Years of Poems and Spirits

Full article here.

… Because Rolls-Royce manufactures infrastructure-class machinery, there is an inherent asymmetry in vendor-customer dynamics: there are few customers for Rolls-Royce to court but the stake in each is exceptionally high. This may not be as much as a challenge in developed counties as it is in the less developed ones (LDC). When entering those markets, Rolls-Royce has to learn to balance between customer appeasement and customer education, to fend off corruption, and to weather political turbulences. Under such environment, nurturing healthy and sustainable relationship often takes a long and painful process without guaranteed success.

… As Rolls-Royce expanding into more markets, it will surely encounter a whole new set of customers’ needs and market conditions. … Whether Rolls-Royce is sensitive enough or is nimble enough to respond to those new challenges could have a long and lasting impact to its fortune in a particular market.

There is no readily-available recipe in International Marketing. Proven methods such as promotions and surveys will help. But what I’ve learned from the class is, like in any fluid situation, leadership is always the key to success … Without such conviction, even a company knows it should hire local talents to help, it may not know what to look for in a candidate or how to build trusting relationship with them.

… The intensive and high-risk investment in Research and Development (R&D) commands, as much as depends on, high price premium. If its IP is stolen, the model will inevitably collapse and Rolls-Royce reduced to just another manufacturer competing on price. … To complicate matters further, some countries may make technology transfer a precondition to entering their markets.

… if I have to choose, I will place Corporate Reputation And Social Responsibility at the bottom of the must-consider list. This decision is based on the observation that Rolls-Royce does not operate in a labor-intensive industry, so it is less exposed to labor or human rights issues.

The next one is even harder to pick. Eventually, I decided on Currency Risk not because it is in any way less important to Rolls-Royce’s bottom line, but because it is more “technical”, thus, more manageable.

To answer question 2, let’s revisit Rolls-Royce recent acquisitions in light of Sir John Rose’s comments. To me, it is apparent that a common theme among all three is “access to market”… In each and every case, there are unquestionable benefits of enriched technology portfolio, and stimulated product development. However, without a clearly vision of market application, such benefits may proven irrelevant, if not detrimental (as in the Sony’s case), to Rolls-Royce’s bottom-line.

… Some may scoff at the utilitarian appearance of those mergers. Yet the fact that the benefit of a merger is quantifiable may very well be the key to its durability.

I would like to add that, when expanding into LDC markets, a partner’s governmental connections may be even more valuable than its technologies. …, if Rolls-Royce plans to enter Indian market, an ideal acquisition target could be a government-invested enterprise that makes hydraulic turbines.

Acquisition can also be used to hedge against future risks.

…, it is doubtful that today’s high energy price is sustainable. Many economists predict a choking effect such high price level will have on demand. More importantly, given the high geopolitical and environmental cost oil and gas is exacting, more and more countries are seeking alternative energy sources to supplant oil and gas.

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