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External Business Environmental Factors on Rolls Royce

University: University of Greenwich

  • Unit No: 3
  • Level: Post Graduate/University
  • Pages: 17 / Words 4201
  • Paper Type: Assignment
  • Course Code: hi6008
  • Downloads: 28
Question :

This assessment will cover following questions:

  • Contemporary Developments in Business are the fundamental aspects that enhance business working. Critically evaluate the different frameworks within which organisational decisions are made.
  • Contemporary Developments can be assessed by changing business as per the external environment. Evaluate how Rolls Royce might respond to external global forces.
  • Elaborate the range of theoretical concepts and apply them to practical business problems or issues.
  • Generate the factors that affecting business performance in international markets in the context of Rolls Royce.
Answer :
Organization Selected : Rolls Royce

INTRODUCTION

As businesses are growing and expanding on the intentional levels due to globalization, they have to make some developments in their business and management so that they can attract their targeted market and earn desired profits. For existing in the market sustainably and to compete in the market it is important that the businesses analyze all the internal and external factors which can affect their business so that appropriate decisions can be made which will help it in dealing with the negative impacts (Alvarez, 2016). To gain a competitive advantage in the market it is important that the organizations do an external analysis so that effective managerial decisions can be made. For studying contemporary business developments Rolls Royce Motors Car Ltd. is taken which is a luxury automobile manufacturing company located in England, UK. In this report, the impact of external business environmental factors on Rolls Royce will be studied along with the response of the company towards them so that a competitive edge can be achieved which helps it in accomplishing its goals and objectives. Further, the importance of corporate social responsibility and sustainability in reference to Rolls Royce will be studied so that it can survive in the car manufacturing industry.

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TASK 1

External factors influence an organisation and their importance

As the firms operate in a business environment they are affected by various external environmental factors which affect the way in which they operate, function and compete in the market so that they can achieve their goals on time. The external factors cannot be controlled or changed but can only be dealt with by making efficient decisions so that their negative impact can be reduced while their positive impact can be taken to the advantage of company. PESTLE analysis is the strategic management tool which helps the organisation in evaluating all the external environmental factors in detail so that the policies of company can be changed in a way which can help it to exist sustainably in the market (Anastase and Grigoruț, 2016).

PESTLE analysis of Rolls Royce:

Political: These are the factors which are affected by the change in rules and regulations by the government of the country which affects the trade of company and the way in which it formulates its policies. Some political factors which affect the country's policies are tax regulations, trade tariffs etc. which affect all the businesses functioning in the country. Rolls Royce which is a manufacturing company of luxurious cars is affected by the political situation of UK and the decisions made by the government regarding trade policies create an impact on the business of Rolls Royce. UK is politically stable which means that the rules and regulations of the company do not change frequently. This creates a positive impact on the company as it do not have to change its policies, strategies and decisions frequently which are difficult to be implemented in a large company like Rolls Royce (Brewster, 2019). This also saves the cost of implementing  change across the complete organisation which helps it to keep the price of its products stable thus influencing the customers with the same pricing strategies. Other political factors which affect the company positively is that the UK government support the manufacturing companies as they help in the development of country. This help Rolls Royce in getting subsidies on the manufacture of cars and reduce the cost of manufacturing while increasing the company profits.

Political factors thus play an important role in the operation of business as they create an impact on the policies and decision-making of management of company. These factors are important to be evaluated so that the company can take advantage of the positive effects of political situation of the country so that it can grow and develop in the competitive marketplace.

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Economic: These are the factors which relate to the economic condition of the country which creates an influence on the purchasing power of the people and also creates an impact on the sales of the company offerings. Some of the important economic factors of the company are its GDP rate, rate of unemployment, standard of living, inflation rate, interest rates, banking policies etc. These factors create an impact on the sales of company as the economic situation of the company defines the affordability of the society (Butt, 2020). Rolls Royce deals in luxurious cars which mainly aims at the premium customers who can  afford expensive cars. This means that people must be able to afford the premium priced cars of company. UK has a stable economic condition and the people have high standard of living which means that in order to create an image and to be considered as high society, people are ready to purchase premium products of the company. Also the unemployment rates of the company are low which means that the people have high purchasing power and can afford high priced products.

Economic factors are important be analysed as it determines the value of products a company can offer in the market depending on the affordability of the products. Also the customer demand of products in the market can be known which helps the company in estimating its profit in the market. Also the bank interest rates and inflation of the country can affect the buying behaviour of customers which affect the business sales and profits.

Social: These factors are related to the type of people who constitute a society and determines the buying behaviour of the people. The religion, culture, sex, age etc. determine the composition of the society and also creates an impact on the buying behaviour of customers. The society of UK is composed of people belonging to multiple religions and culture and they are also highly advanced with a continuous change in their taste and preferences (Chen and et. al., 2015). Rolls Royce offers premium priced, highly featured and expensive cars to its customers and the people of UK have high standard of living which makes the product of company successful in UK market. This helps it in providing its customers with a variety of products which can be afforded by them and fluctuation in prices do not affect their buying behaviour. Thus the socio-cultural composition of UK is favourable for the company which can help it to grow and develop in the market.

Social factors are important for the company because the profits of the company depends on customers who are ultimately influenced by the society in which they live in. it also help the company in determining the demand of company products so that it can continue to expand in the market which can help it in achieving its goals and objectives on time.

Technological: These are the factors related to the technological advancement of the country and the rate at which R&D is promoted in the country so that innovations can be brought in technology which can help in the development of the country. UK is a technologically advanced nation which means that all the new and modern technologies are available in the country. This also means that the businesses can easily acquire these techniques at cheaper rates which can help them in their growth in UK market (Cordeiro and Tewari, 2015). Rolls Royce can be benefited from the technological advancement of UK which can help it in modifying its cars and upgrading it with unique and advanced features which can make their cars highly advanced and luxurious. This helps the company in adding value to the cars thus increasing the worth of customer's money thus creating loyal customers and attracting more customers in the market. The technological advancements also help the company in manufacturing the cars at lower costs by simplifying the processes and activities of the company thus reducing company costs. It helps in increasing the profits of company.

Technological factors are important for the company as it helps the company to make use of these technologies so that they can add advanced features in their products so that a competitive edge can be achieved in the market. Also with technology a company can invest more in R&D which can help it to improve its products thus giving more customer satisfaction which will help it to increase the profitability of company.

Legal: These are the factors which re related to the legal system of country and the laws that operate in the country which governs the policies and decisions of company so that their activities can fall under the legal framework of the country. The employment laws, auto-mobile laws, safety rules, intellectual property laws, data protection laws etc. all comes under the legal pursuit and must be followed by the companies so that they can perform their business activities legally (Gause, 2016). In UK companies need to strictly follow all the rules and regulations so that they can work deficiently in the market without getting involved in any illegal activities. The laws in UK regarding manufacturing sector are favourable which means that Rolls Royce do not have to face many difficulties in going along the legalities of country.

Legal factors are important for company as it helps in making the activities of company legal and helps the company in gaining support from all its stakeholders. This factor is thus important for its growth as the company can win loyalty of customers thereby increasing the profitability of company.

Environmental: These are the factors related to the environment of a country which affects the availability of resources for company and also affect the company policies and strategies depending on the environmental protection laws of a country. Due to the increase in pollution and increased usage of natural resources, UK has taken part in many environment protection treaties which means that the businesses of the UK needs to follow these treaties so that minimum harm is caused to the environment (Günther, Kannegiesser and Autenrieb, 2015). Rolls Royce thus needs to manufacture such cars which do not create pollution or cause harm to the environment so that it does not face any opposition from the customers or government which can affect company's image.

TASK 2

Corporate Social Responsibility and Sustainability of Rolls Royce

It is defined as a self regulating model of business which assist a firm to be socially accountable towards itself, stakeholders as well as public. Being a social responsible a business can enhance their brand image and grow or develop in order to sustain for a long time period. The social responsibilities authorise workers in order to leverage corporate resources and they can able to increase employees morale as well as lead towards the high level of productivity.  

Relevance and influences of CSR and sustainability on policies and decision making

The Rolls Royce motor car company is an everlasting expression of exceptional and it is exclusive producer or manufacturer of branded cars. It is the British luxury automotive manufacturer which was founded in 1998 and headquartered in England, United Kingdom which basically deals in the manufacturing as well as distribution areas across the entire globe (Hammer, 2015).

Relevance of CSR and Sustainability with Rolls Royce company:

This company is vast in nature so has a large number of customers, buyers, suppliers and so on and they all have strong and loyal relationship with the Rolls Royce brand. In order to maintain long term relations and sustainability the company need to develop their corporate social responsibilities in order to satisfy them effectively as a result of these they can able to gain maximum customer satisfaction along with the long term sustainability.  

Influences of CSR and sustainability on policies and decision-making of Rolls Royce:

There are several factors which influence on the policies, decisions and management of Rolls Royce Motor car. So that company needs to consider corporate social responsibilities as well as sustainability strategies in order to get huge growth and development. These influences are as follows:

  • Customer influences: As customers are termed as a king of market that make their own decisions regarding buying of goods and services of all company's. They mainly considered the high quality, low price, environment friendly as well as ethical consideration while making purchasing decisions which will largely influenced by the brand value and goodwill of company. The Rolls Royce company can make large base of customers by formulating marketing strategies by considering the advantages of customer's and adopts appropriate CSR activities (Kolios, Read and Ioannou, 2016).
  • Investors influences: Social activities of Rolls Royce help investors in order to making decisions regarding the investment in company so that they are termed as a most influencer for an organisation. As social activities assist a company for acquiring best amount of investment from external parties as well as help investors to make appropriate decision regarding their investment. Thus, the company Rolls Royce formulate their marketing activities and decisions clearly which will help investors to make appropriate decisions so that company' automatically gain high sustainability.
  • Employees influences: As workers are considered as an important part of organisation that lead the organisational success at a wide range. In Rolls Royce Motors car, employees are the important stakeholder as they influences on productivity as well as distribution of products. So it is considered that workers highly influence the decisions and policies of Rolls Royce by which a business require to make them satisfied for their betterment as well as sustain leading position in the marketplace. In order to satisfied company's employees the management need to formulate such kind of decisions and policies that are socially accountable for workers and they feel happy or satisfied and highly engaged in working performance to gain high growth and sustainability (Lambert, Browne and Michaelides, 2015).
  • Self influences: While a business get huge level of involvement then the company Rolls Royce indirectly have a large influences of self in the auto-mobile market and socially covered a detailed introduction regarding customers. This will assist in formulating appropriate policies, management and effective decisions also by means of their self control. By considering CSR activities company can able to generate more innovative concepts and ideas which helps company to get huge opportunities and gives sustainable growth and development.
  • Competitors influences: Most of the businesses plans or prepares policies and strategies for their operational activities by considering  the competitors because they are the main threat of companies. While Rolls Royce Motors highly involved in corporate social responsibilities for the betterment of society and community then these things of social activities make them unique or different from their competitors. This will help in taking competitive advantages in marketplace and sustain for longer period of time in a competitive marketplace (Mohd Fuzi and et. al., 2017).
  • Public influences: Within businesses, media is considered as one of the most influencing component that effects all type of business across world. As the image of business depends on the positive or negative factors that directly leads the failure or success of organisation. While the company Rolls Royce operates any corporate social responsibilities in their operations that means the information about social activities spread all over the areas that helps in auto promotions of cars as well as increase their customer base through the positive note. As these social activities are more essential as well as influential to the company's management, policies and decisions.

Critical analysis of the effectiveness of Rolls Royce's response

The company Rolls Royce is highly responsive towards the corporate social responsibilities and sustainability for the public and themselves. Few of the responses of Rolls Royce towards CSR and sustainability along with the effectiveness are discussed below:

  • Charity and community development: As the company Rolls Royce creates better, positive and strong relationship with the general public or stakeholders by developing some form of charitable activities. As the company Rolls Royce promotes their goods and services in the market by doing or considering several activities related to the community development which includes raising social awareness among people through organising campaigns on the social topics or subjects (Okpaluba, 2015).
  • Green business: Company pay their concentration towards making green industry by including CSR activities in their businesses. As all know about that day by day entire world is getting warming, so Rolls Royce need to make appropriate strategies, policies and decisions towards the development of green business within time. As they focused on keeping society safe, clean as well as non populated by means of automotive vehicles. If society is getting populated by industries or companies then they will be created negative message in media against business which will highly influence on the reduction of customers by putting questions on the consideration of social as well as ethical responsibilities. By doing social consideration or response in the favour of society helps in increasing the company's goodwill and create a strong belief within the market (Renwick, 2018).
  • Priorities customers and keep communicating: The company Rolls Royce know that customers are important community towards their success and growth as they can easily change the position of business in few minutes. So that customer is the foremost consideration for the improvement of organisation in order to make beneficial and attractive. They continuously focus on facilitating best solutions as it requires to anticipate opportunities as well as challenge which will face by customers. This will help in developing better customer relationships and effective interaction with them.
  • Ethics and compliances: The company Rolls Royce Motors sets high standards towards ethical behaviour as well as properly compliances with rules and regulations that are necessary in order to protect company' reputation as well as long term success and growth. As the company committed to conduct entire activities in an ethical way as well as these are free from the corruption or bribery.
  • Reducing wastages:The automotive industry produce wastages while manufacturing and distributing products and services which creates adverse impact on the company as well as environment. So the company Rolls Royce prepare themselves about facing wastages derived from such industrial activities and take significant steps towards minimising such wastages. The company also works with the European union in order to make or reducing industrial wastages for the improvement and betterment of public (Russo-Spena, Tregua and De Chiara, 2018).
  • Employee betterment: As all knows that workers are the main driver of business success so the company Rolls Royce response effectively towards the betterment of them by facilitating adequate training, salary, bonus, accommodations and so on. These activities makes community pleasant because of their caring towards employees or operates business functions from their local community so the firm is able to get sustainable development.
  • Minimising unemployment: The issue of unemployment become most concerning across the world so companies need to be focused on that in order to minimise appropriately. As the company Rolls Royce maintain strong relations with the government for the improvement as well as betterment for future in order to finds attractive benefits to the community from this well beings.
  • Solve customer complaints: It is termed as an superior response of Rolls Royce company towards corporate social responsibilities. As the company solves all issues and complaints by providing appropriate compensation and recovery for the well beings of customers instead of say sorry which is not enough at all. It is considered as an ethical attitudes of company that helps in comfort customers and make them happy which will assist in increasing the demand of products and company can able to sustain for the longer period of duration within the market.   

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Some areas for improvement

Rolls Royce is a company which follows CSR policies so that it can make all the stakeholders fully satisfied which help it in creating value for its customers along with gaining their loyalty towards company. This help the company to spread its business across national borders so that it can become a leading business in the auto-mobile manufacturing sector and can increase its profits. The company also contributes positively towards the UK economy as it help in providing employment opportunities, contributing towards the GDP of country, enhancing the living standard of people, creating value for customers etc. All these factors help the company in receiving support from UK government which has contributed towards its growth. There are some areas where improvements can be made which can help it in becoming more responsible towards its stakeholders. Some of the areas where improvements can be made are:

  • As the company price its products at high rates it becomes difficult for all the income groups to be able to afford its cars. This makes it difficult for the company to offer its products in other markets. This restricts the company to expand its business in areas where the economic conditions of the country are not good and the purchasing power of people is low.
  • The company needs to hire more employees from local community so that the social responsibility of the company towards society can increase which will help in gaining more support from the society hence the CSR responsibilities of company will be completely applied.
  • The company can also increase their concern towards the remote community and give them some percentage of employment in the company so that they can be uplifted in the society which can help in making their conditions better. This help the company to ethically implement CSR in its policies.
  • The company can start manufacturing electric vehicles so that environmental pollution can be reduced along with a reduction in the consumption of fuels. This help the company in following its CSR responsibilities in an efficient manner.
  • The company needs to include ethical practices related to manufacture of cars along with following all the laws of country so that it can work under the legal framework of country and can attract more customers and employees towards the company so that the sales of company can increase.

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CONCLUSION

From the above report it can be concluded that businesses while working in a business environment are affected by various external factors which can be analysed by the use of PESTLE analysis so that the positive and negative impact of all these factors can be evaluated. This helps the business in determining how to take advantage of positive factors while make changes in policies so that the negative effects can be reduced. Also in the modern world where businesses develop they need to follow some themes so that they can remain sustainable in the market and can competitively grow in the market. CSR helps the company in making its activities legal and ethical which helps it in gaining support from all its stakeholders which is important for the survival of the company in marketplace.

REFERENCES

  • Alvarez, J.L. ed., 2016. The diffusion and consumption of business knowledge. Springer.
  • Anastase, I.B. and Grigoruț, C., 2016. contemporary developments of the marketing orientation and activity. SEA: Practical Application of Science .4(2).
  • Brewster, C., 2019. Comparative Employee Relations: An Overview of Contemporary Developments and Scholarship. In International Comparative Employee Relations. Edward Elgar Publishing.
  • Butt, G., 2020. Contemporary Developments in Geography Education Research and Theory. In Geography Education Research in the UK: Retrospect and Prospect (pp. 71-114). Springer, Cham.
  • Chen, J. and et. al., 2015. CSR Development Index for the Automotive Industry (2012). In Research Report on Corporate Social Responsibility of China(pp. 187-200). Springer, Berlin, Heidelberg.
  • Cordeiro, J.J. and Tewari, M., 2015. Firm characteristics, industry context, and investor reactions to environmental CSR: A stakeholder theory approach. Journal of Business Ethics .130(4). pp.833-849.

APPENDIX-I

Organisation profile

Rolls Royce Motors Cars Ltd. is British car manufacturing company renowned for its supreme quality and highly luxurious car models. The company is wholly owned subsidiary of German group BMW and was established in 1998 when BMW got the license of using brand name and logo from Rolls Royce plc. The company operate its functions from purpose built administrative and production facilities located in England, UK. The company thus focus its products on high income groups who can afford the premium priced vehicles offered by the company. The premium pricing policy of company helps it in making a loyal customer base along with providing them with the most advanced features so that high value can be created for customers.

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