Analysis of Dyson Business - Case Study Example

1.0 Introduction

Before the world embraced globalisation, many companies struggled to achieve their economic objectives since they were limited to operating in their countries. This is no longer an issue because companies can become multinationals and expand to other regions. However, even with globalisation, it is still important for companies to consider some factors. This consideration enables companies to evaluate their situation as well as the situation of the country in which expansion is projected. The essence of this analysis is that it gives companies an outlook of the targeted country. In this paper, the focus will be on Dyson’s plans to expand its services to Nigeria. The paper is divided into main parts including the SWOT and PEST analyses.

1.1 Company background

Dyson is a UK company that primarily deals with the designing and manufacturing of hand dryers, vacuum cleaners, heaters and bladeless fans. Currently, the company sells its products to over 70 countries around the world. Further, its workforce as at 2015 stood at 4,500. The company’s key people include James Dyson who is the founder, and Max Conze is the CEO. In 2015, the company reported a £448 billion in profit while its revenue stood at £1.74 billion (Forbes, 2016). Buyers from the countries in which the company sells its products can log in to the websites to identify the local dealers and locations.

2.0 SWOT Analysis

In every business, there are its strengths, Weaknesses, opportunities as well as Threats facing. The essence of conducting a SWOT analysis of a company is to identify its potential for growth, the likely impediments and the possible rewards (Andreyenko, 2010). Once a company understands its situation using this model, it becomes easier to respond and plan for its future. For instance, companies can choose to mitigate risks, avoid or transfer them. In the case of opportunities, organisations proceed to convert the opportunities into profitable ventures and achieve their objectives. Typically, a SWOT analysis assesses both the internal and the external state of a company. In light of this information, the following section details the SWOT analysis for Dyson.

2.1 Strengths

This is one of the components of the SWOT analysis that analyses the internal state. Internal assessment is conducted informed by various principles include a company’s resources. In the case of its Dyson number one strength is the availability of resources. The company can easily get the materials to produce its products. Secondly, the company has demonstrated tremendous trends of innovation which is critical in remaining competitive. As a matter of fact, many of the company’s products were born out of innovation. For instance, when the founder, vacuum cleaners came as a result of the difficulties Dyson encountered problems in the 70s (Forbes, 2016).

Thirdly, Dyson’s products are of high quality, and this gives the company an upper hand in the competition. Also, the company has a strong sales and distribution network spread across many countries globally. Even more importantly, Dyson embraces invest heavily on Research and Development (R&D). In 2014, the company’s founder reported £250m would be invested in the company’s R&D (Bradley, 2016). These strengths would have a tremendous impact in the case of Nigeria especially owing to the country’s growing population.

2.2 Weaknesses

Nonetheless, the company does have some weaknesses worth highlighting one of which unavailability in many countries. Even though the company strives expanding to many countries, it has not managed to spread across the globe. In essence, Dyson lacks the capacity for expansions. Secondly, the company lacks differentiation of its products, hence encountering stiff competition that often derails its profit objectives. For instance, the company’s ‘Dyson 360 eye’ struggled against the ‘Rhoomba’ in the US market. In fact, the product trailed other similar products such as the ‘Neato Botvac’, ‘Deebot’ and ‘Rydis H68 Pro’ (Bradley, 2016). Thirdly, the company has the weakness of operating in an extremely competitive industry. Apparently, there are tens of other companies offering services almost identical the Dyson. If Dyson fails to address this weakness in the Nigerian market other competitors could take advantage.

2.3 Opportunities

Notwithstanding the indicated weakness, the company still has some opportunities that could return lucrative rewards while helping it achieve its objectives. One, the company is well positioned for acquisitions. Typically, companies engage in acquisitions as a way of reducing competitions hence increasing the market share and subsequently maximizing profitability. Two, Dyson can expand to other regions where there is low competition such as African and Asian markets. Three, Dyson can still create other products related to their current products. Fourth, Dyson could engage in franchising in the areas where political environment is not friendly.

2.4 Threats

Unless the opportunities highlighted above are utilised, Dyson risks suffering many threats some of which will be highlighted here. First, stiff competition is likely to threaten the existence of the company. As indicated, there are many other competitors in the industry whose products offer intense competition Dyson. Secondly, the threat of substitute is rife in the industry, and this would affect all the players- Dyson included. Thirdly, unfriendly economic times in the future could adversely affect the company’s sales. Also, there is the risk of saturation that would, effectively, have adverse implications on the company’s profits. This threat is informed by the past statistics showing that in 2000 there were only a few companies dealing with the services the company currently offers. However as at 2015, there were hundreds of companies mainly in the UK and US replicating the products sold by Dyson.

Another threat worth addressing is the trade and commerce laws that can in the future be enacted. Sometimes, these trade laws vary from a country to another, and this could hamper Dyson’s plans to expand to other states. Moreover, cultural barriers are likely to occur whenever Dyson seeks to enter a new market. For instance, while the company’s products have been exceptional in the West, there is no telling how the same would be received in the African and Asian markets. In the case of Nigeria, there are various cultures some of which prefer traditional ways of doing even simple household chores such as cleaning (Ezekiel, 2014). Lastly, distribution channels might be different in other countries, and this could impact Dyson’s profitability negatively.

3. 0 PEST analysis

While SWOT analysis focusing primarily on a company’s internal and external state, the PEST analysis is focused on analysing a particular region with regard to its business environment. The word ‘PEST’ is actually an acronym for Political, Economic, Social, and technological state of a region. Again, conducting this analysis will help a business owner to plan about the entry. Still, one can decide to enter a market or shun it depending on the results obtained from this analysis. For instance, when it is evident that the economic state of a region is low, a company would strategies its sales or shun the venture altogether. In this case, the PEST analysis is conducted in Nigeria for Dyson to evaluate how expanding into this area would demand and offer.

3.1 Political

Presently, the political state of the country is not pleasant. Though there is no political turmoil, the threat of terrorist attack has become political as the ‘Boko Haram’ threatens the business environment. The group has a tendency for kidnapping and killing Nigerian citizens though the frequency of these cases is not high. Generally, Nigeria is a peaceful country that does not witness perennial violence, except for the terrorist group’s attacks. Other political factors also seem to favour the business community in Nigeria.

For instance, trade regulations are neither too punitive nor prohibitive; meaning business persons enjoy considerable freedom. Also, employment laws in the country are not stringent as evidenced by the minimum wage. Apparently, the country’s workers have a minimum wage of just N18000 that translates to barely $90 per month (Imobighe, 2010). Also, the low minimum wage will help the company in bringing down the operation cost if it decides to venture into the Nigerian market. Nonetheless, if the terrorism continues it might hinder Dyson’s objectives.

3.2 Economical

Economically, Nigeria has some mixed ratings. It is categorized as a developing country by the World Bank. Nigeria’s economic growth fluctuated as is the case elsewhere but it reported a 6% growth in 2014 with its inflation rate dropping from 12% to just 9% the following year (Dike, 2014). It has been commended for embracing trade freedom, though regulatory efficiency and open markets remain issues of concern. Interestingly, Nigeria’s middle-class population has been growing exponentially in the recent years. It was noted that in 2000 there were only a few hundreds of thousands of middle-class in the country. Incredibly, a 2013 study showed that the number had risen to over 5 million. Even more interesting, the number was projected to increase up to 58 million by the year 2030 (Ozturk, 2015).

The above report would help Dyson in making plans on how to enter Nigeria. For instance, the 6% economic growth indicates the country is growing economically, meaning the company’s chances of profits are high. Secondly, the dropping inflation implies that people will not fear to spend, thus placing Dyson among the beneficiaries. Then, the rising middle-class is an advantage to Dyson because it means the people can afford its products. Since the number is projected to grow, Dyson stands to benefit from the same. Nonetheless, Dyson needs to consider the ever-fluctuating economy in Nigeria as this could have implications for its goals.

3.3 Social

In this area, Dyson stands to benefit from its venture to Nigeria. Though there are a few cultural limitations likely to hinder its objectives, the impact is insignificant. For instance, there are still some people that prefer traditional trends when it comes to the products Dyson sells. However, it is the lifestyle that many Nigerians have that will positively impact Dyson. For instance, its products fall in the daily lifestyle of many middle-class people in the country. One area Dyson needs to be aware is that many people in the country remain loyal as long as the product serves offers satisfactory service. Apparently, many people will openly discourage or encourage their friends to buy or not buy a product depending on their experience with it. Hence, Dyson needs to be aware of this fact as it can ruin its reputation if the product sold fails to meet customer expectations.

3.4 Technological

Technology is another important component of PEST analysis as it helps a company understand how the targeted market fairs in this area. Nigeria has developed in the recent times with respect to technology as evidenced by a 2014 study. It was reported that computers were available in almost every city, and that “many examinations in Nigeria are conducted using the computer technology” (Oladunjoye and Ngozi, 2014 pp 5). Furthermore, many Nigerians have high computer literacy, several cyber cafes, and most people do own personal computers. From this study, it is evident that Dyson would benefit from the technological development in Nigeria. Customers can order products online since they possess relevant skills.

4.0 Conclusion

In summation, Dyson can attain its organisational objectives by venturing into the Nigerian markets. First, though, it ought to analyse its weaknesses as highlighted above. Secondly, the threats it faces needs to be addressed decisively. For instance, it can extinguish the threat of competition through acquisition as well as through developing new products. Concerning the situation it faces in Nigeria, the economic and political environment seems to work to the company’s favour especially in the area of economic development and availability of affordable labour. However, it has to consider the threat posed by the terror group, ‘Boko Haram’ as well as a possible sudden change of trade laws in the future. Upon evaluation of the company and the targeted country, this paper recommends that Dyson expands into the Nigeria.