James Dyson: Theories of Decision Making
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James Dyson is a UK-based engineer and founder of Dyson Appliances Ltd he is identified as the inventor of the first bag less vacuum cleaner. In 2012 his sales were over £1billion and he has a sales presence within 45 countries worldwide. DAL had emerged as the market leader in the vacuum cleaner market in the UK as well as the USA.
This paper will critically identify the key theories used by Dyson in his decision making process, strategic preferences will also be analysed within the development of the Dyson range of products. Theoretical models will be used to understand Dyson's analytical decisions and the strategic choices that have been used within the development of the Dyson product range. Economic decisions will be evaluated to try and gauge the long term affect upon the stakeholders within the business.
James Dyson started his career at the Royal College of Art in London where he studied furniture and interior design. In 1974 after spending four years with Roturk Marine Engineering as a designer he started his own business and made his first invention.
The Ballbarrow which was an update on the wheelbarrow and used a plastic ball for easier manoeuvrability instead of the conventional wheel was his first invention, almost all of Dyson's inventions and ideas are because of personal frustration with the current product available on the market. Ballbarrow was launched in 1975 and was priced at three times more than the conventional wheelbarrow; the product which sold surprisingly well was sold on to a major manufacturer four years after its concept to enable Dyson to finance his future inventions.
In 1978 Dyson realised his vacuum cleaner was continuously losing suction power; he noticed how dust was quickly clogging the pores of the bag which was leading to a block in the airflow. He then made the decision to resolve this problem, after five years and over 5000 prototypes he launched the first cyclonic bag less vacuum cleaner.
Dyson offered his invention to all of the most important manufacturers but none would invest in a bag less vacuum cleaner because of the potential loss of sales on the £500 million bag industry.
Despite initial financial obstacles in 1993 Dyson launched his new design of cyclone bag less vacuum cleaner the Dyson DC01which was seen as being a vast improvement over the conventional vacuum cleaner, other major manufacturers who had earlier rejected the cyclone idea have since copied Dyson's concept to ensure their stake within the vacuum market remains intact.
Marketing professionals have different views on brand building, there are different models that all agree on what makes up a brand, the most obvious factors include awareness, quality and association (Boyle 2003, 79-93).
Dyson's achievement emphasises the need for the creation of a strong brand and is certainly one way for a business to accomplish and retain competitive advantage. A strong branding will lead to a brand equity which is a uniqueness that sets it apart from similar products (Tuominen 2007, 65-100).When uniqueness and value are delivered within a product range this can enable a business to maintain a higher price over its competitor's products.
Max Conze CEO of Dyson believes their competitive advantage is because of recruitment of the brightest graduates, expansion into various other markets and concentration on engineering development, 'our lifeblood is inventing that is where we invest the majority of our money' and that DAL are ' more than a vacuum company we are a technology company'.
A new innovation needs to be given the right look; key decisions for Dyson are its attributes, brand characteristics and value for money innovative products will not be a success unless the benefits are greatly visible at the point of purchase.
Dyson's products original had the iconic yellow colour that makes them look childishly simple. Some have a roller ball and the transparent plastic holding cells that conceal the dirt that is removed. This has the aim of easier move ability and also shows the dirt that has been suctioned from your living space.
Dyson has denied using branding saying "We're only as good as our latest product," and "I don't believe in brand at all". The comments from Dyson seem questionable considering his own unique style of vacuum cleaner and the millions of pounds that have been spent on TV commercials and advertising.
Dyson's mission statement is "Take everyday products that don't work well, and make them work better". All the evidence points to a very clever marketing campaigner being as innovative as the products he sells. The products are easily identifiable by its brand name and are a continuing source of dominance and differentiation within the vacuum market.
In saturated product markets the development of a unique strategic product can give you a sustainable economic advantage within the market. A small number of businesses have managed to achieve a sustainable competitive advantage; Apple and Sky are two of the leading companies that can make claim to have been highly successful within their area of expertise and justifiable deserve the praise and accolade they have within it.
Dyson plays down his decision making skills with reference to his vacuum cleaner commented "we were in the right place at the right time and with the right product". But the reality is for it to happen there has to be a clear vision of where the company is going and where the market opportunity exists.
Key features of sustainable competitive advantage include charging a premium for its services even low cost suppliers out price other low cost suppliers. Leading the market by innovation will get new ideas quicker to market also having control of market channels and buying power helps an organisation to adopt a new competitive price structure.
Dyson and his colleagues have continued to develop new innovations to maintain their competitive advantage, creation of vacuum cleaners with higher suction through an entirely new cyclone system and a robot cleaner are amongst the latest inventions to be marketed.
Not all of Dyson's products have become a market leader in 2000; he launched the world's first two-drummed washing machine, the Contra rotator. Dyson and his engineers constantly re-evaluate different products and they found with the traditional washing machine that the fabric is not flexed enough and washing by hand gave better results than a single drum machine. Dyson's two drummed washing machine took four years and £25 million to develop the machine it came with a revolutionary built-in jack and trolley. In 2005 the Contra rotator was withdrawn from the market, Dyson stated "It wasn't a failure and it was a great washing machine but it was too cheap and we didn't make money from it".
Schools of Strategy
Henry Mintzberg's Ten Schools of strategic management are interlinked; the intention of this chapter is to mostly concentrate on three of the schools which the author feels that Dyson most uses within his ideology and approach to strategic management.
The Entrepreneurial School:
This strategy process has a single person in charge normally the CEO and is built on a strategic vision. Supporters of the entrepreneur school believe that managerial success is a personalized leader ship which is based on strategic vision; this will also be evident in the starting up and building of an organisation and in the case of breaking up of an organisation.
The Entrepreneurial School Of Knowledge
Main components within the entrepreneur school include a strategy making which is preceded by rigorous search of opportunities. Power is central to the leader and is characterised by large leaps in the wake of uncertainty and that growth will always be the main aim of the organisation.
The basic principles of the school are that strategy exists as a perspective in the leader's mind and the formulation process is conscious only to a certain extent. The leader Dyson will promote a vision which he watches closely and this power will allow him to make changes or amendments within the organisation based on intuition and experience.
The criticism of this school of thought is that it is centred on an individual leader and there formulation of a strategy, if employee's lose faith within their leader due to a poor economic decision or strategy this can lead to a demand for a change of leadership within the organisation.
The Design School:
The design school looks to find a match for internal capabilities and external possibilities; it seeks to gain importance within the analysis of internal and external situations. Internal relates to strengths and weaknesses and external covers the opportunity of a threat to an organisation. SWOT is the analysis that is used which covers managerial values and social responsibility and can also play a role in the formulation of a strategy.
Design School Model-Mintzberg's
The main principles of a design school include a planned process of conscious thought with a leader who takes the responsibility regarding control and consciousness of an enterprise.
The models within the strategy should be simple and informal; the process will be complete only when the strategy is explicit and formulates a perspective. Implementation will only commence when the best one has been chosen.
Criticism against this thought school include a lack of clarity within an organisation relating to their strengths and weaknesses and the time frame of when to formulate the strategy. There are also assumptions that data will be aggregated and sent to a higher level not showing potential losses and the environment will always remain stable within the future.
The Learning School:
The learning school has a view that strategies emerge when organizations can learn as much from failures as they do from success. Learning organisations assume that managers and workers close to design, manufacturing and distribution know more about their activities than their superiors and that the transfer of knowledge from one part to the other ensures that relevant knowledge reaches the desired place.
Learning School Knowledge Network
The main principles of the learning school can be complex and the nature of the organisation's environment makes implementation and formulation identical to a large extent.
The leader for e.g. 'Dyson' will pay close attention over time to what works and what does not work and this structure will be incorporated into their overall plan of action. Criticisms of the school can include a threat of weak decisions and a largely passive approach to strategy.
The seven remaining schools are planning, positioning, cognitive, power, cultural, configuration and environmental school all the schools are interlinked and can at different levels have a relevance to the James Dyson organisation. The author for e.g. feels that the environmental school has a much smaller link to the Dyson organisation than many of the other strategies available has this school is set to be reactive based on external environment. Most of the other schools just make reference to the environment but this school believes that the environment is ultimately the crucial key concept within this model. But protagonists of the environment school include Mintzberg's and Freeman and the basic models include the four groups of contingency view - stability complexity, market diversity and hostility (Thompson 2004, 1082 - 1094).
Strategic choice for Stakeholders
Stakeholders are individuals who are affected or have an effect on the actions of an organisation. Stakeholder method focuses on the needs of its main stakeholders which include the owners, employees, customers and the local community. In contrast to this the shareholders method focuses on dividend to shareholders, which means the business objectives would be to increase profit.
Dyson made a controversial decision in 2002 when he moved his manufacturing to Malaysia to be closer to his suppliers and to reduce his production cost. This move from Wiltshire to Malaysia was the cause of 800 job losses which would affect both employees who would have been made redundant and the local community.
The Unions reacted furiously to the job losses general secretary of Amicus, the engineering union Derek Simpson "Dyson has no commitment to his workforce and is a desperately bad example to the rest of the sector." and: "This latest export of jobs by Dyson is confirmation that his motive is making even greater profit at the expense of UK manufacturing and his loyal workforce". Tony Blair told MPs he was "deeply disappointed" at the Malaysian transfer.
Dyson commented in 2005 on his controversial decision to move production to Malaysia 'that record profits and his vacuum cleaners becoming the number one best seller worldwide as justified his decision to move production in 2002 away from the UK'.
After the move Dyson's manufacturing costs have dropped significantly and as a result his profits have increased. Dyson said 'that the company may not exist at all today if it weren't for the move'. This decision would initially seem to point to a focus on shareholder dividends but this is unlikely to be the case as Dyson owns 100 percent of the shares and does not need to worry about his return to shareholders.
James Dyson has been a controversial figure within the business world but with an estimated worth of £350m and a product presence in over 45 countries worldwide he has led Dyson Appliances Ltd (DAL) to be the leader in the vacuum cleaner market. He as over the last 30 years proven that risk-embracing entrepreneurship often run the most innovative companies and that his strategic sometimes controversial approach has at least for James Dyson been a great success.
He has received a knighthood for his services to business in 2007 and has created the James Dyson Foundation in 2002 to support design and increase engineering education for future engineers.
www.bbc news.co.uk-Dyson: Business whirlwind 2012:1-2
www.the guardian.com reinventing Britain 2011:1
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