Dyson Company Strategic Management

Resources and Capabilities - ‘Inside Dyson’: a distinctive company?



The value chain is essentially a form of analysis of business by which a company decompose into its constituent parts, seeking to identify sources of competitive advantage in those value-generating activities. That competitive advantage is achieved when the company develops and integrates the activities of its value chain more cheaply or better differentiated than its rivals. Therefore the value chain of a company is made up of all its added value generating activities and the margins they contribute.

The value chain is divided into two parts:

Primary activities

Inbound Logistics comprising receipt, storage and distribution of raw materials.	Operations – (Production): processing of raw materials processed into the final product.	Outbound Logistics - Storage of finished products and consumer product distribution.	Sales & Marketing - activities which disclosed the product.	Service and Support - Service: after-sales and maintenance, group activities to preserve, enhance product value through the application of safeguards.
The Dyson plant manufacturing is located in a rural village located in the west of England. .350 engineers are located here for making new products which give the company its control over secrecy and its IP rights. Product meetings are held in sound proof rooms	Vacuums, fan, hand dryers, moving into integrated kitchens and robotic vacuums following the success of iRobots	Product manufacturing is carried out in countries like Malaysia and China where labour is cheap and cost of warehousing and distribution logistics are cost effecting helping to cut down production costs and also ultimate product MRP. Nearness to supply sources also help to maintain quality standards.	Dyson products are new, and different,: whether vacuum or washing machine they are unique  and easily identifiable from their bright colour variations.. The products are  robust, and need little after sales support. Dyson has one of the best online retail stores, which is responsible for most of distribution functions for the company.	Unique Engineering design protected by IP rights.

Secondary activities

Firm Infrastructure (General Management) Infrastructure organization supporting activities across the enterprise, such as planning, accounting and finance .	Their large testing facility in Malaysia operates continually with over 120 test­ing stations. The operation in the UK employs 1200 varied people: some experienced, some freshly qualified, some with 'way out' ideas
Human Resource Management - recruiting, hiring and staff motivation.	Creativity is rewarded and encouraged. A major part of profits is ploughed back in product design. Staff are encouraged to process their ideas whatever be the cost and are rewarded for their efforts.
Technology Development -Development of technology, research and development: cost drivers and value.	The company is focused on innovative product design and development and ploughs back almost half its profits into ruggedness testing of prototypes whatever be the cost involved.
Procurement	Procurement is done near the suppliers of the raw materials and are thoroughly tested for zero defects in the procurement stage. the manu­facturing part of his vacuum value chain in Malaysia and later that of his hand dryers in Nanjing in China

Since the commercial success of Dyson products depends on several players the efficient use of IP tools greatly reduce the hazards faced by the different actors, so that they can then make reasonable profits in exchange for their participation in the process. The IP greatly facilitates the process of introducing innovative technology on the market – before a product is launched it is thoroughly tested for ruggedness by breaking down 100 to 1000 prototypes and locating manufacturing defects at the same time plays an essential role in promoting the image of its technological excellence and all Dyson products are new or improved and need little servicing. Thanks to the added value obtained, the greater profitability leads to increased income or productivity. The value chain is not a collection of independent activities but a system of interdependent activities. Value activities are related by links in the value chain. The links are the relations between the manners in which an activity and the cost or performance of another will play

Dyson company is very rigid about maintaining its product secrecy. Its UK headquarters has advanced biometric identification to restricted areas  and internally developed sound proofing panels ensue that the outside world do not get access to any conversational leaks. The vacuum cleaner value chain located in Malaysia ahs the support of as many as 20 highly specialised testing laboratories all of which are located in the vicinity of the manufacturing plant. There are also additional 120 testing stations which operate round the clock. Hand dryers are produced in Nanjing, China. Dyson has its operations in more than 45 countries situated all around the globe and has a presence in highly competitive markets like Japan, China and USA. 

Identify the resources and competences which underpin Dyson’s sustained and / or temporary competitive advantage.

 By the shifting its production to low cost economies in Asia and China Dyson has brought down the labour component in its product pricing and at the same time increased its profits which have enabled the company to retain and attract a lot of talented engineers. These policies have enabled the company to compete with products manufactured in high cost economies like Europe and USA.  

The foundation of the success of Dyson’s empire is centred on the unique contribution of its engineering division which has helped it to create innovative product designs by engineering and re-engineering its products continuously and always brainstorming new approaches through a breakdown analysis of every prototype created. A prototype is broken down and put together again more than a 100 times and more than 1000 prototypes are created if necessary for a single product before it is launched in the market.  The company promotes an environment where creative ideas are nurtured and rewarded. Its engineers are encouraged to think in different ways and travel through less trodden paths. The even get support from the company for any idea however absurd it may appear if there is an element of creative insight. The protection of every product by the Intellectual Copyrights Act gives the company a greater edge and helps it to use its resources in the most effective way. Its patented technologies like the Ball Technology and the Root cyclone technology which are used in all cars and automobiles and vacuum cleaners have a global penetration and cannot be duplicated by an manufacturer due to the unique value addition features which has given the company a cost reduction advantage which cannot be duplicated.    Distribution Channel, premium products, and value chain

The Dyson presence in the online marketing scene has enabled the company to cut down on logistic costs. Its 24x7 availability and its helpline have enabled a customer loyalty and fetch premium prices for most of the company’s products. The theory and practice of the value chain analysis is typified by the Dyson Company. Strategic competencies on how to create value by increasing testing facilities nearer to the supply source, and location of production in low cost economies has helped give the customers additional value in terms of costs and also reliability together with a greatly reduced maintenance requirement.  

SWOT Analysis

The strengths of the company are centred around its protection of its Intellectual Copyright through patenting every product. Its secrecy, private ownership, lack of financial resources from financial institutions and international availability of the products  have allowed the company to give consumers value for their money.  The weakness will occur when a patent expires or a government changes its policy towards proprietary technology and finally a great deal of dependence on the promoter.

Imitation

Although secrecy is heavily guarded at Dyson competitors might find the key to its strategies but owing to the value chain it has created competitors will find it difficult to match its price and product characteristics in terms of quality and durability. These elements cannot be substituted. This will keep the company sustainable till a wave of more powerful technological interventions appear or companies develop better R&D capacities. The proprietary nature of the company gives it greater freedom to pursue a path of creativity and deployment of resources.

 Threshold capabilities

I believe that the future of Dyson is firmly secure by it policies for development of human resources as freedom for creative engineers will rarely be found in any other production environment. The heavy investment in its research and development and testing has positioned it uniquely as no other competitor will have a similar framework which can be upgraded to Dyson operating standards. Strategic plant locations in Asia where labour will continue to remain for some more time will help the company to carry on unhindered by competition.