Rolls Royce - Report Example

Rolls Royce: Possible Future Structure for Maximizing Growth and Profitability After establishing its reputation as a builder of excellent cars and large engines in earlier half of the twentieth century, the Rolls Royce brand now enjoys a market position as the global leader in the manufacture of aero engines and caters to international demand in both the civil as well as defence sectors. The company initially established its name in the automobile sector as a niche class in itself and catered to the rich and famous with its exclusive luxury models, which had a reputation of unparalleled quality and reliability. Rolls Royce diversified into manufacturing aircraft engines during the Second World War and with the use of innovative technologies as well as application of sound business strategies by its owners and managers, emerged as the leading supplier of engines and energy solutions in market segments wherever the demand for sophisticated technology existed. Its automobile section went through numerous upheavals and takeovers and has now attained a secondary position which has been entrusted to another historical giant of the automobile industry, The BMW Car Company of Germany. Presently the company focuses more on aircraft, land and marine engines as it has an established reputation of being the leading supplier to the major aircraft manufacturers in the world including Boeing and Airbus. The company now boasts of being a provider of integrated power systems which cover all terrains- land, sea and air (rolls-royce.co.uk). The organizational structure in Rolls Royce follows a traditional hierarchical pattern which incorporates a large collaborative structure as an extended enterprise of a conglomerate with numerous partners and manufacturing facilities located worldwide (codesnet.polito.it). The assembly sites for Rolls Royce engines are primarily located in the United Kingdom and raw materials are sourced globally with most European countries serving as fist tier suppliers. The Head office is located in Derby (Midlands) with other major divisions in Scotland and Bristol. Another large joint venture is located in Germany. Rolls Royce traditionally draws its manpower in from of elite skilled personnel, employed after careful selection from the best in engineering, business and research categories. The company has a well defined hierarchy headed by the non-executive chairman of the board, Simon Robertson who is 67 yeas old (Reuters.com). John Rose, who doubles up as the Chief executive and executive director is assisted by a stream of Presidents who look after the energy, marine, nuclear, civil aerospace, defence aerospace, gas turbine supply chains respectively. Rest of the hierarchy involves officers who control diverse sections common to such large organizations such as the finance, personnel, human resources, global corporate development, procurement, manufacturing, etc. Eight non executive independent directors assist in the overall control of the Rolls Royce Company (Reuters.com). Due to its dominance and tremendous share of the aviation and the defence sectors in major developed as well developing countries of the world; the Rolls Royce Company has been able to keep a large chunk of business in its kitty largely due to maintenance of high quality standards and exclusivity of its products. However, the recent worldwide recession has scorched this juggernaut too as reflected in the fluctuation of its stock in the last two years. The recession has also forced the company to initiate proceedings for downsizing and it intends to cut 2000 jobs in the current year, 2009 (news.bbc.co.uk). The total manpower of Rolls Royce is 39,000 worldwide, out of which 60% of the workforce is located within the United Kingdom. The company has however been able to secure many prestigious projects worldwide during this period which promise to keep it afloat for the forthcoming years (www.rolls.royce.com). The company has kept abreast of the latest developments in information and communication technology and incorporated innovative technologies to increase automation and coordination (Griffiths, 2008). Royce has a niche market segment in the world and in order to sustain it, it has to strengthen its core structure of hierarchical organization. The people selected for eminent positions must possess leadership and motivational qualities and develop better relationships within the organization with scope for contributions from the lower order as well. At the same time they should possess and exercise the power to control subordinates through reward and punishment. Competition from rival organizations, changing politico-economic scenarios, highly discerning customers and rapid changes in society require the market orientation of any organization to be a oriented according to latest market forces. Traditional hierarchical organizations need to modify their setups by initiating measures to get inputs from, and coordination between all departments in a cohesive manner (Lafferty & Hult, 2001). The present world scenario and organizational setups include persona from a wide variety of cultural backgrounds who have to be harnessed into a single entity by motivation and encouragement. Modern information and communications channels allow for rapid sharing of ideas and early identification of problems. A more cooperative culture needs to be setup within the organization where each member shoulders the responsibility assigned to him or her without the fear of being blamed for any lapse. Such lapses need to be corrected at an early stage to plug any holes within the organizational and operational structure. Tasks for different sections and members need to be clearly defined and structured according to well identified goals. The company needs to develop future strategies to identify new products and markets for its core components and initiate timely changes in strategy to meet the impending fuel crisis. The products accordingly need to be designed keeping in view fuel efficiency and performance standards which are already the best in the industry. Although defence interests of any country are vital to its existence, much escalation in military related technologies is not expected in the future as the world gradually realizes the futility of war. A minimum military deterrent will therefore be maintained by all countries as the focus shifts more towards economic resurgence of the business and civil sectors. International travel has increased exponentially during the last few decades and the number of people travelling by air is expected to be 2.5 billion in the current year (Rolls-Royce.com). The company should therefore focus on developing technologies which cater to this burgeoning demand. Concerns for safety in flying involve both travellers as well as insurance companies and building fail-safe engines is the need of the hour. Managers at Rolls Royce have already shifted the focus from a mere engineering perspective to the company becoming more of a business and service oriented entity. It still enjoys a premier position as the market leader in aircraft engines and spare parts which it needs to sustain in the future. Although competition is a primary factor in the modern era, Rolls Royce at present is immune from this fear as establishment of a manufacturing facility of such magnanimous proportions and variety is almost impossible in the near future. References Competing within a changing world, online article accessed Dec. 16, 2009 at: http://www.rolls-royce.com/Images/competition_tcm92-11184.pdf Griffiths, M.A. 2008. Zeroshift ITC at Rolls Royce, online document downloaded from: http://www.sbac.co.uk/community/dms/docdetails.asp?txtDocPK=4568&m=1&hidedetails=1 on Dec. 15, 2009. Lafferty, B.A. & Hult, G.T.M., (2001), A synthesis of contemporary market orientation perspectives, European Journal of Marketing, 35, 1/2. Rolls Royce UK website, accessed Dec. 16, 2009 at: http://www.rolls-royce.co.uk/ Rolls-Royce UK Aero-engine cluster, online pdf document accessed Dec. 16, 2009 at: http://codesnet.polito.it/Laboratory/Format_V-LAB_final_Aero.pdf Rolls-Royce Group PLC (RR.L), online company information accessed Dec. 16, 2009 at: http://www.reuters.com/finance/stocks/keyDevelopments?symbol=RR.L Rolls-Royce plans 2,000 job cuts, online news story accessed Dec. 16, 2009 at: http://news.bbc.co.uk/2/hi/business/7739026.stm Rolls-Royce website accessed Dec. 15, 2009 at: http://www.rolls-royce.com/cr/index.jsp Read More