yson’s Business Focus and Background:
Dyson Ltd is a UK based company with 4,545 employees in the worldwide technological market. Primarily, they design and manufacture vacuum cleaners, bladeless fans and hand dryers, which are sold in over 70 countries. Dyson was founded by James Dyson in June 1993, who privately owns the company allowing for his long-term vision, which includes huge spending on R&D and the James Dyson Foundation, to be implemented into the company’s operations without resistance from a board of directors, as there would be should Dyson be a public company.
The Competitive Environment of the Household Cleaning and Technological Sectors:
Dyson operates in the UK’s highly competitive manufacturing/technological sector. In order to minimise the impacts of high competition, Dyson make use of patents. Although patents are expensive and time consuming to develop, being required in every country and taking time to be registered, they protect against competitors copying Dyson’s innovations, ensuring they maintain and expand their competitive advantage globally. In addition, the unique appearance of a Dyson is protected by a Registered Design. This ensures Dyson remains at the peak of innovation within the industry, enabling them to charge higher prices, “Dyson is the brand most people think is worth paying more for” (Mintel, 2015), and therefore make a greater profit.
A further element of the competitive environment is the importance of green technology. Over time, the environmental awareness of consumers has significantly increased, following threats of global warming from rising pollution and therefore, it is important firms sustain their brand image by being environmentally aware. To ensure this, Dyson set maximum and minimum temperatures in buildings, place labels on recyclable materials, ensure products are energy efficient and have no unnecessary consumables. Although these increase the costs of production, this appears to have been successful, with Dyson having “stronger ethical credentials than other brands” and being “the most closely associated with being socially responsible, caring for the environment and caring about health/wellbeing” (Mintel, 2015).
Additionally, government regulations of the UK manufacturing sector are imposed on companies such as Dyson. This includes corporation tax, environmental claims and labels and health and safety regulations, such as the Electrical Equipment Regulations 1994. These also increase the costs of manufacturing, making it more difficult for companies to generate profits, increasing the need to compete in other areas, such as innovation.
Competition within the floor cleaning market includes Bosch, who are known for performance, Samsung, a trustworthy brand, Hoover, a nostalgic and family themed brand, and Vax, an accessible brand. However, “Dyson is the brand most likely to be seen as innovative” (Mintel, 2015), making them one of the most competitive brands in the market.
Dyson’s Innovative Products:
Innovative products invented and manufactured by Dyson utilise Dual Cyclone technology, enabling machines to be bagless and efficient with no loss of suction. These include vacuum cleaners, bladeless fans and hand dryers, with each model improving on the previous, with advances in innovation and changes to customer needs and wants.
Innovative Approaches Evident in the Evolution of Dyson related to Specific Entrepreneurial Theories and Strategies:
In order to maintain competitiveness, Dyson are investing £1 billion over 4 years to generate product development, an element of Ansoff’s Matrix. This includes investing £50 million into UK University’s to encourage engineering graduates. This highlights James Dyson’s long-term strategy, as more skilled graduates are likely to produce more innovative products, sustaining global competitiveness. However, graduates can be lost to rival firms, giving competitors skilled labour, enabling them to gain a competitive advantage in the market at the cost of Dyson.
This product development element of Ansoff’s Matrix occurs where new products are developed in existing markets, which in the case of Dyson means an updated model in the floor cleaning market. For example, the DC03 which was developed following a customer survey with 72,000 responses, highlighted that customers wanted to retain the opaque bin, integral hose and constant suction. Therefore, the DC03 was created with customers needs and wants in mind, ensuring it would be successful product development helping Dyson to continue their reputation and profit generation for further R&D and innovation. Furthermore, this product development extends the product life cycle. For example, Dyson have brought out models from the DC01 to the DC75, each time improving on the product following innovation and R&D, while extending the product life cycle as it reaches the decline stage, where “competitive advantage has eroded, and sales and profits are declining” (Mariotti and Glackin, 2016, P169). This helps to maintain the long term sustainability of Dyson, as products remain at the maturity and saturation stages where sales and thus revenue are highest.
Furthermore, Dyson believes that profits should be reinvested in further R&D. An example of this is in 1996, when Dyson spent six times more on R&D than advertising. This helps gain customer loyalty and repeat purchases as products are likely to be more innovative and of a higher quality thanks to greater R&D, which overall guarantees long term profitability as opposed to short term profitability encouraged by advertising. However, more recently advertising spend in the floor cleaning market has increased rapidly, with “total spending up by 124% between 2011 and 2014” (Mintel, 2015)
Dyson makes use of iterative development and incremental innovation of new ideas and designs. Although this is slow and requires testing at every stage, it ensures that each element of their machines is as good as it can be. Similarly, Dyson make use of a design ‘funnel’, where design options are screened based upon choice and evaluation until just one design is left. An example of this is James Dyson’s original design, which took 5,127 prototype models until the right design was selected. Thus, Dyson will have certainty in their final design ensuring they maintain their competitive advantage and brand reputation for being innovative and of high quality, helping to achieve sufficient profits enabling Dyson to reinvest in further R&D for their next products.
By investing so heavily in R&D, such as James Dyson’s planned £1 billion over 4 years, Dyson achieve a strong competitive advantage within the floor cleaning and other markets they operate in. This is justified by the Six Factors of Competitive Advantage. For example, the huge R&D spend ensures that Dyson can “provide higher quality than competing businesses” (Mariotti and Glackin, 2016, P125) as products are incrementally innovated to ensure they are as good as they can be. The 5 year guarantee also gives customers peace of mind that products are of a high quality. On the other hand, in terms of service, Dyson’s UK based helplines, which are open 7 days a week, ensure better customer service than much of the competition. Price however is not low, but the “higher price reflect[s] quality” (Mariotti and Glackin, 2016, P125) and therefore customers are willing to pay more. The remaining factors; location, selection and speed/turnaround also facilitate a sustainable competitive advantage, placing Dyson at the top of the floor cleaning market in terms of competitiveness.
Dyson also conform to “The Five Roots of Opportunity in the Marketplace” (Mariotti and Glackin, 2016, P42), which involve problems, changes, inventions, competitive advantages and technological advances. For example, the initial problem which James Dyson set out to solve was the loss of suction, which was achieved 5,127 prototypes later. As previously explained, competitive advantage and inventions/innovations and technological advancements are central to Dyson’s operations.
How Dyson’s CSR Strategy Has Influenced the Development of their Innovative Products:
Dyson’s CSR strategy can be related to the 3P’s of Sustainability; People, Planet and Profit.
In terms of ‘People’, Dyson “lobbied the EU to introduce a cap on the size of vacuum motors from 2014” (Dyson, 2016) which would amount to saving 8 million tons of CO2e per year by 2020. This encourages competitors to innovate, developing smaller but more efficient motors, thus helping reduce environmental pollution. Additionally, Dyson “comply with RoHS, the European Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment” (Dyson, 2016), which restricts the use of lead, mercury and cadmium. This prevents risk to the health of engineers and the end users of Dyson machines.
When analysing ‘Planet’, Dyson from the beginning have produced bagless vacuums, meaning no unnecessary consumables are used. In Europe alone, 126 million bags and filters are in landfill/incinerated. Therefore, environmental impact is limited by the development of innovative bagless products. Additionally, the Dyson Airblade hand-dryer uses unheated air passing through a 0.3mm gap at 400mph making it up to 80% more efficient than conventional warm air hand dryers. Therefore, use of CSR and general environmental awareness has influenced the development of Dyson’s innovative products.
Finally, in regards to ‘Profit’, Dyson reinvest heavily in R&D, further increasing the efficiency of their products. For example, “in 2013, the company spent £80m” helping ensure they’re “thinking long-term” (Financial Times, 2014). By doing this, impact to the environment in the future is restricted, and therefore Dyson’s CSR strategy, including reinvestment of profits, helps influence their innovative products.
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