The management broad has stated to produce an environment analysis and strategic growth management plan for Rolls Royce through considering the analytical tools and objectives of the business.
- Analysis of impact and influence of macro environmental factors on Rolls Royce operations.
- Conducing an assessment of internal environment and strategic capability which are possessed by Rolls Royce.
- Determining and evaluating the competitive forces in the market through Porter’s Five Forces model.
- With the use of theories, models and concepts determine and interpret the strategic direction available to Rolls Royce.
In the present business world, it is important that the administration work in a way that it can compete with tough competition prevailing in the market. for same strategies need to be formulated well in advance as it assists in carrying out business in a competitive manner. business strategies are the plans that are made prior to commencement of any project so that the desired goals and objectives can be achieved (Ackermann and Audretsch, 2013). An effective approach minimises the gap between actual and desired results as these are prepared after analysing all the factors that affect the function of business. Rolls Royce cars limited is a British automobile organisation having its headquarters in UK. It was founded in 1998 after BMW was licensed the rights to the Rolls – Royce brand name. As the referred brand belongs to a sector having a range of competitors it is important for same that it formulates such strategies which can help it in maintain the higher image in market. The following report will talk about how an effective plan can be made using distinct tools for auditing like PESTLE and SWOT analysis which helps in understanding the business surroundings.
P1 Capabilities of Rolls Royce and impact of macro factors on same
The external surroundings of business keeps on fluctuating and it is important that the change taking place in the environment are dealt with care. Automobile industries fluctuate much and has to operates within the legal obligations made against the same. There are different factors that are present in the external surroundings and effects the day today function of the business (Annabi and McGann, 2013). This is of great importance that these factors are identified in advance so that corrective actions can be taken. For same PESTLE analysis is an effective tool that shows how the elements that are present outside has their indirect impact on business. The following discussion will show how these factor has their influence on the business.
Political factors - These are the factors that are part of the political change or policies prevailing in a particular nation. Whenever any business operates it has to first go through the political conditions prevailing as they are different in distinct nations. As the referred company is operating in different nations it is effected by the policies that are followed there. The tax rates are high for the referred firm and also strict laws are made for controlling the air pollution which further affects the business as pressure on the manufacturing unit increases. The long term profitability of the firm further gets effected as it uses the products that are supplied from the different nations hence become more prone to global political changes. it is important for the firm to first go through the political stability of an enterprise. It involves identification of the military invasion as it has its indirect impact on the scope of business (Auzair, 2011). Apart from this Rolls Royce also uses the intellectual properties in order to protect the important assets and getting the same involves range of formalities which gain effects the growth of business. There are different laws and regulation which are capable of restricting the growth of a business like the safety regulations made for protecting the work force.
Economic factors – This is another factor which has its influence on the working of an enterprise. the economic condition of different countries is distinct from one another and it is important that it remain stable so that the predicted sales level can be achieved (Murano and et. al., 2011). Before formulating the plans for a particular nation it is crucial that same are examined against the present economic state of the country. Change in the interest rate, inflation or any other monetary or equivalent value aspect has to be given maximum care so that the financial factor of the business remains unaffected. The government intervention is high in this sector in order to maintain stability in the automobile market. as the referred enterprise is operating globally it further faces restrictions of trade that are made to maintain the economic conditions and exchange rates. in the process of manufacturing of cars high labour is required which add additional cost to the business. It is difficult to find cheap labour and therefore Rolls Royce add that cost to its final product which is already out of reach to a middle class customer. It takes loans too to carry out the daily operations for which interest is paid and hence the rate of interest become another factor through which the business of referred institution gets effected (Azar, 2011). In this sector it is important to have skilled labour so that effective and efficient work is done which again become a challenge for the company to find in different countries.
Social factors – This is a part of external environment of Rolls Royce which effects the operations in indirect way and most difficult to determine in advance. The culture and way of living of different individuals is a part of this segment which has a major effect on how a particular company receives demand in the market (Oestreicher-Singer and Zalmanson, 2012). the designing and changes that are made in the company’s product are influenced by the society it is serving so that maximum satisfaction to the costumers can be given. As the product the referred company is dealing in is of premium class education level also play an important role. It is important that market in which the company is operating consist of people who has knowledge of the brand and understands the worth of same. Apart from this the influence of society is also high in a way that there are people who do not believe in promoting the foreign brands and avoid using their products considering it as a move towards saving own economy. It is difficult to influence the people of this belief and hence become a challenge to achieve the desired sales. Thereafter another way how the referred enterprise remain effected by this element of macro environment is that there is a very little part of whole society who like to spend on luxury (Bharadwaj and et. al., 2013). As the prices of this brand are high it is less demanded by the customers.
Technological factors – These are the other factors which involves the impact on business due to change in the applications used in the business surroundings. It is important for the businesses that such software’s are used which are recently used in the business. the impact of this factor are as follows:
- Technology has its high impact on the pricing of distinct product
- The rate of installation of new applications is high
- Competitors influence is high on the code of conduct of own business
Legal factors – In order to make the business lawful and free from different unethical activities diverse legal obligations are made which needs to be followed while performing the function (Schaltegger and Wagner, 2011). The different factors that need to be followed by rolls Royce are as follows:
- Consumer protection laws
- Safety act
- Use of good application
- Maintenance of pollution act
P2 The internal environment and organisation capabilities
Rolls Royce has very unique internal environment which in turn helps out in identifying the skills and abilities of the employees and also helps out in performing the tasks and objectives in better and effectual manner. There are various kind of factors which are highly essential for analysing the external kind of factors as they have high level of impact upon the success of the company (Scholes, 2015). Certain kind of factors which are involved within the internal elements and they are like weaknesses, strengths, relations of employee, productivity along with final resources and many more. Concept of strategic abilities mainly refers to the business abilities and potential for formulating with the competitive strategy with the motive of surviving within the world full of competition and this will mainly improve the value with time. Rolls Royce company which is multinational company and thus it is highly essential for mainly devising the effectual kind of plans along with strategies which in turn can help out in maintaining the brand value across the globe. Along with this, it will help out in bringing improvisation within the level of profits along with its revenues at the same tenure. It is highly essential for the managers of Rolls Royce to acknowledge about the mission and vision of the company which in turn can provide support within developing the strategies for the company. This mainly needs the skills, talents, knowledge, abilities and expertise for the management so that they can effectively formulate the plans and strategies for maintaining the lead and thus it can help in making the company to enter within new kind of markets and countries (Slack, 2015). Rolls Royce can mainly apply the VRIN\VRIO Framework for mainly identifying that the resources which can in turn help out in availing competitive advantages. In order to serve at the best and get sustainable benefits, resources should be:
Valuable (V) – In an organisation if it is found that the resources of the organisation are giving the desirable returns to the business than same can be considered as of having worth for business. Rolls Royce uses a range of resources in its day to day operations and is doing good business which shows that the enterprise is having effective resources. Proper evaluation should be done on time so that good quality of same are maintained in the long run and profitability is raised (Bucolo and Matthews, 2011). Whenever any change takes place in the external surroundings of the referred enterprise it directly effects the worth of present resource with the organisation.
Rare (R) – It includes those resources which are only possessed by Rolls Royce and are not shared by any other brand. These resources assist in achieving the competitive advantage to the referred enterprise. By using the capacity of rare resources the referred enterprise can experience growth in the long run.
Imitable – It consists of those features of an organisation which cannot be imitated by any other party and Rolls Royce has a good design which is difficult to copy by other with the same efficiency of cost and quality.
Non substitutable – In order to achieve higher scale of efficiency the referred enterprise should ensure that it use such resources which cannot be copied by any other enterprise so that it can achieve the competitive advantage.
The SWOT analysis of Rolls Royce is as follows:
Strength - The referred enterprise has established a good brand image in the market which helps it in experiencing higher volume of sales in the long run. As the brand value of Rolls Royce has achieved success it now does not have to invest much on the marketing activities which further assist in saving much of the operational cost. Another strength with this unit is that it belongs to a premium product line which becomes a factor for attracting people who likes to show off in the society and like to have premium goods (Grover and Kohli, 2013). the quality of services which are delivered to the customers is high which helps in raising the customer satisfaction level.
Weaknesses – Rolls Royce belongs to the automobile industry where competition is high and also it is difficult to adopt the change at the same moment they take place. Due to the existing rivalry pressure on every individual increases which further effects the day to day operations of the business to a great extent. Getting skilled labour becomes a challenge for the referred enterprise which is of great importance to maintain innovation in the product delivered in the market.
Opportunity – The demand for automobiles is continuously increasing in the market. It shows that the referred institution has the chance to grow which is possible through adding more features to its existing products which are capable of defeating the other products existing in the same field. Apart from these the sales can also be raised through adopting to new code of conduct which has the capacity of raising the present scale of operations.
Threats – Every business operate in a dynamic surroundings and it is important that same are identified in advance so that corrective actions are taken in advance. Change in the present political conditions can affect the functioning of business as it is not necessary that every government supports the automobile industry and an unfavourable change can affect the profit margins or scale at which business is operating