Corporative Strategy

Ardent Julius @00326264

30/04/15

Word count: 2,724

 Contents Page

INTRODUCTION ………………………………………………………………….Page 2

CURRENT POSITION…………………………………………………………...Page 2-10

AVAILABLE STRTEGIC OPTIONS…………………………………………..Page10-13

RECCOMENDATIONS…………………………………………………………….Page13-14

REFERENCES………………………………………………………………………….page 15-16

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1.0 Introduction

This report intends to Analyze Dyson’s position and strategy choice as a

business. This report will be broken down in to three parts. The first will analyze
the current position of the business. The secondly will evaluate the strategic
options available and lastly recommendations’ will be made on which strategy is
the way forward for the organization.

The current position of the Dyson will be analyzed in relation to the environment
and competitors. To do so several models will be used.

2.0 Current Position

PESTLE Analysis

Political Haroon (2015) stated that In January 2015 the home

secretary announced that she wants conservatives to force
non-EU students to leave the UK straight after their degree
and apply for a new visa while out side of the country. This
would have a direct impact on Dyson as this means it would
worsen the shortage of scientists and engineers. Government
involvement in this kind of industry is limited therefore
Dyson can focus on long-term strategic plans without
interference from the government.

Economic Exchange rates constantly change which may lower the prices
of products that are being sold out of the UK. The pound
sterling is the dominating currency, which may necessarily
mean products are a lot cheaper in other countries. GDP is
another economic factor that may affect Dyson, as it would
determine product demand in the countries it operates in, for
an example China’s GDP has been growing which directly
affects product demand.

Dyson has strictly followed the outsourcing trend which

benefits the business by having excess capacity, reduced units
costs and also spread economic risks over a wider number of
markets (David,2005)

Social Demographics are changing people are moving around in the

world, as well as the aging population. Pollack (2005) states
that approximately 10 % of worlds population is over the age
of 60; by 2050 the proportion would’ve more than doubled.
This means Dyson would have to have this demographic
change in mind when designing their products. There is
always change of trends therefore is it is quite difficult to
convince customers.

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Technological Globally technology is constantly evolving, Especially in the
electrical industry where firms are investing millions into
research and development to stay ahead of competitors.
Dyson has come up with new innovative products such as the
all in one kitchen, which has been patented, to stop
competitors from using the idea.(dyson.co.uk) Ball and
Geringer (2012) states that technological and digital
communications are permitting information and ideas to flow
world wide to other functions so that it’s easier to work on
the same product. This relates to Dyson on how they would
communicate to the manufacturing plant in Malaysia.
Legal There are a lot of legal factors that Dyson has to follow
internationally and this also benefits the business as well. For
example the patent law. Patent protects an idea from being
used by another party. Dyson v Hoover is one recognizable
case that took place in 1999. When Hoover tried to Imitate
Dysons technology. Dyson has also had new regulations work
in their favor.
Environmental Dyson has stated that they have an eye for the environment
and they try to stay green as much as they can. The material
they use is robust and most of their products are made from
recyclable material. Dyson follows all environmental laws and
also influence the creation of new laws (www.dyson.co.uk)
Dyson has also been already been doing good for the
environment with their products using less energy, when the
EU decided to pass a legislation on forbidding products that
use more than 1600 watts Gosden, E. (2014).

External analysis shows that Dyson is positively affected by most factors in the
pestle analysis. Political factors could have a negative impact on Dyson. As
shown on the table if the new law is passed to force non EU students out of the
country straight after their degree. This means that Dyson will also have limited
skilled people with ideas to employ. Therefore this would affect their long-term
strategies. Dyson will probably have to think about training people and mainly
focusing on the investing more on technology schools they are involved in to
make sure that new people with better ideas will keep coming into the
organization. The UK Government is more involved in the tertiary sector giving
companies such as Dyson the freedom to pursue any strategy, as there are no
huge restrictions. This give Dyson has freedom than most of its competitors to
carry out their activities.

The economic factors show that the organization face different struggles and
benefits in the global economy, as mentioned exchange rates will affect profit in
the operating countries. “Dyson has expanded into Southeast Asia and have
become big competitors in the floor cleaning industry” (Simthers, 2014). The
firm needs to export goods and materials and if the business will almost pay
cheaper because the pound sterling is one of the strongest currencies. The trend
of moving manufacturing to other countries has would impact the business
positively as this means that they can get cheaper materials due to alliances

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within the country of operation and also it will also cost the business less to
produce products in countries such as Malaysia and China. Dyson formed
Competitors such as hoover has not followed the expansion trend, which leaves
Dyson at a greater advantage.

Globally demographics are changing and people are living longer. These social
factors are affecting Dyson and how they operate. These factors will affect the
way Dyson will design their products, as they would need to have the older
generation in mind. Technology is becoming more and more advance it could be
hard for the older people to keep up. Since people are living longer this means
that the business would have a few older people in the organization and they
would need to think about how they will accommodate them Gov.uk, (2013).

Technology has become more advance and it evolves very quickly. In this case
the technology industry is where Dyson resides; therefore it’s in major
competitions from competitors. The business has a lot of patents to make sure
that the business stays relevant. A few years ago the business placed a patent for
a silent hair dryer (Arthur, 2013). These patents go to show the level of
competition in the industry. Technology has also got advanced that it makes
work easier for the business when it comes to designing and manufacturing. Also
communications make it easier for the business to communicate ideas to
different branches of the business whether be it in China or Japan and they could
still work on the same project without any difficulties.

Legal factors include different laws such as the patent law and the tax laws.
Dyson operates in around 45 countries and these countries have different tax
rates. In America Dyson Has to pay around 30 % of profits as tax and in japan its
34% Tax Foundation, (2015). The patent law works at Dyson’s advantage as it
works to protect ideas and inventions. This can be backed up by the case of
Dyson V Hoover 1999.

Most environmental factors work to Dyson’s favor as the firm already try and
stay environmentally friendly. The new EU regulation has boosted the
organizations competitive advantage as all of Dyson’s products work using 1600
watts or lower where by competitors when using ridiculous amounts of energy.
This gave competitors bad press as to say that they were not green Gosden, E.
(2014).

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Porter’s five forces

The Power of Customers/ Buyers Threat from substitute products

Power of customers is high because Dyson are at a higher risk of
Dyson is a premium brand substitutes as it is a premium
therefore there would be brand. Product prices are quite
substitutes customers can go to. expensive; therefore customers
would only go for Dyson products
when they want something much
better.
Source: www.dyson.co.uk
The Powers of Suppliers Threats from new entrants
Dyson produces premium products, Dyson was first found in 1978 and
which may need parts that are was quick to take over Hoover with
difficult to locate, therefore in this the Unique inventions. The threat
case suppliers have the power to of new entrants is really low for
determine price of materials. Dyson because the business knows
how to protect its self. High Capital
is required to enter this market as
most of the business within it
spends tremendous amounts on
research and development,
produce efficient products.
Competitive Rivalry
Dyson has a lot of rivals such as
Hoover, Excel Dryer Corporation
and Electrolux. The organization
has started to branch out into
different markets such as the hand
dryer, Fans and kitchen markets.
Dysons approach has been to
produce better versions of product
that already exists but has
differentiated them selves by
designs and technology.
Competitive rivalry is quite low as
Dyson has high innovation
capabilities.

The porters 5 forces show that the business in a position where it is market
leader and the only threat it has is from substitute’s products and that is only if
they fail to sustain customer loyalty. Customers basically have the power to
determine Dyson’s success in the market as they have many choices to choose
from.

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SWOT Analysis

Strengths
 Global recognition
 Various product lines which
set them into different
markets
 A lot of resources that
contribute to Research and
Development
 Low Labor Costs
 Experienced and skilled staff
 Strong distribution networks
 Private ownership
 Diverse work force
Weaknesses
 James Dyson is the important part
of the brand. His involved in all
the advertisements of the
products.
 Tax structure compared to
competitors
 Competitive industry
 High investments in research and
development
 High production cost
 50% of profits are invested in
research and development
 Complex manufacturing

Opportunities
 Breaking into new markets,
for example the new space
saving kitchen.
 Global markets
 New products
 New acquisitions
 50 % of profits used in the
creation of new products
Threats
 Substitute products from
competitors for example Hoover
vacuum cleaners.
 Government regulations
 Constant market change
 Aging population
 Customer resistance

Dyson’s strengths can hugely benefit them and it can put them in a position
where they can expand even more globally. The contributions into research and
developments help the business to come out with new products to keep up with
competitors. The diverse workforce will definitely help with different ideas and
perspectives on producing the best products.

Weaknesses of the business can definitely affect the organizations

productiveness or success. James Dyson’s involvement with Business brand
could be really damaging for example he was to sell the business or stop taking
part in the marketing process. 50 percent of profits are invested back into the
business for research and development. This is weakness because they are
spending so much money on products that might not hit the shelves but it also is
strength as it keeps the business way ahead of competitors as new products
could definitely change the whole technology industry.

Dyson has a lot of opportunities they can explore. With the resources they have
within the organization. This enables them to create different products for
different markets. They have already shown they are capable of breaking into

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new markets by obtaining patents for the space saving kitchen and the silent hair
dryer. 50 percent of profits are reinvested in to0 the company for research and
development purposes. This ensures that the business is staying ahead of
competitors. Dyson is a private organization therefore they do not publicize
their annual reports therefore competitors see them as unpredictable.

Customers have wide variety of products to chose from in this industry so Dyson
faces this threat everyday of operation. Dyson claims that their products are
made to last forever therefore if these products are lasting for a very long period
of time customer loyalty is created and customers will depend on the brand.
Customer resistance is another threat that the firm faces but this only relates to
new markets that the business would be breaking to and customers would be
used to a certain brand that dominate that market until Dyson can prove their
reliance.

RBV

In relation to the RBV theory Dyson has managed to create a competitive

advantage because their resources are valuable and rare. They have managed to
sustain this advantage throughout all of their product range from the cyclone
technology vacuum cleaner to the bladeless fan. Their resources are in 4
categories. Physical resources, which include factories and R&D centers.
Intellectual Capital including patents, brands and business systems. Human
resources and financial resource (dyson.com)

Industry Life Cycle

source: Sabol, Šander and Fučkan, (2015)

Looking at the industry Dyson is in the Maturity phase as competition in the

industry is very high. Dyson is involved in different markets and the
differentiation strategy helps the firm to be relevant in the market. Profits are at
the peak. Dyson will be in this face for a long time as the organization still has
different products that haven’t hit the market yet.

Strategic Capabilities

Resources Competences

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  Factories  Managerial knowledge
Physical/intellectual  Machines  Knowledge of the market
 Design  Marketing techniques
Technologies involving James Dyson
 Testing centers
 Patents
 Copy rights
 Ideas
 Alliances
Human  Managers,  Experience to keep the
 Employees, business ahead of
 Suppliers competitors. Bring Ideas
 Customers to life and manage the
business meet strategic
goals.
 Component knowledge
Financial  Profits,  Ability to fund the
 Business loans operations of the
 Investments business including
 Profit research and
reinvestment development and general
operations
Source:

Tallman, S. and Fladmore-Lindquist, K. (2015) States that competitive advantage

results from the firms’ strategic capabilities. As graph one below shows that
agricultural capabilities are the sources of organizational synergies at the core of
the firm. Agricultural capabilities are defined as the integrating components of a
firm for productive purposes (Tallman, S. and Fladmore-Lindquist, K 2015).

Graph 1

Source:
Tallman and
Fladmore-

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Lindquist (2015)

Dyson has already shown that they have been integrating their components fo
productive purposes as every product they release to the market makes a
different and gains the company market share. Graph 1 clearly shows how Dyson
do it, as capabilities at the core are able to support different strategies.

Competitive Advantage

Dyson has competitive advantage over competitors because of closed innovation.

According to Oakey (2013) open innovation involves internal and external
contribution. Whereby closed innovation involves internal workforce only.
Dyson is very secretive with their research and development and this gives them
an advantage of staying ahead of competitors. The Closed innovation strategy
has proved to be successful for Dyson. Looking at the external and internal
Analysis Dyson has great competitive advantage as most factors in the pestle
analysis work in their favor for example the new energy regulation by the EU,
which stated that electrical products should not use more than 1600 watts
Gosden, E. (2014). The uniqueness of products invented by Dyson definitely
keeps them ahead in the market and they should carry on with such innovations,
as this would distance them from competitors.

The major competition advantage is also because the business follows the
differentiation strategy where product design and engineering is the main focus.
“Differentiation is when products offered by a company meet the needs of
customers better than others” (Lynch, 2006). Nobody in the market produces
quality products like Dyson. The strategies being used by Dyson are working
great for them and they don’t need to change them as the business is in a
dominating position.

3.0 Available Strategic Options

There are different strategic choices a firm can make. These choices will be made
in relation to the market environment, capabilities and resources. The Graph
above shows the different strategic choices Dyson can chose from. The tree
strategic choices put together will elevate an organisation to greater competitive
advantage.

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Graph 2

Business strategies

There are different business strategies a business can follow; Focus strategy,
differentiation, Low cost and synergy (Reider, 2014). Dyson already follows a
differentiation strategy, which offers customers more enhanced products in the
market. The differentiation strategy is very costly, as money would need to be
invested for research and development. This strategy can also be used at lower
cost too. An organisation will be distinct from competitors as they sell different
products, which then enables the business to set the brand image at a premium
level.

Dyson has already taken this stance. Dyson can also decide to go for a low cost
strategy, which isn’t a great strategy to take on regarding their market position.
The low cost strategy is when the business tries to reduce its costs whether be
promotion, marketing, research and development or raw materials. Looking at a
broader view low cost strategy may work if the business decides to move all of
its manufacturing to the east where labour is much cheaper and access to raw
materials could be much easier and cost effective. The main advantage of this
strategy is that the business can save a lot of money that can be then invested in
other projects. The business could also see higher profits. There are also
limitations to this strategy. Dyson may not be able fully explore advantages they
may have in the market as they would be following a low cost strategy.

Differentiation and low cost are two main strategies and they can be
accompanied by Focus strategy. This consists of concentrating on a segment of
their customer base or on a certain product. This basically would work to
increase market share by targeting certain customers. It also limits the
business’s operation to one segment. This also would to the business’s
innovative side, as they will only concentrate on the products they have.

Synergy strategy is when a company shares parts of its function with another
company for example marketing, offices etc. In Dyson’s case they have engaged

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with another company that will deals with its distribution. This strategy is good
for a company when it has to expand to a new market or environment. Alliances
with other companies will make sure that the company is gradually introduced
to customers in that area.

Internationalization approach

Dyson is already at an international operation level. Operating in over 65

countries (Dyson.com.au, 2015). There mare many approaches Dyson can take
on an international level for example global sourcing. Global sourcing would
benefit a firm because of the cost advantage, unique local capabilities and Market
characteristics. This strategy is definitely a requirement wants to sustain
competitive advantage, as it would expose Dyson to new markets and customers
that competitors would have reached.

Source: Adapted with the permission of The Free Press, a Division of Simon &
Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior
Performance by
Michael E. Porter. Copyright © 1985, 1998 by Michael E. Porter. All rights
reserved.

There are different strategic options that are available to Dyson. As mentioned
before the organisation has been following the differentiation strategy. Ansoff
matrix helps to clearly point out the corporate strategic directions that are
available to the organisation. Bachmeier (2009) states that Ansoff matrix is
supposed to describe optional options in a growing economy.

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Table 1

Source: Adapted from H.I. Ansoff, Corporate Strategy, Penguin, 1988, Chapter 6.

Dyson now has different Corporate level strategies they can follow, market
penetration, market development, conglomerate diversification and new
products and services. Dyson has already been following a diversification and
related diversification strategies, which has benefited the business so much that
they are way ahead of competition. They have done this by operating in 45
different countries; they have manufacturing in Malaysia, which saves the
business a lot of money. Ideas and innovation level of the firm is very high that
competitors only try to imitate products and designs of Dyson, For example the
patent case against hoover in 1999.

 Market development has been on of Dyson’s recent strategy they

followed. This helped them to figure out new markets internationally.
Market development is when a firm offers existing products to new
markets . Dyson has followed this strategy when they expanded into
America and the Southeast of Asia. This has helped the business gain a
larger market share globally. Even though they have already used this
strategy it is still an option of the business. They can carry on with this
strategy and try and break into other untouched markets globally.

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  Product development is when a business innovate new products for
existing markets. For example Dyson has just exhibited a new robotic
vacuum cleaner (Kelion, 2014).

 Market penetration helps to increase share of current markets.

 Diversification is the development of new products that will then be sold in

new markets. Dyson is also already heading in that direction with a new
patent for a space saving kitchen. Diversification can only work in the
long run as a lot of time would need to be invested to make sure that the
new products have great value and have great qualities that match the
match the brand reputation. Dyson therefore hasn’t extremely diversified
away from the industry.

These are the four strategies available to Dyson. These four corporate strategy
directions serve different purposes and also will benefit the firm in different
ways. For example market penetration will help the organisation gain shares in
the current markets the firm is already in.

4.0 Recommendations

There different strategies that can be recommended to Dyson and these would
relate to Business level strategy, corporate strategy and International strategy.
Looking at the evaluation Dyson should carry on with the Differentiation
strategy on the business strategy level. This strategy can be implemented by
making sure that products produced are totally different from competitors and
that they meet customer needs in a different way. Products should also be
unique in design and technology.

On corporate level Dyson should start to think about a diversification strategy,

which will introduce them into new markets. Diversification will enable the
business to then produce most products that they have patents on for example
the space saving kitchen and the silent hair dryer. These two products are totally
different and also they will target in two different markets. Dyson is already at a
position that’s it has dominated the markets that it operates in so breaking into
markets will only enable the business to gain more competitive advantage. The
implementation of this strategy will consist of being more innovative. This
strategy then will link in with the differentiation business strategy.

Internationally Dyson should still focus on Global sourcing, as it will be cost

efficient for the firm. This will also introduce the business to new alliances in
different markets and could help to introduce new products in new markets.

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