Rolls-Royce: A Manufacturer at Your Service

            
 
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Case Details:

Case Code : MKTG208
Case Length : 21 Pages
Period : 1970-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Rolls-Royce plc.
Industry : Aerospace
Countries : UK, Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Introduction Contd...

By 1987, the company had become financially stable, and it was privatized by the British government. In 1996, John Rose (Rose), a member of the company's Board of Directors who became the CEO, provided a new direction to the company. Rolls-Royce made major inroads into business segments like defense aviation, marine propulsion, and energy, in addition to continuously bringing in innovations to its aero engines. Under Rose's leadership, after-sales service also became a significant source of revenue for the company. Rolls-Royce sold maintenance contracts for its aero engines under the concept of 'Power by the hour'. Under this concept, the customers paid a fixed maintenance fee for each aircraft flight hour (only for the time during which the aero engine was running).

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The company also offered different service packages for different customers.

Through a joint venture with an IT company, Rolls-Royce provided its customers with several tools for engine health management (EHM). It also developed a new system to remotely monitor the working of the engines onboard its customers' aircraft, to detect and rectify engine anomalies In addition, it created a global repair and overhaul network.

The after-sales services provided by Roll-Royce helped its customers reduce maintenance costs and downtime. The service also enabled the company to improve its aero engine designs and build good relationships with customers. Moreover, the company gained a steady long-term revenue stream from the maintenance contracts.

Analysts felt that the service strategy adopted by the company strengthened its position considerably in the highly volatile aerospace industry.

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