However, after 9/11 events, it expected downturn in the economy, hence it felt the need to cut costs. Thus, in 2002, the company’s strategy was changed to ‘Investing in technology, capability and infrastructure’ (Rolls Royce, 2002). To cut costs it decided to change the priority on employees and lay-off extra resources wherever needed. In 2002 alone, it reduced the total head count by 4900 (Rose, Rolls Royce Annual Report 2002, 2002).
Shift in focus from New Product Development to Creation of Capabilities which Increase the Scope and Value of Service Activities: Due to fall in overall demand for new engines, Rolls Royce shifted the focus from new product development to cost reduction per unit and creation of capabilities which increase the scope and value of service activities.
Rescaled the business to balance load and capacity: Post 9/11 company analysed the impact of the event on the demand and capacity of civil aerospace business and its consequence on the workload and employment with Rolls Royce facilities throughout the world. In line with the expected downturn in demand for civil engines, Rolls Royce revised the number of engine units it expected to sell in 2002 (1500 from to 900 engines)
Change in the mix of sales: Due to decrease in expected sales of new engines, Rolls Royce placed more stress on services front as a growth avenue. They strategized to increase their after- market revenue by developing comprehensive services capabilities. As a result of increased focus on services in 2001, the revenue from services accounted for 44% of sales in 2002 (Rose, Rolls Royce Annual Report 2002, 2002)
Supply Chain Restructuring: Post September 2001, Rolls Royce decided to reschedule its entire civil engines supply chain effecting a 40% reduction in planned deliveries at very short notice. Supply chain restructuring was