Dyson Company - Internal and External Analysis - Example

Business Plan (Dyson Company) By Student’s Name Course + Code Class Institution Date Executive Summary Vacuum cleaners are earning global popularity among many other household appliances in the world. Before 2010, the vacuum cleaners business was considerably low as compared to current when the market is rising steadily. This growth is a good indicator to the innovators who are seeking to improve on vacuum cleaners to cater for the growing market. Vacuum cleaners manufacturers should seize this opportunity for their growth purposes. There are several vacuum cleaner companies, but one that has totally stood out for its innovations and technology is Dyson Ltd. The company has gained its popularity among the U.K. residents for its continued production of quality and excellent products. Recently, the company introduced their latest technology of a powerful cordless vacuum cleaner. This business plan seeks to improve chances of success for Dyson Ltd. The plan is the company’s roadmap which helps to run the cohesive vision by indeed analysing the sales, marketing, manufacturing among other possible aspects. A good business plan leads to a company's success, and this will be one of the success milestones for Dyson Ltd. This program will offer a realistic road map to success through a sound financial structure. The major parts of the plan will include market feasibility, financial and technical feasibility, and human resource feasibility. Vision Statement “To provide and maintain a cost effective, integrated and sustain products which are continually responsive to user's needs and progressively supporting the growth of consumer goods.” Mission Statement “To provide the universally best vacuum cleaners with excellent pricing and high quality.” Table of Contents Executive Summary 2 Introduction 4 Market Feasibility 5 Internal analysis 6 Strengths 6 Weaknesses 7 External Analysis 7 Opportunities 7 Threats 8 Marketing mix 8 Product 8 Price 8 Place 8 Promotion 9 People 9 Process 9 Technical Feasibility 10 Operations and production feasibility 11 Structure of Management 12 Human feasibility 13 Financial Feasibility 14 Underlying Assumptions and Information 14 Financial statement 15 Profitability 15 Cash flow statement 16 Financial forecast 16 Breakeven analysis 17 References 18 Appendix 19 Introduction Dyson Company majorly deals with design and manufacture of hand dryers, bladeless fans, vacuum cleaners, and heaters (Dyson 1983). The company is located in Britain with its products selling in more than 72 countries internationally which implies that the company needs great techniques in marketing (Dyson and Burlington 2003). The founder of the company is James Dyson and last year alone; it bagged a revenue of more than 1.70 billion Euros (Dyson 1983). The company is, however, facing stiff competition from companies producing similar products. Dyson Ltd was the first company to introduce the Dual Cyclone which was a breakthrough in vacuum technology. Dyson's first technology was in 1901 and 1979; he noticed that his vacuum cleaner lost its suction power as the bag filled (Kim 2013). During its operation, air is allowed to pass through tiny pores as the dust settles in the collection bag. However, when dust blocks these small pores, the suction power of the cleaner goes down thus becoming less effective (Dyson and Burlington 2003). That was frustrating for people who chose to use vacuum cleaners for broad areas. Dyson, therefore, embarked on a technological and innovative journey to seek a solution to this menace. For five years, the company had tried more than 5, 120 prototypes with each failing until the first bag-less vacuum cleaner with no loss of suction and no bag arrived (Dyson & Prototypes Ltd 1986). It was the first ever vacuum cleaner with such characteristics, and it is true that whatever is not in the hands of one’s competitors, is different. James Dyson trawled for two years in UK and Europe trying to look for someone to license the product, it was later sold and licensed in Japan where it became a status symbol. As if that is not enough, money from this license was used by Dyson to focus on a new product in Britain were set up a local workshop. He later opened a research centre and factory to produce Dyson Dual Cyclone vacuum cleaners in Wiltshire. It is clear that business is technology and research oriented (Dyson 2001). The market needs an efficient, user-friendly, high quality, less noisy and eco-friendly vacuum cleaner. To achieve such a product, there is need to have product development as a key aspect in achieving profitability and sustainability and competitiveness. The company has entered the right books for its innovations which improve the customer's experience. Dyson has remained proactive in the market over the years through its innovations and products created. Market Feasibility Dyson Ltd. Has managed to penetrate the international market despite stiff competition in the market. From several interviews and articles, James Dyson significantly implied what he wants for the Dyson Company is to become a household name like Hoover one of its competitors (Frennert & Östlund 2014). To become number one brand for floor care, to make innovations that would satisfy the market and ensure its products are sold in every corner of the world. Dyson Company is aimed at getting more into the global market (Dyson 1983). Dyson dominated the vacuum cleaners business by 50%, outselling the nearest competitor by 9:1 ratio. Dyson's market has no limits because the world is fully diving into technology and there is no aspect of technology advancement, especially those that enhance lifestyle are given a deaf ear (Dyson and Burlington 2003). Cleaning is a daily affair hence vacuum cleaners can sell in any part of the world meaning that Dyson's market is not limited to the UK and a few other countries. The entire industry is, however, growing at a tremendous rate with new competitors getting a market share (Kim 2013). Though Dyson is leading, companies such as Panasonic, LG, Samsung and others still give it sleepless nights. Vax is the market follower in manufacture and distribution of vacuum cleaners after Dyson who is the leader (Frennert & Östlund 2014). Others include Black and Decker who have occupied the categories of upright and cylinder vacuum cleaners. Internal analysis Strengths Dyson Company has several strengths which are making it stand tall above all its competitors. The company has dominated the market because of the following strengths: Use of new technology called Balla, which enables the use to change direction while cleaning by just turning wrist. Dyson Company has dominated the vacuum cleaners business and market in most countries starting with the UK. The product has no loss of suction Use of a technology that replaces bags with centrifugal forces which pump dust straight into the trash. No bags or filter needed Efficient in energy consumption. High market orientation Dyson’s vacuum cleaners are the only cleaners approved by British Allergy Foundation Environmentally friendly products Excellent customer service Attention to detail, through use of cameras in development of products and large scale prototyping Rapid and continuous research and development Brand positioning It Focuses on corporate social responsibility. The company launched a product that helps Dyson to raise 1.6 million pounds for breast cancer research and treatment. Weaknesses Apart from the numerous strengths, the company is suffering some weaknesses too. Some of these challenges have delayed its production or its sales directly, they include; Due to the high-end products manufactured by Dyson, they are super expensive which poses as a threat because not all can afford. There is a significant difference between Dyson’s prices and those of its closest competitors. Its products just like all others is suffering recession External Analysis Opportunities Dyson is specializing in its products because there are groups in the market that are in dire need for those products. The first attention is given to the efficiency of the products and its performance. The group between 26-35 years old is looking for performance oriented vacuum cleaners and are willing to pay whichever price for it. The group between age 43 and 52 years are looking for energy efficiency. Youngsters and single households look for flashy and coloured products which are small. Dyson is delivering quality products to its lucrative groups. The company should be aware of the current trends and pay more attention to them (Seo & Han 2013). One-stop-shops, for instance, is the current trend which Dyson should embark on, together with sale and trade promotion. For senior citizens, Dyson should ensure they mention less fatigue, time-saving, and more hygiene factor. Catalogue marketing is a good start for the company to make it easy for the old and other buyers as well (Gantz 2012). Cataloguing can be done through brochures which provide technology that convince the customers. The marketing trend is changing course, and there is an opportunity for Dyson to focus on e-marketing and open up more stores for convenience. Threats The biggest challenges that Dyson is currently facing are imitation. Bag-less technology, for instance, has been copied and implemented by its competitors who sell their products at relatively low prices. Competitors are making tremendous steps in technology with Bissell, one of the competitors, introducing a power roller technology which enhances deep cleaning for just thirty minutes. Marketing mix Product Dyson deals with a variety of the goods, but our main focus is vacuum cleaners which come in different types. They include cylinders, handheld, upright and multifunction. Price Pricing strategies for the company should remain steady with a few changes where the competitors seem to bridge the gap. Black and Becker and Vax are competitors making Dyson alter its prices because they have similar technology selling at a lower price. Place Groceries and departmental stores should be given a primary focus for the cleaners. Placement is super crucial because it enhances sales of products. Dyson should venture on e-marketing; therefore, the other arrangement for vacuum cleaners is the internet (Seo & Han 2013). Promotion Promotional efforts can be based on the strengths and opportunities of the company. Everyone settles for best, and in this case, people have desired Dyson's vacuum cleaners because of their quality, style, and performance. In the first group, during the promotion, the company should touch on innovation and new technology incorporated in the product. In the second group, the promotional message should be emphasizing on energy saving and efficiency (Gantz 2012). Eco-friendly terms can also be mentioned to entice the aged to get Dyson’s products. People Vacuum cleaners are not entitled to a small group of people. Cleaning is done by almost everyone and manufacturers are making more household stuff that can only be cleaned efficiently using vacuum cleaners. The population of people living in the urban areas is increasing, and so is the need for vacuum cleaners in those houses. The people who mostly go for the products are youth, because of their size and style. The middle-aged because of the latest technology and state-of-art engineering and efficiency (Gantz 2012). Those between 43 and 52 years old like these products because of their effectiveness, they are eco-friendly, less noisy and easy to operate. Dyson products are for every person and not a small group of people. Process All activities at Dyson are perfectly aligned to measure up to the Dyson formula. Some of these activities include drawing of machines, testing and dropping at premises and testing by employees at home and having the problem-solving spirit through perfection and brilliant innovation (Parker & Parker 2006). The company has put in place strategies for long-term development and concurring the market. Technical Feasibility Dyson has injected a lot of money to the R&D department to ensure there is continuity of innovation. The only option present in the company currently is self- designing through thorough research. Every new technology produced by Dyson is as a result of intense research to find gaps that man experiences and need to be handled (Gantz 2012). James Dyson, the founder, and owner of Dyson Company is the brains behind cordless vacuum cleaners among other technologies. Dyson says that every product he produces to fulfil the needs of his customers. The product is already patented and licensed under Dyson Company for manufacturing and distribution. The company, however, is seeking to expand more to other countries, and it would be cheaper to have joint ventures with a couple of enterprises to co-produce their [products in their factories and distribute them in the region (Seo & Han 2013). Joint ventures are more economical compared to setting up production factories in every nation. In some countries, the production cost is relatively high thus causing the price of every machine to go up. The company is exclusively entrusted with sales and distribution. Dyson has acquired the most qualified individuals for every position in the enterprise. The company, therefore, will manage all its productions independently without asking for any external help. One thing to be done is the addition of employees in every department to handle much work that is coming soon going to be felt by Dyson (Gantz 2012). More workers will be needed in the production and sales departments so that more items are produced in a short and taking a similar time to distribute them across a wider market. There are many companies in the industry, and they too are devoting time and resources for research and development. Such companies include Vax and Black and Becker who are slowly closing in the gap. Such trends are posing a threat to the enterprise because they are all after the same customer base. Operations and production feasibility Dyson Company operates under regulations by the state and manufactures board. Technology by James Dyson is given patent rights hence people are not allowed to duplicate it without his consent. The company has its products checked for safety and operations as per the regulations before they are released to the market. After claims that Dyson's products are environmentally friendly, people raised questions about those claims (Frennert & Östlund 2014). However, this was later verified by the British Allergy Foundation which passed Dyson as the first company to meet health and environmental issues in the industry. Dyson has taken three types of operational risks that are risks that are taken to exist naturally. As a business, there are some risks that need to be avoided at all costs, and finally, there are those that need to be taken to make breakthroughs in the market (Kim 2013). Dyson monitors and manages all categories of risks to survive and thrive as a business. There are following procedures and mechanisms that are taken as well as health and safety precautions which manage all risks. Dyson Company has a reputation to safeguard, and it ensures that any work is done to perfection. The company has hired the best and highly skilled individuals to provide high-quality service to clients (Gantz 2012). The company is accredited and well recognized across the region. To demonstrate company's impeccable level of commitment, the company has been awarded three charters. The first charter is a customer, people charter and lastly partnership charter. Structure of Management Human feasibility Staffing at Dyson is a role of the human resource department. The organization is divided into units which co-exist and work together for the common good of the company. The research and development department is more empowered among all because Dyson believes in finding solutions to people through innovations and inventions (Parker & Parker 2006). The company began its vacuum cleaners’ mass production in Malmesbury, Wiltshire and later moved to Malaysia in 2002. The main reason for moving was to get closer to the consumer base since most clients are in the Far East. Washing machine production unit was also taken to Malaysia due to the incentive of low production cost. Every company or organization has set in place contingency plan in case they are faced with a crisis. There is crisis that requires immediate attention while others just call for simple attention (Frennert & Östlund 2014). In case some parts are late getting into the factory, there is no way production would go one and due to this manufacturing companies came up with plans to curb this issue so that the entire production does not stop. There are Line Replaceable Unit (LRU) which include parts designed to be removed, repaired and fixed back by the maintainer at the operational site (Frennert & Östlund 2014). Non – LRU is parts which can as well be removed, checked and fixed though this time round, not at the functional site. Non- replaceable LRU are parts of machinery which are designed to be removed, discarded and replaced with a new one at the operational site (Gantz 2012). There are parts of machines which could be faulty, and the company is forced to pay for their repair. Routine maintenance is however done on equipment to ensure they are running as they ought to be. Financial Feasibility Underlying Assumptions and Information Dyson has a finance department that manages all its investments and ensures the company strikes a balance between new technology on testing and profits (Gantz 2012). The R&D department gets an ample share as seen earlier, but economic statistics and tallying are made to ensure the company does not get into problems. Dyson is a registered company number 061164128 with its office at Tetbury Hill, Malmesbury, Wiltshire, SN16 ORP (Parker & Parker, 2006). The nature of the business is (SIC), manufacture of domestic electric appliances. The company is a privately owned by James Dyson, and there is a possibility of the status quo holding on even later after he is gone. The 69-year-old entrepreneur adopted his son's light company under Dyson's management which seems to plan for taking him as the heir of Dyson's dynasty. The company files one million Euros as returns every year. All its official financial transactions are openly viewed by anyone who wishes to indicate their high level of transparency. Financial statement The Dyson Company has prepared financial statements projecting three years. These statements include balance sheet, income statement, and cash flow statement. The money appearing on the cash flow statement is constant throughout the three years (Frennert & Östlund 2014). The projected surplus of money show full financing of the projects and repayment of other external financiers. Income Statement 2016 ($) 2015 ($) 2014 ($) 2013 ($) Net operating income 43,182 42,143 38,981 31,624 Cost of sold goods -16,125 -15,952 -12,715 -10,167 Gross profit 27,057 26,191 26,266 21,457 Administrative and sales expenses -12,432 -12,001 -10,922 -9,283 Other charges of operation -627 -819 -562 -273 Operating Income 13,998 13,371 14,782 11,901 Interest income 581 502 399 345 Interest expense -327 -413 -203 -297 Net Equity income 871 534 673 844 Income before taxes 15,123 13,994 15,651 12,793 Income tax -1,723 -2,212 -1,248 -1,679 Gross total income 13,400 11,782 14,403 11,114 Profitability Return on Sales 2016 2015 2014 2013 Gross profit margin 70.18% 69.92% 70.11% 71.12% Operating profit 23.12% 22.82% 21.29% 23.44% Net profit 19.28% 18.03% 26.11% 28.92% Return on Investment Return on assets 10.29% 10.34% 15.53% 16.02% Return on equity 28.21% 26.17% 25.28% 22.78% Dyson Co. EV Calculation 2016 ($) 2015 ($) 2014 ($) 2013 ($) Common stock net value 3,192,234,918 3,192,200,182 3,199,123,911 3,201,819,271 Market value 150,182 142,127 140,245 117,923 Non-controlling interests 728 826 363 273 Total equity 150,910 142,953 140,608 117,650 Payable loan 15,192 12,993 10,134 8,673 Maturities of current loans 1,218 1,316 1,200 879 Total debt and equity 167,320 157,262 151,942 127,202 Cash equivalents -7,123 -12,911 -8,102 -8,305 Marketable securities -2,032 -1,201 -881 -891 Enterprise value (EV) 158,165 143,150 142,959 118,006 Cash flow statement Financial forecast Beginning with the overall financial statement, Dyson Company is making tremendous steps as long as profitability is concerned. The company, however, is not strictly followed regarding its financial records because it is privately owned (Frennert & Östlund 2014). However, this plan seeks to see how the business can expand to other nations; therefore, forecasts are crucial. The company seems to be doing well as far as its sales are concerned. There is an improvement each year since 2013, though the margin is small because of the stiff competition and other common factors. Dyson Company, however, is set to improve in the next few years when some suggested practices are incorporated. The data above clearly shows expenses that the company incurs during its operations and production process. The company has put strategies to ensure the cost of production is low by moving to Malaysia which lowered it by 30%. Through more efficient ways of production, the company will reduce expenses (Frennert & Östlund 2014). From the above data, the company is treading on the right direction with minimal losses in comparison to the sales. From the cash flow statement and balance sheet, the company has recorded a steady flow of cash through the business. Breakeven analysis The analysis presented is between 2013 and 2016 a span of four years. Different analysis has shown various steps taken to arrive at conclusions mentioned. For the breakeven analysis, it is reached by calculating the fixed costs and dividing them by the product contribution margin. The breakeven point gives the volume of sales expected after a period to cover all the costs. References Bruce, L & Bruce, I 2005, Household technology, 1st ed, Macmillan Library, South Yarra [Vic.]. Dyson, J 2001, Against the odds, 1st ed, Texere, London. Dyson, J and Burlington, G.M., Dyson Limited, 2003. Vacuum cleaner. U.S. Patent 6,553,612. Dyson, J & Prototypes, Ltd., 1986, Vacuum cleaning appliances. U.S. Patent 4,573,236. Dyson, J 1983, Vacuum cleaning appliances. U.S. Patent 4,373,228. Frennert, S & Östlund, B 2014, "The domestication of robotic vacuum cleaners among seniors", Gerontechnology, vol. 12, no. 3. Gantz, C 2012, The vacuum cleaner, 1st ed, McFarland, Jefferson, N.C. Kim, J 2013, Robot intelligence technology and applications 2012, 1st ed, Springer, Berlin. Parker, P & Parker, P 2006, 2007 report on commercial and industrial portable vacuum cleaners, the: world market segmentation by city, 1st ed, ICON Group. Seo, Y & Han, T 2013, "Assessment of penetration through vacuum cleaners and recommendation of wet cyclone technology", Journal of the Air & Waste Management Association, vol. 63, no. 4, pp. 453-461. Appendix 1.0 Cash flow statement 2.0 Gantt Chart 3.0 Swot Analysis STRENGTHS No bags or filter needed Efficient in energy consumption. High market orientation Dyson’s vacuum cleaners are the only cleaners approved by British Allergy Foundation Environmentally friendly products Excellent customer service Attention to detail, through use of cameras in development of products and large scale prototyping WEAKNESSES Due to the high-end products manufactured by Dyson, they are super expensive which poses as a threat because not all can afford. There is a significant difference between Dyson’s prices and those of its closest competitors. Its products just like all others is suffering recession OPPORTUNITIES The group between 26-35 years old is looking for performance oriented vacuum cleaners and are willing to pay whichever price for it. The group between age 43 and 52 years are looking for energy efficiency. Youngsters and single households look for flashy and coloured products which are small. THREATS Product and Technology imitation Competition 4.0 Product Mix 7P’s Read More