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Executive Summary

The following report will determine the strategic position of Rolls-Royce and the environmental impact of a new technology upon that strategic position. The report will analyse and evaluate the role and impact of short to medium range single aisle narrow body aircraft on the strategic position of Rolls-Royce. The report will focus on the civil aerospace business of Rolls-Royce and will use Rolls-Royce Inchinnan as a base model.
The Boeing 737 series and Airbus A320 are the most popular aircraft ever produced with a 737 landing in the world every five seconds. The 737 in particular will reach the end of its service life within the next ten years. Southwest airlines are requesting an overdue replacement with most airframes living thirty years, the original 737 was released in 1967. The effect of the next generation 737, released in 1998, retiring will leave a considerable gap to be filled. Rolls-Royce does not power the Boeing 737which is monopolised by Pratt and Whitney and General Electric. Should Rolls-Royce attain a share of this market it will become the largest contract ever undertaken by Rolls-Royce. The new aircraft is currently under development and is expected to form the latest of aerospace technology such as composite structures, geared turbofans or open rotor designs. All of the large aerospace manufacturers are currently vying for involvement in the programme for should the new edition emanate the previous, the returns will be substantial.

Contents

Executive Summary..................................................................................................................Page i
Contents.....................................................................................................................................Page ii
Chapter1 Introduction................................................................................................................Page 3
Chapter 2 Background...............................................................................................................Page 4
Chapter 3 Environment.............................................................................................................Page 5
Chapter 3.1 Internal Environment.................................................................................Page 5
Chapter 3.1.1 Purpose and Value......................................................................Page 5
Chapter 3.1.2 Stakeholders................................................................................Page 6
Chapter 3.1.3 Organisation of Resources.......................................................Page 8
Chapter 3.1.4 Culture........................................................................................Page 13
Chapter 3.1.5 Processes and Competencies...................................................Page 17
Chapter 3.2 External Environment............................................................................Page 19
Chapter 3.2.1 PESTL......................................................................................Page 19
Chapter 3.2.2 Five Forces..............................................................................Page 22
Chapter 4 SWOT Analysis...................................................................................................Page 24
Chapter 5 Strategy and Strategic Position...............................................................................Page 27
Chapter 6 New Technology...................................................................................................Page 28
Chapter 7 Impact on Strategic Position..................................................................................Page 29
Chapter 8 Conclusion...........................................................................................................Page 36
Chapter 9 References...........................................................................................................Page 37
Chapter 10 Appendices.............................................................................................................Page 38

Chapter 1 Introduction

The Boeing 737 replacement programme, incorporating advanced composite technology, will require a 21st century power plant system. Of the ‘big three’ civil aerospace power plant providers Rolls-Royce have provided an option, ‘the open rotor turbine’, which is capable of accommodating the future demands of passenger transport both environmentally and economically.
This paper will critically evaluate how the emergence of the Boeing 737 replacement programme will impact upon the future strategic position of Rolls-Royce.
With the current strategic position, the effect of an emergent technology in the form of the Boeing 737 replacement programme can be investigated thus highlighting the acclimation needed.
Rolls-Royce creates value in the form of economic value through production of civil aviation gas turbines, amongst other products, which generates 44% of their revenue as of 2009 (Rolls-Royce Annual report 2009). For the duration of this paper, focus will be given to the civil aerospace business for civil aerospace would be the strategic business unit responsible for the Boeing 737 replacement programme.
The Boeing 737 replacement programme will affect the entire organisation across all of its businesses. This paper will apply its models to Rolls-Royce Inchinnan as and when required, whilst considering the entire organisation at a strategic level.

Chapter 2 Background

Charles Stewart Rolls and Frederick Henry Royce were introduced in Manchester in 1904 and in 1906 Rolls-Royce were formalised and began trading as an automobile manufacture. In 1906 the pair moved to Derby and set-up headquarters where it has since remained.
Today Rolls-Royce employ over 38,000 staff and are a global business providing integrated power systems for use on land, at sea and air. A decade ago Rolls-Royce had an order book of £13.2 billion and share in civil aerospace has expanded from 27 per cent in 1999 to 34 per cent in 2009 (Pfeifer 2010). The 2009 order book stood at £58.3 billion, which is the product of four strategic business sectors (Drew 2010). The Trent XWB has achieved orders in excess of 1100 and preliminary engine testing has begun of June 2010 with service entry of 2013 (Howie et al 2010).
Rolls-Royce expect access to US$2 trillion over the next twenty years, comprising of US$1,400 billion for civil aerospace, US$450 billion for defence aerospace, US$320 billion for marine and US$120 billion for energy (Rolls-Royce Annual Report 2009) .
On the new Boeing 787 and the Airbus A350 XWB families, Rolls-Royce has achieved a market share of 64 per cent (Sykes 2010).
Rolls-Royce Inchinnan is an integral part of the Rolls-Royce gas turbine supply chain and a key manufacturing centre for Rolls-Royce gas turbine compressors. Inchinnan currently employs 1200 staff and a floor plan of Inchinnan is shown in Appendix A highlighting the cradle to grave manufacturing approach adopted at Inchinnan.
Inchinnan was opened in 2004 and manufactures approximately 1.2 million blades and vanes annually into the global supply system.
Further reading on the background of Rolls-Royce can be found in Appendix B.

Chapter 3 Environment

The environment which Rolls-Royce operates within is static complex.
The environment is static due to the pace in which change occurs at, determined by manufacturing and design capability. Aerospace companies such as General Electric, Pratt and Whitney and Rolls-Royce invest heavily in Research and Development (R&D) to maintain their competitive edge through technology. The complexity of the environment which Rolls-Royce operates within is difficult to break down due to the complexity of the supply chains involved.
3.1 Internal Environment
The internal environment is affected by factors from within Rolls-Royce. These factors will discussed in detail and allow an analysis to be performed which will show Rolls-Royce’s strengths and also its weaknesses.
3.1.1 Purpose and Value
Rolls-Royce delivers economic value through reliability, integrity and innovation. These three terms are Rolls-Royce values.
Rolls-Royce’s vision is “To be trusted to deliver excellence.” Rolls-Royce’s vision is where they wish to be in the future, with Rolls-Royces showing their commitment to quality. The term trusted personifies that Rolls-Royce are aspiring for perfection to be delivered to their customers each and every time.
Rolls-Royce’s mission is not stated, however from the research within the paper, Rolls-Royce’s reason for existence is to provide solutions in a global market both ethically and efficiently. The products produced by Rolls-Royce power 400,000 people into the air at any one time, provide energy for homes and provide the power to defend (Rolls-Royce Group Story 2010).

3.1.2 Stakeholders
The stake holder map is shown in Figure 3.1 and highlights the related positioning to specific strategies within Rolls-Royce. Further information relating to the chosen stakeholders is shown in Appendix C.
The ‘Minimal Effort’ square of the matrix is designated for individuals whom are not a priority in relation to Rolls-Royce’s strategy unless the environment changes. Should students start to constitute a large part of Rolls-Royce work force, the university teaching standard would be a great concern to Rolls-Royce. .
The ‘Keep Informed’ square of the matrix is devoted to stake holders who hold high level of interest but low level of power. Constituents include unions, suppliers and sub-contractors. They have a high interest as their business or members will hinge on the direct performance of Rolls-Royce, yet they will have little power to alter that performance.
The third sector of the matrix is ‘Keep Satisfied’. Stakeholders in this situation find themselves with high vested power but have relatively low interest. Westminster have a large, rarely ever exercised, direct power over British organisations such as Rolls-Royce but the interest is low unless an eventuality occurs. Such an event did occur when Rolls-Royce were nationalised in 1971.
The final frame in the matrix is the ‘Key Players’. Stakeholders in this category are very much the decision makers directly or in-directly. Rolls-Royce stakeholders of this level will include the executive board, CEO and the Civil Aviation Authority (CAA). Due to the high monetary value associated with Rolls-Royce products customers are often included throughout the process from design to installation.

Low
Low
Level of Interest
Level of Interest
High
High

Students
Students

Sub-Contractors
Sub-Contractors
Distributor
Distributor
Supplier
Supplier
Universities
Universities

Low
Low
Keep Informed

Keep Informed

Minimal Effort
Minimal Effort

Technical Staff
Technical Staff

Non-Technical Staff
Non-Technical Staff

Level of Power
Level of Power
Unions
Unions
Competitors
Competitors

Airframe Manufacturers
Airframe Manufacturers
Council
Council

CAA
CAA

Customers
Customers
High
High
Key Players
Key Players
Keep Satisfied

Keep Satisfied

CEO
CEO
SEPA
SEPA

Group Executive
Group Executive
Westminster
Westminster

Executive Board
Executive Board

Figure 3.1-Stakeholder Map (Mendelow 1991)
Figure 3.1-Stakeholder Map (Mendelow 1991) 3.1.3 Organisation of Resource The organisation of resources for Rolls-Royce is shown in Figure 3.2. The BCG shows the relationship between market share and market growth. The chosen products from the BCG are discussed in Table 3.1.
The higher the markets share the higher the revenue to the organisation. Return on investment from market share is shown graphically in figure 3.3; this graph is known as the experience curve. A description of Rolls-Royce products is shown in Appendix D.
The product life-cycle for traditional engine is shown in figure 3.4.
Rolls-Royce generates a large amount of investment from servicing of their products. This would be placed into the cash cow business unit as a customer is tied into service contracts with Rolls-Royce. This has the benefit of revenue but also maintains a strong relationship with the customer and Rolls-Royce.

High
High
Market Share
Market Share
Low
Low

BR710
BR710
Fuel Cells
Fuel Cells

Trent 900
Trent 900
Trent XWB
Trent XWB

Trent 60
Trent 60
TP-400
TP-400
The Star
The Star
High
High
Problem Child

Problem Child

F136
F136
EJ200
EJ200
Trent 1000
Trent 1000
Tidal Turbines
Tidal Turbines

Cash Direction
Cash Direction
Growth
Growth

V2500
V2500

Trent 700
Trent 700
RB199
RB199

PWR2
PWR2
Low
Low
The Dog
The Dog
Cash Cow

Cash Cow

Trent 800
Trent 800
Tay
Tay

Trent 500
Trent 500
RB211-535
RB211-535

Figure 3.2-BCG Matrix (Henderson 1979)
Figure 3.2-BCG Matrix (Henderson 1979)

Engines | Justification | TP-400 | The TP-400 is a 'Star' for it is in production and is the most powerful turbo-prop in the world with the monopoly of the A400M for several European countries. The position of the TP-400 on the lifecycle model is growth. | Trent XWB | Rolls-Royce over 1000 orders for the engine and not one has been delivered yet. This places the Trent XWB in the problem child box. On the life-cycle model the Trent XWB is growing for they have secured significant orders and the number is expected to increase. | Trent 800 | The Trent 800 has been in service for over fourteen years and has secured a significant share of the civil aerospace market for its thrust class making it a cash cow. The revenue returned from the Trent 800 will be the capital for engine programmes such as the Trent XWB. On the life-cycle model the Trent 800 will be in the shake-out phase and starting to approach maturity. | Trent 500 | The Trent 500 is a cash cow also it has established itself as a significant player in its thrust class. On the life-cycle model the Trent 500 is approaching maturity as the market is very stable. | Trent 700 | The Trent 700 is a cash cow due to the time in market and the significant share the engine holds of its market. The engine will feature in the maturity sector of the life-cycle. | Trent 900 | The Trent 900 is powering the super jumbo A380 from Airbus and holds a large part of the market. The engine is self-funding placing it within the star unit. On the life-cycle model the engine is very much growing. | Trent 1000 | The Trent 1000 is a problem child for the engine has been developed for the Boeing Dream liner which due to the novel design and manufacturing techniques, the aircraft has been beset with problems resulting in delays. The Trent 1000 is in the growing stage of the life-cycle model. | Trent 60 | The Trent 60 is a star for it is within a market with competitors such as Siemens, Mitsubishi and GE. All of whom invest heavily in their products and dwarf Rolls-Royce. The Trent 60 is a large player in the market allowing it to self-fund. | RB211-535 | The RB211-535 is a dog for it is being phased out of service but is kept in order to prevent the competition securing market share. The RB211-535 is now in decline. | BR710 | The BR710 is a star for it holds a significant share of its market and is self0funding. This is because the business jet market will increase as millionaires will increase. The engine life-cycle is growing. | RB199 | The RB199 is a cash cow for it is the single engine for the RAF Tornado. On the life-cycle model it is mature and should be phased out for the Typhoon but due t the spending review this will not be the case. | PWR2 | The PWR2 is a cash cow for it is the single power source used by the Royal Navy. On the life-cycle model the PWR2 is very much growing for the rest of the Astute are being manufactured at time of writing and the Trident programme may be renewed within the next decade. | V2500 | The V2500 is a dog for it was introduced as the engine to rival the CF56 which flew on the Boeing 737. The market growth is low and the share is low for the engine. The life-cycle model would have the V2500 placed as in decline. | F136 | The F136 is a star for the market share of the engine is high and the market will grow strongly. The USA spends over 40% of the worlds defence spending and the F136 is the aircraft which will replace all existing models. On the life-cycle model it is growing strongly. | Fuel Cells | Fuel cells are very much a problem child. The technology of fuel cells is relatively un-proven but due to the potential rewards of the technology several organisations are investing significant capital. On the life-cycle model, fuel cells are under development. | EJ200 | The EJ200 is the engine powering the Typhoon Eurofighter. It is a star as the market will grow and the EJ200 is the sole engine for the Typhoon. The EJ200 is growing. | Tidal Turbines | Tidal Turbines are a problem child for the technology requires a huge amount of investment and as of yet has seen no returns. The market share for Rolls-Royce is low but should the technology prove viable Rolls-Royce will have not a turbine but also the means of installing and commissioning the turbine from experience of other markets. Tidal Turbines are very much in development. | Tay | The Tay is a dog for the market is low growth and the share of the Tay engine is low due to other Rolls-Royce engines being introduced. The Tay is a very mature engine. |
Table 3.1-BCG Matrix Justification
Table 3.1-BCG Matrix Justification

Return on Investment
Return on Investment
Market Share
Market Share | |
Figure 3.3-Experience Curve
Figure 3.3-Experience Curve | | | | | | | | | | | | | | | | | | | | | | | | | |

Cash Flow
Cash Flow

| Development | Growth | Shakeout | Maturity | Decline | | | | | | | Users/Buyers | Very few except airlines with vested interest. | Trial of engine from interested parties. | Growing selectively of purchase | Engine trialled with most major airlines and is market choice | Usage has now declined | Competitive Conditions | Very few competitors as most large scale organisations will not see significant returns. | Competitors will enter and fight for early share by getting their trialled product marketable first. | Weakest competitors will be lost and prices will start to fall due to ramp up in volume production | Competitors struggle to maintain share and emphasis is now on efficiency. | Competitors exit distribution is much more selective. |
Figure 3.4-Life-Cycle Model (Hill and Jones 1998)
Figure 3.4-Life-Cycle Model (Hill and Jones 1998)

3.1.4 Culture
Miles and Snow (1978) believe that culture can be divided into four varying types, based on how an organisation reacts strategically. Rolls-Royce is a defender culture. Rolls-Royce is operating in a very stable and mature market, defending their share from large competitors such as General Electric. Rolls-Royce structure is very much hierarchical. Senior management individuals are shown in Appendix E.
The cultural web is shown in Figure 3.5. The cultural web is made up of seven frames of reference with the paradigm in the centre. The rationale is shown in Table 3.2. The paradigm is the central thought of the organisation and is often taken for granted or subconsciously recognised within the organisation.
The paradigm of Rolls-Royce is Quality, Regulated, Professional and Trust. Quality is the backbone of the Rolls-Royce brand and is the first priority in every aspect of their processes and methodology.
Regulated is another school of thought as Rolls-Royce must be seen to maintain a high standard of work. This differs from quality in that no defects are created but regulated shows that the standard of work must be high.
Professional is a paradigm of Rolls-Royce for the employees must act with integrity. This can be in the form of not taking bribes or acting responsibly for the environment.
Trust is the final Rolls-Royce paradigm for Rolls-Royce engines are expected to operate effectively, safely and efficiently. Trust is becoming more and more prevalent for generation Y will not wait on a runway for thirty minutes whilst an engine is checked.

New Facility
Good old days
Politicians
CEO

New Facility
Good old days
Politicians
CEO

Acronyms
Quality
Excellence
Cleanliness
Acronyms
Quality
Excellence
Cleanliness

Weekly Meetings
Christmas Party
Starting Times
Weekly 5s

Weekly Meetings
Christmas Party
Starting Times
Weekly 5s

Management
Executive
Customers
Silos
Management
Executive
Customers
Silos
Quality
Regulated
Professional
Trust

Quality
Regulated
Professional
Trust

Responsibility
CAA
Employee Shares
Unions
Responsibility
CAA
Employee Shares
Unions
Hierarchical
Tribal
Tayloristic
Competitive
Hierarchical
Tribal
Tayloristic
Competitive

Figure 3.5-Cultural Web (Johnson et al 2005)

Symbols Reason | Symbols Justification | Logo | Rolls-Royce holds the Rolls-Royce plc logo which is the second most recognised logo in the world. | Acronyms | Acronyms are efficiently used by Rolls-Royce to save time provided that you aware of the meaning. | Quality | Brand is synonymous with quality. | Professional Excellence | Rolls-Royce is recognised as a centre of excellence in that professionalism is maintained at all levels. | Cleanliness | Rolls-Royce prides itself upon the 'clean room' standard of the facility. | Director Location | All employees sit together which provides a symbol of a flat management structure. | | | Power Reason | Power Justification | Executives | The decision makers have an over-riding authority. | Management Structure | Decision makers at the business level of Rolls-Royce. | CAA | Regulators have huge amount of power over Rolls-Royce, should any significant non-conformance occur then the CAA can halt production and demand a recall. | Politicians | Politicians have the power to change legislation away manufacturing which could affect Rolls-Royce. | Silos | Silo structure will prevent Rolls-Royce to evolve quickly to accommodate significant change. This is also shown by the hierarchical structure of management. This will provide q blockage to change. | Customers | Especially with reference to design, customers can demand certain performance criteria. The change may not be as significant as the engine operating characteristics, could be the simple mounting brackets used to hold the engine. The power would be there to not accept or not allow conformance. | | | Organisational Structure Reason | Organisational Structure Justification | Hierarchical | Within Rolls-Royce there exists an us and them attitude. | Tribal | The forge quality is regarded, by the forge, to be the best quality but rotor machining disputes the claim. The tribal structure is very much that forge employees sit with forge employees at lunch etc. | Tayloristic | Work is segregated down into individuals. Ease of automation from this point on. | Competitive | Each department has its Right First Time results published along with scrap value encouraging competition between cells and departments. | | | Stories Reason | Stories Justification | New facility. | New forging facility opens at the back of Rolls-Royce Inchinnan shows that Rolls-Royce plc is investing for the future and Rolls-Royce Inchinnan is firmly in those plans. | The good old days | Employees discussing when times were busier and the old factory employed almost 10,000 employees. | Politicians | Some of the stories being that the new government is a villain and that the future could be uncertain. | CEO | The then CEO was viewed as a hero as he himself sought government investment and secured niche markets to safeguard the company and satellite sites like Rolls-Royce. | Change Agents | Employers from inside and outside the organisation whom implement new strategies and innovations. These are regarded as disrupting the flow and are just causing problems. | Employee outings "Jollies" | Jollies are professional company ventures such as meetings, conferences and training. Employees often bring back stories which make it round the organisation. Not always a good thing. | | | Controls Reason | Control Justification | Responsibility | Each individual is responsible for their own work. Each individual piece work should be the best they can deliver. This is checked as each individual piece of work is checked from every internal supplier to internal customer | CAA | The CAA fully regulate every part number within Rolls-Royce. This prevents any failures entering into engine build which could be disastrous. | Customer Share Scheme | Customer share incentives encourage employees to perform as should RR plc do well then RRI will benefit and the shares will increase in value. | Unions | Unions are control to prevent the unfair treatment of their members from the employers. | | | Routines and Rituals | Routines and Rituals Justification | Weekly meetings | This routine is done to update employees on the internal environment and to pass information up and down the management tier. | Weekly 5S | The 5s is done to ensure that nothing unnecessary is done and that only what is required is kept. This is also lean manufacturing. | Starting times | The working day times are the same for every employee that is on day-shift or 'staff'. | Christmas Party | Held every year as a ritual to thank the employees for the year’s hard work. | Table 3.2-Paradigm Justification
Table 3.2-Paradigm Justification

3.1.5 Processes and Competencies
By analysing the processes it is possible, using the value chain, to identify where value is generated or lost within Rolls-Royce. The value chain for Rolls-Royce is shown in Figure 3.6.
Secondary activities can be outsourced or bought into the company through a merger or acquisition. Several centres for Research and Development (R&D) are now created within universities such as Sheffield and Manchester. Rolls-Royce will invest capital as a means of tailoring research towards the gain of Rolls-Royce whilst avoiding the high cost of bringing in salaried research staff to the organisation.
Within the primary activities, the core competencies have been highlighted. The core competencies are the competencies which differentiate Rolls-Royce from its competitors. The greatest competence which differentiates Rolls-Royce to its competitors in the in-bound logistics activity is the staff. The staff value is created from the training, education, attitude and support. Should the quality of the training decrease then the quality of the staff would suffer also.
The core competence in the operation is the inspection. Rolls-Royce will inspect to a substantial degree in order to differentiate them from their competitors. Rolls-Royce distribution network is another of their core competencies in the outbound logistics as it allows holding a high supplier and distributor loyalty.
The core competence in the marketing and sales activity is the reputation of the company based on its previous work. Right first time is very much a part of everyday life at Rolls-Royce plants such as Inchinnan.
The core competence in the services is failure. A huge amount of condition monitoring is applied to assets such as aircraft engines and by using the latest technology, failures are avoided. Rolls-Royce expects that services will account for half of their revenue over the next twenty years.

Support Activities
Support Activities

Margin

Margin

Margin

Margin
Infrastructure
Procurement
IT
HR and Training
Research and Development
Infrastructure
Procurement
IT
HR and Training
Research and Development

Service
Security
Customer services
Education
Repair
Maintenance
Installation
Failure
Condition Monitoring

Service
Security
Customer services
Education
Repair
Maintenance
Installation
Failure
Condition Monitoring

Marketing and Sales
Company -Reputation
Company -Brand
Advertising
Previous work
After sales

Marketing and Sales
Company -Reputation
Company -Brand
Advertising
Previous work
After sales

Outbound Logistics
Collect
Conveyors
Sort
Store
Labelling
Packaging
Distributing

Outbound Logistics
Collect
Conveyors
Sort
Store
Labelling
Packaging
Distributing

Operation
Inspection
Coatings
Finishing
Testing
Forging
Grinding
Milling
Turning

Operation
Inspection
Coatings
Finishing
Testing
Forging
Grinding
Milling
Turning

Inbound Logistics
Materials
Machines
Tools
Sub-Contractors
Coolant
Staff
Material Handling
Material Control
Testing equipment
Transportation
Cleaning
Refuse Collection

Inbound Logistics
Materials
Machines
Tools
Sub-Contractors
Coolant
Staff
Material Handling
Material Control
Testing equipment
Transportation
Cleaning
Refuse Collection

=
=
Efficient Or Effective
Efficient
Or Effective

Primary Activities
Primary Activities

Figure 3.6-Value Chain (Porter 1985)

3.2 External Environment
The external environment is all the influences from outside the organisation which will have a direct effect. Such factors are current competition, new competitors and buyers. In this chapter a PESTL analysis will be developed with a five forces framework.
3.2.1 PESTL
The key points from the PESTL analysis are shown in the corresponding Table 3.3. Political Reason | Political Justification | Defence Spending Review | Rolls-Royce manufactures a large amount of military parts. This will also be affected by countries such as the USA and there defence cuts. | War | Rolls-Royce manufacture a large number of military parts so war would increase the number of military aircraft orders. This is true of the TP-400. | Change of Government | This would affect Rolls-Royce in a significant number of issues but focus being made to unions, investment potential, taxation and international relations. | Exchange Rate | A big market is Asia so a good exchange rate is important for selling. It is also important so Rolls-Royce can buy parts cheap from countries such as the USA. | Political Unrest | Should relations with a country break down, Rolls-Royce won’t be able to trade n that country as Rolls-Royce are seen as very British. | Tax on Exports | Tax could be increased on exports, costing Rolls-Royce to export. The tax could also be decreased. | Tax on Imports | Cost Rolls-Royce more for example to import materials. The tax could also change for other countries making it more expensive to buy from. It is a 40% tax to import steel into the USA. | Minimum Wage | Minimum wage is political as it is set by the government. Would increase the labour cost to Rolls-Royce. | National Insurance Increase | National Insurance increase could only be instigated by the government and would create an increase cost on what Rolls-Royce buys but also on staff wages. |

Economic Reason | Economic Justification | Double Dip Recession. | Customers unable to invest and banks will not lend capital to Rolls-Royce. | Rising Interest Rates | This would cost Rolls-Royce more money to purchase materials. | Rising Unemployment. | This will affect Rolls-Royce for the government will pay income support and this raises taxes to Rolls-Royce. | Lack of Talent | Unable to secure any high potential employees to benefit Rolls-Royce. | Retirement Age | Rolls-Royce must pay into pensions for longer. | Banks not Lending | Cannot get accepted for credit for investment. | New Competitor | A new competitor could decrease Rolls-Royce's market share. | Old Competitor Increase Investment | A current competitor to increase investment may allow their products to be more effective directly affecting Rolls-Royce. |

Social Reason | Social Justification | Employee Bereavement | Employee suffers emotional stress and will miss work. | Lethargic Employees | Employees becomes in-efficient and Rolls-Royce suffers as a result. | Lateness | Removing time from Rolls-Royce. | People Smoking. | Costs time which could be used for work. | Sick Days | Cost Rolls-Royce money in the form of sick days. | Poor Health | Costs sick days and lower working life. Combated with cycle to work schemes. | Green Company | Associated aerospace companies are not seen as green companies. | Image | Socially viewed as a good employer to work for. | Apprentice Programme | Essentially viewed as a good apprentice programme with prevalent nepotism. | Energy | Cutting down on office power usage. | Societies | Supporting Rolls-Royce golf clubs and Rolls-Royce cycle teams. | School Involvement | Creating future engineers by involving in schools and helping with local communities. | University Involvement | Offering students placements and projects which provides practical experience and helps build CV's. | Unions | Represent the workforce. |

Technological Reason | Technological Justification | Paperless office | Low cost by keeping information transfer purely electronic. | Wireless Communication | Faster communication with wireless technology and also a safety issue as no trip hazard. | Second life | Rolls-Royce employees will not need to fly to international or domestic meetings. | 737 Introduction | Potentially the largest civil aerospace contract ever. | New Travel Design | Travel revolution such as teleportation would damage Rolls-Royce. | Hot Desking | Could be used to prevent the use of solid computer terminals and employees would be encouraged to keep mobile. | Cloud Computing | Cloud computing would use a server farm so that people in Australia could use the power when UK standing down. | Robots for Cleaning | Robots could be used to clean the floors. | Robots for Machining | Robots are currently used for various machining operations and this could be expanded. | Single Fixture Machining, | Single generic fixtures would prevent the use of fixture stock and index time. | BPR introduction | Move away from silo structure. | Forward Integration | Rolls-Royce could buy up its distributors. | Reverse Integration | Rolls-Royce could buy up suppliers. | Horizontal Integration | Rolls-Royce could move into new markets. |

Law Reason | Law Justification | HSE | Must be prevalent within Rolls-Royce to protect employees. | Break Allocation | Employees must be allowed a break every three hours. | Fresh Drinking Water | Fresh water must be provided to the employees. | Clean Surroundings | Work area must be clean and tidy to prevent accidents. | Car Park Facilities | Allocated to provide space for employees vehicles. | Council Tax | Rolls-Royce must pay for council services | Council Amenities | Council will remove waste from site. | Special Waste | Organisations such as SEPA will monitor the output from Rolls-Royce. |
Table 3.3-PESTL (Johnson et al 2005)
Table 3.3-PESTL (Johnson et al 2005)

3.2.2 Five Forces
The five forces model identifies the competition within the sector that an organisation is working within. Figure 3.7 shows the model applied to Rolls-Royce. The connections are shown on the five forces model but these will not be discussed within this report.
The substitutes are other options instead of buying an engine from Rolls-Royce. As Rolls-Royce is directly linked to airframe manufacturers other options of travel will be the direct effect. E-mail spelt the end of Concorde for business travellers no longer required to be in New York less than four hours for an email could be there instantly. Rolls-Royce manufactured Olympus which powered Concorde.
Buyers and suppliers are linked as they have similar effects in constraining organisations. The mentioned suppliers supply not only materials but also services such as machining operations. Buyers for the civil aerospace business are airlines. Airlines have significant power over Rolls-Royce as they strive for environmentally air travel yet focus must be drawn to exactly what they wish to achieve.
New competitors are companies with enough capital to invest in the industry. Due to the complexity of the civil aerospace market a large amount of capital would be required. Samsung manufacture turbine parts for General Electric and have sufficient capital to invest. Other organisations such as NASA and EADS are already involved in the aerospace field.
Competitive Rivalry is the fifth of the five forces and is impinged upon by the other four forces, affecting Rolls-Royce’s relationships with their competitors. Listed are Rolls-Royce’s direct competitors in the aerospace market. General Electric is in the top ten of the world’s largest companies and precedes Rolls-Royce in the civil aviation market.
In order to compete in the aerospace market Rolls-Royce must provide high barriers to entry to prevent new competitors and high barriers of mobility for current competitors.

New Competitors
Samsung
NASA
EADS
Siemens

New Competitors
Samsung
NASA
EADS
Siemens

Bargaining Power
Bargaining Power
Threat of Entry
Threat of Entry

Buyers
British Airways
Virgin Atlantic
Emirates
Singapore Airlines

Buyers
British Airways
Virgin Atlantic
Emirates
Singapore Airlines

Suppliers
KHI
MTU
Leistritz
Goodrich

Suppliers
KHI
MTU
Leistritz
Goodrich

Competitive Rivalry
General Electric
Pratt & Whitney

Competitive Rivalry
General Electric
Pratt & Whitney

Bargaining Power
Bargaining Power

Threat of Substitutes
Threat of Substitutes
Substitutes
Shipping
Car
Train
Not Travelling

Substitutes
Shipping
Car
Train
Not Travelling

Figure 3.7-5 Forces (Porter 1985)
Figure 3.7-5 Forces (Porter 1985)

Chapter 4 SWOT

The Rolls-Royce strategic messages are shown in the analysis of the strengths, weaknesses, opportunities and threats (SWOT) in Figure 4.1. The SWOT highlights the potential strategic position and direction of the organisation.
From the SWOT the key points are listed;
Strengths-Rolls-Royse should seek to maintain their strong position by continually investing in R&D, maintaining their competitive edge.
Weaknesses-General Electric dwarf Rolls-Royce however but the pressure must be maintained through innovation.
Opportunities-Rolls-Royce must fully exploit all emerging markets through forward, reverse or horizontal integration.
Threats-Rolls-Royce is suffering the environmental impact due to operation within the delicate troposphere and must ensure their products constantly produce emissions as base as possible.
Bu using Figure 4.2, Rolls-Royce will protect and build upon their position in order to further increase their share of problem child’s whilst maintaining a high share in mature markets.

High Reliance on Aerospace
High Reliance on Aerospace
Powerful Brand Name
Powerful Brand Name
Reputation for Quality
Reputation for Quality

Internal Environment
Internal Environment
Tayloristic
Tayloristic

Innovative R&D
Innovative R&D
Large Market Scope
Large Market Scope
Strengths
Strengths
Weaknesses

Weaknesses

Large Product Range
Large Product Range

Investment in Emerging Technology
Investment in Emerging Technology
Union Power
Union Power
Powerful Competitors
Powerful Competitors

Stricter Emissions Target
Stricter Emissions Target
Nuclear Energy
Nuclear Energy

External Environment
External Environment
High Speed Trains
High Speed Trains
Renewable Energy
Renewable Energy
737 Contract
737 Contract

Threats
Threats
Opportunities

Opportunities

Oil Price Increase
Oil Price Increase
Increased Competitor Activity
Increased Competitor Activity
Increase in Air Travel
Increase in Air Travel

Figure 4.1-SWOT (Macleod 2001)
Figure 4.1-SWOT (Macleod 2001)

Existing
Existing
Product
Product
New
New

Product Development * Existing Capabilities * New Capabilities * Beyond Current Expectations
Product Development * Existing Capabilities * New Capabilities * Beyond Current Expectations
Protect/Build
* Consolidation * Market Penetration
Protect/Build
* Consolidation * Market Penetration

Existing
Existing

Market
Market

Diversification * Existing Capabilities * New Capabilities * Beyond Current Expectations
Diversification
* Existing Capabilities * New Capabilities * Beyond Current Expectations
Market Development * New Segments * New Territories * New Uses

*
Market Development * New Segments * New Territories * New Uses

*

New
New

Figure 3.1-SWOT (Ansoff 1988)
Figure 3.1-SWOT (Ansoff 1988)

Chapter 5 Strategy and Strategic Position

“Our consistent strategy is based on five key elements underpinned by core characteristics which have helped shape our business today across four key markets with an expanding product portfolio, an increasing contribution from services and a commitment to R&D creating high barriers to entry delivering a 20 year track record of growth” (Rolls-Royce Annual Report 2009). Rolls-Royce’s strategy references their core competencies shaping the markets. Rolls-Royce’s strategy highlights their commitment to the servicing of their engines.
The strategic position of Rolls-Royce based on the previous analysis in the report is Rolls-Royce sit very strongly within their markets. Rolls-Royce must however make full use of emerging technologies as they come available.
Rolls-Royce is excellent at pioneering technological advances in aerospace but must acknowledge the use of e-commerce and its benefits. Rolls-Royce operates within a global market and to reduce the cost of air travel both environmentally and economically, a means must be considered for the future. A potential adoptable means of doing so could be the use of Second Life.
Rolls-Royce sits strongly in their environment despite competing head-to-head with a multinational conglomerate. Rolls-Royce’s cash flow is shown in Appendix F. The confidence of Rolls-Royce to exploit their strategic position is shown by the dynamics of their mobility. The Crosspointe facility opened by Rolls-Royce in Virginia (USA) is a strong message of their intentions of progression on the world aerospace circuit. North America Civil Aerospace is expected to grow annually by 3% and to have a strong base there is a strategic decision but also a risky one as North America is home to Rolls-Royce’s biggest competitors (Rolls-Royce Annual Report 2009).

Chapter 6 New Technology

The emerging technology affecting the strategic position of Rolls-Royce is the replacement medium range single aisle narrow body aircraft. The most popular of these aircraft is the 737 family from Boeing.
The 737 was first manufactured in 1967 and has since gone on to become the most popular aircraft in the history of aviation with 6348 aircraft delivered. It is estimated that on average 1,250 are in the skies at any one time with a 737 landing somewhere in the world every five seconds (Sykes 2010). The 737’s main competition is the Airbus A320.
The drive to replace the aircraft is driven by economics as the 737 design was based upon 1960’s design knowledge. A replacement is required for the advances of composite airframes have been proved with the 787 and the A350. The savings of this technology are estimated to be in the region of 20% of the fuel bill (Drury 2010).
Rolls-Royce does not power any of the 737 currently in service. For the replacement aircraft all of the big players in the aero-engine manufacture are providing a new engine design. Rolls-Royce plan to supply the open rotor design which also is designed in order to reduce its environmental impact through a weight saving.

Chapter 7 Impact on Strategic Position

Should Rolls-Royce secure even a share of the replacement 737 programme then the effect on the company’s strategy would be substantial. Rolls-Royce would be operating on a programme which was to replace over 7000 aircraft. The 737 is a twin engine aircraft potentially meaning 14,000 engines for Rolls-Royce, more than the current number of engines operational (Sykes 2010).
The markets scope of Rolls-Royce is differentiation for they do not operate by lowering cost but by offering a different product. Rolls-Royce provides an engine in every class of aircraft allowing them to operate from business jets to double aisle long-hauliers, ensuring maximum customer exposure. This is shown in Figure 7.1.
The effect of the technology on the stakeholders would be similar to the current situation of Rolls-Royce. A major difference would be the power of the airframe manufacturers. Currently the airframe manufacturers design for an aircraft to be powered by a high by-pass ratio turbofan. As three new engine designs are being provided by the three major competitors, Boeing must either accommodate for all three variants or simply chose a design and incorporate it across the range. This would give Boeing a large amount of power in Rolls-Royce should Rolls-Royce power the 737 replacement, shown in Figure 7.2.
The BCG along with the product life cycle is shown in Figure 7.3 and 7.4 respectively. The 737 replacement would likely be powered by Rolls-Royce’s open rotor design. For Rolls-Royce for to be able to compete even for the contract they would be required to provide evidence that they could support the manufacture of the open rotor to the volume required. This would place the open rotor in the problem child business unit. Should the contract prove successful, the open rotor design would become self-funding very quickly due to the volume of production required and thus drive up efficiency. When a significant base had been established, Rolls-Royce could milk the programme from their total care after sales agreements. The lifecycle curve may be over a period of thirty to forty years.
The value chain shown in Figure 7.5 is shown with the introduction of the open rotor for the 737 replacement programme. The chain shows that the machines Rolls-Royce would require producing components in the required volume whilst maintaining the Rolls-Royce standard for quality would be very high making them a competence. Following machines the chain is inspection. Inspection would be a means of adding value as it was previously for it prevents defects and maintains a high degree of quality. Distributing is the next link; Rolls-Royce would be required to out-source a high degree of their manufacture. For Rolls-Royce to outsource effectively the distribution must be correctly managed. The final two links are after sales and maintenance. The final two links are grouped for Rolls-Royce would generate significant income from the maintenance programme and hence the customer services would come in the form of ensuring minimal disruption to the airline operation.
The impact on the competition of Rolls-Royse securing the replacement 737 order would provide Rolls-Royce with significant buying power for both suppliers and distributors. The threat of new competitors will always remain for Rolls-Royce but to compete against Rolls-Royce for the 737 programme would require a massive investment of capital just to start manufacturing on the required scale. Substitutions for Rolls-Royce would come from damage to the airline. High Speed Trains are the major competitor to the range in which the 737 replacement would fly.
The strategic direction of Rolls-Royce with the introduction of the 737 replacement programme would ramp up production and allow Rolls-Royce to command a high degree of power in the market. The attained power would allow Rolls-Royce to turn the 737 programme into a cash cow and re-invest the capital into programmes such as problem children. With kerosene available until 2090 there will be only two, maybe three, new engines within that time so the next few years will definitely be the critical factor for securing the investment required to develop non-fossil fuel burning engines.

Lower Cost
Lower Cost
Differentiation
Differentiation
Competitive Advantage
Competitive Advantage

Differentiation
Differentiation
Broad
Broad
Cost Leadership

Cost Leadership

Market Scope
Market Scope

Narrow
Narrow
Cost Focus
Cost Focus
Focus Determination

Focus Determination

Figure 7.1- Market Scope (Johnson et al 2005)
Figure 7.1- Market Scope (Johnson et al 2005)

Low
Low
Level of Interest
Level of Interest
High
High

Students
Students

Sub-Contractors
Sub-Contractors
Distributor
Distributor
Supplier
Supplier
Universities
Universities

Low
Low
Keep Informed

Keep Informed

Minimal Effort
Minimal Effort

Technical Staff
Technical Staff

Non-Technical Staff
Non-Technical Staff

Level of Power
Level of Power
Unions
Unions
Competitors
Competitors

Council
Council

CAA
CAA

High
High
Customers
Customers
Key Players
Key Players
Keep Satisfied

Keep Satisfied

CEO
CEO
SEPA
SEPA

Airframe Manufacturers
Airframe Manufacturers
Group Executive
Group Executive
Westminster
Westminster

Executive Board
Executive Board

Figure 7.2-Stakeholder Map (Mendelow 1991)
Figure 7.2-Stakeholder Map (Mendelow 1991) Low
Low
Level of Interest
Level of Interest
High
High

Fuel Cells
Fuel Cells
Trent 60
Trent 60
Trent 900
Trent 900

F136
F136
Trent XWB
Trent XWB

TP 400
TP 400
PWR2
PWR2
The Star
The Star
Low
Low
Problem Child

Problem Child

EJ200
EJ200

Trent 1000
Trent 1000
Tidal Turbines
Tidal Turbines
AE 3007
AE 3007

Cash Direction
Cash Direction
Level of Power
Level of Power

BR710
BR710
V2500
V2500

Trent 700
Trent 700
RB199
RB199

High
High
The Dog
The Dog
Cash Cow

Cash Cow

Trent 800
Trent 800
Tay
Tay

RB211-535
RB211-535
Trent 500
Trent 500

Figure 7.3-BCG Matrix (Henderson 1979)
Figure 7.3-BCG Matrix (Henderson 1979)

| Development | Growth | Shakeout | Maturity | Decline | | | | | | | Users/Buyers | Very few except airlines with vested interest. | Trial of engine from interested parties. | Growing selectively of purchase | Engine trialled with most major airlines and is market choice | Usage has now declined | Competitive Conditions | Very few competitors as most large scale organisations will not see significant returns. | Competitors will enter and fight for early share by getting their trialled product marketable first. | Weakest competitors will be lost and prices will start to fall due to ramp up in volume production | Competitors struggle to maintain share and emphasis is now on efficiency. | Competitors exit distribution is much more selective. |
Figure 7.4-Life-Cycle Model (Hill and Jones 1998)
Figure 7.4-Life-Cycle Model (Hill and Jones 1998)

Support Activities
Support Activities

Margin

Margin

Margin

Margin
Infrastructure
Procurement
IT
HR and Training
Research and Development
Infrastructure
Procurement
IT
HR and Training
Research and Development

Service
Security
Customer services
Education
Repair
Condition Monitoring
Installation
Failure
Maintenance

Service
Security
Customer services
Education
Repair
Condition Monitoring
Installation
Failure
Maintenance

Marketing and Sales
Company -Reputation
Company -Brand
Advertising
After Sales
Previous Work

Marketing and Sales
Company -Reputation
Company -Brand
Advertising
After Sales
Previous Work

Outbound Logistics
Collect
Conveyors
Sort
Store
Labelling
Packaging
Distributing

Outbound Logistics
Collect
Conveyors
Sort
Store
Labelling
Packaging
Distributing

Operation
Inspection
Coatings
Finishing
Testing
Forging
Grinding
Milling
Turning

Operation
Inspection
Coatings
Finishing
Testing
Forging
Grinding
Milling
Turning

Inbound Logistics
Materials
Staff
Tools
Sub-Contractors
Coolant
Machines
Material Handling
Material Control
Testing equipment
Transportation
Cleaning

Inbound Logistics
Materials
Staff
Tools
Sub-Contractors
Coolant
Machines
Material Handling
Material Control
Testing equipment
Transportation
Cleaning

Primary Activities
Primary Activities
Efficient
Or Effective
Efficient
Or Effective
=
=

Figure 7.5-Value Chain (Porter 1985)

Figure 7.5-Value Chain (Porter 1985)

Chapter 8 Conclusion

In conclusion, the programme would significantly affect the strategic position of Rolls-Royce for it would place a huge strain upon the organisations current capability but the returns far exceed the negatives. Rolls-Royce is currently ramping up in production for the Trent 1700 (XWB) which will be delivered on a basis of an engine a day. The possibility of the 737 will dwarf this capability therefore it could not be manufactured with the current manufacturing techniques or even methodology, posing a problem to Rolls-Royce. Historically a situation such as this is where Rolls-Royce has their pedigree. “Strive for perfection in everything you do. Take the best that exists and make it better. When it does not exist, design it.” Sir Henry Royce 1863-1933

Chapter 9 References

M. Alflatt, Rolls-Royce Income Statement, 2010, Accessed on 31/10/2010 through http://www.rolls-royce.com/investors/financial_reporting/income_statement.jsp.
H. Ansoff, Corporate strategy, Chapter 6, Penguin, 1988. C. Drew, Panel Seen Approving F-35 Engine, Risking Veto, New York Times, July 26 2010. B. Drury, Speaking at IMechE Conference, Rolls-Royce Inchinnan, 14/10/2010. R. Evans and I. Bustin, Rolls-Royce, Market Forecast, 2009, Accessed on 31/10/2010 through http://www.rolls-royce.com/Images/brochure_MarketOutlook2009_tcm92-14291.pdf.
C. Hill and G Jones, Essentials of Strategic Management, 2nd Edition, 2009, ISBN-10; 0-547-19432-3. D. Howie, C. Taylor, N. Britton and J. Isles, Rolls-Royce magazine Issue 126,2010, Accessed on 31/10/2010 through http://www.rollsroyce.com/about/publications/magazine/index.jsp. G. Johnson, K. Scholes and R. Whittington, Exploring Corporate Strategy, Prentice Hall, 2005. S. Macleod, Strategic Communication Management, September 2001, pp.8-9. A. Mendelow, Proceedings of 2nd International Conference on Information Systems, Cambridge, Massachusetts, 1991. S. Pfeifer, Rolls-Royce lifts guidance as order book expands, Financial Times, July 29 2010. ME. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985. AJ. Sykes, Rolls-Royce 2010 Half-Year Results, July 28 2010. Rolls-Royce Annual Report, 2009. Accessed on 31/10/2010 through http://www.rolls-royce.com/about/publications/annual_report/index.jsp
Rolls-Royce Products, Accessed on 31/10/2010 through http://www.rolls-royce.com/civil/products/largeaircraft/ Video Link, Rolls-Royce Group Story, Accessed on 31/10/2010 through http://www.rolls-royce.com/investors/news/.

Chapter 10 Appendices

Inchinnan Floor Layout
Inchinnan Floor Layout
Appendix A

Appendix A

Appendix B-Rolls-Royce Business Units.
Defence aerospace is the oldest of the Rolls-Royce markets, dating back to manufacture of rotary engines for the Royal Air Force during World war one. Rolls-Royce is number one military aero engine manufacturer in Europe and number two globally. Rolls-Royce power a quarter of the world’s military fleet.
The marine market which Rolls-Royce operates powers over 30,000 commercial and naval vessels. This includes over seventy different navies. Rolls-Royce also provides equipment for vessel refits, propulsion, bearings and stabilisers. This allows Rolls-Royce to strategically position themselves in a growing market with a wide scope of naval products. The Rolls-Royce marine division headquarters is based in Singapore for proximity to customer base.
Rolls-Royce provide some of the best in class industrial engines which power the oil and gas sector in their drive for deep water exploration. The products provided by Rolls-Royce include tidal turbines and fuel cells; the market integration for Rolls-Royce has been slow due to market infancy.
Rolls-Royce is a world leader in nuclear submarine propulsion and their support services. This incorporates design, control, operation and commissioning. Rolls-Royce supplied the first Pressurised water reactor to HMS dreadnought in 1960, first UK nuclear powered submarine, and have been the technological authority for the Royal navy submarine fleet since. Rolls-Royce also provides services, equipment and expertise to the civil nuclear market which is expected to be globally worth £50 billion in fifteen years (Rolls-Royce Annual Report 2009).
Rolls-Royce predict that over the next 20 years 141,000 engines, worth over US$800 billion, will be required for more than 65,000 commercial aircraft and business jets (Sykes 2010). In addition to the demand for engines, Rolls-Royce forecast a market opportunity worth US$600 billion for the provision of product-related aftermarket services (Alflatt 2010).

Appendix C-Rolls-Royce Stakeholder Justification Stakeholder | Stakeholders Interest | Stakeholders Power | Students | Rolls-Royce employs several student internships and offer several student projects. | Virtually none. | CAA | Regulatory body, huge interest for safety reasons for civil aircraft. | Huge amount f power. Have the power to read any document, stop processes check any emails or halt distribution. | Competitors | Indirect stakeholder with low interest. | Little power but can dictate with their strategy etc as Rolls-Royce must be able to complete. | Sub-Contractors | High interest in Rolls-Royce as a high number of sub-contract labour is used. | Virtually zero power. The main reason why this form of labour is used. | Universities | Employs high amount of students for internships and sends a lot of part-time students for business to the university. | Virtually zero. | SEPA | High interest as they're job is to monitor environmental effects from Rolls-Royce plants such as Inchinnan. | Fairly high and will become more important. Currently not important enough to decide strategy. | Council | Low interest as Rolls-Royce is happy to be left alone. | High level of power but rarely exercised unless in drastic circumstances. | Westminster | Low interest but would like to know that all is well for employment etc. | High power but again rarely ever exercised. | Unions | High interest as Rolls-Royce is a large employer | Low power in terms of corporate strategy. | Suppliers | High interest due to buying power of Rolls-Royce. | Low power due to large number of suppliers available. | Distributors | High interest due to work being given to them by Rolls-Royce. | Low power as transit companies are numerous and could potentially in the future being integrated to within Rolls-Royce. | Technical Staff | Technical employees have a high interest as they are employed by Rolls-Royce. | Low power but would be considered for strategy. | Non-Technical Staff | Non-technical staff such as IT and security has a high interest as this their employer and are a high salary employer. | Low power due to smaller numbers compared to technical staff. | Manufacturing Managers | First tier of management would have high interest in Rolls-Royce as they will have a small influence | Significant level of power. May be invited to meetings but will not form part of critical decisions. | Vice-President | High interest as they will significant shares from Rolls-Royce. | Power to make the decisions. | Customers | High interest as Rolls-Royce will supply them with products. Main customer will be engine build. Internal customer so quality is paramount | Power to change designs, change processes, send back non-conformance. | CEO | The individual with highest interest. | The individual with highest power. | Group Executive | The group executive would contain individuals with very high interest as they will be direct decision makers. | The power of the individuals will be very high. | Airframe Manufacturer | The airframe manufacturers will have a high interest in Rolls-Royce as they require a high performance from the engines to compete. | Their power is high due as they can chose to tailor an aircraft towards a particular engine. | Stakeholder Justification
Stakeholder Justification
Executive Board | The interest of the board is very high for the board are directly responsible for the performance of the organisation. | The board have the highest power as they are the business decision makers. |
Appendix D-Rolls-Royce Products Engines | Description | TP-400 | The TP400-D6 will be developed and produced by EPI Europrop International, an international cooperation comprising Rolls-Royce, Snecma, MTU and ITP. The engine has been designed to fulfil the ESR (European Staff Requirements) for the A400M military transport, Europe's response to the increased requirements for transport capacity within Europe and for peacekeeping missions abroad. Major development activities started in May 2003 after the engine contract was signed by Airbus Military S.L. and EPI Europrop International Gmbh. This contract covers the development and production of more than 750 engines to be delivered from 2012 onwards for the A400M fleets of Germany, France, the United Kingdom, Spain, Turkey, Belgium and Luxembourg and the production of additional engines for potential export customers. Rolls-Royce's areas of responsibility include the overall engine performance, Air & Oil systems, the Intermediate casing, the 6-stage High Pressure Compressor and the Low Pressure shaft. | Trent XWB | The Trent XWB combines innovative proven Trent® design with world-class after-sales services delivering the best power solution for the latest aircraft family from Airbus. It joins the Trent family of engines - the customers' number one choice, having already won nearly half of the engine orders for new generation wide bodied aircraft. Powering the A350-800 and -900 in the 250-300 seat market, the Trent XWB continues the successful partnership of Rolls-Royce and Airbus, building on the market leading position of the Trent 700 on the Airbus A330. The Trent XWB will also power the larger A350-1000 in the 350 seat market, the A350-900 freighter and the ultra long range A350-900R, providing a single engine type across the aircraft family. | Trent 800 | The Trent 800 entered service in April 1996. Built on the solid foundation of Trent 700 (entered service in March 1995) experience, the Trent 800 was certified ahead of schedule at 90,000 lb thrust, exceeding its original target of 84,000lb. The Trent 800 rapidly established a reputation for industry-leading reliability and the capability of the original design has been demonstrated by continuing thrust growth. Today the Trent 800 is available from 75,000 to 95,000lb thrust with a common engine standard, the widest range of any engine in its class. Today the Trent 800 is the power plant of choice for the 777, having secured orders for 41 per cent of the available market. | Trent 500 | With an initial take-off thrust of 56,000lb, the Trent 500 provides reliable and economic power for this generation of A340 aircraft. The Trent 500 has been certificated at 60,000lb, which provides excellent in-service margins, leading to longer time on wing. With its design derived from the reliable RB211 family of three-shaft engines, the Trent's advanced layout provides lighter weight and better payload/range and revenue-earning potential than its competitors. Its diffusion bonded/superplastically formed (DB/SPF) wide-chord fan protects the engine against foreign object damage while latest generation single crystal high-pressure turbine blades help to ensure that engines have the best on-wing life in the airline industry. The combustor produces the lowest flight pollution levels and the engines are designed for low noise, making them kinder to the environment. | Trent 700 | The Trent 700 is the first engine in the highly successful Trent family. It has established itself as the engine of choice on the A330 with over 53% market share. Since Cathay Pacific launched it in March 1995 the Trent 700 has logged over 13 million hours (3 million cycles) in service and accumulates around 180,000 service hours every month. The Trent 700 delivers the power requirements for all weights of the A330 and in particular, for the higher weight aircraft operating in harsh environments. This has been demonstrated by over a third of all operational experience being in the Middle East. With the highest in-service thrust of 72,000 lb, the Trent 700 provides the best take-off performance and revenue-earning potential for operators of the A330. The engine was designed for growth capability of the A330 and incorporates materials capable pressures and temperatures for 75,000lb. | Trent 900 | The Trent 900 is the most advanced large engine in service. Powering the Airbus A380, this combination provides a significant step forward in the aviation landscape. The Trent 900 is certified at 70k, 72k, 76k and 80k pounds of thrust. It is the only engine certified at both 70k and 72k on the Airbus A380. The higher two ratings demonstrate the growth capability embedded in the engine should further aircraft development require. It satisfies all its key requirements, most delivering better than specification: fuel burn, noise, emissions, weight and power. The Trent 900-powered A380 is quieter than expected, meeting the QC0.5 level on Arrival, where requirement was QC1. Granted with the lowest NOx emissions on the A380, the Trent 900 demonstrates the result of the environment being the driving force behind the design. | Trent 1000 | Boeing selected the Trent 1000 in 2004 as launch engine for all variants of the Boeing 787 Dreamliner™. The first test bed run of the Trent 1000 took place in 2006, followed by certification, delivered as promised, on 7 August 2007 or 7/8/7. First on-wing ground testing took place in May 2009 as part of the gauntlet test programme ahead of the first flight. The Trent 1000 will undertake the lion's share of flight testing on board the first four aircraft in the Boeing flight test programme. The Boeing 787 Dreamliner™ is planned for operational service in 2010. | Trent 60 | The Rolls-Royce Trent 60 is the most advanced aeroderivative gas turbine available today. Delivering up to 64MW of electric power in simple cycle service, at 42 per cent efficiency, the Trent 60 has established a new benchmark for fuel economy and cost savings. It also offers operators fast delivery and installation times and beneficial performance. The Trent 60 is also available for onshore or offshore mechanical drive applications. The Trent 60 is ideally suited to meet the higher power, variable speed demands required by applications like natural gas liquefaction, gas transportation and gas injection for oil recovery. The design flexibility of the Trent 60 allows the same engine that serves the power generation market to meet the needs of mechanical drive service with no design changes. | RB211-535 | The three-shaft architecture, first introduced on the RB211-22B, allows an engine to have fewer stages giving a shorter, stiffer structure. This technology allows the rotors to run to their optimum speeds thereby reducing the need for compressor variable guide vanes. The RB211-535E4 has the lowest combination of in-flight shutdown rate and shop visit rate in the airline industry, a factor that has resulted in the RB211-535E4 being the airlines first choice to power the Boeing 757. The RB211-535E4 achieved the world record for on-wing life without removal for over 40,000 hours over nine years in operation. This is equivalent to 18,000,000 miles flown, or 37 return trips to the moon. It stays on wing almost twice as long as any other engine on the airframe. | BR710 | The BR710 has enabled its aircraft to set many world records in the fields of range, speed and altitude. It also offers low noise and excellent emission characteristics, ensuring unrestricted access to local airports around the world. Service experience is proving the BR710 to be a very reliable performer, while its Specific Fuel Consumption (SFC) levels are the lowest in its thrust class enabling outstanding aircraft range. Due to their excellent performance, BR710 powered business jets are able to cruise above commercial airspace, thus enabling passengers and crew to fly from point to point around the globe thus saving time and fuel. Their excellent climb performance allows these aircraft to reach cruise level much faster than commercial airliners, again saving fuel and reducing time to climb. The engines' take-off performance allows BR710 powered aircraft to depart from virtually every domestic airport or major hub alike. | RB199 | The RB199 is a three shaft reheated turbofan engine, with three low pressure (LP), three intermediate pressure (IP) and six high pressure (HP) compressor stages, powered by two single-stage turbines (HP and IP) and a two stage LP turbine. The combustion system is of annular vaporising design. Engine control is by a FADEC (Full Authority Digital Engine Control) system and the engine also features an integral thrust reverser. The RB199 was designed to power all variants of the Tornado multi-role combat aircraft and was used in a development role for today's Eurofighter Typhoon. The versatile RB199 meets a wide range of operational requirements. Its compact design gives high thrust-to-weight and thrust-to-volume ratios while maintaining good handling characteristics and low fuel consumption. | PWR2 | Today's new Astute class submarines are the largest and most powerful attack submarines ever built for the Royal Navy. The first, to be known as HMS Astute when commissioned, is due to commence sea trials later this year. They will all be powered by Rolls-Royce PWR2 plant and will give the Royal Navy new levels of underwater capability. All will be fitted with the long-life reactor core, designed for a full platform life, eliminating costly reactor refuelling and associated long overhaul periods, thereby increasing availability and helping reduce the cost of ownership. | V2500 | The V2500 is the Rolls-Royce offering in the 22,000 to 33,000lb thrust class. The product of IAE International Aero Engines AG (a multi-national consortium led by senior shareholders Rolls-Royce and Pratt & Whitney, together with JAEC and MTU Aero Engines) the engine is available for the A319, A320, A321 and Airbus Corporate Jetliner aircraft. The V2500 also powers the now out of production Boeing MD-90. The latest build standard, V2500 SelectOne™, entered commercial service in October 2008 and offers up to four per cent better fuel burn performance than alternatives. The V2500 achieves improved payload and range. Superior performance retention leading to longer on-wing life is also a characteristic of the engine. | F136 | The GE Rolls-Royce Fighter Engine Team joint venture was formally created in July 2002 and is responsible for developing the F136 'interchangeable' engine for the Lockheed Martin F-35 Joint Strike Fighter. Rolls-Royce has a 40 per cent share of the F136 programme. The F136 is a 40,000 lbf class, two-shaft engine specifically designed to be "interchangeable' across the three variants of the Lockheed Martin F-35 Joint Strike Fighter. With a potential market in excess of 4000 aircraft, the F-35 aircraft will be operated by customers such as the US Air Force, US Marine Corps, US Navy, Royal Air Force, Royal Navy and a host of international customers. A transatlantic collaborative programme, the F136 is a product of the GE Rolls-Royce Fighter Engine Team, the highly successful joint venture with GE in which Rolls-Royce has a 40 per cent share. Rolls-Royce responsibilities include the three-stage fan, combustion system, LP turbine and accessory gearbox. Many of the JSF International Partners are actively involved in the F136 programme which will enter the System Development and Demonstration phase in 2005. The F136 will be available in 2011 after the delivery of fewer than 100 F-35s. | Fuel Cells | The Rolls-Royce fuel cell system is lower cost; more efficient; more easily distributed; more durable and maintainable than its nearest rival. Rolls-Royce has experience in the system integration of several different types of fuel cells and believes the Solid-Oxide Fuel Cell is the best for stationary power generation applications while retaining the capability of being developed subsequently for various transportation, military and marine applications. | EJ200 | The EJ200 is a twin shaft reheated turbofan, with three low pressure (LP) and five high pressure (HP) compressor stages, powered by two single-stage turbines (LP and HP). The combustor is annular with airspray injectors. The engine reheat system features a three-stage manifold system and a convergent/divergent nozzle. Engine control is by an integrated Full Authority Digital Engine Control (FADEC) system. The technology of the EJ200 engine makes it both smaller and simpler in layout than current power plants of a similar thrust class while giving it lower fuel consumption and an unprecedented power-to-weight ratio - all vital factors in enhancing the multi-mission performance and effectiveness of combat aircraft. EJ200's design emerged in the late 1980s following the formation of EUROJET Turbo GmbH in 1986 to co-ordinate and manage the project. EUROJET's partner companies are Rolls-Royce, Avio of Italy, MTU of Germany and ITP of Spain. | Tidal Turbines | Tidal power has a more limited opportunity. It’s obviously restricted to areas with strong tides. The UK is very well-placed due to the strong tides on the coasts. That’s also true of northern France and Canada, and some river systems. But again, the technology needs to be proved and there needs to be a market opportunity. | Tay | The Tay is a two shaft high-bypass ratio engine featuring a wide-chord fan with three more stages of low pressure (LP) compressor and a 12-stage high pressure (HP) compressor driven by a two-stage high pressure (HP) turbine and three-stage low pressure (LP) turbine respectively. It has an annular combustion system consisting of ten combustors. The majority of the bypass duct is constructed in carbon fibre composite material. Cold bypass air and hot exhaust gases are combined in a forced mixer that gives good propulsive efficiency and low noise generation. |
Rolls-Royce Products (http://www.rolls-royce.com/civil/products/largeaircraft.com)
Rolls-Royce Products (http://www.rolls-royce.com/civil/products/largeaircraft.com)

Appendix E-Rolls-Royce Senior Management Directors | Position | Notes | Simon Robertson | Non-executive Chairman | Chairman of the nominations committee Simon Robertson was appointed to the Board in 2004. He is the founder member of Simon Robertson Associates LLP and a non-executive director of HSBC Holdings plc, Berry Bros & Rudd Limited, and The Economist Newspaper Limited. He is a director of The Royal Opera House Covent Garden Limited and a Trustee of The Eden Project and the Royal Opera House Endowment Fund. He is the former President of Goldman Sachs Europe Limited. Age 68. | Sir John Rose | Chief Executive | A member of the nominations committee Sir John Rose was appointed to the Board in 1992, having joined Rolls-Royce in 1984. He has been Chief Executive since 1996. He is a Trustee of The Eden Project. Age 57. | Helen Alexander CBE | Non-executive director | Chairman of the remuneration committee and a member of the ethics and nominations committees Helen Alexander CBE was appointed to the Board in 2007. She is President of the CBI and Chairman of the Port of London Authority and of Incisive Media. She is a non-executive director and chair of the remuneration committee at Centrica plc and senior adviser to Bain Capital. She was CEO of the Economist Group from 1997 to 2008. Helen is also senior trustee of the Tate Gallery and a trustee of the World Wide Web Foundation. Age 53. | Peter Byrom BSc, FCA | Non-executive director | A member of the remuneration, ethics and nominations committees Peter Byrom was appointed to the Board in 1997. He is Chairman of Domino Printing Sciences plc and a non-executive director of AMEC plc. He is a Fellow of the Royal Aeronautical Society. He was a director of NM Rothschild & Sons Limited from1977 to 1996. Age 65. | Iain Conn | Non-executive director, Senior Independent Director | A member of the audit and nominations committees Iain Conn was appointed to the Board in 2005. He is an executive director of BP p.l.c. having held a range of executive positions within the BP Group worldwide. He is Chairman of the Advisory Board of The Imperial College Business School. Age 47. | Professor Peter Gregson | Non-executive director | A member of the remuneration and nominations committees Peter Gregson was appointed to the Board in 2007. He is President and Vice-Chancellor of Queen’s University Belfast and serves on the Northern Ireland Economic Development Forum, the Council of CBI Northern Ireland and the Steering Group of the US-Ireland Research and Development Partnership. He is a Fellow of the Royal Academy of Engineering, a Member of the Royal Irish Academy, and Deputy Lieutenant of Belfast. He was formerly Professor of Aerospace Materials and Deputy Vice-Chancellor of the University of Southampton and has served on the Councils of the Royal Academy of Engineering and the Central Laboratory of the Research Councils. Age 52. | James Guyette BSc | President and Chief Executive Officer of Rolls-Royce North America Inc. | Jim Guyette was appointed to the Board in 1998 having joined Rolls-Royce in 1997. He is a director of the PrivateBank and Trust Company of Chicago, Illinois and of priceline.com Inc. Until 1995 he was Executive Vice President, Marketing and Planning of United Airlines. Age 64. | Dr John McAdam | Non-executive director | A member of the remuneration and nominations committees John McAdam was appointed to the Board in 2008. He is Chairman of United Utilities Group PLC and of Rentokil Initial plc, the Senior Independent Director of J Sainsbury plc and a non-executive director of Sara Lee Corporation. He was the Chief Executive of ICI plc until ICI’s acquisition by Akzo Nobel. Age 61. | John Neill CBE | Non-executive director | A member of the audit and nominations committees John Neill was appointed to the Board in 2008. He is the Chief Executive of the Unipart Group of Companies. He is a member of the Council and Board of Business in the Community and is a non-executive director of Charter International plc. He is Vice President of the Society of Motor Manufacturers and Traders, BEN, the automotive industry charity and The Institute of the Motor Industry. Age 62. | John Rishton | Non-executive director | Chairman of the audit committee and a member of the ethics and nominations committees John Rishton was appointed to the Board in 2007. He is Chief Executive Officer of Royal Ahold. He began his career in 1979 at Ford Motor Company and held a variety of positions both in the UK and in Europe. In 1994 he joined British Airways Plc where he was Chief Financial Officer from 2001 to 2005. He is a former non-executive director of Allied Domecq. Age 51. | Andrew Shilston MA, ACA, MCT | Finance Director | Andrew Shilston was appointed to the Board in 2003 having joined Rolls-Royce in 2002. He was a non-executive director of Cairn Energy PLC until May 2008 and he was Finance Director of Enterprise Oil plc from 1993 until 2002. Age 54. | Colin Smith BSc Hons, FREng, FRAeS, FIMechE | Director – Engineering and Technology | Colin Smith was appointed to the Board in 2005 having joined Rolls-Royce in 1974. He has held a variety of key positions within Engineering, including Director – Research and Technology and Director of Engineering and Technology – Civil Aerospace. He is a Fellow of the Royal Academy of Engineering, the Royal Aeronautical Society and the Institution of Mechanical Engineers. Age 54. | Ian Strachan | Non-executive director | Chairman of the ethics committee and a member of the audit and nominations committees Ian Strachan was appointed to the Board in 2003. He is a non-executive director of Xstrata plc, Transocean Inc and Caithness Petroleum Limited. He is the former Chief Executive of BTR plc, former Deputy Chief Executive (1991 to 1995) and Chief Financial Officer (1987 to 1991) of Rio Tinto plc, former non-executive Chairman of Instinet Group Inc and former non-executive director of Johnson Matthey plc, Commercial Union and Reuters Group plc. Age 66. | Mike Terrett | Chief Operating Officer | Mike Terrett was appointed to the Board in 2007, having joined Rolls-Royce in 1978. He has held a variety of senior positions in the development of new aero-engine programmes, including Managing Director of Airlines and President and Chief Executive Officer of International Aero Engines (IAE), based in the United States. Prior to his appointment as Chief Operating Officer he was President – Civil Aerospace. He is a Member of the Institute of Mechanical Engineers and a Fellow of the Royal Aeronautical Society. Age 53. | Tim Rayner | General Counsel and Company Secretary | Tim Rayner joined Rolls-Royce in 2007 having previously been General Counsel and Company Secretary at United Utilities PLC. Age 49. |

Group Executive | Column1 | Role | Tom Brown | | Human Resources | John Cheffins | | Acting President – Energy | Miles Cowdry | | Director – Global Corporate Development | James Guyette | | President and Chief Executive Officer of Rolls-Royce North America Inc. | Dr Michael Haidinger | | President – Rolls-Royce Deutschland Ltd & Co KG | Lawrie Haynes | | President – Nuclear | Mark King | | President – Civil Aerospace | Dan Korte | | President – Defence Aerospace | Alain Michaelis | | President – Gas Turbine Supply Chain & Deputy Chief Operating Officer | Peter Morgan | | Director – Corporate Affairs | Dr Mike Orris | | Chief Procurement Officer | John Paterson | | President – Marine | Tim Rayner | | General Counsel and Company Secretary | Andrew Shilston | | Finance Director | Colin Smith | | Director – Engineering and Technology | Mike Terrett | | Chief Operating Officer | Tony Wood | | President – Gas Turbine Services |
(Evans and Bustin 2009)

Appendix F-Rolls-Royce Cash Flow
Consolidated income statement
For the year ended December 31, 2009 | | | | | | Notes | 2009
£m | Restated
2008
£m | Revenue | | | | | | 2 | 10,414 | 9,082 | Cost of sales | | | | | | | (8,303) | (7,278) | Gross profit | | | | | | | 2,111 | 1,804 | Other operating income | | | | | | | 89 | 79 | Commercial and administrative costs | | | | | | | (740) | (699) | Research and development costs | | | | | | | (379) | (403) | Share of profit of joint ventures and associates | | | | | | 10 | 93 | 74 | Operating profit | | | | | | | 1,174 | 855 | (Loss)/profit on sale or termination of businesses | | | | | | 24 | (2) | 7 | Profit before financing | | | | | | 2 | 1,172 | 862 | Financing income | | | | | | 3 | 2,276 | 432 | Financing costs | | | | | | 3 | (491) | (3,186) | Net financing | | | | | | | 1,785 | (2,754) | Profit/(loss) before taxation1 | | | | | | | 2,957 | (1,892) | Taxation | | | | | | 4 | (740) | 547 | Profit/(loss) for the year | | | | | | | 2,217 | (1,345) | Attributable to: | | | | | | | | | Equity holders of the parent | | | | | | | 2,221 | (1,340) | Minority interests | | | | | | | (4) | (5) | Profit/(loss) for the year | | | | | | | 2,217 | (1,345) | Earnings per ordinary share: | | | | | | | | | Basic | | | | | | 5 | 120.38p | (73.63p) | Diluted | | | | | | 5 | 119.09p | (73.63p) | Payments to shareholders in respect of the year | | | | | | | | | Pence per share | | | | | | 16 | 15.00p | 14.30p | Total (£m) | | | | | | 16 | 278 | 263 | 1 Underlying profit before taxation | | | | | | 2 | 915 | 880 |

Key performance indicators | 2005 | 2006 | 2007 | 2008 | 2009 | Order book £bn | 19.0
+17% | 20.0
+5% | 35.9
+80% | 43.5
+21% | 47
+8% | Engine deliveries | 881 | 856 | 851 | 987 | 844 | Underlying services revenues £m | 2,016 | 2,310 | 2,554 | 2,726 | 2,626 | Underlying services revenues % | 59 | 59 | 63 | 61 | 59 | Percentage of fleet under management | 45 | 48 | 55 | 57 | 59 |

| 2005 | 2006 | 2007 | 2008 | 2009 | Underlying revenue £m | 3,406
+11% | 3,907
+15% | 4,038
+3% | 4,502
+11% | 4,481
0% | Underlying profit before financing £m | 454
+118% | 519
+14% | 564
+9% | 566
0% | 493
-13% | Net assets £m | 1,617 | 2,165 | 2,468 | 330 | 2,694 | | | | | | |

(Rolls-Royce Annual Report 2009)

End of Report…...

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...Position Paper First things first and here we must understand what addiction is “the state of being enslaved to a habit or practice or to something that is psychologically or physically habit-forming, as narcotics, to such an extent that its cessation causes severe trauma.” After such statement we need to think if we are familiarized with those descriptions. Here a deeper look is necessary to fully understand and reach its meaning. When stated being slaved, what can be understood from that, a person that does not have a choice in the matter, something or somebody else is in control and here the control is to a habit or practice or something. It can be either physical or psychological habit-forming, it’s a cycle that needs to be done every day and it gets to the point it can be harmful. Another statement might exemplify a little better what I’m saying here. “Anything any person does more often than is thought reasonable from the reference point of the describer is ‘‘addicted’’ to the behavior in question.” Everyone knows someone to be doing something more often than is thought reasonable. Some people can’t stop working out, other eating, getting connected to Facebook, phone texting. Is it harmful? The answer is yes; think about those that died or killed somebody for texting while driving, or eating so much that health problems starts to emerge. And when the word addiction is pronounced the first thing most people have in mind is alcohol, drugs, cigarettes. They...

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Position Paper

...The Position Paper Analysis 3.1 Composition II There is a common ground that all of human nature shares, and that is the fact that we all must eat to survive. Food. It is what keeps us alive, and is undeniably one of the single most important factors of our existence. Without it we would perish. So, how does the world manage to mass produce enough food to feed the billions? Mass production of crop cultivation on a large scale. In order to do this successfully and provide food for the populations there are a few primary issues which must be addressed. One of the main issues the farmers of the world must deal with is the problem with crop destroying insects and invasive plant species. Pesticide is used to identify both insecticides and herbicides, or (as I like to refer to them) bug and weed killers. Although pesticides curb the effects of insects and weeds in food cultivation, the detrimental health issues concerning the effects of pesticides continues to increase; therefore, pesticides should have stricter standards imposed upon their use, and more focus should be made towards developing alternative methods and safer solutions. Depending on location, environment, weather, and many other variables there is a great need to protect the world’s crops from the devastating effects of bugs and weeds. Certain species are capable of terminating the growth of necessary food sources. Of course humanity would react as alarmist and jump to an immediate solution of......

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