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Rolls Royce is Quality and Their Business Acumen is Mind-Boggling
In 2001, Rolls Royce was in debt for 1.4 billion dollars and today they have cash reserves of almost 2 billion dollars!!!
In 2008, their sales grew by 17% and their underlying profits grew by 10% and that's in spite of all the recent economic turmoil.
Their orders for new equipment and repair services have increased 21% during the last year. Are you guys in Detroit hearing this?
Sir John Rose, the Rolls Royce CEO, said that they have diversified their business in a different ways.
Diversification: Not Just Cars
They have diversified geographical across the world to gain access to new markets.
Rolls Royce has also balanced selling new products with repairing the products sold. After all, if you buy a Rolls Royce, you have to maintain it. They try to get lifetime service contracts, which could last up to 25 years for some products. That's thinking ahead.
Rolls Royce has also diversified between product lines such as cars, ships, airplanes (Both civilian and military ships and aircraft), nuclear power etc. My guess is that at first they may have defined themselves as car manufacturers, then engine and equipment manufacturers for boats and planes and then as power manufacturers in anything that generates powers, such as nuclear energy. I wonder where they will branch out to next.
During the last decade, management has been working hard to improve their financial position and balance sheet. They have also focused on cost reduction by improving operational efficiency and cost efficiency of the supply chain. They expect the hard work to continue to pay even greater dividends. I love this company's management technique!
They are now in a position to take advantage of the growing market opportunities. Rolls Royce has over 50 years of experience in both civilian and military nuclear development. They developed and managed England's nuclear submarine fleet. They have already signed contracts with Westinghouse and Ariva. They also utilize their repair service experience from industry to industry. Their repair service organizations for cars, ships, aircraft all work on the same general principles.
In summary, Rolls Royce management is great and I hope very much that many companies will learn from their business plan!
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