Strategic Management Assignment: Business Report On Dyson Ltd
Task: The strategic management assignment is a written Business Report (in a business style format) about DYSON including:
1. Introduction, including terms of reference; scope and boundaries of the analysis; methodology;
2. External Analysis of the Industry in which your chosen company operates taking the following into account: a. Industry overview, including relevant facts, figures, values, volume, segments, etc. b. Macro-environment analysis; c. Industry structure analysis, d. Competitor analysis and/or Strategic Groups; e. Opportunities and Threats f. Implications of macro-environment analysis on industry structure; Key Trends and Key Drivers of change, critical uncertainties, Critical Success Factors/Key Success Factors, etc.
3. Internal Analysis of your chosen company taking the following into account: a. Brief introduction to the chosen company and its scope of activities, key facts and figures, etc.; b. Mission/Vision and their “fitness for purpose” in the current business and competitive environment; c. Any CSR or Business Ethics issues facing the industry and your chosen company; d. Your chosen company’s resources and capabilities; e. A Strategic Financial analysis of your chosen company and at least two other direct competitors using relevant metrics/ratios; f. A critical analysis of how well your chosen company has performed financially in comparison to its main competitors; g. An analysis of the competitive strategy (or strategies) that you believe your chosen company is following, including competitive positioning; h. Any value proposition that clearly differentiates your chosen company and its chosen segments from that of its competitors; i. Any strategic capabilities or distinctive core competencies leading to sustainable competitive advantage, if any;
4. A summary of all analysis undertaken taking into account:
- Identification of key external and industry specific issues, challenges, opportunities and critical uncertainties;
- Identification of key internal, organisation specific issues, challenges, opportunities and critical uncertainties;
Dyson Limited is an UK based British technology company, that was established by Sir James Dyson in the year 1987. The technology-based company is famous for its innovation into various markets such as hair and hand dryers, vacuum cleaner and cars. Dyson’s quitter and yet powerful hair dryer helps the company by providing unique selling point (USP) which helps to gain competitive success. This business report is going to analyze internal and external environment and opportunities and threats of the chosen company, Dyson. With the aim to make a business report on Dyson, secondary data collected from various books, journal and websites would be good enough as there are many scopes and less boundaries to gather data.
Industry Overview: Dyson is a leading technology-based company that is famous for their hair and hand dryers and vacuum cleaners. Though in order to expand their market, Dyson planned to move into electric car industry in the year 2019. However, they have pulled the plug of their electric car project and Sir James Dyson has unveiled their plan to launch seven-seater luxury SUV with a 600-mile range. According to Weakley et al., (2020), currently more than 1400 people are working for Dyson and the company is operating in more than eighty countries over the world. As per the financial of the year 2020, the total revenue of the company is 8.2 billion US Dollar.
Macro environment of a company consists of major external forces such as economic, demographic, technological, natural, social and cultural, legal and political.
Economic- Dyson is a high-end home appliance company. Therefore, major economic factors like interest rate, growth rate and exchange rate have influences over the company’s business.
Demographic- According to Chaouk, Pagliari and Moxon, (2020), both male and female from the age group of 25-45 who earned middle to high income are the buyers of products manufactured by Dyson. Buyers from UK, France, Canada, Netherland earn well and purchase Dyson products for their personal use and family use.
Technological- As stated by Azoulay and Al-Maghribi, (2019), this company is all about latest technology and innovation. Dyson tries to create technological trends and provides solutions to their customers, to be ahead of their rival companies.
Natural- As people are more aware about environment than ever, therefore, the company provides cleaning solutions to its customers and now produces electronic cars.
Social and Cultural- Lifestyle or the sociocultural structure of the customers vary due to demographic region. As stated by Quiceno et al., (2019), consumers who are not interested in technology and are not aware of what Dyson invented, can reduce Dyson’s business.
Legal- Dyson must maintain all the rules, regulations and laws such as employment laws, trademark registration, safety laws and other important laws of different countries (Benzaghta et al., 2021). Though, UK’s Cross-border Trade Act 2018 helps organizations to be globalized.
Political- In UK, political stability and political laws are very easy for any company to gain market profit. However, Dyson business is affected by unstable government, complex trade rules, import restrictions and unstable government of some countries.
As stated by Weakley et al., (2020), Dyson’s revenue has increased from 0.89 billion GBP in 2010 to 1.74 billion in 2015 and finally their revenue has reached to 5.4 billion in 2019. From a net income of 711 million euro in 2019, Dyson’s profit jumped 17% as it abandoned its car project. Dyson’s current market share is 30% by value and 20% by volume.
Stage of Dyson's Life Cycle
Product Development and Market Introduction - James Dyson bought a vacuum cleaner in 1979 and identified many faults in it. Later he created a better vacuum cleaner and started his company in 1992. Dyson then launched hand dryer. Thus, Dyson started to capture the market. Growth- Dyson is the first company to introduce bagless vacuum cleaner. After a long five years and 5127 prototypes of vacuum cleaner, Dyson finally reached at the target place.
Maturity- Dyson’s costing strategy and product innovation strategy are considered as its maturity.
Stability- With continuous growth, competition with giant rivals through strategic plans, Dyson is now at a sustainably stable place at the global market.
Porter's 5 Forces and Competitive Advantage
Competitive Rivalry- Having the second highest market share after TTI Floorcare, Dyson has other giant competitors such as Hoover, Electrolux, iRobot and many more, which indicates a high rivalry.
Bargaining Power of Buyers- As brand switching cost is not high, therefore, the bargaining power of buyers is moderate.
Bargaining Power of Suppliers- As the suppliers are dependent toward this company for having a global market, the bargaining power of suppliers is low.
Threat of New Entrants- Threat of new entrants is low as it is difficult for new companies to invest huge capital in research and technology to capture a global market like Dyson did.
Threat of Substitute- There are already many companies selling electronic household appliances in comparatively less price. Therefore, threat of substitute is high for Dyson.
Industry Structure Analysis
The flat organizational structure of Dyson leads the company towards many chances. In such industry structure, even the executives do not have their own offices and all employees and workers work together in a large space under same roof.
In-house design and manufacturing are the core competencies of Dyson. Dyson has a number of leading competitor firms such as Miele, Electrolux AB, Hoover and Vax Ltd. These companies embrace diverse strategy to increase their business. For instance, Miele became popular as it satisfies the divers needs of its customers by providing vacuum cleaner, washing machine, kitchen appliances and dishwasher. Hoover is another giant competitor that owns the United Kingdom’s market share of 8% by producing vacuum cleaner, hard floor cleaners and laundry products (Kim and Kim, 2021). As stated by Sandberg, (2018), Electrolux produces ovens, microwave, refrigerators, dishwashers, cookers and many more appliances and thus it brought 14.15 US dollars revenue in 2020. Whereas, Dyson earned a revenue of 10.48 US dollar.
Opportunities and Threats
Opportunities- Dyson is famous for creating trends in technology and enhancing product features. Dyson always satisfies the need of its customers. In order to diversify its market, Dyson entered into electronic luxury SUV car making sector. Global expansion such as operating in more than 80 countries is considered as another opportunity for Dyson. As stated by Vlados, (2019), in the UK, Dyson became a market leader by selling one lac units of Dual Cyclone vacuum cleaner per month.
Threats- As China has become Asia’s leading vacuum cleaner market by producing low-cost products, therefore, Dyson’s major threat is China as consumers prefer to purchase cost effective products. According to Scholz, Czichos, Parycek and Lampoltshammer, (2020), giant firms like Electrolux, Miele and Hoover have more divers’ products along with vacuum cleaner and hair dryer to meet the customer’s expectation.
Implications of Macro-environment Analysis on Industry Structure
Macro environment analysis is about a company’s strategic management that helps to identify and analyze potential opportunities and challenges that can affect the business. As the key trend in technology industry is Artificial Intelligence (AI) and Robotic Process Automation (RPA), Dyson needs to maximize the use of such technologies at their production. Trending technologies and diversifying market are the important factors for organizational change. Key Drivers of organizational change are target customers, human resource, changes in legislations, competitors, business growth, globalization and technological development. According to Kim, Jeong and Kim, (2021), as Dyson’s aim is to produce best technology-based products, the company has reinvested more than 20% of its earnings in regular research and development. This is one of the key strategies of Dyson.
Internal Analysis of Dyson
Introduction of Dyson
Dyson is an UK based leading electrical manufacturing company having its headquarters in Malmsbury, Wiltshire and it was established in 1991. This company is solely owned by Sir James Dyson, whose passion for upgraded technology gave him sustainable success. Dyson is famous for manufacturing powerful yet quitter hair dryer, hand dryer and vacuum cleaner. Besides having a significant market share, this is the first company to bring bagless vacuum clear and now bladeless fan in the market. Dyson operates over more than 80 countries like France, Belgium, Netherlands, Spain, India, China and Japan. Over the years, the company is now having more than thousand efficient engineers and 14000 employees over the world.
Dyson’s Vison and Mission
Dyson is such an industrialist who turned his business idea into his business success. As stated by Dyson, S., (2017), Dyson’s vision is to innovate more environment friendly products which are technology based and easy to use. Dyson’s another vision is to conduct research on core technologies such as robotics, motors and batteries. Dyson’s unique mission is to solve such problems, that others seem to ignore. Sir James Dyson’s current mission is to promote environment safety through their innovation and upgraded design. Another mission is to provide suitable solution to improve existing electronic goods that would make household works such as cleaning more enjoyable, exciting and effortless. Inspiring a new generation of engineers is another important mission of Dyson.
Business Ethics or CSR
Dyson is a company which is socially committed and maintains the ethics. The company is an international technology enterprise and realizes its corporate social responsibility towards the global society. They believe in rising above and beyond in their practices. The actions of Dyson as they are informed of has far-reaching consequences. They are trying to make a positive difference through their efforts and corporate social responsibility (CSR). They aim at reducing the negative impact on the environment through their activities. They intend to enhance the standard of living of their workers. They inspire and motivate new talent to bring out the best design engineers of tomorrow.
Corporate Social Responsibility
Resources and Capabilities of Dyson
Dyson’s capabilities revolve around its heavy engineering design that is considered as its major resource to be different from other competitors. Dyson invests a major part of its profit and tremendous amount of valuable time in research, developing and engineering. In order to offer best experience to customers, Dyson creates oscillating fans that is able to multiply air and creates such bagless vacuum cleaner that turns around every corner of the house. Dyson’s raw materials and resources are suitable for household use. For instance, Dyson uses ABS Polycarbonate, which is used in riot shield, for their machineries. In order to picking up grim by pushing extra force, Dyson made aluminum made reinforced wand. Therefore, resource-based capability is one of the strategic visions of Dyson.
Strategic Financial Analysis
Dyson is known for their high-end products which are labeled with high price tag. Pricing policy of this company is impressively strategic. According to Ahuja, (2019), it is a normal tendency of people, that they think high price means better quality. Though, Dyson believes that they offer more valuable products to their target customers than how much they charge for the products. Two-year warranty for every product and the facility of eighteen-month no-cost EMI are Dyson’s financial strategies. With all these strategy Dyson gained a revenue of 4.4 billion euro in the financial year 2018, which is a growth of 26% revenue from the financial year 2018. Even, Dyson’s gross profit margin was 56.5% in the financial year 2018.
Critical Analysis for Financial Comparison with Competitors
In current time, which is considered as “most difficult year in memory”, Dyson gained profit soar with the launch of their new hair straightener. Revenue of Dyson grew to 5.7 billion euro which is a hike of 6% from the previous year and their underlying profit reached to 1.3 billion euro which is a 18% hike from the previous year. As stated by Lanfranchi and Grassi, (2021), on the other hand, Dyson’s strong competitor Electrolux brought a revenue of 14.15 billion U.S. dollars in the financial year of 2020 which is decreased from 14.52 billion US dollar in 2019. In the year of 2019, the net income of Electrolux was 3.452 billion kr. Miele, a Germany based company generated a revenue of 4.5 billion euros in the financial year 2020.
Analysis of Competitive Strategy
According to Shokuhi and Nabavi Chashmi, (2019), test marketing is one of the competitive strategies taken by Dyson. Dyson discovered that users of their prototypes were satisfied and provided positive feedback.
As stated by Wright, Hillon, Garrido-Lopez and Fowler, (2019), identifying market location is another marketing strategy that the company follows. For instance, Dyson choose Sydney, Australia to launch their Air Multiplier, because people over there prefer to try new technologies and because of timing and weather.
Environment friendly and product diversity of Dyson is another important strategy. Major competitors of Dyson diversify their products, but keeping their limit within producing only home appliances. On the other hand, Dyson moved into making electric luxurious SUV cars.
As stated by Payne, Frow, Steinhoff and Eggert, (2020), for instance, Dyson’s value proposition is design and technology. Vacuum clear is not a new thing in market, but Dyson came with ‘bagless’ vacuum cleaner. In order to solve “buffeting” issue of conventional fan, Dyson came with ‘bladeless’ fan to deliver value to customers. Dyson has entered into electric luxury car making. Thus, they try to satisfy each customer segment. Dyson already have gained recognition for its unique design, innovative technology and high-end quality. However, to achieve sustainable gain the company needs to diversify their product segment.
Figure 1: Value Proposition Canvas
(Source: Authors creation)
Strategic Capabilities of Dyson
On the basis of product and services, pricing, customer service, diversity scores, CEO rankings, Dyson is compared to its giant competitors like Hoover, Electrolux, Dematic and Miele. Regarding product, Dyson so far innovated ‘bladeless’ fan to mitigate the issue of “buffeting”, which attracted many customers. Product life cycle is another profitable strategy. Providing 24*7 customer support along with two-year warranty of their products are another lucrative strategy of Dyson. According to Barbieri, Rodrigues, Dyson and Jordan, (2020), Dyson’s products are costly enough, which is also a strategic plan to fix such price label as higher price reflects high quality. However, they used media coverage for their innovative ‘bladeless’ fan as they believe that journalists have the capability to see the potentiality of a new invention. However, Dyson is able to secure second position in product quality rank.
Strength- High quality innovative products, great design, use of modern technology, huge workforce, efforts in research and development are Dyson’s strength.
Weakness- Lawsuit filed again Dyson, controversies, criticism about foreign students, washing machine failure are some of Dyson’s weaknesses.
Opportunity- Enhancing product features, global expansion, online presence, meet customers’ expectations and the economy of scale are the opportunities for Dyson.
Threats- Huge presence of substitutes and cheaper products, strong competitors, delay in product launch and market fluctuation in the UK are the major threats for Dyson.
Market Penetration- Through motivating Dyson’s existing customers, it sells existing products to its existing market on the basis of reliability towards quality, technology and design of Dyson products.
Product Development- Dyson focuses in developing and upgrading their existing products with modern technology and innovative design. Product development is Dyson’s core strategy.
Market Development- Dyson is expanding in the new geographic regions with their existing products such as vacuum cleaner, dryers and air purifiers.
Diversification- Dyson fails to develop new products for new market. For instance, Dyson’s washing machine was a huge failure because of its high price and inability to deliver what it promised.
Porter's Generic Strategies Analysis
Cost Leadership- Dyson is considered as a high-end brand and expensive brand. It is Dyson’s strategy to fix high price as people believe expensive things are better in quality, though Dyson believes their price is not enough for what they are offering. Differentiation- Producing innovative products with unique design is Dyson’s competitive advantage.
Focus- Dyson’s focus is centred in research and technological upgradation of their existing products.
Identification of External Issues
The target customers of Dyson are middle to high income group and they prefer to purchase high-end products. Therefore, Dyson produces high quality products and put high price tag on them. Dyson’s main focus is on technology and design of their product. Even Dyson is famous for their technologically innovative products. Besides, concentrating on their products and technology, Dyson maintains other external factors such as legal, political and socio-cultural issues as it operates in more than eighty countries over the world. As UK is considered as a politically stable country, being a UK based company, Dyson never faced such political issues over there. Specially, laws and regulation regarding business is much easy over there. Major challenges for Dyson are to maintain different rules, laws and regulations and maintain respecting the cultures of different countries.
Identification of Internal Issues
Internal issues of Dyson are regarding Corporate Social Responsibility (CSR), resources, competitive strategies and financial strategies. Dyson realizes their responsibility towards global society. Therefore, they innovated such home appliances that are able to make household works easier and more enjoyable. They are ready to launch their electronic cars that are eco-friendlier than the conventional vehicles. In order to mitigate unemployment issues, Dyson inspires and motivates new talent to bring out the best design engineers for tomorrow.
Being a technology-based company, Dyson already have gained popularity for their innovation and design. It maintains all rules and regulations and satisfies every need of the customers. Though Dyson performs impressively, yet it needs to produce more diverse products to gain sustainable success.
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