Business Strategy and Macro-Environment Analysis: Rolls Royce

This report provides a comprehensive analysis of Rolls Royce's business strategy, examining the impact of the macro environment on its operations. It utilizes frameworks like PESTLE and stakeholder analysis to assess external factors and their influence on the company's strategic planning. The report also evaluates Rolls Royce's internal environment and capabilities, and applies Porter's Five Forces model to analyze its market sector and competitive advantages. Furthermore, it explores the application of various models, theories, and concepts to interpret strategic directions, culminating in the development of a strategic management plan with tangible objectives and priorities. The analysis focuses on the UK automotive industry and the challenges and opportunities faced by Rolls Royce in this context, including political, economic, social, technological, legal, and environmental factors.

Business Strategy
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Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
P1. Analysing the impact and influence which macro environment has on business strategies. 1
M1. Critically analyses of macro environment to state and inform strategic management.........5
Task 2...............................................................................................................................................6
P2. Assessing the internal environment and capabilities of an organisation...............................6
M2 Critical business environment evaluation defining organizational capabilities and skills set
.....................................................................................................................................................8
Task 3...............................................................................................................................................9
P3. Evaluating and applying the outcomes of analysing Porter’s Five Forces model to
market sector..............................................................................................................................9
M3. Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................10
P4. Application of models, theories and concepts to assist the interpretation of strategic
directions available in organisation...........................................................................................11
M4. Produce strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCE................................................................................................................................16
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INTRODUCTION
Business strategy is the main planning which is made by managers in order to run a
business and get a competitive advantage. It is important for organisation to make solid and
strong strategies which can be used to make comparison between others organisation effectively.
In other words, business strategy is defined as the process to Strategies Company with new idea
to compete with rivalries through its competitive advantages that creates opportunity to sustain in
global market (González-Rodríguez and et. al., 2018). If organisation has good plans and policies
then it can obtain the higher productivity by facing risk effectively. This project is based upon
the organisation which is Rolls Royce that is automobile company in UK who manufacture
luxury cars and sports cars for its customers and m gaining profit margin. This project
determines the impact and influence of macro environment at business strategies with its internal
environment and capabilities. Additionally, it evaluate the outcomes of business through Porter’s
Five Forces model to analyse competitive advantage This imply various theories, models and
concepts to analyse the interpretation of strategic directions available in organisation.
MAIN BODY
P1. Analysing the impact and influence which macro environment has on business strategies
Macro environment – This means an environment or situations which arises in whole
economy and impacted on business is considered as macro environment. This is important for
organisation analysis the external environment and get information which factor can influences
organisational productivity and profitability. It is important for business concern to focus on such
factors and formulate strategies that can help to reduce the negative impacts and increase
organisational productivity. In context to Rolls Royce, managers are focusing on strategic
planning and frameworks which helps to determine the organisational productivity and
profitability (Setiawan and et. al., 2019).
The vision and mission of Rolls Royce
Mission The mission of Rolls Royce is to fulfil the needs and fuel the
potential of our guests.
Vision It is to follow the guided commitments to great value, the
community, diversity and the environment.
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To analysis the macro environment different frameworks such as PESTLE analysis and
Stakeholder analysis is used by management which has impacted and influenced organisational
strategy and business performance that are as defined:
Political factor – International trade schemes, tariffs, export controls, government policy,
and political class stability or uncertainty in the emerging market are all part of the international
element. This is important to focus on which political system is following by government and
how it supports to business to run their business effectively. This also supports to business
organisation as bring innovation and introduce something new with the help of political system.
The impact of this factor can affects the strategies that are as defined:
Positive impact – After Brexit, UK has separated from European which has impacted
positively such as government policies become stable and supportive for trade which help to
manufacture better quality of cars without any intervene. Moreover, government of UK provide
subsidies and incentives for enhancing their position and improving market image by selling cars
(Putra, and et. al., 2019).
Negative impact – At the same time Brexit has occurred few situations and hurdles for
business organisation as raw material which they purchases from European suppliers has to stop
their purchasing from such nation. And buying raw material from others become costly and
time taking activity which can influence in negatively.
Economical factor– UK has a globalized and rapidly developing economy that
dominates organization strategies on actual results. This factor is related to economical condition
of a nation which can impact on business. This involves inflation rate, interest rates, growth of
economy and business cycle that can influence the entire business (Sousa-Zomer and Miguel,
2018).
Positive impacts - In UK, the inflation rate is moderate that help to run a business
effectively. Such as due to this manager of Rolls Royce become able to produce cars in less cost
and sale it effectively which help to increase production and profitability. Moreover, it has
impacted positively on strategies which help to deal up with difficulties in manufacturing the
cars and operating business successfully.
Negative impacts – It has been seen that from the last year the economical condition of
UK and other countries are reducing continuously due to COVID – 19 that has stopped all
businesses and transportation which has affected the all businesses as their selling activities has
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reduced and profit margin are going to be decline. Rolls Royce is manufacturer of car in UK
where economic factor influence the strategies of such organisation as managers may fails to set
the prices of their cars according to incurred cost because there is moderate inflation rate and
having Pandemic situation which has reduced the sales.
Social factor – For running a business successfully there is need to focus on people
demand and society who are living in a nation then produce products and services so a business
can be grow effectively. This factor involves age distribution, population shared beliefs, attitude,
preference and lifestyle of people that can impacts on business strategies. The impacts of social
factor on chosen organisation are as defined:
Positive impacts – UK has a globalized and rapidly developing economy which
dominates organization strategies on actual results. The management of Rolls Royce are
addressing needs and attitudes of population according to demand, heritage and unique mixure
that helps to attracts customers and increase organisational sale. By following this factor
manager understand their requirement and fill their needs and wants which helps to increase
organisational effectiveness (Madhushree, Kumar and Aithal, 2018).
Negative impacts – At same time, when management of chosen organisation ignores
strategies and approaches that can impacts negatively on business performance. If customer has
ignored their potential targets then their business activities can be challenged destructively on
strategies and profitability.
Technological factor – Every organisation need to introduce new technology and
innovation in their company which can increase the organisational productivity and brand image.
This is important for Rolls Royce to adopt new technology and innovation in their organisation
so competitive benefits can be gain by this origination. In UK, technological change have
adopted by chosen company that have impacted such as:
Positive impacts – The management of Rolls Royce are using innovation and new
technology such as Advance3 demonstrator that is uses to test the new engines core for the
purpose of delivering optimum fuel efficiency and low emission. It helps in recognising brand
image by producing special feature of sports and luxury cars which attracts customer more and
maintain good performance by formulating strategies. Therefore, technological factor is
impacting positively on strategies and organisation (Hyginus and Maria, 2018). Moreover, VR
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and AR technology also uses by management that can help to attracts customers by providing
great experience and increases business performance.
Negative impacts - Nonetheless, research for innovations can be very difficult for the
Rolls Royce business because it is not economical for it to invest significantly in these areas and
to neglect them will impact negatively the ability of the organization to impact adversely on rival
approaches and the company's role. Moreover, to adopt new technolo9gy management of such
company need to invest money more that can reduce productivity and profitability.
Legal factor- If an organisation is running their business then it is important to follow all
legal aspects and regulation so it can get governmental support to run their business and
maintaining good performance. This involves product safety acts, equal opportunity, consumer
protection law, employment and others laws which need to follow and impacting on business
performance and strategy that are as defined:
Positive impacts – Rolls Royce company renders all its operating and supportive
activities by finding successful modes of government laws, legislation and guidelines. This helps
to reduce government interference and retain leadership without any problems or challenges that
have a positive effect on all activities, the organization's strategies. As management are
following employment, health and safety act that uses to retain employees and increase
organisational productivity and profitability (Brassey, Christensen and van Dam, 2019).
Negative impacts – In absence of all legislation such as employment, equal opportunity
and consumer protection law can impacts destructively which reduces organisational sale and
increase the operating risk. In UK government makes amendments to existing legislation, it
creates difficulties in carrying out research according to new regulations that adversely affect the
management of amendments, the implementation of new methods and the brand image of the
business.
Environmental factor – This is another important factor which involves environment
protection law, charities, government bodies and others which has impacted on business
strategies and organisational performance. The impacts of such factor are as defined:
Positive impacts –In this Rolls Royce do not use the government-banned components
and avoids environmental emissions. It assembles its waste and eliminates carbon emissions
positively affecting business strategies in good ways and keep its efforts to world safe and
hygienic. This helps to improve the organisational performance and profitability (Dubey, 2018).
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Negative impacts – On the other side, manager of chosen organisation are unable to take
steps to reduce pollution and use scare tools that cause detrimental effects in order to build an
amazing picture of the UK sector and its minimal waste strategies. The management of such
organisation need to follow the environmental rules that can helps to maintain good performance
and increase business profitability (de Sousa Jabbour, Vazquez‐Brust, Jabbour and Ribeiro,
2020).
Stakeholders analysis
This is another framework which is used by organisation in order to get the competitive
advantages. Such framework is used to assessing the power and interest of an entire company
which influences strategies and organisation. In context to Rolls Royce, managers are playing
vital role which helps to make business decision that are as underneath:
LEVEL OF
INTEREST
LEVEL OF
INTEREST
LEVEL OF POWER HIGH LOW
HIGH Management, Owners Government
LOW Staff members Customers
High power, high interest – In Rolls Royce, management and owners have high-
powered and high-interest affiliations with selected motor agency. Managers understand the
requirement of their customers and provide products and services accordingly. They are the one
who takes crucial decisions and carries out positions that positively affect the execution of plans
and the achievement of company performance.
High power, low interest – This means governmental bodies who have high power but
low interest in business activities. These are affecting business strategies as government supports
Rolls Royce organisation by running their organisation and formulating trade policies which
helps to run business activities and increase performance as well as brand image effectively
(West and et. al., 2018).
Low power, high interest – Staff members are those people who are participating in
business activities and increasing organisational profitability. In Rolls Royce, staff members are
playing important role that get their roles and responsibilities which helps to complete the work
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and operation on time and increase organisational profitability by influencing strategies
(Mitroulis and Kitsios, 2019).
Low power, low interest – These are considered as those people who have low interest
and low power to maintain the business activities. Customers of Rolls Royce are highly satisfied
from this product that impacts positively on strategies and improve the organisational
performance. They are supporting business by purchasing products and services effectively
(Rogmans and Abaza, 2019).
M1. Critically analyses of macro environment to state and inform strategic management
It is necessary to consider external influences in order to manage the business effectively,
as they affect the organization in positive and negative ways. In context to Rolls Royce,
managers are using PESTLE and stakeholder analysis which helps to run a business by
evaluating which factor can impacts negative on business performance. In this, managers are
following different regulations and policies which help to reduce the negative effect and increase
business profitability. On the other side, stakeholder analysis is used to increase effectiveness of
a business by showing interest and power of shareholders (Demirel and Kesidou, 2019).
Task 2
P2. Assessing the internal environment and capabilities of an organisation
Internal environment – This is important for business organisation to focus on internal
environment of their business and make a decision accordingly by cooperating and
communicating. In context to Rolls Royce, management are evaluating an internal capability that
gives positives outcomes. Therefore, internal capabilities of chosen organisational are defined:
SWOT Analysis – It is a framework that uses by companies to evaluate internal
capabilities and increase the internal strength that are as defined:
The SWOT analyses in context to Rolls Royce are as defined:
Strength Weakness
 Royce operates business in better
facilities where high-value cars are
made.
 This organisation is associating with
quality and performance which help to
 People associate this brand as high
status and dignity which reduces sales.
 It evolves cars that look like clones of
single models that only attract few
customers.
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maintain brand image.
 It is getting technical support from
parent company which is researching
by managers.
 This or designing cars in superior
designs in interior and exterior.
 Different nature of cars generating high
consumer demand.
 Lack of focuses on customer demand
and affordable price that impacts
business negatively.
 This targets only small groups of
customers.
Opportunities Threats
 This organisation is using technology
faster than others one of the biggest
trends is self -driven car.
 Main focus on research in automobile
companies that give opportunity to run
business effectively.
 A customer spending is growing which
become opportunities for organisation
to set prices of their cars accordingly.
 Customisation in which customers are
willing to pay the cost of their cars.
 Focusing on green and hybrid vehicles.
 Focus on sustainability that is serious
cocern for organisation.
 This organisation is facing competition.
 The cost of raw material is growing
continuously which is reducing
productivity and profitability (Ateş, van
Raaij and Wynstra, 2018).
 Not focusing on low cost
VRIO analysis – This analysis states the importance of organisation where number of
products and services are provided by organisation and increasing their working capacity which
helps to improve organisational performance. In context to Rolls Royce, management are gaining
competitive advantages that are as defined:
Resources Valuable Rare Inimitable Organised
Skilled
employees
Yes No No No
Marketing Yes Yes No No
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strategies
Design of cars Yes Yes Yes No
Distribution
channel
Yes Yes Yes Yes
Valuable – In organisation there are various resources which are used by management in
order to increase organisational productivity. Resources are valuable for organisation who are
playing important role and maintain good performance. For instance, Rolls Royce is having
Skilled employees, Marketing strategies, design of cars, distribution channel which are
valuable and helping to compete with others. Skilled staff and friendly atmosphere is used to
accept the challenges and produce unique design of cars which is not possible for others that
helps to take competitive benefits (Hammonds, 2018).
Rare – This illustrates as rarity of resources which helps organisation to get competitive
benefits. Such as Rolls Royce is having different Marketing strategies that is uncommon in
other companies, which allows to gain competition and increasing the size of the company.
Moreover, design of cars and distribution channel are not rare that can be obtain by others . This
organisation is introducing new marketing strategies in every year that is different from others
such as using V logs, slogans, messages, greater experience and other that make different from
others and it is rare which is not possible to use by others. This helps to increase the brand image
and high market share (Pröllochs and Feuerriegel, 2020).
Inimitable – This means resources which have in organisation cannot be copied and
running their business by taking competitive benefits. This is important for companies to provide
unique products and services that can attracts customers and encourage them to buy. The Design
of roll Royce cars is unique that cannot be imitate by other automobile company which helps in
competition and increasing sale of business industry (Foss and Saebi, 2018).
Organised – In this strategy, all activities and resources should be in organised form that
can helps to increase productivity and profitability. The distributional channel of Rolls Royce is
highly organised and properly manageable which helps to reach nearby customers and increase
organisational effectiveness (Wahyuni, Fahada and Atmaja, 2019).
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Therefore, Rolls Royce is analysing its internal capabilities by using VRIO analysis
which helps to provide unique design of cars that can compete with others and maintaining good
performance in competition world. With the helps of this managers are formulating their
strategies and increasing profitability.
M2 Critical business environment evaluation defining organizational capabilities and skills set
It has analysed from the above that Rolls Royce company can obtain new opportunities
when using SWOT analysis and VRIO analysis for making efforts to eliminate the threats that
they faces. As in the United Kingdom the supplier's bargaining power is strong to turn that into
leverage, it needs to have a contractual agreement with suppliers so it can get products at fixed
prices. On the other side VERIO analysis states what resources are valuable and not imitable
then plans is formulated accordingly which gives competitive advantages (Dobni and Sand,
2018).
Task 3
P3. Evaluating and applying the outcomes of analysing Porter’s Five Forces model to
market sector
The business strategy is termed as the competitive strategies that move the actions of
organisation in order to achieve success. This focus attracting large number of consumers for its
least cost effective product at high quality to satisfy their needs, desire and wants. It is the ability
to compete with rivalries through various internal and external environments by increasing
strength over weakness that results in achievement of organisation goals and objectives.
Competitive advantages:- This is described as the capability of an organisation to manage
its controllable and uncontrollable risk through its strength and opportunities as to compete with
rivalries tp sustain in perfect competition market. It attempts to monitor superior performance for
achievement of organisation goals and objectives. . The competitive advantage of an organisation
is described on the basis of Porter’s Five Forces model as:-
Porter’s Five Forces:- It is considered as the competitive five forces for an organisation
that affects the stability in global market. Every business focuses on developing its strategies
effectively by utilising its scarce resources that creates opportunity to increase its strength. This
determines the strategies adopted by its competitors that may cause weakness and threats to the
business. . These five forces are described with reference to Roll Royce which is as follows:-
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Supplier Power:- The business focus on the various powers of supplier in keeping their
price high and low as they have to meet the requirements of consumers. It is the ability of
company to produce their product with high quality that attracts consumers to purchase more of
their goods and services. Managers of Rolls Royce attempts to maintain their price in accordance
with the quality and features of their car manufacturing that may be able to meet the requirement
of their potential consumers on which they are ready to high prices. This leads business to
compete from various suppliers through their bargaining cost that affects its buyers with their
choice and loyalty (Aydiner, Tatoglu, Bayraktar, Zaim and Delen, 2019).
Buyer Power:- This is referred as the ability of buyers to bargain for prices applied on the
products through suppliers. It states that as in perfect competition market there are large number
of suppliers and buyers selling the same product at different quality and price. The managers of
Rolls Royce analyse the demands and requirements of consumers as they are the king for every
organisation to provide them satisfaction in order to gain success. It analyse that buyers have the
power to select the car with best features at least cost effectiveness (O'brien, 2019).
Competitive Rivalry:- It is considered as there are large number of sellers selling their
products to consumers for increasing their satisfaction level that leads to achieve organisation
goals and objectives. The managers of Rolls Royce have to challenge this competition through
their internal strength to overcome controllable weakness and external opportunities to minimise
the uncontrollable risk that creates threats. These managers have competitors such as Bentley,
Toyota, Bugatti, etc., create various challenges for business to remain stable in global market
(Hickman and Silva, 2018).
Threat of Substitution:- It is explained as the ability of buyers to select the best product
at least cost from the available substitute suppliers which provides them high level of
satisfaction. The managers of Rolls Royce targets to attract consumers through positioning their
product to consumers that maximise their revenue and profitability ratios. They focus on
producing qualitative and best featured cars that provide luxurious and safety measures while
driving it (Samad, 2018).
Threat of new entry:- This is described as the new entrants of business with their
innovative idea and strategies that may lead to compete in the global market through their best
features at least cost effectiveness. It creates threat for organisation in its stability and delay in
achievement of organisation goals and objectives. Managers of Royal Royce develop and
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