Rolls Royce (Essay Sample)

Rolls Royce
Name of student (First name, Second name initial, Third name)
Institutional affiliation
Rolls Royce
Rolls Royce is an engine manufacturing company dealing with the entire auto industry. It manufactures automobiles, aerial vehicles such as jets, defense material used in the military as well as maritime vehicles. The aerial sector of Rolls Royce deals with gas turbines which are used for both civilian and military aircraft. In addition, the company deals with production of turbines which are used for electricity generation in different platforms such as Hydro electricity production turbines as well as Geo thermal production turbines. Rolls Royce’s mother company is BMW and operates in Europe, North America, Australia, Africa and Asia. Rolls Royce is one of the most respected engine manufacturing companies in the world and is also one of the largest. The company’s headquarters are in London UK and employs approximately 40,000 people. In 2011, the company made a whopping $1.5 billion in profit up from $850 million in the previous financial year. Since it is a first quality manufacturer, Rolls Royce’s target customer base is the rich and wealthy. Its automobile sector is the most advanced of all the segments.
Strengths
Rolls Royce has a reputation of producing high quality products in all the segments it deals with. This has made it weather a lot of storm especially during the recent financial crisis which left many companies cripples as seen in GM United States and others. The brand Rolls Royce is one that most high end customers reckon with and therefore, many keep buying despite the global turmoil. The company’s reputation of maintaining quality as suggested by Helms and Nixon (2010) has ensured that it remains afloat in tough financial climate. I9n addition the diversification which the company has established in its manufacturing model ensures that production is cheaper since most of the products are manufactured close to the markets and therefore saving on the shipping costs. Since it has established manufacturing branches in most of its major markets, it makes it cheaper in terms of importing raw materials and exporting back the finished product as applies in Valentin (2001) at resource view perspective.
Secondly, the company is a trusted supplier of military hardware for the UK government. This puts it above the other competitors since it has a ready contract with the government while others have to begin from scratch. Most of the military purchases include multi-billion dollar contracts which run for years making it very stable financially. Ensuring such a relationship with the government is very critical for its survival in the British market (Cohen 1995). Moreover, the company operates in as many as 50 countries where its products hit the market as soon as they are launched making it access a wider market as compared to some of its competitors.
Weaknesses
In its bid to supply high end and expensive products, the company has ended up locking a lot of customers from its target group since most will not be able to afford such products. This means that it loses a lot of revenue and profits as Dyson (2002) terms it, which would be gained if it started manufacturing both low end and high end products and leave the customer to choose for him/herself. In addition, the company loses a lot of income which would have been attained from the unexplored countries. Some of the countries are large enough to sustain growth in the company for a long time (Cohen, 1995). This means that if the company were to venture in the growing economies, its revenues would shoot up by a very big margin. The global financial crisis has served to teach a lot of entrepreneurs that even the developed economies are not well cushioned to repeal the effects of financial meltdown and United States is a good example where companies has to be bailed out to survive. The European Union (one of the core markets for Rolls Royce) is still in the woods and therefore most of the auto companies from that region have to depend on developing markets to keep moving.
The company is also having a very huge wage bill especially in its indigenous markets such as the UK, US and Germany. This is because the cost of labor in these countries is usually high as compared to wage bill in developing countries. This bill in the end becomes one of the greatest challenges for the company forcing is to lay people off for fear of reducing the remunerations for the employees.
Competition
Manufacturing industry has been one of the most competitive sectors of the economy. In UK for example, there are very many manufacturers of both high end and low end automobiles and engines and therefore Rolls Royce has been having competition from its own backyard spreading to international markets. German manufacturers are some of the most advanced group in the world and have been challenging the company on all ends, by applying the strategies suggested by Ronen and Pass (2007) in achieving full resource utilization. Auto makers such as Mercedes Benz, Porsche, BMW, and Audi among others are so advanced such that they often beat Rolls Royce in the high end market. Siemens, also a German manufacturer is also involved in manufacturer of heavy industry appliances and poses a serious threat to Rolls Royce.
There is also the threat of new entrants such as the Chinese manufacturers who are fast taking huge chunks of both automobile and heavy industry engine manufacturing. Recently a Chinese contractor was given a long term contract to install nuclear plants across the country. This sounds alarm bells for companies such as Rolls Royce which have been enjoying government support for a very long time. In addition, in some countries such as China, cost of production is very low as compared to places like US or Europe; this enables their products to be more competitive when they get into the European markets. In fact, the threat of Chinese companies tak...