Strategic Management for Competitive Advantage

This essay analyzes Rolls Royce's approach to corporate social responsibility (CSR) and sustainability, examining its triple bottom line framework, CSR initiatives, and sustainability strategies. It also explores the company's corporate governance structure and financial performance, highlighting the link between CSR and business success.

Strategic Management for
Competitive Advantage

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Corporate social responsibility is one of the major obligation an organisation must adhere
with. The term means that a business have certain responsibilities and duties toward society in
which it operates. Sustainability has become an integral part of a business as it owes a duty of
protection of environment as well. In the present report, CSR and sustainability approach of
Rolls Royce limited will be discussed. Along with this, adherence to corporate governance and
financial ratio analysis is also carried out.
MAIN BODY
Triple bottom line
This is approach followed by every big business organisation in its accounting frame
work. The three major part of triple bottom line are- social, environmental and financial aspects.
Rolls Royce is one of the major car company in UK and is copying with all its environmental
and social responsibilities along with its organisational duties and responsibilities.
Social Aspect: Rolls Royce is committed to create an environment where its people can
give their best. The organization is determined to ensure right values and competencies in them
and to incorporate right capabilities and behaviours for future (Tai and Chuang, 2014). For this,
aspects which are undertaken by business are health and safety of employee and its workforce,
ensure employee engagements in management and their retention. A diversity and inclusion
implies for employment without any consideration of gender.
Environmental Aspect: For protection of environment and its development major steps
taken by Rolls Royce are getting control over greenhouse gas effect, reducing its energy
consumptions, controlling its solid and liquid waste and the same to landfills.
Financial Aspect: With ensuring its social and environmental responsibilities the
company also ensures it financial growth. As this is the main aim of every firm to earn higher
proofs and this can also be done with complying with its social and environmental
responsibilities. This will increase the goodwill of organisation and in turn profitability and
productivity of business also enhances.
CSR rating of Rolls Royce Group Plc: 62
Corporate social responsibility of Rolls Royce:
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The business is committing to inspire the next generation into field of science,
technology, and engineering and mat career. This is termed as STEM by Rolls Royce. Under the
activities of STEM, a target to reach around 6 million people till 2020 is set up. Almost 1400
employees of this organisation are involved volunteer in this cause to help young generation.
This helped around 3.8 million people since 2014. In 2017, it recruited 313 graduates and 339
apprentices around the globe. Out of this 74% joined the programmes for engineering
development (Suliman, Al-Khatib and Thomas, 2016). Women employment in 2017 increased
by 21% and level of female graduates increased by 22%. The target is set to reach 30% for
female graduates.
CSR expectations:
To have a positive impact on local and global communities where the company operates.
The focus will be kept on these 4 activities:
 Education and skill development
 Heritage, art and culture enhancement
 Environmental protection and improvement
 Social investment.
The activities undertaken in this regard are national programmes such as Rolls Royce
science prize for activities in local schools and communities (Wagner and Disparte, 2016). A
total investment of 7.7 million pounds have been made till date under these various programmes.
This includes 4.3 m as cash contribution and 93900 hours by employee in time.
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Illustration 1: Global headcount by Gender
(Source: Rolls Royce Data Charts, 2018)
Another aspect in protection of social life taken, is in direction of prevention of
reportable injury of employees. They are main human resource of this business. In case on
injury, sometimes fatal accidents at workplace can cause death of employee which can be
considered as lack of responsibility on behalf of Rolls Royce Plc. Rate of injury was .55 per 100
employees which is about half a percent. The organisation is also supporting the employee who
belong to LGBT community and for this PRISM, an employee resource group (ERG) have been
formed to help and support those employees. The company have 14 ERG in its different
organisations around the globe.
Sustainability in Rolls Royce:
Approach: Company being a leading industrial technology company have a profound
effect on society and the environment (Wood and et. al., 2014). All risk and opportunities
associated with climate changes are addressed. A major step taken by company is adoption of
low carbon global economy concept. Human behaviour is increased in line with greenhouse
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gases pertaining to atmosphere aspect. This in turn significantly influence the level of global
climate.
Rolls Royce is pioneering its technology which can deliver clean, safe and competitive
solution to resolve vital power requirement of planet.
Material issues recognised:
 Energy consumption
 Waste and recycle
 Product safety
 Product performance
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Illustration 2: Energy Consumption
(Source: Rolls Royce Data Charts, 2018)
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Illustration 3: Production waste
(Source: Rolls Royce Data Charts, 2018)
Plans undertaken:
 Marine conservation and research: This step is taken by Rolls Royce to operate
discreetly and to develop technology which create no sound redaction in sea and oceans.
For this more than 1000 vessels were designed by it for providing effective solutions. The
most effective design was UT758ICE offshore which provided a foundation to address
climate changes.
 Coping up with storm: Dp system develops by Rolls Royce helped crew of a vessel
form coping up with the worst environmental conditions in offshore of Canada (Ong and
et.al., 2016). It provided training to crew members and overall user-friendly and clear
information was presented. Along with this, easy user interface was provided which was
quick to understand and operate.
Decisions underpinned:
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Illustration 4: Greenhouse gas emissions
(Source: Rolls Royce Data Charts, 2018)
 Hybrid systems will be developed and launched with lower carbon emission as a part of
low carbon global economy (Sustainability, 2018). With leverages of engineering and
capabilities new business opportunists are found and this resulted in delivering of more
effective product.
 To reduce emission of greenhouse gas (GHG) in operations and facilities by 50% and till
date a 32% progress have been achieved. The 50% target is set to be achieved till 2025.
 To reduce total solid and liquid waste in operations and facilities by 25% which can be
normalised by revenues. Till date, a 78% completion of this project has between done this
target is set to be achieved by 2020.
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 To go 100% waste free in landfill operation and facilities and till data 57% completion of
this project has been done, this project is also had a target year of 2020 to reach a 100%
of going waste free.
 To reduce energy consumption be 30% in all business operation. A 100% achievement of
this project has been done yet a keen eye is kept on this project to maintain same level of
energy utilisation.
 It invest 1.3 billion ponds every year in research and development and 2/3 which will be
dedicated for improvement product's environmental performance and reducing harmful
effect of engines.
Corporate governance
In Rolls Royce, a group governance frame work is set out which governs its business,
manages risk and ensures that all standards are followed in its global operations. A board safety
and Ethics committee is formulated and its given responsibility of keeping a check with
sustainability along with safety of products, ethics and SH&E. Recently it have introduced an
executive level environmental and sustainability committee for strengthen its approach towards
governance and risk management for environment protection.
Along with this an external advisory board have also been formed so that it can make
independent recommendation on its operational strategies and product (Annual report, 2018). To
handle the material issues responsibility is distributed to ELT and is distributed among
employees. A strong governance of Rolls Royce can determined by the fact that it has formulated
various group policies across the globe to address material issues. These policies includes Global
code of conduct, anti-discriminatory policy and Ethical principle for third party.
Financial ratios
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Return on asset ratio
-20
-15
-10
-5
0
5
10
15
20 15.15
-16.85
2017`
2016
Return on equity
-150
-100
-50
0
50
100
150
104.8
-117.28
2017`
2016
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Net income
-80
-60
-40
-20
0
20
40 30.3
-59.21
2017`
2016
Ratios 2017` 2016
Return on asset ratio 15.15 -16.85
Return on equity 104.8 -117.28
Ernie per share 0 0
Net income 30.3 -59.21
From the above ratios it's can be seen that Rolls Royce have seen a finical growth from
2106 to 2107.In 2106 the company was in loss and in 2107 with covering all losses it earned a
profit of 30.3 million ponds. With a loss in 2016 there was no returns on investments and this can
be stated that assets and liabilities of business were not used effectively to generate profits. For
both years there was no earnings per shares. That no dividend to shareholders. With this it can
be said then while fulfilling its CSR and sutanability responsibility Rolls Royce have also
achieved its financial target of earning profit.
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CONCLUSION
From the above report it is concluded that Rolls Royce is considering sustainability and
corporate social responsibility very seriously. As itshas understand many programmes and
activities for development of societies such as STEM. For protection of environment it has
considered to reduce effect of greenhouse gas on global climate and reduce carbon emission. For
saving energy it has reduced it energy consumption by 30%. The waste percentage is reduced
and recycling of waste have been increased so that it can impact environment with minimal
damages. This can be said that in year 2017 Rolls Royce was able to achieve all three aspects of
triple bottom line with initiating programmes for social and environmental protection and
improvements with earning good profits.
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REFERENCES
Books and Journals
Ong, W. J and et.al., 2016. Graphitic carbon nitride (g-C3N4)-based photocatalysts for artificial
photosynthesis and environmental remediation: are we a step closer to achieving
sustainability?. Chemical reviews. 116(12). pp.7159-7329.
Suliman, A. M., Al-Khatib, H. T. and Thomas, S. E., 2016. Corporate social
responsibility. Corporate Social Performance: Reflecting on the Past and Investing in the
Future. p.15.
Tai, F. M. and Chuang, S. H., 2014. Corporate social responsibility. Ibusiness. 6(03). p.117.
Wagner, D. and Disparte, D., 2016. Corporate social responsibility. In Global Risk Agility and
Decision Making. (pp. 221-243). Palgrave Macmillan, London.
Wood, R and et.al., 2014. Global sustainability accounting—developing EXIOBASE for multi-
regional footprint analysis. Sustainability. 7(1). pp.138-163.
Online
Rolls Royce Data Charts. 2018. [Online]. Availabile
through:<https://www.rolls-royce.com/sustainability/performance/data-charts.aspx>
Sustainability. 2018. [Online]. Availabile
through:<https://www.rolls-royce.com/sustainability/approach.aspx#/>.
Annual report. 2018. [Online]. Availabile
through:<https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/annual-
report/2017/2017-full-annual-report.pdf
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