“Identifying Potential Communication Problems between innovators and investors- A case study on Rolls Royce”
This particular research is based on the analysis of extent to which financial leverage is present within the UK Innovational industry. Financial Leverage can be defined as the level of debt which a particular organisation has utilised in order to finance its assets. It is important to note that this unit of measurement differs between companies (Clinton and Whisnant, 2019). This is largely due to the fact that every firm has different anomalies which create a variation in the degree of complexity and financing needs of the business. On the other hand, innovation can be termed as the application of better solutions which are generated through the introduction of new ideas or creative thoughts that help in the achievement of new new requirements, uncommunicated or existing needs of the markets. In UK, this phenomenon has become a hub for many aspirants, organisations and researchers. As a result, innovation has become a key for this economy that contributes towards national growth in a sustainable manner both in the past as well as in current-day scenario. The present study entails the identification of potential communication problems which arise between innovators and investors. Currently, almost every organisation has identified the usefulness of innovation in terms of future growth and enhancement of corporate performance as well as profitability. Although this is true, it is equally crucial for the organisations to communicate such intentions to the investors as they are true owners of the business. Here, a problem may arise between the company and investors based on the difference in perceptions. This means that what an organisation may perceive as a profitable investment may not be considered the same by its owners. As a result, communication problems arise between innovators and investors.
Rolls Royce is a luxury automotive manufacturer based out of Derby, England, United Kingdom. The company was founded by Henry Royce in 1884 which mainly dealt in the electrical and mechanical business. However, by 1960s the company's performance declined due to mismanagement of its RB211 Jet Engine, thus, resulting in creation of heavy cost over-run situations for the organisation. The company remained nationalised until 1987 and currently operates as a subsidiary of Rolls Royce Holdings PLC. Rolls Royce envisions continuous innovation of their products in order to facilitate best market solutions to their customers. Based on this, its management believes that the following three trends are most crucial in the present day scenario to successfully compete in the global automotive market:
- Increasing demand for cleaner, safer and improved competitive power;
- Electrification; and
The company's innovators aim to provide highly customized and tailor-made products to their customers. However, the investors are of the view that excessive innovation may result in erosion of competitive advantage which is usually found in the form of cheap labour. Also, there seems to be a disagreement between the investors and innovators due to various reasons such as misunderstanding of message and educational or intellectual differences among others (Dickinson, Kassa and Schaberl, 2018). This research will be highly beneficial in determination of how communication problems between such parties can be easily identified and what are the steps that may be taken so as to reduce the gap between the two. This study will also enable the readers to recognise the issues which may arise due to such communicative problems and help the users to derive valuable insights in regards to the problem identified.
“To identify the potential communication problems among innovators and investors”
- To evaluate the importance of innovation from investor's perspective;
- To understand the relationship between innovators and investors;
- To assess the importance of communicating innovation strategies to investors;
- To identify potential barriers that may disrupt communication between owners and innovators;
- To determine the ways which may facilitate rectification of such problems in a significant manner.
- What is importance of innovation from investor's perspective?
- What kind of relationship exists between innovators and investors?
- Why it is important to communicate innovation strategies to investors?
- What are the potential barriers that may disrupt communication between owners and innovators?
- What ways which may facilitate rectification of such problems in a significant manner?
Preliminary Literature Review
According to Judge (2018), investors are the key facilitators of financial growth and profitability for a given organisation. Every company aims to improve their levels of productivity and financial growth in a comprehensive manner. In order to harness such opportunities, it is crucial for the management to analyse all the focal points which may enable the business enterprises to gain economies of scale along with higher revenue development. In present day scenario, this is only possible when the views of investors regarding innovation are in alignment with that of the managers. This is due to the fact that innovation has become an inherent part of strategic planning practices undertaken by the companies worldwide. Mostly because this phenomenon has immense potential to develop core competencies which are crucial to develop strong competitive advantages among the market. For this purpose, innovation holds a special importance from investors' perspective since backing such projects would enable them to retrieve higher return on investments not only in current period but also in future.
For the purpose of successful completion of this research, this dissertation takes form of a Management Inquiry Project which is chiefly secondary-data based study. The rationale behind assuming this research to be an inquiry project is due to the fact that innovation has gained immense importance in recent years and still continues to grow. Analysing its historical trends and literature review related to this aspect would facilitate in the determination of problems that arose between innovators and investors in the past and enable in investigating their implications in a much more detailed manner (Richter, Jackson and Schildhauer, 2018).
This study will first provide a comprehensive analysis on relationship between investors, innovators in relation to a particular organisation. Once this is established, it will take into account past incidents which have resulted in deterioration of communication between innovators and investors. Thus, enabling one to ascertain the key areas which indicate potential communication issues between such parties to a business enterprise. Hence, the research methodology undertaken in the context of this particular study is quantitative as well as qualitative. However, the data taken into account is chiefly secondary.
- Clinton, L. and Whisnant, R., 2019. Business Model Innovations for Sustainability. In Managing Sustainable Business(pp. 463-503). Springer, Dordrecht.
- Dickinson, V., Kassa, H. and Schaberl, P.D., 2018. What information matters to investors at different stages of a firm's life cycle?.Advances in accounting.42. pp.22-33.
- Judge, K., 2018. Investor-Driven Financial Innovation.Harv. Bus. L. Rev..8. p.291.
- Richter, N., Jackson, P. and Schildhauer, T. eds., 2018.Entrepreneurial Innovation and Leadership: Preparing for a Digital Future. Springer.