ROLLS ROYCE R Rolls-Royce Expanding a business through skilful acquisition Introduction In 1999, Rolls-Royce acquired Vickers players in the field in order to gain Identifying the new Rolls-Royce has developed a world- Plc. Vickers was already a key player in competitive advantage. A competitive the marine market, providing leading strategy is one that enables an opportunity leading marine business that services customers in global commercial and edge marine equipment. The take-over organisation to stay ahead of rivals. In naval markets. Today, more than 20,000 demonstrated Rolls-Royce's strategic the modern world, large organisations Given the high levels of global compe- commercial and naval vessels use Rolls- intent to become the dominant player in tition in the modern world, a company compete in global markets. To be Royce equipment, and the company's the marine market. This acquisition like Rolls-Royce can survive and pros- successful they have to be the best at engines power 400 ships in 30 navies. In gave the company a range of leading per only in those markets in which it is what they do and they need to be seen the marine market, Rolls-Royce edge businesses. a dominant force. Opportunities for provides high capital-value products o be the best on a global scale. A acquisition have been taken after care- services and systems and develop Rolls-Royce carried out extensive company's strategists need to identify ful evaluation. These opportunities have long-term relationships with customers. market research and conducted the key characteristics that will make enabled the company to combine its detailed financial analyses into the it "the best' in the markets in which own existing strengths with those of the The acquisition of Vickers in 1999 added a range of complementary marine market. This research identified it operates. excellent companies that it has acquired The name 'Rolls-Royce' has always been search costs. Therefore, customers look for products and services and expanded associated with high quality products. Most a clear opportunity; an opportunity The faster the growth of a particular in order to build market leadership. suppliers who are able to meet the full range the Rolls-Royce route to market. that Rolls-Royce has backed-up people probably link the company with high of their needs with the highest level of service. The marine market has proved to be an through significant investment in this market, the greater is the amount of The products acquired as a result of the quality aero-engines and motor cars. growth area. expenditure required in order to outstanding opportunity for expansion Vickers take-over are market-leading Rolls-Royce has already built a strong, mature for Rolls-Royce. There are two main Rolls-Royce still makes aero-engines, but no maintain position in that market. In a brands in the commercial and naval business in defence aerospace and is well The strategy of expanding in the marine dynamic market, considerable expendi- reasons for this: marine business and include Ulstein, longer manufactures cars. Instead, the company placed in future programmes. Over the past sector should be seen as part of an ture is required on investment in product the marine industry is looking to Bird-Johnson, Aquamaster, Kamewa has transferred its core strengths and expertise three years the company has won an average overall strategy of seeking to grow lines. Intelligent organisations identify increase the engine power associated and Brown Brothers into other markets in which it has the greatest of 30% of the civil aerospace market by value. the business of Rolls-Royce by those areas of a market that are experi- with movement of passengers and The effect of adding Vickers Ulstein competitive strengths. These are the civil aerospace, However, aerospace is a maturing market, so searching out the most suitable encing the highest levels of growth and freight by sea Marine Systems to the existing capabil defence aerospace, marine and energy markets. t makes sense for Rolls-Royce to look for new opportunities for global expansion and then seek to increase their share of the ities of Rolls-Royce was to: Strategies are the means by which organisations opportunities for expansion. This case study market leadership market in these sectors. . the marine industry is under pressure from governments to produce . make Rolls-Royce a world leader in achieve their objectives. Strategies are long- focuses on how Rolls-Royce has built a strong engines that meet more demanding presence in marine markets. It has done this Expanding in the This case study shows how marine systems term plans. Strategic implementation is the process of putting these plans into action. Rolls-Royce has identified key areas of regulations on emissions. . broaden routes to market through a process of take-over, consolidation marine market through the marine markets on which to focus. Rolls-Royce's strategy is to secure and retain and by focusing on developing competitive It follows from this that the companies acquisition Today, marine activity accounts for . create new business opportunities which are best placed to produce and the leading position in its key markets. The advantage in this sector. Competitive advantage about 15% of the Rolls-Royce group's supply marine equipment and systems . broaden the product range and allow company recognises that an increasing number has resulted from the company making leading The main way of achieving marine turnover. It has the potential to move that are powerful, efficient and environ- integrated systems to be of customers want to deal with as few suppliers edge improvements, including a strong focus market expansion has been that of to about 30% of the group's turnover mentally friendly are likely to win the developed/offered as possible in order to reduce purchasing and on meeting the green challenge. acquisition: taking over other leading over the next 10 years. largest share of this market. . build a strong global support network.Glossary of Keywords Complementary products: Products that support other products eg producing control systems for marine engines. Core strengths: The things that a company does particularly well, eg manufacturing to high levels of accuracy. Cruise, ferry and merchant Moreover, in global markets it often Rolls-Royce has taken major steps in Leading edge improvements: Improvements that are in a key Cruise ships: engines, propellers, pays to have a branch of an organisa- the field of environmental awareness, area of an industry's activity, and which represent important podded propulsors, thrusters, deck tion specifically tailored to meeting including a commitment to report regu- breakthroughs. machinery, stabilisers local needs. This is certainly true of larly on progress made. The company naval marine markets. For example, for produced its first environmental report Maturing market: A market in which the prospects of future The force in marine Rolls-Royce prides itself on being Fast passenger ferries: engines, the supply of sensitive defence needs in 1999 and places a strong emphasis growth are diminishing. solutions much more than a company that propellers, podded propulsors, where secrecy is required, the Royal on reducing the impact of products on Niche market: A specialist part of a total market. provides products. Rather, the goal is thrusters, deck machinery, stabilisers Navy will deal only with UK companies. the environment. The force in marine solutions' is the to become the partner of choice Liquid Natural Gas carriers By developing a global marine presence, In the marine market, Rolls-Royce has Search costs: The time and money spent in shopping around for set out to use tomorrow's technologies the products that are needed. slogan that Rolls-Royce has been using for marine solutions internationally. propellers, deck machinery Rolls-Royce has been able to penetrate so as to enable customers to meet and to launch the new and enlarged busi- With such a broad product portfolio Fast freight: Marine Trent gas turbines overseas markets. For example, Rolls- exceed international requirements for Solutions: Responses that meet customer needs. ness. The slogan features in all of the made up of leading brands, Rolls-Royce Royce Naval Marine Inc is a US regis- and the world's largest water jets is singularly well placed to provide tered company. Being US registered, it energy efficiency and also environment Take-over: Where one company acquires another by buying up a company's advertising and customer integrated lifetime solutions for Offshore oil production and support is able to deal directly with the US navy tal concerns eg in the types and quanti- majority shareholding. communications. Its primary purpose is ties of fuels burned in marine engines. In o gain competitive advantage and customers that include shipbuilders, Semi-submersible rigs: control systems, This has led to the development of an advanced water jet in the USA. particular, Rolls-Royce has pioneered Turnover: The total value of sales. distance Rolls-Royce from competitors. ship operators and prime contractors podded propulsors, winches, thrusters the next generation fuel-efficient marine in all marine markets. These solutions Floating production vessels: control The importance gas turbine that will offer operators An advertising campaign promoted the key Today, Rolls-Royce provides the widest nternational naval and commercial markets. range of marine products because a require an involvement from Rolls- systems, thrusters, winches of cruise ships and of other ships the Royce at every stage in the development of building a range of key brands are now part of the opportunity to develop innovative Naval sector Rolls-Royce portfolio. This portfolio of marine vessels. differential through ship designs that will increase their includes: Aircraft/helicopter carriers: engines, green credentials operators' potential to earn revenue. Product Rolls-Royce's marine stabilisers, steering gear, propellers, Description deck machinery Today in advanced industrial societies, Conclusion Aquamaster Swing up or retractable thrusters market Bird-Johnson Fast patrol craft: gas turbines, gear concern for the environment is at the Controllable pitch propellers forefront of manufacturers' thinking. In Rolls-Royce is convinced that the best Brown Brothers Stabilisers, steering gear boxes, water jets way to be successful is to be a leading Rolls-Royce provides marine solutions order to gain competitive advantage, it Kamewa Propellers, tunnel thrusters, player (1 or 2) in the markets in which is essential for manufacturers to produce water jets for a wide range of customers. Frigates/destroyers: engines, stabilisers, In particular, the company targets steering gear, propellers, deck machinery it operates. The company has a busi- A variety of marine activities products that meet rigorous environment The new force in marine A worldwide capability in Ulstein ness with a proven marine pedigree that solutions marine technology from vessel design and control the high value niche markets of Submarines: nuclear reactor plant and al criteria. can trace its roots back to 1849. systems to winch manufacture the industry. total support for this plant and other Rolls-Royce is very well placed to However, in the modern globally Rolls-Royce's strength in marine parts of the submarine deliver solutions that meet modern day integrated highly competitive market comes from its leading position in a Examples of the products and systems In the marine market, customers are regulatory frameworks and which place, it is essential to be the main force range of current markets: provided for specialist vessels include: likely to have a variety of needs for include clean solutions and fuel effi- in marine solutions by: different types of marine equipment and ciency. The company accepts that providing the widest range of marine other marine solutions. These customers responsibility for the environment has products will want to deal with a supplier who to be an integral part of its business . providing a unique systems capability, operates on a scale that is sufficiently strategy rather than a separate activity including market leading environment intended merely to satisfy minimum tal solutions, that sets Rolls-Royce Pulling together the world's Controllable Giant large as to be able to service and meet a World-leading integrated leading names in marine technology marine systems Podded range of complex needs. standards set down by government. aside from the competition. propellers Water jets Thrusters propulsors winches Stabilisers 1 Why did Rolls-Royce expand its 2 How did Rolls-Royce expand its 3 How might customers benefit 4 Why is environmental concern 5 If Rolls-Royce were to grow the presence in the marine market? presence in the marine market? from the growth of Rolls-Royce an important part of the pack- business further, into what in the marine market? age in providing marine solu- areas would the company be tions ? looking to expand? 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