Technology Management and Strategy (IMEN 301) Prof. Euiho Suh

by Khalil Manar, Jin Xiongnan andHerv Kusnik

1.Abstract32.Introduction31)A creator: James Dyson32)Early products by James Dyson43)A new idea44)The $ 2000 vacuum cleaner45)The first Dyson43.Product51)Vacuum cleaners52)Hand Dryer53)Washing Machine64.R&D75.Marketing71)Evolution of Dyson in the market72)Turnover83)Differentiation Strategy94)Focus Strategy105)Cost Strategy106.Innovation111)The innovators challenge112)Fast transition from concept to 3D113)Rapid prototypes from design data124)Computer simulation boosts design accuracy125)Protecting their innovations137.Analysis131)Porters Five Force Model13Existing Rivalry14Bargaining Power of Supplier14Potential Entrants14Threat of Substitutes14Bargaining Power of Buyer152)SWOT Analysis15Strength15Weakness15Opportunity15Threat16

1. AbstractIn 1978, James Dyson noticed that the air filter of the workshop where the spraying finishing operations on Ballbarrow models was constantly obstructed powder particles (like a vacuum cleaner bag is blocked by dust).He has designed and manufactured industrial cyclone tower, which removed the powder particles by exerting a centrifugal force 100 000 times the force of gravity.The same principle could he operate in a vacuum? James Dyson began to work. Five years and 5,127 prototypes later, the first Dual Cyclone bagless Vacuum cleaner was created.Then a legend of Dyson was come into being. He cooperated with a Japanese companies to developed his inventor to the Japan and later also in United Kingdom. With the help of some friends he made his own company Dyson, and invented different kinds of electricity like vacuum, hand dryer, washing machine and also fun. And he has driven his company into an innovation motivated company.After the success in Japan and Europe, Dyson entered the American market. With less than 2 years, Dyson became the leader in the market by beating his long term rival Hoover.In 1999, after a lengthy court battle, Hoover was found guilty of infringing one of James patents. Other manufacturers, unable or unwilling to develop their own vacuum cleaners, still try to copy Dyson technology to no avail.With this different kinds of interesting story we want to research the inside story about Dyson. To accomplish our goal we may first be aware of the company. And then with some information of its products, we want to know the innovation strategy of the company. Later, we will introduce the marketing strategy of the company to know how they can get the success in different markets. Finally we will use some tools to analyze the company in whole way.2. Introduction1) A creator: James Dyson"I certainly have invented better myself!" This thought crossed our mind when a product disappoints us, but how many of us act out? James Dyson, himself, did. He is a man who likes to improve things. With the help of his research team has developed products whose sales have generated more than 3 billion worldwide.

2) Early products by James DysonIn 1970, while studying at the Royal College of Art, James Dyson launched its first product, the Sea Truck. A few years later was born a new product that would be rewarded: the Ballbarrow - a wheelbarrow racing, which goes where others have never gone! It was then the turn of Wheelboat and Trolleyball. Even the integrated hose that can be seen on most upright vacuum was invented by James Dyson.

3) A new ideaIn 1978, James Dyson noticed that the air filter from the paint shop of Ballbarrow was constantly clogged with powder particles (like dust blocking the vacuum bags). He decided to design and build a tower to industrial cyclone, separating the powder particles of air exerting a centrifugal force which exceeded 100 000 times that of gravity. This principle could also apply to a vacuum cleaner? James Dyson set to work and 5 years and 5,127 prototypes later, the first bagless Dyson appeared.

4) The $ 2000 vacuum cleanerStrange as it may seem, is in Japan, the birthplace of technologies that James Dyson has sold its first bagless vacuum cleaner. Dubbed "G-Force, this vacuum in 1991 won first prize at the International Design Fair in Japan. The Japanese, impressed by his performance, made the "G-Force" a symbol of prestige, sold at $ 2000 each!

5) The first DysonUsing income generated by its license in Japan, James Dyson is dedicated to manufacturing a new model of vacuum cleaner in Britain under his own name. In June 1993 he opened his own research complex and production in Wiltshire, not far from his home and developed a device that can pick up even finer particles of dust (to microscopic particles as small as cigarette smoke). Result: DCO1 is the first in a complete line of vacuum cleaners that maintain a constant suction.3. ProductThe Sea Truck, Dyson's first product, was launched in 1970 whilst he was at the Royal College of Art. Sales of the Sea Truck amount to $500 million. His next product, the Ballbarrow, was a modified version of a wheelbarrow using a ball to replace the wheel. Dyson remained with the idea of a ball, inventing the Trolleyball, a trolley that launched boats. He then designed the Wheelboat which could travel at speeds of 64 km/h on both land and water. 1) Vacuum cleaners In the late 1970s Dyson had the idea of using cyclonic separation to create a vacuum cleaner that wouldn't lose suction as it picked up dirt. He became frustrated with his Hoover Juniors diminishing performance: dust kept clogging the bag and so it lost suction. The idea of the cyclones came from the spray-finishing room's air filter in his Ballbarrow factory. While partly supported by his art teacher wife's salary, and after five years and 5,127 prototypes, Dyson launched the 'G-Force' cleaner in 1983, the world first bagless vacuum cleaner. Unfortunately, no manufacturer or related distributor would launch his product in the UK as it would disturb the valuable cleaner-bag market, so Dyson launched it in Japan through catalogue sales.With the success of G-force which is also called DC01, he and his company developed 22 different vacuums for different uses. Some of them are used in regular floor and some of them are used for animals. And the latest product is DC25. DC25s brush bar is made from high-temperature ABS, a material that can retain its shape under extreme stress. Even at 5,400 revolutions per minute it remains stable, reducing vibration and noise. The machine rides on a ball, which means it can turn on the spot. Its harder to steer conventional fixed wheel vacuums, which prefer straight lines.2) Hand DryerLet's say you're a company that has perfected air flow technology, cornered the high-end vacuum cleaner market, and are now looking for new product categories to conquer. Well you could leverage your copious knowledge to invent the world's most powerful air hockey table, or perhaps an air compressor with a super-snazzy industrial design, but UK-based Dyson has instead opted to tackle a problem that has plagued public restroom patrons for years -- crappy, inefficient hand dryers. Apparently the main problem with traditional hot air dryers is that they rely on evaporation to get the wet stuff off -- a process that can take up to 35 seconds and actually result in dirtier hands as people rub theirs together to speed things up (pushing bacteria deeper into skin layers and fingernails as they do so). Well Dyson is attempting to make this task both quicker and more hygienic with its new Airblade system, a revolutionary dryer that blasts a 400MPH stream of clean, unheated air through a 0.3-millimeter gap and processes the excess water with a disinfecting iodine resin filter. The end result is cleaner hands in a shorter period of time, with waste water being disbursed into the air as a fine mist instead of forming a gross little puddle on the floor.3) Washing MachineCR01 has unique 2-drum wash action. By implementing 2 drums rotating in opposite directions, Dyson claims that fabric is flexed much more than in conventional washing machine. This results in the "cleanest wash, largest load, fastest time". Energy efficient, the contrarotator has interlocking double doors, child lock, coin and button trap, wipe-able control panel, and hygienic long-life seal. The contrarotator drums have just under 5,000 perforations, compared to only 945 perforations found in conventional single drum washers. The door is made from the polycarbonate material used for police riot shields and crash helmets to prevent dents. There is also a retractable handle on the bottom that pulls out to easily move the machine. Control panel is conveniently located and is easy to use. 3 soil level options are available. Dyson makes the contrarotator in 5 models. Some models come with flow check that shuts the washing machine down if leak is detected, and memory function that recalls most often used programs. Overall dimensions are W60 x D58 x H85 cm or 23.62" x 22.83" x 33.46". The price range is from 1,000 to 1,200 or $1,876 to $2,252.4. R&DDyson is already an icon of British inventiveness, and the company says its latest soaring financial results vindicate a strategy committed, above everything else, to research and development (R&D).The vacuum giant reported that operating profits doubled to 190m in 2009 and turnover shot up by 23 per cent to 770m. The secret of the success is all about investment, according to Dyson's chief executive, Martin McCourt."We have kept investment in research, design and development running very high all the way through both the good economic times and the bad," Mr McCourt said. "The results are a clear recognition that people do want machines that incorporate new ideas and new technologies."Dyson certainly puts its money where its mouth is. All the company's R&D is done in the UK, the company invested 42m in R&D last year, and will spend more still in 2010. The strong financial results prove it is a strategy that works, says Mr McCourt. And the company is recruiting another 350 engineers this year, doubling its engineering headcount to 700.New ideas are the lifeblood of Dyson. Every year, they invest half their profits back into harnessing them at theirresearch and development laboratory in Wiltshire. The 350 engineers and scientists based in R&D department. Thinking, testing, breaking, questioning.Theyre a varied bunch, too. Many are design engineers developing new ideas and technology. Then there are specialists who test and improve different aspects of each machine, from the way they sound to what they pick up. Some will have years of experience. Others are fresh out of universities like the Royal College of Art, Brunel or Loughborough.They share some eclectic engineering pastimes - from building vintage cars to reconstructing medieval catapults. One design engineer also has a jet engine hell fire up in the back garden once in a while.5. Marketing1) Evolution of Dyson in the marketJames eventually licensed his design in Japan, the home of hightech. The Japanese loved the pink GForce, which was sold $2000 in 1993 and obtain the International Design Fair Prize. The royalties allowed James to manufacture a machine under his own name, DCO1.An inventor pays substantial fees to renew patents every year. Though he brushed with bankruptcy during the development years, for James, it was money well spent.In 1999, after a lengthy court battle, Hoover was found guilty of infringing James patent. Other manufacturers, unable or unwilling to develop their own vacuum cleaners, still try to copy Dyson technology to no avail.In 2002, Dyson move its manufacturing to Malaysia, so the company could concentrate on Research and Development.2) TurnoverAt the beginning in 1993, the turnover of Dyson was around 2,4 million pounds. This amount is still rising today, as we can see on the chart below: Almost 300 million in 2003, 400 in 2004 and 515 million in 2006.

Hoover the first firm has marketed the product since 1908. Rowena from Germany have marketed its first Vacuum Cleaner since 1974. Miele (heizerbrock) famous for a mean device life cycle of 20 years, superior mean to 6 years compare its competitors from 1932. Electrolux from Sweden since 1910, Electrolux is one of the world's leading manufacturers of household appliances with 28% global market of the domestic equipments.Philips vacuum cleaner since 1960, Philips is one of the largest worldwide in terms of electronics, appliances and music publishing. Dyson exist since 1992.

Diagram DFC (Differentiation/Focus/Cost)

Dyson Positon3) Differentiation Strategy A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added to the Dyson products enable the firm to charge a premium price for it. Dyson hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product's unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily. Firms that succeed in a differentiation strategy often have the following internal strengths: Access to leading scientific research : Essential point: The research development Highly skilled and creative product development team : A team of engineer Strong sales team with the ability to successfully communicate the perceived strengths of the product : advertisement Targeting Corporate reputation for quality and innovation : VerifiedThe risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. 4) Focus Strategy The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it. Dyson which is using a focus strategy enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly. Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist. Because Dyson succeed in a focus strategy is able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well. They use their core skills to create a wide product range.Some risks of focus strategies include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even better. 5) Cost StrategyDyson doesnt have a cost strategy because they purpose a new kind of product and very innovative, thats means that there is a lot of research and prototype. All of these things are an expansive cost, anyway for Dyson they are different and focus on the target segment.

6. InnovationLed by its charismatic founder, James Dyson, Dyson is an innovation success story. In 1993 the company introduced the Dyson DCO1 Dual Cyclone, the first vacuum cleaner with constant suction. Over the following decade, Dyson has grown to become the top-selling vacuum cleaner manufacturer in Western Europe and the leading vendor of upright vacuums in the USA. It now employs 1,400 people in the UK and sells machines in 38 countries.1) The innovators challengeOne of the issues facing Dyson is how to create increasingly sophisticated machines such as the DC15, which has more components, while ensuring that design and development cycle times do not become overly extended.Since 1998 Dyson has been a committed user of the NX next-generation digital product development software system. Dyson originally bought five seats of NX. Over the years this has increased to 88 licenses, with the software now being used by more than 100 in the Dyson R&D team: design engineers who are part of the New Product Development team, which generates ideas and concepts; scientists involved in testing and developing ideas and technologies; and the engineers responsible for the actual detail design of the machines.2) Fast transition from concept to 3DAs the early ideas and concepts for the DC15 began to come together in cardboard and foam, design engineers used NX to produce detailed 3D models that helped them clarify their thinking and refine the ball mechanism. Our conceptual designs are produced in 3D, which has fantastic benefits, explains John Myers, CAD systems manager at Dyson. Rather than just producing views of the product, you design the real thing. This reduces ambiguity and often makes it easier to understand complex assemblies. You get a lot of feedback, seeing it coming together before your very eyes.The modeling features within NX enabled Dysons design engineers to work extremely quickly. With the 2D CAD software that had been used before, a design engineer could spend weeks on the design of a complex part. With NX we can produce a 3D model in a fraction of the time, Myers says.3) Rapid prototypes from design dataThe next phase in the DC15s development involved the creation of physical prototypes to help the design team better evaluate the new concept. Designs created in NX were used directly for rapid prototyping, supporting the swift creation of physical models for testing and evaluation. NX geometry was converted into STL files that were then used by Dysons in-house prototyping modeler, which creates prototypes from successive layers of powdered nylon.Fast prototyping of metal components was made possible by NXs integrated NC machining functionality, part of NXs computer aided manufacturing (CAM) portfolio. NX Machining leveraged the 3D design geometry to drive milling and cutting tools. One of the advantages of using NX Machining was that refinements made to the design were automatically incorporated into the CNC programs, without the need for reprogramming. This avoided potentially costly delays to the creation of successive prototypes.Dyson generated a variety of prototypes as the design engineers and scientists considered alternative designs. The speed at which NX could help deliver prototypes was a major benefit. With a complex project such as the DC15 that required us to evaluate a number of alternative models, NXs ability to support rapid prototyping was an important factor in helping us to keep the development time in check, Myers adds.4) Computer simulation boosts design accuracyTo improve accuracy and eliminate errors in the design and ultimately speed the overall development cycle Dyson used a number of NX digital simulation and testing capabilities. For example, NXs assembly modeling functionality allowed Dyson to ensure that the many parts within the product, which were created by different design engineers, would fit together correctly.NX mechanism analysis allowed the design engineers to view animated sequences simulating the precise motion of the moving parts. This ensured that parts did not interfere with each other as they moved. And to help engineers understand the stresses on the different parts within the DC15, 3D design data was also used for finite element analysis (FEA) within NX.5) Protecting their innovationsThe first patents relating to the Dual Cyclone Technology used in its vacuum cleaners were filed back in 1980. Today, the company's inventions are protected in a range of countries.Dyson's clear patent strategy is to protect all its inventions. According to the company, it spends 'tens of thousands of pounds' each year on patent renewals. Unlike smaller growing players, Dyson has its own team of in-house IP and patent experts based at its Malmesbury headquarters. Its worth noting that even Dyson doesn't bother paying the very expensive patent legal expenses insurance.In a famed recent case, the vacuum cleaner designer took legal action against Hoover after the latter launched its Vortex cleaner, which used a similar process to Dyson's dual cyclone model. Dyson eventually settled with Hoover in late 2002. Encouragingly, its patents were more than sufficient to remove the infringing Hoover machine from the market.Hoover was found to have infringed Dyson's patent and was ordered to pay 4 million in compensation by the High Court. The settlement was believed to be larger than any previous court award of damages in British patent case history. At the time, James Dyson said, 'when we discovered Hoover had stolen one of our patents, we tried to settle the case to avoid a long and expensive three-year court battle, but Hoover refused. So we were forced to defend our patent against Hoover's infringement. The patent system can work. I hope this encourages inventors who have their ideas stolen by multinational companies.Although any company could use Dyson's technology when its patents expire, its strategy is to protect improvements as well as its fundamental technology. This means any competitor would have to resort to old technology in an attempt to imitate its products.

7. AnalysisIn this part we will analyze Dysons different altitudes with Porters five force model and SWOT analysis.1) Porters Five Force ModelThere are five factors in Porters Five Force Model. They are existing rivalry, bargaining power of suppliers, potential Entrants, threat of substitutes and bargaining power of buyer. We will analyze one by one to know how Dyson is affected by different kinds of factors.Existing RivalryAs we analyzed in marketing part there are many companies in the vacuum cleaner market, such as Philips, Hoover and so on. Philips is one of the most success companies in the electricity area. They have a great brand image and they are enjoying big market share in vacuum cleaner market share in the worldwide. And Philips cannot be ignored all the times, because they have the ability to defeat you in anytime when you are not doing very well. Compared to Philipss focusing on all the areas in electricity, Hoover put their most energy in vacuum area. They are one of the oldest companies in the cleaner area. Hoover is founded in 1908 and Hoover has been Dysons main competitor all the way. Except these two big companies there are also lots of companies who threat Dyson during its way to success. Bargaining Power of SupplierBecause they are doing lot of experiments, they need of different kinds of material. And some of them are really difficult to find. Then the supplier has the advantage to decide the price for the material. And Dyson need to get more options for their suppliers. Potential Entrants In late 1980s the profit of cleaner was 5billion per year. 30years later, the number must be increased a lot. For this kind of huge cake all the companies who have the ability want to share it. Actually there are lots of companies who want to enter the market to share the cake. Dyson should also take care of the power get from the potential entrants. Threat of Substitutes The technique used in Dyson product is very unique but most other products are in different design. If the vacuum cleaner with bags have overcome the shortage and still be in the lower price, they will become a substitute for the Dyson vacuum cleaner with dual cyclones. Another new design of cleaner is coming around the corner which doesnt need the user to move it from one to another. They have a great performance in automatic. They will clean the room by themselves. If this kind of design takes place of the Dysons design Dyson will face a great threat during the market.Bargaining Power of Buyer The prices of Dyson are always one of highest compared other products. And because the price they have to face some actual facts that they will lost most of the consumers. However they are in high price strategy to make sure that their products are the best and it is kind of guaranteeing to their users. Customers buy the products in high price and at the same time they get a high quality service from the company. And if the users give up Dysons product they lost a great service.2) SWOT AnalysisWith the information from the Porters force model we can do an analysis of SWOT. StrengthDyson is a company famous for the innovation. They have more than 1400 engineering who just focus on creativity. With the spirit of innovation they got the success and they should keep on the innovation driven strategy not only for them but also for the society.WeaknessTheir products are limited in just 38 countries and for most of the customers Dyson is not available. However its competitor are now enjoy high share of the market like China, India and other developing counties.OpportunityDyson could expand their shares in countries using floor tiles by continuing word of mouth marketing strategy. Currently, China and India are not high in demand for vacuum cleaners, but with their economies growing 10% per year, more consumers will become affordable and demand soon will grow.ThreatIn 1999, after a lengthy court battle, Hoover was found guilty of infringing one of James patents. Other manufacturers, unable or unwilling to develop their own vacuum cleaners, still try to copy Dyson technology to no avail.