Rolls Royce Holdings SWOT and PESTLE Analysis

Strength

1. Simplified and Focused Business Structure: The Company has five core business units named Civil Aerospace, Defence Aerospace, Power Systems, Marine and Nuclear. It will be simplified and restructured into three units –Civil Aerospace, Power Systems and Defence. The decision counterbalances the increasing cost structure of the business and reduces the complexity of the group. It also helps in improving customer service and the financial health of the company. Civil Aerospace which contributes to more than 50% of the revenue, build aero engines to minimize engines issues and more fuel efficient. With technological revolution, the company aims to become the leader in industrial technology.

2. Strong R&D team: £1.3bn is invested in R&D every year. Recently, Rolls and Royce have opened an autonomous ship R&D centre in Finland to build autonomous vehicles. Till now, 672 patents are filled by the company. It has also teamed with 31 University Technology Centers and 7 Advanced Manufacturing Research Centers to aid in its innovation journey and emerge as a leader in the manufacturer of power systems. About 2/3rd of the R&D is done to improve the environmental performance, lower fuel consumption, reduce noise and emissions.

3. Adoption of Advanced Technology, System Solutions and Systems Life: Recently Rolls and Royce plan to collaborate with Airbus and Siemens to develop a hybrid electric vehicle that will convert a short- haul passenger jet to run partly on electricity. The company’s power solutions aim to incorporate advanced technology, complete systems solutions and which takes care of systems life to meet the dynamic trend of customer’s evolving needs.

4. Strong Brand image and advanced engineering focus: The customer identifies with the strong brand name of the company which still means today, excellence and trust. The brand name has leveraged the company to be valued 24% more than its original value. The cutting-edge technology helps them to take innovation to the next level. This is the level of Cross Innovation which employs medical technology to develop smart engine maintenance.
The turbine blades operate under ambient temperatures much higher than the melting point of the materials used. Thus, the complex cooling system used is very much similar to the human vascular system. Secondly, innovation is leveraged in the development of intelligent engines and automated cleaning. The purpose of intelligent engine is to develop systems that will monitor the engine health and communicate the same with the help of complex algorithms. The analyzed data will thus enable the entire fleet of engines to learn from the patterns of engine failure systems and thus minimize disruptions and unscheduled maintenance. The automated cleaning systems aim to reach the intricate design of cooling ducts and holes on turbine blades to clean the clogged impurities. The cleaning process is sophisticated and requires highly qualified mechanics. So automated cleaning will make the system mechanized, reduce costs and the tool can navigate the turbine blades autonomously without affecting the secondary engine parts. Hence the advent of advanced engineering improved the manufacturing and service capability of the company.

Weakness

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Opportunity

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Threat

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Political

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Economic

1. Foreign Exchange Rates fluctuations: Currency Fluctuations affect the profit margins for the company. For a strong dollar but a weak euro and Norwegian crown, currency fluctuations can wipe away 350 million pounds from its revenue. Brexit also has caused the sterling slump due to which the company has to write down 4.4 bn EURO on the value of financial hedges that the company uses to protect itself against the currency fluctuations. 4.6bn EURO loss has been the biggest corporate loses in Britain history. The company has lost it as the statutory pre-tax loss.

Social

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Technological

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Legal

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Environmental

1. Adoption of renewable energy sources like Project Sunshine: Photo voltaic panels are installed on the roof and the carport of Seletar Campus of Singapore. It can manage to supply only 7% of energy needs now but it will help to save over 31,000 tonnes of CO2 emission. There are other projects undertaken by the company to reduce and lower the carbon energy. Like a ground-source heating installation at Bristol, UK; a further solar installation at Aiken, US; and a combined heat and power (CHP) facility at Friedrichshafen campus, Germany. These projects are under observation and installed on different campuses of the company to monitor their performance and make the necessary adjustments.

2. Zero waste targets: The Company aims to achieve zero waste for landfill by 2020. Over 40 manufacturing sites, despite an increase in engine manufacturing, has achieved zero waste target. They even target to reduce their solid and liquid waste by 25% by 2025. They have launched a new program where the focus will be placed on key waste streams like machining coolant and process chemicals.

3. Minimize CHG emissions and energy use: The GHG emissions are the reason we are facing global warming and ozone depletion. Therefore the company is doing it bit by targeting to reduce the GHG emission by 50% by 2025. For that, they are focusing on implementing renewable solar energy and low carbon energy schemes to reduce the effect their operating activities have on the environment. It is a part of their long-term strategy. They are even trying to reduce their energy use by 30% by 2020. They are making a further investment of 8mn EURO to meet their energy reduction target early. The company has also become a member of International Aerospace Environmental Group (IAEG) for aiding the low carbon energy movement on a global level.