Rolce Royce a Case study – By Arun kumar Murali (037)
Q1.) XYZ Plc. a manufacturer of Automobile Engines is planning to enter the Jet Engines Market. Using the 5 Force Analysis Model, present the feasibility of XYZ entering this market? What are the forces which are negative to XYZ's entry into the jet engine market?
One way in which staff within Rolls- Royce have focused their actions for responding to the changing role of the business, has been to use Porter’s ‘Five Forces’ model of industry competition. Five Forces analysis gives an improved understanding of the degree of competition within the business environment. It has helped them to develop a better understanding of the business environment so that business opportunities could be analyzed. The model identifies one force within the industry – competitive rivalry - as well as four forces outside the industry: • potential entrants and the threat of entrants
• power of buyers
• power of suppliers
• threat of substitutes
As described above three dominant players operate in this oligopolistic global industry. The industry is capital intensive and there is a requirement for high investment in advanced technology and research and development. No single manufacturer dominates the industry, so balance fuels the rivalry. Competition in the primary market for aero-engines is intensified by the link to the secondary market for engine part sales and services. Access to the secondary market is dependent on achieving the original sale of new engines. In recent years the intensity of competition has increased as each manufacturer has tried to improve its volumes and market share. Rivalry has also intensified because gas turbine engines are now essentially a mature product and the potential for technological differential advantage has been reduced.
Power of buyers
The numbers of potential buyers of new aircraft are low. Buyers of aircraft engines are therefore...
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