Rolls Royce's Global Business Strategy: Analysis of Aerospace Issues

This report provides an in-depth analysis of the challenges faced by Rolls Royce in implementing its global strategy, particularly within the civil aerospace division. It highlights issues related to the Trent 1000 engine, which suffered compressor durability problems, leading to flight cancellations and economic repercussions for the company. Furthermore, the report addresses the impact of a subsequent announcement of 4,000 job cuts, which negatively affected the company's reputation and employee morale. The analysis includes a five forces analysis to evaluate competitive threats and substitutes. The report also discusses global strategies such as champion electrification, vitalizing existing capabilities, reinventing with digital solutions, and business transformation aimed at overcoming these challenges and improving market share. Recommendations are provided to help Rolls Royce regain its international standing, suggesting business expansion opportunities in countries like Vietnam.

Running head: ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Issues in Global Business and Strategic Concepts
Name of the Student
Name of the University
Author’s Note

1ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Executive Summary
This specific study has provided deep insight on how Rolls Royce after facing issues in
implementing global strategy in civil aerospace division. This organization has already occupied
a predominant place in the realm of aviation craft industry. After identifying a problem in Trent
1000 of airline the company has faced immense challenges in maintaining their organizational
glory. In addition, the sudden announcement of 4000 job cut within the organization had
rendered a catastrophe for achieving business success. The study has provided detailed analysis
on how the business experts can increase their market share. Some of the major
recommendations have also been provided in this study in order to evaluate on how the
organization can overcome these major issues and improve their global strategies for regaining
international glory.

2ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Table of Contents
1. Introduction:................................................................................................................................3
2. Background of the company and its current trading environment:.............................................4
3. Issue faced by Rolls Royce especially in civil aerospace division:.............................................5
4. Civil aerospace global strategy and its future scopes:.................................................................7
5. Current market share of Rolls Royce:.........................................................................................9
6. Five force analysis and improvement strategy on five forces:..................................................11
7. Strategy for increasing the rate of market share:.......................................................................13
8. The reasons of business expansion of Rolls Royce in other country with proper justification:14
9. Recommendations:....................................................................................................................14
10. Conclusion:..............................................................................................................................14
Reference List:...............................................................................................................................16

3ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
1. Introduction:
The study has identified some of the major issues of Rolls Royce while expanding global
business especially in the Aerospace sector. It has provided in-depth overview about the
importance of global strategic concepts implemented within the organization to overcome
organizational issues. Established in the year 1884, Rolls Royce is one of the most prestigious
engineering companies occupying a predominant place in the market of London. In quest of
expanding widespread wings in various geographical boundaries Rolls Royce always searches
for merger and acquisition. Rolls-Royce has won a significant boost after budget airline
Norwegian agreed a $2.7bn (£1.9bn) deal to buy engines from the company (Rolls-
royce.com 2018). Providing superior quality of products in affordable price range is the unique
selling point of the organization. The business experts by implementing participative form of
leadership style at the workplace intend to maintain a friendly environment within organization
in order to get effective services from the employees. Especially in the department of aerospace
it is observed that Rolls Royce has gained immense business image and popularity by providing
effective services to the customers.
The entire business cycle of Civil Aerospace department is constituted with five major
stages that include cutting edge technology, dynamic technology management, compelling
customer proposition long term value creation and resilient business. The company aims to build
strong heritage in mechanical engineering in quest of producing electro mechanical chain and
hybrid power system (Ellis 2015). However, while expanding their regional business wings in
the international market the organization has faced innumerable issues in the department of Civil
Aerospace especially.

4ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
This very specific study has provided detailed overview about the key major issues that
Rolls Royce have faced in order to while making global strategy and technical barrier. By
making effective five forces of Porters’ the study has critically evaluated on how Rolls Royce
has to face threats from its competitors and substitutes in order to run the entire process of
business effectively. By identifying the issue the study has focused to provide some of the major
recommendations on how to overcome the challenges of Rolls Royce in making global strategy
and regain their organizational glory and reputation (Dobbs 2014). In addition, the study has also
focused in making critical evaluation on the reasons of business expansion of Rolls Royce in
other country. Apart from Britain if the country needs to expand its wide range of business in
other regional boundary it should be Vietnam where Rolls Royce can expand its widespread
wings.
2. Background of the company and its current trading environment:
As already mentioned Rolls Royce is one of the most remarkable engineering companies
occupying a predominant place in the market of London (Yunna and Yisheng 2014). This
particular brand has already established its entire business wings in Africa, America, Asian
Pacific, Europe and Middle East. Among most of the Asian pacific zone Azerbaijan, China,
India, Indonesia, Japan, Malaysia are the most prominent. However, it is observed that Roll
Royce is still intending to have new market entry based on which the company can easily drag
the attention of international customers (Indiatsy et al. 2014). Airline, Business Aviation,
Helicopters are the three prime stakeholders of Rolls Royce. Among three Airline $2.7bn
(£1.9bn) has made the deal to buy engines from the company due to which Roll Royce has
achieved a huge success. However, Trent 7000, Trent 1000, Trent XWB, Tend 900, Trent 700,

5ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Trent 500 are the core products that are delivered to Airlines on behalf of Civil Aerospace
department.
However, this very specific study has focused to make detailed overview on how Airlines
has faced innumerable challenges with Trent 1000 engines as a result of which the company has
decided to render huge job cut as a consequence (Porter and Heppelmann 2014). However, this
specific incident has rendered immense disaster in maintaining entire business image and
reputation. As a result, the current trading environment has become in turmoil situation based on
which the business experts are unable to gain customer loyalty.
3. Issue faced by Rolls Royce especially in civil aerospace division:
Rolls Royce has received a complaint that Trent 1000 engines is getting affected with its
compressor durability. The primary purpose of making this engine is fast services than
expectation. In order to fulfil this need Trent 1000 engines have failed to meet its sustainable
compressor durability (Sassen 2016). However, it has become a major problem in the realm of
aviation industry due to which Rolls Royce has lost customer loyalty to some extent. After
finding the issue within “Package B version” with compressor durability, Rolls Royce has tired
to fix up the flaw by launching “Package C”. However, the issue faced by the British Airways
and Norwegian cannot be avoided even after launching the next version of Package C in the
market (Lasserre 2017). Aircrafts powered by trent1000 was compelled to be grounded due to
compressor issue. Due to the sudden cancellation of leading flights such as Airlines, Virgin
Atlantic the entire transportation system has become demolished. As a result, it has become a
major challenge for international business experts and other international visitors as well.

6ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Due to the raise of this kind of sudden problem the economic strength of the company has
faced a major downfall (Taylor et al. 2014). In this situation, the organization has announced for
4,000 job cuts for this industry which resulted a massive catastrophe on the overall reputation of
the organization. Large number of employees had to lose their job due to this sudden mechanism
issue raised within Trent 1000. In this very specific condition the spokesman of Rolls Royce has
stated in an occasion “We are proposing to move to a considerably simplified staff structure,
with fewer layers and greater spans of control across the group” (theguardian.com 2018).
The major two issues that are identified within the business sector of Civil Aerospace
department include compressor durability issue of Trent 1000 and job cut issue due to its
consequence.
The first issue faced by the organization has left a major impact on the overall customers’
purchasing behaviour of their products and services. Customers who intend to use the services of
Airlines for maintaining their business deal or any other purposes have showed their reluctant
attitude in purchasing services from Airlines (Murray, Skene and Haynes 2017). In addition, due
to the frequent cancellation of flights the travellers had to go through immense difficulties in
maintaining their regular life. Automatically, the brand reputation has been immensely hampered
due to this kind of inconvenience. This very specific study has focused to make detailed
overview on how employees after the decision of sudden job cuts have faced severe challenges
in leading their life effectively. The rate of unemployment status in the aviation industry has
raised a major concern (Smith 2014). The business experts were not able to deliver the services
to the customers within affordable time due to the lack of sufficient workforce strength. Rolls
Royce had to be answerable as they were not maintaining corporate business ethics while
running a successful brand so effectively in the market of aviation industry. As per corporate

7ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
business ethics the organization should serve a notice period before discharging a specific
employee from the business services (Nummela et al. 2014). Sudden announcement of job cut is
a sever decision from Rolls Royce due to which the company has to be answerable in front of
media personalities. These two specific issues have left major negative impact on the overall
business growth of Rolls Royce. As a result, both the internal as well as external stakeholders are
getting affected.
4. Civil aerospace global strategy and its future scopes:
After facing these kinds of major issues mentioned already in the previous part, the
organization such as Roll Royce has decided to implement effective global strategies in quest of
fulfilling the future challenges (Dragoni et al. 2014). While evaluating the global strategy of
Civil Aerospace it is observed that the organization tends to follow four major strategies which
include champion electrification, vitalize existing capabilities, reinvent with digital and
transformation of business. This specific part has also decided to analyze the future scope of
the global strategy that has been formed for overcoming the global issues that Rolls Royce has
faced due to mechanism issue as well as sudden job cut issues.
Champion electrification:
The key statement of this business strategy is to invest in new power solutions for long
term success. As per the belief of business experts of Rolls Royce long term business strategy is
the ultimate way to maintain business sustainability (Gandini, Gennari and Cassano 2014).
Therefore, the organization while providing effective services to the customers would have to
focused on maintaining superior quality of machines.
Vitalize existing capabilities:

8ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Vitalize existing capabilities believes that the organization has to develop their
technology up to next generation so that the product can meet the needs and demands of current
trend of market. The organization is investing momechanical products for ensuring that they
provide the safest and most competitive solutions for the customers (Engert, Rauter and
Baumgartner 2016). This very specific strategy would help the customers in gaining competitive
advantages from the other competitors. Automatically, the competitors would be receiving
immense market threats due to its product quality as well as service flexibility.
Reinvent with digital:
This particular strategy has implied that Rolls Royce has rendered digital solutions in
order to provide effective services to the customers. With the help of digital solutions the
customers by sitting at their own workplace can get necessary information regarding the services
(Demoly et al. 2014). On the other hand, people belonging to various geographical backgrounds
and attitudes may not be flexible in visiting the stores of Rolls Royce. In this kind of situation,
digitalisation can enable the customers in getting detailed overview about products and services
by using their Smart devices. With the help of using mobile application the customers can
directly access the services of Rolls Royce.
Transformation of business:
Business transformation strategy followed by the civil aero scope department of Rolls
Royce implies that the organization needs to render a change within operation system. As
mentioned by Murray, Skene and Haynes (2017), employees within the aviation department
would have to be well trained and professional based on which they can maintain a collaborative
outlook towards the services. However, it is observed that Rolls Royce is constantly trying to

9ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
enhance digital twin of the physical activities for seeking new data innovation. In this kind of
situation, the organization can effectively maintain performance quality as well as services.
Effective leadership style:
The leaders of Rolls Royce have observed that participative form of decision making
style is the most effective ways of dealing with the employees from cross cultural backgrounds.
Participative form of leadership style ensures that both the business experts and the employees
would equally participate in decision making (Dyllick and Muff 2016). As a result,
psychological barrier would not come among the employees. On the other hand, the business
experts believe that employees’ decision is also very important for motivating them towards the
services. However, this very specific style of leadership can give the scope to employees in
sharing their views and thoughts.
5. Current market share of Rolls Royce:
As per current business scenario, Rolls Royce is holding 33 to 34% of market share in the
region of Britain. Underlying pre-tax profits were significantly ahead of expectations, rising from
£813m to £1.1bn in 2017 (centreforaviation.com 2018). Free cash flow also beat forecasts,
jumping from £100m to £273m. It is observed as per several departments of Rolls Royce the
organization is holding 42% of market share for globally only due to civil aerospace. After
facing a serious downfall on the overall market of Roll Royce the company is holding maximum
number of market share due to their civil Aerospace sector.

10ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Figure: market share of Rolls Royce in terms of business and in terms of Geographic
region
(Source: centreforaviation.com 2018)
While evaluating the entire market growth structure of Rolls Royce it is identified that the
organization has made least entry in the Asia pacific region in comparison to other geographic
boundaries. 53% revenue of the company is brought from Civil Aerospace division.

11ISSUES IN GLOBAL BUSINESS AND STRATEGIC CONCEPT
Figure: Sales growth of Rolls Royce due to Civil Aerospace
(Source: centreforaviation.com 2018)
However, it is undeniable that after the catastrophic consequence happened after Trent
1000 issue, the organization has still maintained its business glory in the international market to
some extent (Dyllick and Muff 2016). The business experts have faced immense challenges in
dealing with the customers effectively due to their mechanical issue and poor rate of customer
services. Still the market share scenario has not faced a serious downfall.
6. Five force analysis and improvement strategy on five forces:
Porters’ five forces analysis helps the organization in evaluating the industry analysis on
how the bargaining power of the suppliers and buyers is standing in the current market. This part
would help in providing effective recommendation on how to improve five forces for gaining the
business glory and image of the organization.
Power of the Suppliers At the current market scenario the power of
the suppliers is high as Rolls Royce has already
faced a major issue in their Civil Aerospace.
Therefore, the suppliers get more chances for
bargaining (Derber 2018).
In order to improve the situation, the
company would have to improve their current
market status so that suppliers’ power can be
decreased and they can get the raw materials in
affordable prices.