Rolls Royce PESTLE Analysis

Published in Companies category by MBA Skool Team

Here is a detailed PESTLE analysis of Rolls Royce which examines political, economic, social, technological, legal & environmental factors.

Political Factors:

The political factors in the Rolls Royce PESTLE Analysis can be explained as follows:

Rolls Royce is a British company that operates across the globe. Since the automaker sells across various countries in the world, various political reasons are prevailing in these countries that directly affect its sales. In the European market since the conditions haven’t been as stable as those in the Asian countries, the company’s operations have been affected. With post-Brexit news, there were certain issues that the company faced, in terms of increased costing and lower sales, and reduced ease of operation. Rolls Royce has another area of operation that is related to the army and aircraft.

It supplies the various advanced vehicle engines to the armies. With the existence of lobbying and pressure from certain US/EU countries, the company has to bend its course of action according to the country in power. A benefit that Rolls Royce gets is the power associated with when working with the army and air force. It has a good hold and can try and influence various political situations in its favor.

Image: pixabay

Economic Factors:

Below are the economic factors in the PESTLE Analysis of Rolls Royce:

Since Rolls Royce operates across various countries, the level of economic stability in that region plays a major role. The segment in which it operates is a premium, and its customers are usually high-end people who can afford the automobile.

The change in exchange rates might affect the company, but not so much, since the buyers are already premium. The Rolls Royce company might get affected by a recession, like in 2008-2009, and the sales might go down. The production is more than that is required in the market, which again leads to increased inventory cost, but again since the demand is unpredictable and depends on the season. There might be periods where the sale is increased due to multiple buyers of the automobile, followed by periods of no or minimum sales. With the duopoly of Airbus and Boeing, it is tuff for Rolls Royce to capture a large segment in the commercial aircraft market.

Social Factors:

Following are the social factors impacting Rolls Royce PESTLE Analysis:

Rolls Royce t is a brand that is widely known across the world, for beautiful automobiles. These cars are a piece of art and are a status symbol. Owning Rolls Royce means a lot and is known to make an impact on the society. Though the company is now owned by BMW, the brand still has a standalone name in the market. Since the company’s venture into the aerospace segment is not much known, it is less appreciated. Rolls Royce is also involved in the manufacture of civil aircraft engines, and with the recent rise in air travel, the stakes are high for the company. With more customers for its civil aircraft market, the company can become more profitable and more influential. One challenge the company might face is the tuff competition in the aerospace segment. With more players trying to enter in, Rolls Royce might have to redo its finances to maintain its profit. The company will see a rise in sales, especially in the developing countries in the Asian market. The income levels have increased in the urban areas and owing to an automobile from the company is of significance. Since the company operates in the posh and premium segment and has its own value, it cannot be sabotaged by any other company easily.

Technology Factors:

The technological factors in the PESTLE Analysis of Rolls Royce are mentioned below:

With Rolls Royce working in the aerospace segment, the latest technology is a mandate to stay in the market. The company is expected to invest more in its R&D projects related to developing new and upgraded technologies. In 2016, the company had applied for around 700 patents to protect its intellectual property. The company has various classic cars in store, and with the changing trends, it might think of going emission less. There are various startups like Lunaz from the UK, who are willing to work with classic models of automobiles, and strip them down to their exterior body, and remodel them to be electrified. Rolls Royce also has an opportunity to go completely electric or produce hybrid vehicles, in its latest lines. The company has been working on cars in the future and has launched a prototype of the 103-EX, which seems to be from a different world. The car is the perfect amalgamation of present technology and all the necessities of the future.

Though the company might not produce it, it might utilize the idea and design to produce better designs for the future.

Following are the legal factors in the Rolls Royce PESTLE Analysis:

When company’s like Rolls Royce work across various countries, there are various legalities they need to follow. Various environmental laws change, which affects the production of automobiles. An example of this is the shift in India from BS4 to BS6. Though the change was spread across a period, it was still a drastic one for the company. In many countries, the rules for hybrid and completely electric vehicles have not yet been defined appropriately which poses a further threat to the company if it launches its hybrid vehicles before the rules are established. A change in any of the legalities, will lead to the implementation of major changes and thus affect profitability. To avoid being sued the company needs to keep a tab on the quality of all automobiles it produces. It needs to abide by the anti-bribery act that has been established by various countries. A recent example is when the CBI booked Rolls Royce in a bribery case, that involved paying an agent to get the HAL and other public sector contracts. These cases tarnish the name of the company and also affect them monetarily when the damages to be paid are high. Beyond the legal difficulties faced, Ford needs to work on the pricing policy according to the different countries it operates in. It needs to keep the legal framework of different countries in view when manufacturing different models, since the regulations related to product design and safety may vary.

Environmental Factors:

In the Rolls Royce PESTLE Analysis, the environmental elements affecting its business are as below:

Rolls Royce believes in the fact that, what they do, matters! With various players venturing into the renewable sources market, it is expected to become more and more competitive in the future. These efforts will reduce the cost of electrical energy by making it more flexible, and also reduce the usage of fossil fuel. Rolls Royce is working towards attaining maximum use of these renewable sources. It has laid down one of the largest sustainable supply chain systems and wishes to deliver more efficient products and services through all its segments of operations. The engines that the company produces have become more advanced with hybrid technology and low emissions. This ultimately leads to a lower impact on the environment.

Rolls Royce is thinking about a new product EVTOL- electric vertical takeoff and landing vehicles. It is still under development process and may release a prototype in 2020. With these efforts, the company is set to create history with new and sustainable technology.

To conclude, the above Rolls Royce PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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