Rolls-Royce Motor Cars Ltd (RR) manufactures and distributes luxury automobiles globally. The document analyzes how political, economic, social and technological factors impact RR. It finds that the Conservative party best supports RR's growth through tax cuts and reduced regulations to allow expansion. However, environmental policies from other parties pose challenges to RR's carbon footprint. Intercultural communication is also vital as 90% of RR's sales are international.

1. Rolls -Royce Motor
Cars Limited
Emerging Global Themes
Alexander Segerlund
i7622675 - 4598895
Word Count: 1963

2. As the CEO of Rolls Royce Motor Cars Ltd, the understanding of political,
economical, social and cultural themes are vital interconnected factors that affect
the working clogs within any organisation. RR covers a broad field of business by
engineering, manufacturing and distributing luxury automobiles and automobile
parts on a global scale.
RR was established in 1998 by being a fully owned subsidiary of The BMW AG
group. The knowledge plus strategies that BMW has brought to the division has
carried RR forward even through many shifts and changes in the economy such
as the credit squeeze and recession of the late 2000’s and early 2010’s. However
every obstacle you meet in time is one nevertheless and even if RR has come
across economic/political changes in the past, there still needs to be a strategy in
preparation for future events. As Porter states “Every Firm competing in an
industry has a competitive strategy, whether explicit or implicit”(Porter 1980).
The upcoming UK election could bring many changes that would force a (Private)
For-Profit company such as RR in a different direction if a new government were
to be appointed. How can a firm best position itself to compete in the long run is
a key question? Understanding the environment, which RR operates within,
should be analysed regularly and used as the starting point when formulating a
defensive plan for risks that would expose RR and cause a financial impact. The
economic, political and business contexts for the private sector/industry and the
concepts of intercultural communication with RR/industry need to be understood
before the election.
Macro Environment Analysis - reveals the broad range of issues that are
apparent in the automotive industry, which then leads on to making a judgment
on the impact it will have upon RR. Performing a PEST analysis on RR will show
what areas the government will impact: Political/Legal Issues, Economic and
Technological Factors.

3. Economic Environment - Over the past 10 years, the price of cars has increased
dramatically due to the rise of the inflation regardless of the price. The recession
and credit crunch were factors that saw many companies see a reduction in
sales and thereby would have to adapt their marketing strategies in order to
recover. As Kotler mentions “a premium product such as the iPhones and iPods
are often hardest hit in economical times”(Kotler et al., 2013). Given that RR
targets a niche market, there will be a less of an impact on sales, due to UHNWI
being able to afford it regardless of an economic downturn. The high
infrastructural development in the luxury car industry (RR) has become one of
most demanding in the world. As Balan, V raises, one of the major factors that
have had an affect on price elasticity is coming from the substance of (oil) and its
constant dependency on it (2015).
RR’s supply/demand and price elasticity of demand is also effected by
government taxes on manufacturers, the price of external resources (for
example: Steel, aluminum etc. will increase the price of the vehicle), price and
costs of outsourcing materials, level of changes in economical activities,
components and services get increased, and the buying capacity of ultra high net
worth individuals. Not applying specifically to UHNWI but RR still need to be
aware of the environmental considerations that lead manufactures for
innovations. More environmentally friendly vehicles such as hybrid cars are being
created and the demand for these products is increasing in society.
Government decisions are the main starting factors in creating a globalised
economy. With RR cars being assembled in the UK but components coming from
foreign countries, the rules and regulations are a clinical part in the growth of the
company.
Political forces, within the UK and internationally are hugely significant influences
to RR. European commissions clearly state, “All new cars must comply with strict
EU vehicle emission standards, known as the Euro standards” (Ec.europa.eu,

4. 2015). RR has been building engines for years but the entire philosophy that it
holds when it comes to its car engines is creating a smooth powerful V12.
The increasing problems that RR has been dealing with is the rules of
environmental friendliness that are put into place, Hybrid vehicles have more
demand and more government support in modern times thus engines becoming
smaller and more fuel efficient. UK Government has introduced financial
measures to favor cars with lower CO2 emissions within major cities. The
increase and decrease of taxes can have an effect to RR and the industry’s
usage/sales. RR operates on a global scale and the import laws vary from
different nations, and given that RR cars are sent across the globe it becomes a
crucial factor to RR. For example In China, importers need an importing license.
In Colombia Importing used vehicles is not allowed entirely and the buying/selling
has to be recorded by, “keeping company records and report changes to
Companies House and HM Revenue and Customs, HMRC” (Gov.uk, 2015).
Technological factors and innovations are at the forefront of RR. Research &
development also play important roles, as RR is constantly trying to improve
standards of driving for the clients.
One of the major requirements to the customer is safety. Linking in with the
economic problems that are being set by the government, Fuel consumption is
one of the major problems at the moment for luxury branded cars, as hybrid and
electric engines have been developed to reduce fuel consumption and help the
environment.
The rise in technology has meant that cars are not fully made by human hands
any more and this has created a slow decline in the need for staff creating fewer
jobs making the decision for redundancies and salary cuts entirely in the
governments hands. Technology advancement is also now leading to the drop in
prices for manufacturing; Investing in research and development with innovating

5. new technologies is a gain that RR constantly needs to generate to boost sales.
Technological development is of great importance to RR as through this the
driver’s control of the vehicle is supported thereby making it a more comfortable
and easier drive. For example: parking sensors, navigation system, automatic
gear change and others. This is crucial to maintain the luxury of RR’s brand
reputation, as Kapferer and Bastien explain “When it comes to luxury, hedonism
takes precedence over functionality”. (Kapferer and Bastien 2012).
In the next upcoming election, challenging governments with different polices will
try and fight their way into power. In that result RR will have to prepare for
changes and understand what government holds the political values to keep RR
most profitable.
Labour are a large party that were in power 5 years ago. They represent
themselves as looking after the citizens of Britain, meaning that an automotive
company that targets UHNWI is not going to be looked at favorably. If Labour
were to be elected into power, some of the polices they would propose would be
to tax organisations highly and freeze energy bills putting all concentration into
new green technologies.
Secondly, Labour would aim to cap tuition fees, this could have a diverse effect
on the quality of education that graduates are coming out with, more students will
decide to go to university and graduates that RR would ultimately target may not
be at the same quality in relation to European education. Labour want
membership with the EU and US and even a greater opportunity to trade with
emerging economies, such as Brazil, India and China allowing Britain to make
considerable economic gains. (Labour.org.uk, 2015)
Liberal Democrats, are currently in a coalition with the conservative government.
During this 4 year stint the party have felt that they have not been able to put
most of their main polices into action but have made sure a couple key ones

6. have been voiced. These have been; making the UK a world leader in low carbon
cars, energy efficient and hi tech manufacturing and to back growing business
whilst cutting energy bills to create jobs. Lib Dem’s want to stay in Europe which
is a plus for RR but have strong polices on green energy, electronic cars, cutting
manufacturing energy’s budget etc. (Liberal Democrats, 2015).
Conservatives, for the past 4 years have made it very clear in their campaigns
that if re elected they will continue to back business to create jobs. This will be
achieved through scrapping job TAX for under 21s, investing into better roads
and transportation to reach new customers, cutting Corporate TAX and helping
companies invest and grow, getting rid of the red tape which leads to freeing up
businesses to concentrate on expansion. (Conservatives.com, 2015)
UKIP, are campaigning with strong right wing beliefs that threaten to take votes
away from the conservative government. Their main and dominating policy is that
the UK do not belong in Europe, which would open a real problem for RR and
would create a step backward in profits due to the importation of components
and exportation of completed cars. UKIP would also cancel European Fare-trade
Area (EFA) and European Economic Area (EEA) yet Supports a diverse energy
market and will reduce the fuel bills. (UKIP, 2015)
Conclusion/Debate – Although RR is owned and managed by a German based
company (BMW), its production and manufacturing is carried out in the UK. Ross
Brennan explains the importance b2b elements coming together “Original
equipment manufactures combine components bought from other suppliers into a
finished product that is sold to end users”. (Brennan, Canning and McDowell
n.d.).
The current security and flow of business strategies would be disrupted by the
policies that UKIP would bring. The separation from Europe along with trading
polices that would be brought would negatively effect RR. This would have an

7. impact on globalisation, which has been a huge part of the company’s success
through targeting consumers predominantly based in strong economic countries.
For example, BRIC nations (Brazil, Russia, India and China). As the Economist
states the Growth in America is still the company's biggest market, but can easily
become outpaced by the constant rise of China, Sales are now RR’s second-
biggest market and has surged by 600%, India by 400%. (overall, 90% of the
firm's output is destined for foreign tarmac (2015).
RR has made them selves known for supporting the environment by introducing
biodiversity targets, battery recycling, water management etc. However being a
luxury car company inevitably will always create high levels of CO2 emissions.
Labour want to heavily tax large (for-profit) organisations, whilst freezing energy
bills. Lib Dem’s also want to push for cutting company’s manufacturing energy
output, making the priorities of these two parties not in the benefit of RR. Labour
do in fact want to promote the activity of international trading with BRIC
economies, however corporate tax would heavily effect the levels of profit that
RR would loose.
After analysing the economic situation of the company along with the proposed
policies of the political parties, the political party that would most effectively
create an economic growth for RR would be the Conservative. The reason being
is their plans to completely cut corporate taxes and open the boundaries of
trading thus creating the ability to concentrate on expansion.
Intercultural communication is a necessity when selling in global markets, given
that RR sell 90% of their output to foreign countries, the representation of the
brand is key. The desire to share in the British “genes and heritage” that the
opulent wood and leather interiors epitomize linked together with the engines,
parts and much of the technology come from excellence of German Engineering.
The conservative government has made it very clear that they want corporate

8. business to grow, so RR should have lobbying power with the current
government about rules to help the company thus keeping the factory in the UK.
Bibliography
Books
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6th ed. Harlow: Pearson, (pp.86-87).
Porter, M., 1980. Competitive strategy. New York: Free Press. (pp xiii).
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