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

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

Porters 5 Forces Model............................................................................6

2.3.3

Competitive Scenario..............................................................................7

2.4

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

Part B................................................................................................................. 15
3.1

Internal Analysis.......................................................................................... 10

Current Strategy.......................................................................................... 15

3.1.1

Porters Five Generic Competitive Analysis............................................15

3.1.2

BCG Matrix............................................................................................. 16

3.1.3

Ansoffs Matrix....................................................................................... 17

Part B................................................................................................................. 18
4.1

Future Strategy............................................................................................ 18

Conclusion.......................................................................................................... 19

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

References......................................................................................................... 22

1 Introduction
1.1 Executive Summary
This report analyses Dysons 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 cleaners 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.)
Dysons 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 Dysons
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

peoples 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. Dysons 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

Economic

Sociocultural

Technological

Environmental

The upcoming elections in the US

that
may
have
impact
on
government regulations regarding
business.
Political
stability
in
Malaysia and Singapore is good for
Dysons
manufacturing
facilities
there. Brexit could have adverse
effects on Dysons business in EU as
the currency will be devalued and
have
a
negative
effect
on
profitability.
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.
A rise in single-person households,
dual income families and men
joining in the household work have
worked well for Dysons products.
The advent of 3D models and
increasing use of robotics are
technological aspects that Dyson
use.
Increasing environmental concerns
and global warming have augured
well for Dyson as they have proven

Legal

to
be
eco-friendlier.
Rising
temperatures translates to more fan
business for Dyson.
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 Porters 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 Porters 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 Hoovers 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
Electroluxs 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 Hoovers 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.
Dysons 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 organizations processes
keep its success secrets within the walls.
2.4.2 Value Chain Analysis
Porters 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 SouthEast 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 Dysons 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 Dysons 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 Houses 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
companys mission and vision.

2.5 SWOT Analysis

Visionary leadership
Private ownership
Patented technology
Talented team
Financial capability
Investment in R&D
Manufactuirng facilities in
emerging markets
State-of-the art design and
technology
Limited product portfolio
Global presence
Strengths
Sustainable engineering

Figure 1 SWOT Analysis

Weaknesse
s

Dependence on Sir
James Dyso
Limited product portfolio
High price difference
with competitors

Growing economy and middle class in

emerging markets
Competitve labor cost in emerging
markets
Trend shift to dual income families and
single-person households
Global warming

Opportunit
es

Government regulations not

favorable for business, e.g. Brexit
Tough competiton from
companies of similar scale
Threats
Slower replacement cycle
Expiry of technology patent
Cheaper vacuum cleaners with
their own bagless technology
transalating to decreasing shares
Cheaper fans

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 Dysons
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 Porters 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

ii.

to the suppliers of their components.

Product R&D: Dyson ploughs back most of its profits to R&D to

iii.

introduce more innovative products.

Production R&D and technology related activities: Dyson uses NX
software and simulation programs that reduce the design and

iv.

production cycle.
Manufacturing activities: Dysons manufacturing facilities in Malaysia

v.

and Singapore have reduced production costs.

Distribution and Shipping activities: Dyson provides free shipping and
their products are available in major department stores as well as

vi.

online.
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)
Dysons premium-priced products score high on innovation and design. Some
of their features are better than competitor products, for example, Dysons
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
Dysons current product portfolio can be examined using the BCG Matrix and
an indication of their future strategy can be derived from it.

Vacuum
cleaners

Fans

Hand driers

Figure 2 BCG Matrix for Dyson

With the world market for vacuum cleaners poised for growth, Dysons
vacuum cleaners belong in the Stars segment as both the market growth and
market share are relatively high considering the premium market segment

only. Dysons 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 Dysons share in the fans market is
low in the world market, thus placing this category in the Questions Mark
segment.
Dysons 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 Ansoffs Matrix

On Ansoffs 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 highend 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, Dysons 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-ofmouth 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 solidstate 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
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