Chapter 1-Economic Factors
Throughout this chapter I shall be investigating Rolls-Royce and how their operations are influenced by the UK and Chinese economies. I shall also be contrasting the challenges faced by them in two different business environments.
Introduction to Rolls-Royce
Rolls-Royce (RR) is a renowned, prestigious car-manufacturer and more recently aero-engine manufacturing company. They were founded by Charles Stewart Rolls and Sir Frederick Henry Royce in 1906, resulting from a partnership established in 1904. Although known for being British, the German car company Volkswagen bought the company for £430 million in 1998.
Economic stability in the UK and China
Economic stability: “Economic stability refers to an absence of excessive fluctuations in the macro- economy. An economy with fairly constant output growth and low and stable inflation would be considered economically stable.” - http://www.businessdictionary.com/definition/economic-stability.html

To be economically stable requires an economy to have an absence of: frequent recessions, a pronounced business cycle, high or variable inflation rates, frequent financial crisis or a high unemployment rate. The UK is prone to a variety of these issues and as a result would not be considered to have “economic stability”. However, recently the economy is on the rise and therefore is on a stable recovery. This is why over the past few years’ sales of RR cars have increased in the UK. Economic stability is crucial to businesses and even more so with a business such as RR. This is because stable economies make everything easier for business, with low inflation rates and higher average GDP per head more spending will increase and as a result people will have more money to buy RR cars. Unfortunately for Rolls-Royce a stable economy is not guaranteed in the UK (nor anywhere in fact) therefore they have