Dyson case study analysis

Strategy for Business Success

Zertab Quaderi, 315273001
June 2016
3717 words
Table of Contents
1 Introduction.......................................................................................... 3
1.1 Executive Summary........................................................................ 3
1.2 Company Profile............................................................................. 3
2 Part A.................................................................................................... 3
2.1.1 Mission...................................................................................... 3
2.1.2 Vision........................................................................................ 3
2.1.3 Goals and Objectives................................................................ 3
2.2 Industry Snapshot........................................................................... 4
2.3 External Environment Analysis....................................................... 5
2.3.1 PESTEL Analysis........................................................................ 5
2.3.2 Porter’s 5 Forces Model............................................................. 6
2.3.3 Competitive Scenario................................................................ 7
2.4 Internal Analysis........................................................................... 10
2.4.1 VRIO Analysis.......................................................................... 10
2.4.2 Value Chain Analysis............................................................... 11
2.4.3 Leadership Style...................................................................... 12
2.5 SWOT Analysis.............................................................................. 13
2.6 TOWS Analysis.............................................................................. 14
3 Part B.................................................................................................. 15
3.1 Current Strategy........................................................................... 15
3.1.1 Porter’s Five Generic Competitive Analysis............................. 15
3.1.2 BCG Matrix.............................................................................. 16
3.1.3 Ansoff’s Matrix........................................................................ 17
4 Part B.................................................................................................. 18
4.1 Future Strategy............................................................................. 18
5 Conclusion.......................................................................................... 19
6 Appendices......................................................................................... 19
6.1 Appendix A: The Global Household Vacuum Cleaners Market......19
6.2 Appendix B: Opportunity Indicators.............................................. 20
6.3 Appendix C: Market Drivers, Challenges and Global Market Potential 21
7 References......................................................................................... 22
1 Introduction
1.1 Executive Summary
This report analyses Dyson’s current business strategy in light of
external and internal environment and suggests a sustainable
future strategy.

1.2 Company Profile

The founder and owner of the company, James Dyson, was born in
UK and studied furniture and interior design at the Royal College of
Art.

In the late ‘70s, Dyson was renovating his home and got frustrated
with his vacuum cleaner’s performance as it lost suction. So he
took it apart to identify the problem. He then set himself to find a
solution and applied the cyclonic technology to vacuum cleaners
after observing it in his own factory. (dyson, n.d.)

Dyson’s revolutionary vacuum cleaner was launched in 1993 in the

UK, fifteen years after the initial idea and after 5,127 prototypes.
(Business Case Studies, n.d.) A small company in Japan was the
first to license his product as none of the vacuum cleaner
manufacturers at home would buy Dyson’s technology.

Today, Dyson operates in 65 countries around the world with a

1000-strong team of engineers based in Britain, Singapore and
Malaysia. (dyson, n.d.)

2 Part A
2.1.1 Mission
Change things for people every day through efficient and eco-
friendly products.

2.1.2 Vision
Foster ideas to build durable and innovative products. (Shaer, 15)

2.1.3 Goals and Objectives

 To build world class cutting-edge electronic appliances for
improving
people’s lives
 Expand the team of engineers and scientists to create more
inventions
  Refine and improve the inventions
 Encourage the young generation to opt for engineering and

technology (dyson, n.d.)

There is alignment between the mission and vision of Dyson to a

great
extent. Dyson’s vacuum cleaners and hand driers show radical
innovation, superior quality, novelty in designs, eco-friendliness
and user-friendliness. However, the vision of Dyson should include
sustainability and customer centricity. Dyson is very focused on
innovation and design but not necessarily on sustainability. A case
in point is their washing machine, the Contrarotaor, launched in
November 2000 but discontinued in 2004 as it was not a profitable
product for Dyson. (Hundreds of Incremental Changes A Case
Study on Dyson, n.d.)

2.2 Industry Snapshot

The world of vacuum cleaners looks profitable as indicated by the
growth trends fueled by focus on upgraded lifestyles in emerging
markets, rise in dual income households, and fast paced lifestyles.
The challenges for this industry are forecasted to be stringent
energy efficiency norms, tight consumer credit in debt ridden
economies, and high unemployment levels in Europe.

The 2020 market forecast predicts a global market of household

vacuum cleaners worth US$ 11.4 billion and 115.7 million units.
The main opportunities lie in the regions of China and India, where
it is expected that 59% and 35% (respectively) of the population
will be urbanized by 2018. The projected middle class population
for 2020 shows the highest growth in the Asia Pacific region (1,750
million) followed by Europe (698 million), North America (328
million), Latin America (261 million), Middle East and North Africa
(171 million) and Sub-Saharan Africa (61 million). (Global Industry
Analysts, Inc. , 2014) Please refer to Appendix A, B and C for
relevant figures.
The global ventilation fans market is expected to reach US$ 2.4
billion by 2023 with an annual growth rate of 4.9% from 2015 to
2023. The Asia Pacific region held 44% of the global ventilation
fans market in 2014 but it is expected that the growth over the
forecast period of 2015 to 2023 will be led by North America. An
increased awareness about the importance of indoor air quality
and infrastructure development are the major reasons behind the
growth. (Transparency Market Research, 2016)

2.3 External Environment Analysis

2.3.1 PESTEL Analysis
Political The upcoming elections in the
US
that may have impact on
government regulations
regarding business. Political
stability in Malaysia and
Singapore is good for Dyson’s
manufacturing facilities there.
Brexit could have adverse
effects on Dyson’s business in
EU as the currency will be
devalued and have a negative
effect on profitability.
Economic Open market economies,
increasing
purchasing power, growing
middle class, emerging markets
like China, and low labor cost in
Malaysia are some of the key
economic factors that have
favored Dyson to produce and
sell innovative household
products.
Sociocultura A rise in single-person
l households,
dual income families and men
joining in the household work
have worked well for Dyson’s
products.
Technologica The advent of 3D models and
l increasing use of robotics are
technological aspects that
Dyson use.
Environment Increasing environmental
al concerns
and global warming have
augured well for Dyson as they
have proven
 to be eco-friendlier.
Rising
temperatures translates to more
fan business for Dyson.
Legal Protection of patents and IP has
fared well for Dyson to take on
Hoover and get compensation
for patent infringement.
The government
regulation in some countries
require fans to be installed in
industrial zones, thus implying a
key segment for Dyson to play
in.
Table 1 PESTEL Analysis

2.3.2 Porter’s 5 Forces Model

Supplier Power is high for Dyson as they have their own team of
talented engineers and designers that are highly focused on the
product development stage, thereby having control over the
supply chain and the lead time for product launching. These
engineers and designers have a high bargaining power as they can
be easily hired by the competition. The research, design and
development centers are located close to each other for
competitive advantage. For materials supply, the power of the
suppliers is low as Dyson has some rules regarding how their
machines are made and how the suppliers treat their workforce. If
these conditions are not met, Dyson looks for alternate suppliers.
(dyson, n.d.)

Buyer Power is high as consumers can choose from lower-priced

products offered by competition. The consumers can also bargain
as they have more options to choose from as well as more retail
options.

New Entrants: When Dyson will no longer have patent over its
technologies, the threat of new entrants will increase. Also,
because of the low labor costs in China and other emerging
markets, it is not difficult for new players to enter the market if
they have the financial resources for capital investment. The
market is already infested with cheaper knock-offs.
Substitutes: Substitute products of vacuum cleaners already exist
in Asia – brooms. In some emerging markets, the use of solar panel
fan and lighting
system - all within a single unit - is popular. The substitutes also
consist of lower priced vacuum cleaners and fans.

Competitive rivalry: The competitive rivalry in the industry of

vacuum cleaners and fans is strong with many renowned brands
offering more products at competitive prices as the industry
continues to grow.

The upshot of Porter’s 5 Forces analysis is that Dyson will face

tough competition from lower priced products with similar
technology and over time, they might even lose their grip on their
patented technology, making it more difficult for them to compete
in the world market.

2.3.3 Competitive Scenario

There was a drop in Hoover’s sale in 2000 to 10% while Dyson had
50% of UK market share. (McGraw Hill Education, n.d.)

Electrolux occupied a volume share of 14% of the vacuum cleaner

market in the world in 2005, leading the North American and
Western European markets. It shared its 60% market dominance in
North America with Maytag and Royal Appliance Manufacturing. In
the Middle East and African markets, Electrolux was the leader in
2005 and ranked only second in Latin America. Dyson had 9%
market share in Western Europe in 2005 compared to Electrolux’s
14%. The Asia-Pacific and Australasian markets were dominated by
Japanese brands in 2005. Dyson had 4% market share in the USA,
but it dominated the high-price segment with 21% share against
Hoover’s 15%. Hoover lost its low-end market shares to Asian non-
brands. (Hollensen, 2007) So it is clear that the two markets where
Dyson plays a dominant role are the UK and the USA.

The competitive scenario reveals that all successful companies

foray into other regions through acquisitions and other business
formats to gain a better foothold in host countries. (Hollensen,
2007) Another important point to note is that the competitors of
Dyson have a larger basket of brands and products and therefore
the risks get spread over a wider portfolio.
2.4 Internal Analysis
2.4.1 VRIO Analysis
Are the resources Valuable?

Dyson has multiple valuable resources. They are as follows:

1. The founder and owner, Sir James Dyson. He is the face of the
company and its products.
2. Innovative products with unique designs and functionality.
3. Financial resources and profits that are invested in R&D help in
producing better designs and efficient products.
4. Research, development and design centers in the UK, Malaysia
and
Singapore.
5. Manufacturing facilities in Malaysia and
Singapore that lower
production costs.
6. Over 1600 engineers and scientists around the world who come
from
different disciplines add to more innovative ideas.
7. Sustainable engineering through knowledge of geometry
and pioneering materials that result in less use of
materials, less weight
and less waste.
8. James Dyson Foundation encourage young people to choose a path
in
science, technology and engineering.
9. Patented technology.
10. International awards.
11. A sense of ownership and involvement in the
product development process among the Dyson staff
results in a more
dedicated staff.
(dyson, n.d.)

Dyson's resources are Rare because they have a patented technology.

Dyson’s resources are Inimitable. Their patented technology

cannot be imitated by other players in the industry. However,
competitors can adopt similar strategies like relocating
manufacturing facilities for cost advantage, the design of the
products, and a team of highly talented engineers and designers.
Dyson is fully Organized to capture the value of its resources. The
organization culture fosters and rewards innovative ideas. (dyson,
n.d.) It spends a huge amount of time and money to develop
prototypes until they get it right before launching in the market.
The company involves its staff in product research and encourages
them to come up with their own versions in order to give feedback
and develop a sense of ownership. (Hundreds of Incremental
Changes A Case Study on Dyson, n.d.) Their manufacturing
facilities in Malaysia and Singapore help the company cut costs
and offer perfect products to the end-users. Moreover, the
organization’s processes keep its success secrets within the walls.

2.4.2 Value Chain Analysis

Porter’s value chain analysis looks at the details of the primary and
support activities to identify which processes are cost drivers and
can create a competitive advantage.

For Dyson, the value chain analysis is as follows:

Primary activities:

 Inbound logistics – Dyson buys components from suppliers in

South- East Asia and the Far East, therefore reducing freight
costs for their manufacturing facility in Malaysia and
Singapore. The cost savings are
invested in further R&D.
 Operations – Dyson used advance software and digital
solutions to reduce the product design and development
cycle. When they have near-perfect prototypes, these are
provided to the toolmakers in
Malaysia for the next stage of development. (Siemens, 2013)
 Outbound logistics – Shipping from UK through online stores is a
dampener for Dyson’s profitability.
 Marketing and sales – Sales of Dyson products occur from
both online and retail stores. Online sales incur shipping
expenses as it is provided free of cost to the customer.
Marketing of Dyson’s products are more
 informative and educational in nature, often featuring the owner
himself.
 Service – Dyson has a helpline that caters to the customers
24/7. (Mitra, 2014)

Support activities

 Procurement – The Strait of Malacca has a series of ports that

help
Dyson save costs on transportation as many of its suppliers
are located there.
 HRM – A culture of innovation and ideas driven by Sir James Dyson
and
his team of engineers and designers. Innovative ideas are
nurtured and rewarded. (Mitra, 2014)
 Technological development – The use of NX software enable
the engineers to work very fast with 3D models, cutting down
the cost and time of producing prototypes. Dyson uses digital
simulation and testing capabilities to eliminate errors and
improve efficiency, thereby saving
time and costs. (Siemens, 2013)
 Infrastructure – R&D centers in UK and USA and
manufacturing facilities in Malaysia and Singapore help Dyson
focus on product development and leverage low
manufacturing costs.

The Value Chain Analysis of Dyson shows that it is weak only in

one area of the primary activities – Sales and Marketing. Their
marketing activities should expand beyond word-of-mouth and
informational advertising to brand building.

2.4.3 Leadership Style

James Dyson is currently the Chief Engineer of his company after
stepping down from the role of a Chairperson. He is still leading
the team with his participative leadership style where he praises
them and encourages them. (Australian Institute of Business,
2015) According to House’s Path-Goal Theory, Dyson follows a
participative style of leadership where the organization has
complex, unstructured tasks and the team has experienced
and confident members who are given the authority to try out their
ideas. This is the best way of leadership for Dyson as the owner
himself gets involved with his team in the innovation process,
which is at the heart of the company’s mission and vision.

2.5 SWOT Analysis

• Visionary leadership
• Private ownership • Growing economy and middle class in
• Patented technology emerging markets
• Competitve labor cost in emerging
• Talented team
markets
• Financial capability • Trend shift to dual income families and
• Investment in R&D single-person households
• Manufactuirng • Global warming
facilities in emerging
markets
• State-of-the art design
and technology
Strength
• Limited product
s
portfolio
• Global presence
• Sustainable
engineering

• Government regulations not

favorable for business, e.g.
Brexit
• Tough competiton from
• Dependence on companies of similar
Sir James Dyso scale
• Limited product Threa ts
• Slower replacement cycle
portfolio • Expiry of technology patent
• High price • Cheaper vacuum cleaners
difference with with their own bagless
competitors technology transalating to
decreasing shares
• Cheaper fans

Figure 1 SWOT Analysis

2.6 TOWS Analysis

SO or Maxi-Maxi Strategy

Use the financial capabilities of Dyson and their manufacturing

facilities in Malaysia and Singapore to reach more emerging
economies. Leverage the technological know-how to launch
products suitable for weather conditions in the emerging nations.
Dyson should continue to use the strength of sustainable
engineering to tackle global warming and environmental issues.

ST or Maxi-Mini

Use R&D and technology to come up with new patents or extend

the life of existing ones. Brand building exercises should be
conducted using Dyson’s financial strength to minimize the threat
from low-end competitors as well as from those who have a similar
or even bigger economies of scale and scope.

WO or Mini-Maxi

With their limited product portfolio, Dyson can tap the growing
middle classes in the emerging economies. They can offer some of
their products as
a bundle offer with a bundle price to dual income families so that
there is less price and more value difference for the customers.

WT or Mini-Mini

Appoint Jake Dyson, the son of Sir James Dyson, as the new face of
the company and foster relations with the government bodies in
the home country as well in others.

3 Part B
3.1 Current Strategy
3.1.1 Porter’s Five Generic Competitive Analysis
Dyson started off with a focused differentiated strategy by offering
just one product – vacuum cleaner - to serve a niche market in
Japan. (Gamble, 2013) They have continued to serve a niche
market in more geographic regions but with a wider portfolio with
special product attributes that includes vacuum cleaners, air
treatment, hair dryers, hand dryers, and lighting. (dyson, n.d.)

The areas which have delivered differentiation for Dyson are:

i. Supply chain activities: Their manufacturing facility in

Malaysia is close to the suppliers of their components.
ii. Product R&D: Dyson ploughs back most of its profits to R&D to
introduce more innovative products.
iii. Production R&D and technology related activities: Dyson uses
NX software and simulation programs that
reduce the design and
production cycle.
iv. Manufacturing activities: Dyson’s manufacturing facilities in
Malaysia
and Singapore have reduced production costs.
v. Distribution and Shipping activities: Dyson provides free
shipping and their products are available in major
department stores as well as
online.
vi. Marketing, Sales and Customer Service activities: Dyson
answers to customer queries 24/7 through its hotline. Its
sales format answers to both online and physical retail. In
their marketing, Dyson uses the face
 of the founder and owner himself. There have been instances
where Sir James Dyson acted as the salesman for his own
product. (Seabrook, 2010)

Dyson’s premium-priced products score high on innovation and

design. Some of their features are better than competitor products,
for example, Dyson’s stick vacuum D6 is cordless and weighs less
than its closest competitor, Shark Rocket HV300. (Jepersen, 2015)

The core strategy of Dyson revolves around radical innovation and

testing until they perfect the technology.

3.1.2 BCG Matrix

Dyson’s current product portfolio can be examined using the BCG
Matrix and an indication of their future strategy can be derived
from it.

Fans
Vacuum cleaners

Figure 2 BCG Matrix for Dyson

With the world market for vacuum cleaners poised for growth,
Dyson’s vacuum cleaners belong in the Stars segment as both the
market growth and market share are relatively high considering
the premium market segment
only. Dyson’s hand driers also belong in this segment by being the
#2 player in high growth market. (PR Newswire, 2015)

The market growth for fans is high but Dyson’s share in the fans
market is low in the world market, thus placing this category in the
Questions Mark segment.

Dyson’s hair drier and lighting were launched recently so it is too

early to say in which segment of the BCG matrix they belong.

3.1.3 Ansoff’s Matrix

On Ansoff’s Matrix, Dyson is currently in the Market Development

strategy stage as they have expanded to new geographic regions
with their existing line of products.

Dyson has failed to fight off lower-priced competitor products due

to its lack of proper brand building exercises that could have
retained customer loyalty. A mix of both rational and emotional
appeal should be used for lifestyle
products like these. Another point of failure is their high priced
washing machine that did not deliver what it promised.

4 Part B
4.1 Future Strategy
Based on the BCG matrix, Dyson should continue to build on the
Star products of vacuum cleaners and hand driers by introducing
more innovative variants. The hand drier market is being driven by
the hospitality industry. (PR Newswire, 2015) Dyson can look at
corporate partnerships with the high- end players of the hospitality
sector that use premium and stylish products.

Corporate partnerships can be an alternate sales channel for

Dyson. For example, their small vacuum cleaners can be sold as
accessories to customers from automobile showrooms where they
buy high-end automobiles like Mercedes Benz. This is particularly
applicable among the growing middle class in emerging economies
where this segment is willing to pay more for more effective and
efficient products that also have a badge value. Hence, forward
integration can be stronger for Dyson.

With more investment, Dyson’s low market share in the fans

industry can be turned into a higher one, for example, launching
industrial fans in the Middle East. This region is rich and because of
the extremely hot weather conditions, public places like mosques
use big fans that spray water. The culture and lifestyle in this
wealthy region encourage badge value so Dyson can earn profits
through its premium prices of industrial fans. As there is no new
technology involved in industrial fans, Dyson can easily make
these.

Where marketing is concerned, Dyson should have brand building

exercises to retain customer loyalty. So far, their marketing has
focused on word-of- mouth advertising mostly. (Hollensen, 2007) It
is not necessary for Dyson to go with the trends as Jake Dyson, one
of the executive directors, opine. (Shaer, 15) They should continue
on their innovation strategy but also build a strong brand along the
way.
Looking at the latest business activities of Dyson like electric cars
and solid- state batteries (Carrington, 2016), it seems that Dyson
is moving on the right track towards a diversification strategy
using their core competencies of design and engineering.

5 Conclusion
The key finding is that Dyson is losing its foothold in the vacuum
cleaning business and must diversify for sustainability through
their core strength of innovation.

6 Appendices
6.1 Appendix A: The Global Household Vacuum Cleaners Market
6.2 Appendix B: Opportunity Indicators
6.3 Appendix C: Market Drivers, Challenges and Global Market
Potential
7 References
Business Case Studies. (n.d.). Innovation, Research and Development A
Dyson Case Study. Retrieved from Business Case Studies:
http://businesscasestudies.co.uk/dyson/innovation-research-and-
development/introduction.html#axzz49ULVP6Lj
Carrington, D. (2016, May 11). Dyson could become next Tesla with its
electric car, says expert. Retrieved from The Guardian:
http://www.theguardian.com/environment/2016/may/11/dysons-
electric-car- development-could-become-the-next-tesla
dyson. (n.d.). Retrieved from dyson:
http://www.dyson.com/community/aboutdyson.aspx
dyson. (n.d.). dyson. Retrieved from dyson:
http://www.dyson.co.uk/community/sustainable-
engineering.aspx
Finch, J. (2010, May 26). Dyson's profits rise to £190m. Retrieved from The
Guardian:
https://www.theguardian.com/business/2010/may/26/dyson-profits-
rise
Gamble, T. P. (2013). Essentials of Strategic Management. McGraw Hill.
Global Industry Analysts, Inc. . (2014, November). The Global Household
Vacuum Cleaners Market. Retrieved from Global Industry Analysts, Inc. :
http://www.strategyr.com/Marketresearch/Household_Vacuum_Cleaners_Mar
k et_Trends.asp
Hollensen, S. (2007). Global Marketing. Prentice Hall.
Hundreds of Incremental Changes A Case Study on Dyson. (n.d.).
Retrieved from Innovation-portal: http://www.innovation-
portal.info/wp- content/uploads/Dyson-Case-Study.pdf
Integrated Brands. (2013, July 12). Dyson. Retrieved from Integrated
Brands a showcase of strategic communications:
http://www.integratedbrands.org/brands/dyson/@@details
Jepersen, C. (2015, July 16). Dyson V6 vs. Shark Rocket: Select the Right
Stick Vacuum for You. Retrieved from nerdwallet:
https://www.nerdwallet.com/blog/shopping/dyson-v6-shark-rocket-
select-stick/
Jurevicius, O. (2013, October 21). VRIO Framework. Retrieved from
Strategic Management Insight:
https://www.strategicmanagementinsight.com/tools/vrio.html
McGraw Hill Education. (n.d.). Case Example:James Dyson. Retrieved
from McGraw Hill Education:
highered.mheducation.com/sites/dl/free/0077098587/58744/ch06_10_
dyson.p df
MindTools. (n.d.). Porter's Value Chain. Retrieved from
MindTools:
https://www.mindtools.com/pages/article/newSTR_66
.htm
Mitra, D. (2014, June 15). Dyson company Strategic Management.
Retrieved from Articles written by me:
http://articleswrittenbyme.blogspot.com/2014/06/dyson-company-
strategic- management.html
PR Newswire. (2015, December 31). Global Electric Hand Dryer Market 2016-
2020.
Retrieved from PR Newswire:
http://www.prnewswire.com/news- releases/global-electric-
hand-dryer-market-2016-2020-300198215.html
Seabrook, J. (2010, September 20). How to Make It. Retrieved from The
New Yorker: http://www.newyorker.com/magazine/2010/09/20/how-to-
make-it
Shaer, M. (15, September 16). Winds of Change at Dyson.
Retrieved from Co.Design:
http://www.fastcodesign.com/3050256/innovation-by-
design/winds-of-change-at-dyson
Siemens. (2013). Dyson innovation yields revolutionary products.
Retrieved from Siemens:
http://www.plm.automation.siemens.com/pub/case-studies/6187?
resourceId=6187
Transparency Market Research. (2016, March 10). Global Ventilation
Fans Market to Reach US$2.4 bn by 2023 due to Growing
Awareness about the Importance of Indoor Air Quality. Retrieved
from Transparency Market Research:
http://www.transparencymarketresearch.com/pressrelease/global-
ventilation- fans-market.htm