INTERNATIONAL FINANCIAL MANAGEMENT

International Financial Management

Executive Summary

The plan of Rolls Royce is to build new factory in Singapore, this factory will be of £ 300 million and it will be located at the Group's Seletar Campus and it will employ around two thousand workers. The strategic benefits for domestic manufacturing for Rolls Royce should have the flexibility in meeting custom orders; companies of Singapore are working with a number of large-scale than Western companies like Rolls Royce and also the more detailed knowledge of market needs and the mentality of consumers than from producers from Singapore.

The evaluation of Rolls Royce new factory in Singapore through the real option theory presented as a powerful tool to facilitate decision making on project of Rolls Royce's new factory in Singapore with high uncertainty and volatility.

Table of Contents

Introduction4

Strategic Benefits and Disadvantages4

Strategic Benefits of Domestic Manufacturing for Rolls Royce5

Strategic Disadvantages of Domestic Manufacturing for Rolls Royce6

Intangible Strategic Benefits of Domestic Manufacturing6

Rolls Royce in the community8

Location Decision9

Loan of US $ 700 million at 5 % to Rolls Royce to build its factory in Singapore10

Conclusion10

Introduction

Rolls Royce plans to build a new £ 300 million factory in Singapore, the factory will employ around two thousand workers and this will be located at the Group's Seletar Campus and form part of its, so-called, facility of the future. For this, Rolls Royce entered in various joint venture partnerships, in Singapore. The joint venture partnerships of Rolls Royce are with the Singapore Airlines Engineering Company Limited (SIAEC), also with the Singapore Economic Development Board. The purpose of these ventures is to plan and execute strategies to enhance Singapore's position as an international business centre and develop the economy of Singapore with the help of production of Rolls Royce. For this purpose, these agencies supported the decision of Rolls Royce to invest £ 300 million in Singapore with the training support and development grants.

Strategic Benefits and Disadvantages

Rolls Royce announced plans to build its most modern engine assembly and test facility in Singapore, incorporating the lean assembly and flow line operation principles the company has developed, which ensures significant operational efficiency and improved service quality. The new factory of Rolls Royce in Singapore, which will be the first outside the United Kingdom to manufacture hollow titanium WCFBs; a technology that has taken part in the success of the aero-engine products of Rolls Royce. The engine and test facility, along with the wide chord fan blade factory, will be part of a wider campus that will also house the Advanced Technology Centre, regional training and conference centre and shared services including the Singapore business headquarters, HR department and supply chain.

Through this new factory, Rolls Royce will become able to strengthen all other business sectors in Singapore, notably marine. The company has also established its Global Marine Headquarters in Singapore, recognizing the rising importance of Asia Pacific markets for the company and the importance of Singapore as a focal point for the Group's regional operations (Madura 1998 p. 34 - ...