Corporate Strategy for Dyson Limited - Assignment Example

` Dyson Limited was founded in 1991 and is based in Malmesbury, United Kingdom with additional offices established in China, Ireland, and Australia, Great Britain, the Netherlands, the United States, Spain, Singapore/Malaysia, Hong Kong, Canada, France, Germany, Italy, And Japan. Dyson’s main business is manufacturing and supplying of vacuum cleaners, fans, heaters, hand dryers, accessories, and groom tools. It offers upright, cylinders, cordless and handheld vacuum cleaners. The company sells its product through retailers in the United Kingdom and via online platforms (Dyson, 1979). James Dyson founded it after he encountered several problems with the conventional wheelbarrow he was using in renovating his property, as it the wheel sank into the mud, was unstable and prone to punctures. Analysis of Dyson Limited’s Current position in relation to its environment and competitors; Pestle Analysis In the technological sector, Dyson limited has finally entered the robot vacuum cleaner space, as the Dyson 360 Eye is finally unveiled ahead of its release this year. This invention came due to the consideration that most robotic vacuum cleaners do not see their environment, have little suction and do not clean properly (Audretsch et al, 1995). In other words, they are gimmicks. The company continues to produce vacuum cleaners in the United Kingdom holding a 20% retail volume share as at 2012. The discovery of the robotic vacuum cleaner will give it a competitive advantage over its competitors leading to an increase in sales. Its main competitors Vax Ltd and Hoover Candy Group posted sales of 10% and 8% respectively in 2012. From an economic viewpoint, the current market scenario does not provide favourable conditions to most industries to expand their businesses, especially, consumer related. Due to unfavourable demand, the vacuum cleaner production factory in Wiltshire is planning to shut down its manufacturing plant leading to a loss of 590 jobs. The firm is moving upright vacuum cleaner manufacture to the Far East where labour costs less compared to the west. James Dyson, the owner of the company pointed out that there are still 1,150 people working at the factory. The market share of the company by volume has decreased from third to quarter over the last five years, which has led to a decline in sales volume and profitability (Baum et al, 2004). Lifestyle has changed in the emerging markets because of the increase in the number of people with quantifiable disposable income. Most single women and men prefer the robotic vacuum cleaners recently launched by Dyson due to its flexibility in cleaning and storage. In the legal view, the company sued Amway for infringement of its copyrights of the dual cyclone prototype. Dyson lost the case but worn a similar legal action against the sister company of Amway called Dirt Devil located in France. In the political arena, various political related are affecting the country given that it is a multinational. For instance, James Dyson explains that countries such as Britain, which was referred workshop of the world two years ago had their factory stripped from their list. Britain denied Dyson the local permit to enlarge his Wiltshire factory thus restricting his increased production. Five Forces Model Dyson’s current position and operations are directly affected by existence of its main competitors that include Allegheny Technologies limited, Showa Denko K.K. and Vesuvius PLC, just to mention a few. Allegheny Technologies is doing well when it comes to producing metals. It manufactures stainless and speciality steels, nickels, and cobalt based alloys and supera titanium and titanium alloys, tungsten material. Allegheny Technologies’ largest markets include the aerospace, chemical process and oil and gas industries (Carruthers, 2007). Dyson Limited has to be on its toes and consequently monitor closely its competitor’s actions in order to keep pace with them so as not be left in the dark regarding recent development. The bargaining power of buyers of Dyson products is expected to be low as Dyson’s innovative technology provides something of better value and satisfaction to the consumers that none of the competitors provides. Thus, the customers would not be having any product to compare the Dyson wide range of products. This will consequently result in low bargaining power of the buyer. The consequence of this is that Dyson will remain ahead of its competitors in terms of sales volume and profitability index (Czinkota et al, 1994). The market share will remain intact unless they venture into increasing the market share but not reducing it. Customers will remain loyal to their supplier and the marketing and promotional costs will be low. The power of suppliers focuses on how easy it is for them to raise and control the prices of manufacturing. Dyson recognised Hirata as an exceptional supplier. It received many contracts for the supply of equipment for manufacturing vacuum cleaners that Dyson sells in its various markets. Dyson works with hundreds of companies all over the world in order to produce its over 26,000 machines. These suppliers must sign its ethical code of conduct in order to ensure standards adherence. Thus, it has strong ties with its suppliers and they cannot shift to supplying to competitors. The threat of new entrants is possible but restricted and limited due to the use of unique technology in undertaking its operations. The technology used in manufacturing the robotic vacuum cleaner is the latest invention not yet imitated by any manufacturers in the industry. Since the imitation of its very first invention of the wheelbarrow, the firm came up with measures to protect its copyrights and patents, which makes its unique. The brand loyalty of existing consumers enables it to stay competitive. It offers unique value to its clients who thus cannot switch to other suppliers. The customer care group is situated near the development area, and all machinery is located there so that when consumers request to interact with Dyson staff about the issues they are experiencing, the employees understands their problem’ VRIO Analysis In value addition, Dyson’s main target is to solve the problem, improve the traditional products, in addition to letting the users access the product easily. The outstanding research and development is very vital in improving the product. Besides this, Dyson adds in their innovation a special feature such as the cyclone technology. The most valuable things is that the customers of Dyson can get a special designed product with better and improved functions compared to the traditional product. Thus, the customers will be satisfied and do not ever think of any other supplier of their needed product (Hill, 2014). In rarity aspect of this model, Dyson has many competitors that provide much cheaper and affordable products compared to it. Dyson provides premium priced products to the consumers and the public. For instance, based on Amazon.com (2013), the cheaper Dyson vacuum cleaner was about 200 U.S. dollars, though the Electrolux vacuum cleaner was just only about 50 USD. Regardless of this, Dyson is reputable in providing good quality and unique designed products to the customers (Johnston, 2009). This offers its product a competitive advantage in the market resulting in increased sales even in times of financial distress to the consuming public. This prevents revenues from substantial fluctuations. Strategic Group Analysis A strategic group is a concept that groups companies within an industry that have similar business models or the same combination of strategies. Dyson has adopted two major strategic group of making their products unique; product positioning which is a technique that ensures a product occupies a unique position in the consumers mind. Dyson has implemented product positioning by ensuring they offer unique value to their (Piercy et al, 2002) consumers that other suppliers of similar products are not capable of offering to their customers. This makes the product special to consumers and it is instilled into their minds that no other supplier can provide the same thus chances of shifting or changing supplier is limited. This increases customer loyalty and low customer loss to competitors. Dyson has in addition invested in product differentiation, which refers to making a product seem and appear different from other competing goods or products. This is advantageous since it makes the product to look more attractive to the specific target market. It can also involve differentiating the product rom competitors’ products as well as a firm’s own products. Dyson has made its products unique through use of special and unique technology (Porter, 1980) research and development that is specific to particular products. This ensures each product is manufactured using special technology and thus ensuring quality of output that attracts and maintains special customers. This maintains the existing and attracts new clients that maintain revenue at acceptable levels. Industry Life Cycle Analysis This involves the four stages of an industry’s life cycle; introduction, growth, maturity and decline. Dyson has come up with innovative products designs that help to boost in building the life cycle. The unitary systems equipment have a tendency to be relegated to the last minute punch list. Sometimes, they are considered as items left beholden to the operational preferences of the owner. This has for a long time been the trend though it is changing quickly. The move behind greater architect regulation and influence over appliances choice is the adoption of life cycle analysis into sustainable building standards, and the benefits of return on investment (Reidenbach, 2010) (ROI) analysis for both building occupants and owners. (The industry life cycle) Some equipment such as packaged terminal air conditioners found in hotel or motel rooms have a greater impact than others do in return on investment and life cycle of a building. These products are used for several years, and their efficiency in energy ratings indicates a real effect on operational costs. Another category of equipment that requires renewed scrutiny in the hand dryers in the restroom. In some building, the hand dryer is left out and towel dispensers are chosen, to leave the client a legacy for bulk quantity of roll or folded paper towel. These products with different life cycles enable the firm to remain competitive at all stages and have the capability of funding its product development stages mostly the introduction stage where sales are low and costs of production high (Saniya’s, 2005). Strategic Resources and Capabilities The main strategic resource of Dyson is the production of high-end products. All or a larger percentage of its products are targeted to the high- income earners in all its markets. This ensures that its competitors cannot imitate them because they are highly priced taking into consideration the production cost of these items. Products such as the robotic vacuum cleaner was made using high quality technology and beat even the oldest competitors in the market. This has helped the firm in maintaining its competitiveness in the supplier of its products category compared to its competitors (Schmid et al, 2006). In addition, the high- income earners rarely experience the effects of changes in prices for products. Thus, the demand of these products is less affected by price changes. Its patents and good research development team is another strategic capability that has kept the firm strong in the market, and has enabled it to remain competitive. Since the imitation of its prior technology in developing the wheelbarrow, the firm learnt a lesson of protecting its patents so as to lock out the imitators. This has continuously ensured that their technology remain unique and thus provide the firm with competitive advantage over their competitors. The unique and quality research has enhanced innovations and inventions ((Teece, 2009) that are unique in the market and offer unique value to consumers thus retaining them and attracting new ones. Strategic Options Now Available To the Organisation Research, design, and development is the core of Dyson. At least one third of the employees at Dyson are engineers and scientists. Their speciality in fluid, mechanical, electrical, thermal, chemical, and acoustic and software engineering gives them the ability to design new and better products as well as challenge and improve the existing technologies. The firm has over 1,300 patents and patent applications for over 300 different inventions as at March 2010. Their research, design, and development investment has quadrupled over the last five years, (Testa, 2009) and with plans underway to double the number of engineers in the future. These plans have enabled the firm to stay ahead of its main competitors and thus it has dominated the industry for since it was established. The company has recently turned its innovative scope towards ultra-efficient hand dyers and now desk fans without external blades, which they have named ‘Air Multiplier’ to enhance, promote and to sell them to Atleast 49 countries all around the world. The aim of this is to become market leader in high-tech and innovative products in markets such as US, UK, New Zealand, Canada, Australia and Europe. The firm has taken operating profits of £190million for 2009 with sales rising up to 23% (Vallance et al, 2013) due to strong demand of its product from overseas with incremental growth in sales due to the recent launch of its bladeless desk fan; Air Multiplier and new handheld robotic version of vacuum cleaner. Dyson is currently trying to venture into potential markets with an abundance of consumers in Asia such as China, India. Dyson limited has gained a competitive advantage over its competitors though its management style that it has adopted for a long period since its inception. Unlike the typical organizations, Dyson has a flat organizational structure ((Woodside, 2005). It uses direct communication and thus avoids communicating with others through emails or on the telephone. The firm believed that the emails and telephone networks will be more effective and efficient in directing and delivering its innovative ideas to keep every employee informed of the intended development. This direct communication between staff and management ensures timely response of what is expected of them thus ensuring less time wastage pondering of what to do. One on one communication is also effective as managers can get immediate responses from facial expressions. A disadvantage is the high prices and costs. The firm makes high-end products, which is a kind weakness because there is a huge price difference between its products and those of major competitors. There is a likelihood of consumers switching to other suppliers. The firm has opportunity to focus more on stores and electronic marketing as the trend is shifting towards the superstores once more. This will help reduce the number of marketing and sales people needed physically and salary costs as sales can be conducted online (Vallance et al, 2013) Recommendations Dyson should implement the internalization aspect once it increases its involvement in international markets. The firm has already commenced the implementation of this strategy by starting operations in various countries in the Asian continent. These countries are China and Japan for instance. This venture is of great importance especially to the robotic vacuum cleaner that it launched in 2005, since its market share is low. Therefore, looking or entering new markets will increase the product’s market share. This will enable the firm to increase its customer base as well as the market share. These combined will lead to increased sales and profitability compared to its competitors (Vallance et al, 2013) Protecting of patents by the firm is a great aspect it should look at for future success. Dyson realized the importance of protecting their ideas form all imitators in the industry. The strategy worked for them and later, the company beat out Hoover (a major competitor) to emerge as the best-selling upright vacuum cleaners brand in the United States with almost 27 % market share. This has kept the innovations and inventions of Dyson safe and secure. Similarly, it has enabled them to take the lead in selling of vacuum cleaners that offer unique value to their customers. The uniqueness of the vale to consumers has enabled the firm to retain its long-time customers and to attract new ones. There sales have been marginally affected thus keeping them on top. A worth undertaking business strategy is the product differentiation strategy. Since this has immensely worked for the vacuum cleaners, it can as well be implemented for other products offered by the firm. Dyson tried this strategy and it was able to buck the trend and make an immediate splash in the vacuum market, rising up to number two seller of vacuum cleaners by 2004.other vacuum manufacturers were competing on price with each other for significant amount of time resulting in adoption of low cost leadership strategy. Dyson, instead, focused on making high quality product that was much better than other vacuum cleaners in the market and attracted many consumers. Implementing this strategy on other products will be advantageous and a worthy investment for the company. Most of Dyson’s products are aimed at the high-end consumer groups. This thus only attracts the high-income consumers and it translates into highly priced products that are only attractive to the very able members of the society (Woodside, 2005). Dyson has ultimately locked out the low and middle-income earners, as they cannot afford most of these items. A worth implementing strategy is thus to commence production of substantial quality but fairly priced products that target the low-income buyers. This is vital since it make the firm to diversify its market share and contribute to revenue growth and profitability due to increased sales from this class of consumers. References Dyson, J. (1997). Against the odds: An autobiography. London: Orion Business. Audretsch, D. B., Feldman, M. P., & Centre for Economic Policy Research (Great Britain). (1995). Innovative clusters and the industry life cycle. London: Centre for Economic Policy Research. Baum, J. A., & McGahan, A. M. (2004). Business strategy over the industry life cycle. Amsterdam: Elsevier JAI. Carruthers, I. (2007). The domestic engineer: How Dyson changed the meaning of cleaning. London: Cyan Czinkota, M. R., & Ronkainen, I. A. (1994). International marketing strategy: Environmental assessment and entry strategies. Fort Worth: Dryden Press. Dyson, F. J. (1979). 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Woodside, A. G., Golfetto, F., & Gibbert, M. (2008). Creating and managing superior customer value. Bingley, Eng.: Emerald JAI. Read More