The power of partnerships
A Rolls-Royce case study

Page 1: Introduction

This case study focuses on how the creation of risk and revenue sharing partners (RRSPs) has enabled Rolls-Royce to take on contracts which have increased its market share in the civil aerospace business. During the 20th century the development of different means of transport has radically changed the global economy. The introduction of the jet engine and the development of commercial aviation...
Read full page

Page 2: Civil aerospace market

Ten years ago 950 million people travelled by air. Five years ago they numbered 1.1 billion and, by 2009, the total is set to climb to 2.5 billion. The aviation industry provides more than 24 million jobs world wide, while its contribution to the world economy is estimated to rise to $1,800 billion by 2009. Today, one-third of all the world’s manufactured exports are transported by air...
Read full page

Page 3: Managing risk

Any large investment required to meet the needs of customers involves a careful examination of the balance between risk and reward of the project. Risk describes the potential of negative results; the potential for positive results creates opportunities and revenue for the business organisation.  In the past, risk management was viewed as a reactive business activity that simply responded...
Read full page

Page 4: Risk and revenue sharing partners

In the past, relationships down the supply chains were based upon transactions relating to cost and efficiency. With a massive project such as the development of an aero engine, if Rolls-Royce was successful, the project would have a considerable knock-on effect for the suppliers of parts for the engines whose revenues would also increase. Though it takes between three and five years to develop an...
Read full page

Page 5: Increasing market share

The Trent 500 is the latest development from the Trent family and has been selected as the sole engine for the Airbus Industrie A340-500 and 600 aircraft due to enter service in 2002. With a thrust range of 53,000- 60,000lb, the Trent will provide reliable and economic power for these new airliners. Virgin Atlantic, Lufthansa, EgyptAir, Swissair, Singapore Airlines, AirCanada, ILFC, Aerolineas...
Read full page

Page 6: Conclusion

There is a strong link between risk, opportunity and reward. In recent years, the notion of managing risk has enabled organisations such as Rolls-Royce to respond to opportunities in partnership with its suppliers, so that both have been involved in strategic decisions and the sharing of rewards. It has provided the means for Rolls-Royce to respond to changes in its operating environment and...
Read full page

Related: Rolls-Royce
Case studies in Business Case Studies