the high standards to adjust with demands of consumer.
 Operations: It consists taking those raw materials antecedently delivered and transmute
them into the good the organization is designing.
Support activities:
 Human Resource Management: The manager's key concern should be in hiring, getting
and managing resources superior to their rivalries.
 Technology development: It aims to reach the motor design, control over emissions and
the safety of customers.
 Procurement: Rolls-Royce aims to limit the costs of raw materials and it is vital to keep
low costs throughout the journey of the value chain.

The chosen company considers this approach as a main contributor of developing value
chain in their motor cars. It considers all such activities that rises the utility of items that
customer will get, evolve value (Sreenivasan and Kothandaraman, 2019). Many important
approaches such as customer service, reduction of wastes, employee empowerment are
combined inside the value chain. They are primary activities involves maintenance and services,
inbound logistics, outbound logistics, marketing and sales and many more. These add value in
the processes. It is researched that key determinant of competitive benefits and organizational
profitability are its resources.
Competitive benefits their core values on sustainability.
Rolls-Royce has concentrated on various sectors such as military, civil, energy and
marine and the organization continued its expensed on investment and R&D, it gives new
technologies and new products. Its competitive benefits highly focus on core technology and
core markets. It has gain its sustainable core benefits by diminishing the carbon exploitation in
order to become net zero carbon business by 2050. It also has reduced GHG emissions, waste to
landfill and energy consumption since 2014 (Luiz, Ganson and Wennmann, 2019). It helps in
gaining more customer base among other players in the market. When customers see, they are
deal with the business which are more environment concerned aids in increasing their demand
towards such products.
CONCLUSION
The conclusion is that global business environment is concerned with various internal and
external factors that influence the decision-making and performance of business. All such factors
creates several challenges and threats, along with opportunities to the business. Different
frameworks are used to analyse these factors such as SWOT, pestle, porter's five forces and
many more.

REFERENCES
Books and Journals:
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling, 78, pp.275-292.
Gorondutse, A.H. and Hilman, H., 2019. Testing the effect of business-level strategy on
performance of hotels. Global Business Review, 20(5), pp.1141-1154.
Grenčíková, A. and et.al., 2021. Slovak business environment development under the industry
4.0 and global pandemic outbreak issues. Entrepreneurship and Sustainability
Issues, 8(4), p.164.
Hung, S.W. and et.al., 2021. Inclusion in global virtual teams: Exploring non-spatial proximity
and knowledge sharing on innovation. Journal of Business Research, 128, pp.599-610.
Kumar, S., Giridhar, V. and Sadarangani, P., 2019. A cross-national study of environmental
performance and culture: Implications of the findings and strategies. Global Business
Review, 20(4), pp.1051-1068.
Luiz, J.M., Ganson, B. and Wennmann, A., 2019. Business environment reforms in fragile and
conflict-affected states: From a transactions towards a systems approach. Journal of
International Business Policy, 2(3), pp.217-236.
Shammugam, S. and Marimuthu, M., 2019. Does Conflict of Top Management Team Impact the
Firm Performance? A Conceptual Review on Large Companies in Malaysia. Global
Business & Management Research, 11(2).
Sreenivasan, S. and Kothandaraman, K., 2019. Improving processes by aligning capability
maturity model integration and the Scaled Agile Framework®. Global Business and
Organizational Excellence, 38(6), pp.42-51.
Online:
Rolls Royce SWOT Analysis, 2021. [Online] Available Through:
<https://swotanalysis.website/rolls-royce-swot-analysis/>
Porter's five forces analysis of Rolls-Royce Holdings, 2021. Online] Available Through:
<https://www.porteranalysis.com/porters-five-forces-analysis-of-rolls-royce-holdings/>