Rolls Royce plc in a Dynamic Business Environment

1. Introduction

Understanding business environment is important for the organisations to develop good strategic planning after suitable market audit, including business dissertation help. The study aims at exploring the external business environment by considering the organisation Rolls Royce plc, which is a multinational company expanding their business around the globe in order to gain high market share. The critical analysis on the business environment as well as the competitive forces of the firm will be helpful for the corporate leaders of Rolls Royce plc to develop good strategic planning for meeting the organisational aim and objectives. Through this paper, it is also possible to distinguish different stakeholders which are engaged with Rolls Royce plc in order to contribute positively in the firm and run the business operational activities as per the strategic planning. The paper also provides a scope to discuss one international country for understanding the internal control system, so that it would be easier for the firm Rolls Royce plc to strategies their activities to expand the business in the international market to maximise their global market share and gain competitive advantage in order to sustain in such a competitive market.

Organisational background

Rolls Royce plc delivers clean, safe and competitive solutions to meet our planet’s vital power needs with the help of latest cutting edge technology in order to meet the clients demand. The power of the organisation is vital to the success of a growing and increasingly connected world so that it can secure future sustainable development. At Rolls-Royce, there is continuous transformation of potential technology. The focus is on pioneering the power that matters for the needs of tomorrow as well as today. The purpose of Rolls-Royce is to use that power to connect power and protect society. The stakeholders and the corporate leaders are working cooperatively at Rolls-Royce, in order to meet their strategic objectives by serving the clients sustainably and deliver the best services to all the customers across the international market. The technology and innovation in the software and robotics system, at Rolls-Royce, further helps the organisation to create values for the service users in the market (Rolls Royce plc, 2021a). The vision is to deliver 'better power for a changing world'. Few companies are better placed than Rolls-Royce to help the society transition to a low-carbon economy and this will drive the competitive advantage in the long term. The corporate leader of Rolls-Royce is determined to utilise the brand position as a global power group to play a role in creating a resilient, inclusive, net zero carbon future (Rolls Royce plc, 2021b).

Business environmental analysis

The business environment plays a crucial role for running the operations smoothly and through Pestle analysis; it is possible to explore the driving forces of the company.

Political

The headquarter of the company is in the UK and it operates across the globe. In the European market since the conditions haven’t been as stable as those in the Asian countries, the company’s operations have been affected in the past few years and also Brexit also its negative impacts to run the global operations. moreover, in the post Brexit era, there are certain issues which are increased costing and lower sales, and reduced ease of operation, for which the profit margin is being affected negatively (Badea, Zamfiroiu and Boncea, 2018). With the existence of lobbying and pressure from certain US/EU countries, the course of actions become critical for the company and hence, the political situation is not flexible yet, but the organisation try to follow the rules and legislations in order to operate under suitable environment.

Economic

Foreign exchange rate fluctuations as well as Government intervention in the free market and related Industrials are considered as economic threat for the company. Moreover, over the period of time, the national income and the purchasing power parity of the individuals become stable and there is economic growth for which the company can access the international markets to run their operations and increase their sales volume. The sales volume is increasing due to multiple buyers in the market and the company is also engaged with another area of operation that is related to the army and aircraft, for which the operational efficacy is there to gain high market share.

Social

Social development is there with high literacy rate, educational gradation, globalisation and emerging economies, where the individual become knowledgeable about new technology as well as products and service available (Hernandez, Kreye and Pigosso, 2019).

Technological

Efficient and environmental friendly innovation is there in the company for which it is possible for the brand to provide the best quality products and services to the customers. The major products and services at Rolls-Royce are Civil and military aero engines, Marine propulsion systems and Power generation equipment, which are produced with the latest technology and creativity.

Legal

Registration, evaluation, authorisation and restrictions of chemicals or REACH norms are there to support and restructure the company activities efficiently and additionally, there are safety concerns at the workplace for which the organisation is successful to handle their legal affairs successfully.

Environmental

Zero waste target and adoption of renewable energy sources like project sunshine is there at the organisation to secure their future sustainable development (de Haas et al., 2018). The practice of minimising the greenhouse gas emission and energy use will lead the firm towards sustainable development.

2. Competitive analysis

The competitive structure of aerospace industry as well as the defence, energy and marine industry is intensely competitive due to existing competitors in the market. Its positive trade balance is the largest trade surplus of any manufacturing industry, supporting high-wage jobs for hundreds of thousands of the workers across the globe. The industry is efficient for job creation in the economy and there is high contribution of the aerospace industry in the national income of the countries as there is huge demand and supply for the products and services in this particular industry. The UK aerospace industry is highly imperfect comprising domestic monopolies in military and civil aircraft (BAE Systems), as well as for the helicopters (AgustaWestland), and engines (Rolls-Royce), with a duopoly market in missiles (MBDA; Thales: Racal and Shorts Missile Systems) and oligopoly in the equipment sector (BAE Avionics; Thales; Smiths; Cobham). Hence, for the engines, the company Rolls-Royce is running their business in the monopoly market structure. However, across the globe, the company is facing intense competition due to other manufacturing companies, which are also efficient to provide the best quality and technically advanced products and services. Rolls-Royce is a partner in associated European collaborative engine projects (Jefferies and Barnard, 2018).

Competitive forces analysis

As per the competitive forces, there are mainly five forces which are threat of new entrants, threat of substitute products in the market, intense competition, bargaining power of the buyers and the bargaining power of the suppliers. Through this strategic model, it is possible to explore diverse forces that affect the organisational operations in the market. The market condition of Rolls-Royce can also be understood through this competitive forces analysis.

Threat of new entrants

The threat of new entrants is low, as the company Rolls-Royce is already gaining high competitive advantage and tit is renowned and established organisation for which the client base and market share are strong. New entrants in Industrial Goods & Services brings innovation as well as new ways of doing the things, however, Rolls-Royce Plc is also efficient to launch new technology to introduce new products with latest innovation and quality. It further helps the company to lower pricing strategy, reduce costs, and provide new value propositions to the customers. Rolls-Royce Plc has to manage all the existing market challenges and build effective barriers to safeguard its competitive edge (Rolls Royce plc, 2021c).

Threat of substitute products in the market

When a new product or service meets a similar customer needs in different ways, industry profitability suffers due to existing competitive firms and diverse product range. The threat of a substitute product or service is high when it offers a value proposition that is uniquely different from present offerings of the industry. There is medium threat of substitute products, as Rolls-Royce is successful to provide diverse product range mainly the engines, where it runs monopoly operations in the UK and also the products in aerospace and marine propulsion systems and power generation equipment also meets the client’s needs for which the client base is strong.

Intense competition

There is intense competition in the global aerospace industry, where there are increasing numbers of competitive firms in the market. Rolls-Royce focuses on diversifying their product range in order to make product differentiation strategy successful and run the business uniquely in order to gain high competitive market.

Bargaining power of the buyers

The buyers are often a demanding lot due to the quality products and services of the company. They want to buy the best offerings available at Rolls-Royce by paying the minimum price as possible. Hence, the bargaining power of the clients is also medium at the industry in order to gain the benefits of purchasing high units at affordable price. This further puts pressure on Rolls-Royce overall profitability in the long run. Higher the bargaining power of the customers leads to higher their ability to seek increasing discounts and offers and thus the company must tackle the clients by rapid product innovation, delivering the best quality and unique products as well as building a large base of customers.

Bargaining power of the suppliers

The bargaining power of the suppliers is medium, as there are several supply chains across the globe, which operates through different distribution network and their pricing strategy also doffers. In order to tackle this, the company must develop strong global network for running their operations smoothly. All most all the companies in the industrial goods and services industry buy their raw material from numerous suppliers, and Rolls-Royce also has renowned suppliers for managing the quality raw materials. Suppliers in dominant position can decrease the margins Rolls-Royce that can be earned in the market. Powerful suppliers in Industrials sector utilise their negotiating power to extract the best prices from the firms in the industries. The overall impact of higher supplier bargaining power is that it lowers the overall profitability of industrial goods and services (Rolls Royce plc, 2021c). Hence, Rolls-Royce must focus on developing dedicated suppliers whose business depends upon the firm, in order to secure future sustainable development.

3. Stakeholders analysis

Identifying stakeholders and Power/Interest matrix

The stakeholders are playing the crucial role in the business by contributing positively with their skill set and capabilities. There are internal and external stakeholders engaged with the corporations for running the operations smoothly. The employee, managers and owners of the company are the internal stakeholders and on the other hand, the external stakeholders are suppliers of the firm, social communities, creditors, government, shareholders and the customers. Roll Royce most significant stakeholders mainly include commercial manufacturers of the aircraft, its direct customers and military aircraft suppliers (Harrison, 2017). The suppliers are the main stakeholders, who are engaged with the main operations in the aerospace industry where the suppliers are able to supply the best quality raw materials and equipment to produce the final products. On the other hand, the creditors and shareholders of Roll Royce are also playing an important role in contributing through raising fund and capital investment to expand the business globally. Moreover, the customers or business clients are another important stakeholders group where Roll Royce aims at creating values for them by providing them the best quality products and services at effective price range. The government and social communities matters to run the business efficiently and in this regard, Roll Royce is able to create values for the social communities as a whole by zero greenhouse gas emissions, maintaining its carbon footprint and reducing the energy resource use, so that it would be possible to secure future sustainable development (Rolls Royce plc, 2021c).

The power/interest grid is a matrix which is mainly utilised for categorising the stakeholders during a project to allow them to be effectively managed at the workplace. The stakeholders are plotted on the grid in relation to the power and interest that they have in respect of the project. The company Roll Royce is able to manage their stakeholders in order to run the business in a systematic way and provide the high return on investment to strengthen their stakeholder’s network. As per the power grid, the four functions are keeping satisfied, monitoring or minimum effort, keeping informed and managing closely. With the high interest of the stakeholders and high power, the organisation can manage all the stakeholders closely (Lee, Lee and Kim, 2019). On the other hand, Roll Royce is also able to manage the customers and social communities by meeting their interest. Though they have low power in the organisational decision, they are informed with authentic information and organisational activities to develop strong client base. the managers and employees have high interest and high power in the workplace for which the corporate leader at Roll Royce manage them closely to fulfil their requirements and continuously motivate them to work efficiently for meeting the business objectives.

Evaluating potential conflicts and suggesting strategies to resolve

There are potential conflicts in the organisational workplace, where the organisation Roll Royce may face difficulties to manage the stakeholders. The conflicts of interest are serious among them; where the stakeholders face conflicts in meeting own interest rather them fulfilling the interest of the brand. This will lead to misunderstanding and mistrust among the employees, managers and the CEO of the company. On the other hand, the issues such as lack of communication, non-cooperation and resistance to change are critical to be resolved in the workplace, as the stakeholders are not willing to adopt change due to conflicts of interest and lack of trust on the decision of the corporate leader. It is important to resolve the existing issues so that Roll Royce can run their operations by retaining all the internal and external stakeholders and engage them with the organisational activities (Bennett, 2021). It is essential to motivate the internal stakeholders such as employees and management team to work efficiently and gain good remunerations and performance related pay in long run. Additionally, providing high return on the investment is mandatory to engage the shareholders and the creditors of Roll Royce. On the other hand, the organisation must inform the stakeholders including government, customers and social communities with all the necessary information, company activities and investment programs for engaging them with Roll Royce and run the business successfully. for resolving the organisational internal conflicts, the corporate leader of Rolls Royce must communicate the corporate vision, inform all the stakeholders with latest information and data, sharing the benefits of change and technical innovation and providing continuous support to all the stakeholders, so that partnership working practice can be developed at the workplace.

4. National economic system

It would be beneficial for the organisation Rolls Royce to expand their operations in the USA, due to its economic growth and sustainable social development. The company can operate in the strong market economy of the USA under the government regulations to meet the above mentioned vision of the company. The U.S. is mainly a mixed economy, exhibiting the characteristics of both capitalism and socialism. Such a mixed economy further embraces the economic freedom, when it comes to capital use, but it also allows for government intervention for the public good. There is government intervention in the aerospace and energy industry in which Rolls Royce is operating recently (van Hoek and Loseby, 2021). The government plays a crucial role in maintain the product quality and pricing strategies so that the clients can gain benefits in long run. Due to the presence of capitalise economy in the USA, Rolls Royce has the freedom to invest capital in the business operations and strengthen their supply chain in order to operate globally (Hsieh et al., 2020). Due to strong supply chain management in the country, it would be beneficial for Rolls Royce to maintain the source of raw materials and utilise the best technology to manufacture the products and services. The major products and services include Civil and military aero engines, Marine propulsion systems, Power generation and other equipment in the aerospace and energy industry. Under the mixed economic system, there is owned private sector and also the government own some organisations (Carr and Nicholson, 2018). There is also the freedom to start the business by meeting the government requirements and following the legislative structure to run the business activities legally. In the USA, the supply and demand of the products and services is determined by the market forces of price and quantity as well as the price control mechanism is also imposed side by side by the government of the USA.

In the USA, the goal of macroeconomics is to maximize the standard of living and achieve stable economic growth. This further has crucial impacts on the organisations as it influence the organisational leader to utilise the country’s resources, adopt latest technology and enhance creativity to run the business in long run. The government aims at maximising the standard of living of the individuals in the USA, and in this context, expanding the operations of Rolls Royce will be helpful to ensure job creation in the economy, maximising national income and purchasing power parity of the individuals in long run. This goal is supported by the government objectives such as minimizing unemployment, increasing the productivity, controlling inflation, and social development (Prakasa and Unggul, 2019). This mixed economic condition is suitable for Rolls Royce to run their operations legally and also follow the government intervention strategies in order to maximise their profitability and sales volume. The advantages of mixed economy are such as efficient production and allocation of the organisational resources, as well as improvement of social welfare in the economy. It would be advantageous for Rolls Royce to utilise the mixed economy of the USA and secure future sustainable development through business creativity and technical innovation.

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