Rolls Royce Company Competitive Advantage - Case Study Example

Competitive Advantage Competitive advantage is that which an organization occupies in its own competitive arena. According to Collis and Hussey (2003), competitive advantage is realized when firm earnings are more than the expenses, at this point the firm is said to be achieving some economic rent. It is the economic rent that makes most competitors imitates other companies competitive advantage thus it becomes impossible for any given company to sustain its competitive advantages a longer duration of time. However, a company can have some positions, strategies and processes that are hard to be copied by other companies. In such a scenario the firm will be able to sustain its competitive advantage. This becomes a great advantage to the company since it enjoys a long - term advantage free from imitations. No matter the magnitude of competition a good sustainable competitive advantage prevails. (Collis and Hussey, 2003) A sustainable competitive advantage is put up under three types of assets namely: - 1) The market positions - Under this we have the company's structural assets, financial, reputation assets, and lastly technological assets. All these assets can greatly determine the performance of a given company. 2) Management and organizational procedures. Harmony among members of any given firm is the major determinant of the organisation's success. Various departments must work with each other so as to realize the set out objectives. Resources should also be shared a thing that ensures sustainable competitive advantages. The methods in which firm learns and adapts to the prevailing changes in its environment determines how successful a firm will be. The environmental based restrictions from the government and changes in the level of technology. 3) Paths For any company to start there must be some guidelines and procedures to be followed. These guidelines help in the development of the firm and highly determine the competitive advantage of the firm compared to other firms. If a company takes the right path of the development track then it is likely to have a sustainable competitive advantage over the other companies and vice versa. Rolls Royce has various sources of competitive advantage some of which are similar to those practiced by Tesco while others are different. The company has introduced a reliable business approach that has assured consistency and wealthy business. (Gilbert, 1999) The company is applying merging and acquisition as a strategy for example the acquisitions of Cooper Energy Services, Allison Engine Company Vickers among others have helped the firm in creating new business opportunities for its marine, civil energy and defence industries. This has also widened its range of products thus creating new markets for the products. The company has a management team that takes care of all the customers requirements, attends to them and ensures that all customers are satisfied. All the company's planned goals are well delivered on the line of recruitment, the company has filled the senior management positions with new human force thus injecting fresh ideas in the company, two third of these senior management team are selected from within the company, they therefore know how the company runs while a third are recruited outside the company who bring new notions and suggestions on improving the company's business activities. (Gilbert, 1999) The company has got strategy of increasing the sales volume. New and modern engines have been delivered with boosted ripeness in the bass of installation. Overhaul and repair activities have also received a tremendous growth following the company's increased technological levels attached to the production of quality products. The company has realized increased assortments on its services. This had made its customer base to increase a thing that gives it competitive advantage over the other firms. Investing in new civil engines and the capability of powering a broader range of aircrafts has given it some competitive advantage since the company's market share of civil aeroplane engines has been raised up to a forty percent mark in the last ten years. Its production of long life fleet of engines that provides a considerable opening for those service activities that are profitable is also a major source of its competitive advantage. The supply to over two thousands commercial and naval marine clients in over two hundred nations had made it a world leader in the marine power systems provision. This has been possible due to the 1999 company's acquisition of the Vickers marine company. The Rolls Royce is focusing on new product investment enabling it to take advantage of the common use of gas turbines making them succeed in that line of business. This becomes a source of competitive advantage over the other firms engaging in similar businesses. The company has borrowed ideas from Purdie (1996) of doubling on investment and investing using new technological levels. These has been very instrumental in ensuring that the company has a sustainable competitive advantage well developed abilities on financial services and increased worldwide support of suppliers and business partners has improved accessibility to marketability of its products. Both the suppliers and employees have been very resourceful in the establishment of new technology. The continued social responsibility had brought some corporate competitiveness integrating the company's technical know - how all over the customers value chain in tackling product life - cycle to the total care services management's packages from the materials. (Purdie, 1996) Aero-engine has widely invested on its labour force, improved infrastructure and well developed manufacturing techniques. Inventive engineer's technology has been put a head of all major business with a record of two hundred and fifty fresh applications of government patents. Engines from Roll Royce are of high quality and they therefore offer long service to the customers a thing that reciprocates with increased profits for years. In the filed of civil aeroplane this company has produced a wide range of products and a good clients base. Its engines are highly competitive for both corporate sectors and the regional airlines. This puts the company ahead of others in engine production. Instabilities on particular programmes are alleviated through the introduction of new and mature programmes in defence aerospace. Naval business in the marine sector is well attached on new orders and programmes in the offshore market with industrial Trent being properly located allowing an expansion in the power generation market share. The company has also instituted combined business undertakings with a group of companies from Asia a more aimed at creating awareness on the cell technology that deals with solid oxide fuel. These groups are able to monitor foreign currencies exchange rate movement. (Tapp, 2001) Competitive vitality has been achieved with the employees and group co - operation enabling Rolls Royce to deliver quality services to both the shareholders and its many clients. The company has continued to receive orders from new clients, for example in the year 2002 the company received thirty four orders for a corporate aviation engine care comprehensive programme and all these orders were from new customers and were valued at one hundred and twenty four million dollars. The company provides service agreements that are of long term enabling it to achieve service opportunities and after markets. The company has been mindful of the communities surrounding it through environmental conservation. It has emphasized on technological research a thing that guarantees improved performance and high quality products. Tesco Company has also its own source of gaining competitive advantage over its competitors. The company had experienced some tremendous growth with customer's base over ten millions in every week. In Britain itself the company has more than four hundred and forty stores and has still ventured in foreign markets for example opening stores in Hungary and France. The company has recruited enough members of staff who are spread over the main office, the retail outlets and centres of distributions. Ti has more than one hundred and ten thousand employees who re very resourceful in the continued success. This in itself has given the company an advantage ahead of others. Human resource approaches are well applied and the company has been able to meet higher service expectations from clients. Tesco has successfully balanced demands for using technology in decreasing costs from the workforce with those of employees' satisfaction in their job. It has a way of adapting to various demographic changes a thing that has made it possible for the company to afford highly skilled and experienced staff in such a sector. The company has been changing its training strategies with shifting from skilled based training to practical skills based training attachment of development to individuals performance level rather than training courses an individual has gone through and business issues and problems has been considered while attending to the development efforts. (Tapp, 2001) Training sessions has helped in coming up with competent managers who are interested in the success of the business by setting some high but achievable goals to guide the company in its operations. All customers for this grocery retail store are accorded special treatment that makes them feel special and more comfortable while doing their shopping at Tesco. This has made them to keep coming since their demands are well met and courtesy is observed in the store. Besides, Tesco treats its employees in a special manner making them motivated in their job. This has made them to attend the customers with a first demand and expectations. To achieve management that is first class the company organizes discussions between the senior management and the store managers, the discussion is entirely on how to implement and meet services that are of first class. The aim of this discussion groups was sharing knowledge amongst the skilled management team on how to improve services offered to the customers. This has put the company miles ahead in provision of high quality service amounting to another competitive advantage over its main competitors. This has been achieved through application of proper style of management that helps employees provide high quality services to the clients. (Saunders, Lewis. and Thornhill, 2003) Tesco has been applying seventeen important factors for success, it has been very inventive and going in line with the latest technology, has developed its employees through training and open discussions aimed at improving customer service through conceptual thinking the company has been able to influence its customers thus gaining a large customer base. Emphasis on team work, attending to the customer's needs and requirements and creating commercial awareness on most, of its products has been among the most sources of competitive advantage. Tesco has introduced a development review card which is a designed questionnaire containing some questions to be filled by workers and clients testing on the staff, boss and peers skills & quality observations. The review card helps in evaluating workers performances and the data is later interpreted to the concerned employee so that he can know where to improve and how. The company organizes seminars and workshops for its staff members education them on some specific skills and practices to the applied order to match the set standards of first class service. (Saunders, Lewis. and Thornhill, 2003) Tesco has loyalty club card aimed at rewarding its regular customers and at the same time assist the company in establishing more customer need thus attending to them. It involves offering discounts to its perpetual customers who demonstrated immeasurable commitment in doing business with them. Customer's loyalty may take different forms for example convenience loyalty occurring as a result of strategic business location that fits the customers, price loyalty occasioned by affordable situations where a given firm does not face any competition on the production of its products making it the sole producer in the whole region a thing that makes its customers to be loyal, emotional loyalty will come due to several factors such as parking, packaging, brand name etc and lastly there is inertia loyalty resulting from the customers laxity in looking for substitutes of a given company's products. (McIlroy and Barnett, 2000), The loyalty club card has been very instrumental in retaining and attracting new customers to the business a thing that has seen it gaining more competitive advantage over its production rivals Conclusion Both the companies have got various sources of obtaining competitive advantages over their business rivals some of which are very different while others are closely related as discussed in this paper. These have made the two companies to be market leaders in their line of product production. References Berry, L. and Parasuraman, A. (1991), Marketing Services: Competing through Quality, the Free Press, New York, Bloemer, J. and De Ruyter, K. (1998), "On the relationship between store image, store satisfaction and store loyalty", European Journal of Marketing, Vol. 32 Nos 5/6, pp. 499-513. Byrom, J. 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(2004), "The effect of customer card programmes: a comparative study in Singapore and The Netherlands", International Journal of Service Industry Management, Vol. 15 No. 4, pp. 351-64. Purdie, R. (1996), "The real business experience of customer loyalty", paper presented at the IDM Conference - Direct Marketing - The Customer Centred Future, London, May. Saunders, M., Lewis, P. and Thornhill, A. (2003), Research Methods for Business Students, 3rd ed., Financial Times Prentice-Hall, Harlow. Tapp, A. (2001), Principles of Direct and Database Marketing, Prentice-Hall, London. Read More