Porter's Five Forces Analysis and Value Chain Analysis of Dyson

This report provides a competitive analysis of Dyson using Porter's Five Forces Analysis and Value Chain Analysis. It includes an analysis of competitive rivalry, bargaining power of buyers and suppliers, threat of new entrants, and threat of substitutes. The report also examines Dyson's primary and support activities in their value chain.

Managing
Information
and
Technology

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY .................................................................................................................................4
Porter's five forces analysis of Dyson ...................................................................................4
Porter's Value chain analysis of Dyson .................................................................................6
Summary and reflection on ways in which Dyson can utilise their business processes to gain
competitive advantage............................................................................................................9
CONCLUSION ............................................................................................................................11
REFRENCES ................................................................................................................................12

INTRODUCTION
Information technology is defined as the usage of computers, storage, networking or any
other physical gadgets to create, process, store and exchange all form of electronic data.
Commercial utilisation of IT includes both computer and communication technology.
Information technology contributes in growth of business by increasing innovation, enhancing
data storage increasing data processing speed. The company selected for the present report is
British technology firm Dyson which was formed by innovator and entrepreneur James Dyson in
the year 1991. The headquarters of the company is located in Wiltshire, UK with second
headquarter in Chicago, Illinois, US. This report includes competitive analysis of Dyson with
application of Porter's five forces analysis. Porters value chain analysis of the company is also
given in this report with identification of value adding business activities. Reflection on usage of
information technology to enhance business processes and gain competitive advantage in the
industry is also given in this report.
Background of the company: Dyson was formed by the British entrepreneur and
innovator James Dyson in the year 1991 and the first product offered by the company was a
vacuum cleaner built by Dyson which provided solutions to problems related to suction present
in vacuum cleaner of other firms. This was a huge success and laid the foundation for the
international growth of Dyson. The respective company currently has employed more than
12,000 employees to conduct daily business activities across 65 countries. Dyson sells a wide
range of household appliances through physical stores and online channels which includes their
website and online retail sites. The respective corporate has funded a professorship at Cambridge
university department of engineering which provides aid to funding of post doctorate research
related to fluid mechanics and science behind movement of air. Dyson offers portable and
cordless hair styling products which is an evidence of innovation as the foundation for the
growth and success of the company. The pricing strategy adopted by Dyson is high as they
provide products with superior quality and innovative elements. The respective organisation
continuously aims to improve their products and services by fostering innovation which has
helped the company maintain stable profits and survive for a long time period. The company
also has positive brand image of producing innovative products with best quality which has
helped the firm retain loyal consumers.

Mission: The mission of the company is to solve various consumer problems and global
challenges through efficient engineering and building high performance machines which utilise
every watt of power and gram of material.
` Vision: The vision of the company is to build future by solving skills gap, maximising
innovation, championing energy use and reducing inefficiencies through effective engineering.
Products and services: Dyson sells diverse range of products which includes hair dryers,
blade-less fans, LED, vacuum cleaners, hair styling products, heaters, air purifies. Each product
build by Dyson is equipped with advanced technology to give the best consumer experience.
Technological advancement along with high quality products is one reason behind the success of
Dyson and expansion to global market swiftly. Dyson aims to offer unique products which
provide innovative solutions for various problems faced by the consumers.
MAIN BODY
Porter's five forces analysis of Dyson
The porters five forces analysis is a framework utilised to analyse competitive forces
present in an industry. This analysis helps every company understand various forces which
determine competitive intensity within an industry and find profitability of any given sector.
Porter's five forces analysis of the British organisation Dyson is provided below:
Competitive Rivalry
This force of the company covers the intensity of competition present in the industry.
Large number of competitors with equivalent products hinders the growth of firm as consumers
and suppliers reach out to the rival organisation in the industry if they are not able to provide
satisfactory products at low price. In relation to Dyson , competitive rivalry in their industry is
low as they offer innovative products and continuously modify their product range to increase
consumer satisfaction (Avgerou and Walsham, 2017). The innovative ability of Dyson to
produce unique products and enter new markets by diversifying their product portfolio with
creative products is the main factor contributing to low competition in their sector as most
organisation offer obsolete technology in their products. Hoover and Electrolux are the main
industry opponents of Dyson.
Bargaining power of buyers

This element of the analysis is related to the sensitivity of consumers to price changes
and their ability to put the company under pressure to lower prices. The bargaining power of
buyers in context of British technology firm Dyson is low. The main reason behind such low
bargaining power of the consumers is that the organisation provides unique products which are
not offered by other organisations and provide creative solutions to various consumer problems.
High quality products provided by the respective company is also another reason which results
in low bargaining power of the consumers (Beirne and Ramsay, 2018). Dyson understands the
importance of innovation and focuses on continuously improving and diversifying their product
range. Apart form this the organisation also regularly modifies their products in order to increase
consumer satisfaction. This helps the company construct loyal consumer base which further
reduces bargaining power of the consumers.
Bargaining power of suppliers
This factor of the competitive analysis refers to the control which the suppliers have over
the company. Low power of suppliers allows the company to reduce costs by purchasing high
quality raw material at low price while high bargaining power of the supplier results in increased
costs of the firm as the surlier is able to increase price of the raw material to increase their
profitability. The overall bargaining power of suppliers in relation to Dyson is low. Suppliers in
the technology industry enhance their skill-set in order to provide quality raw material, so that
Dyson purchases their products from the company which showcases the power of the company
over their suppliers. The organisation has made high investment in R&D division which has
helped the company construct quality products and utilise high quality raw materials in their
manufacturing process.
Threat of new entrants
This factor of the competitive analysis covers the ability of new organisation to easily
gain market share in the industry. High barriers to entry result in low threat of new entrants as
they cannot construct profitable firm easily while low barriers two entry allows organisation with
huge resources to easily take the market share of the company. The threat of new entrants
gaining market share of Dyson by easily establishing a profitable business entity is low. The
reason behind this factor is related to high cots required to produce innovative household
appliances (Bueno and Gallego, 2017). This requires high investment in R&D and heavy

research so that unique products are designed and produces at a large scale and distributed all
over the globe.
Threat of substitutes
Substitute goods and services which are alternative to the products and services of the
company and can be purchased by the consumers as an option are a threat to long term survival
and profitability of the company. The power of the company to control price of their products to
achieve high profit is lowered due to the presence of close substitute in the market. In relation to
Dyson, is high due to the continuous change in technology of household appliances which
quickly make the products of the company obsolete. Consumers from upper class background
prefer the latest technology while consumers from lower class background have the alternative
of using cheap substitutes or low price products which can require high amount of labour but can
replace cleaning products offered by the company such as broomstick, and other abrasive
products (Chuang and Huang, 2018). This threat of alternative products need to be addressed by
Dyson by continuously offering innovative products which attract consumers and increase
consumer retention lowering threat of substitutes form the company.
The competitive forces of industry in which Dyson operates are low which makes the
industry highly profitable and enables Dyson to continuously maximise their profits. The reason
behind low competitive rivalry is due to the continuous product modification and diversification
carried out by Dyson. Buyers have low bargaining power over the company due to their high
quality products which provide creative solutions to various consumer problem. High
technological investment along with large number of suppliers connected with the company
which sell Dyson various parts of their appliances results in low bargaining power of suppliers.
Threat of new entrants is low because of high investment and technological research required for
entering this industry. Consumers have various alternatives to products sold by Dyson in the
form of daily use items such as broomstick and cheaply available low quality electrical products.
This factor does not have huge impact on the company as these alternatives are not innovative
and are of very poor quality (Hills, 2018).
Porter's Value chain analysis of Dyson
Porter's value chain analysis: This is a strategic tool which is used to analyse internal
business operations conducted at the company. This tool helps the company gain competitive
advantage in their industry by identifying business activities which are valuable for the company

and need to be improved to secure beneficial position in their industry. The business activities of
the company are divided into two sections of primary business activities and support activities.
Primary activities Inbound logistics: Raw material handling, transportation of raw material, warehousing,
stock control and inspection of quality material is part of the inbound logistics which
facilitates production. The company purchases raw material from more than 300
suppliers and manufactures products in 4 of their manufacturing plants (Holm,
Drogendijk and ul Haq, 2020). Dyson has moved their manufacturing plant to Malaysia
to buy high quality raw material at low price and ensure that every product sold by the
company is of high quality while reducing the cost of related purchasing and managing
raw material. The firm utilises third party logistics service from Flextroniocs which has
helped the company increase efficiency of their inbound activities. This firm provides IT
solutions such as logistics architecture and software design which reduce the cost of
various inbound activities such as transport and allows the company to monitor daily
inbound operations. This allows the company to come up with creative solutions to
barriers which reduce efficiency of inbound logistics such as delay in transportation. Operations: This activity revolves around processing of raw material into final product.
The manufacturing operation at Dyson is mainly conducted at their production plants in
China and Malaysia while business operations related to designing products and
modifying products with unique features are completed at UK headquarters of the firm.
Manufacturing plant of the company in Singapore and Philippines are able to produce
digital motor every two seconds with the help of robotics and automation. This is
valuable for the company as it allows production of high quality goods at low cost in
quick speed. Dyson has built workforce which consists of 4,400 skilled engineers and
scientists which are dedicated towards designing innovative product which solve
consumer problems such as high carbon emission with creative solutions (Libicki,
2016). The respective organisation is able to gain success in various international markets
through this business activity as the engineers of the company continuously design
innovative products which gives the company competitive advantage.
 Outbound logistics: Storage of finished products and effective distribution of products
according to consumer demand is the main gaol of this primary activity. Dyson utilises

third party logistic from Flextrtonix to gain real time data related to distribution of
products, identify risk spots in outbound logistics to maximise efficiency and quickly
respond to consumer demand. Utilisation of IT by Dyson through third party logistics
add value to the overall outbound business activities by minimising risk and ensuring
smooth storage and distribution of products (Lioukas, Reuer and Zollo, 2016). Dyson
distributes their products through physical stores in UK while US distribution is
completed through retail firms such as Best buy and Sears. Apart form this Dyson also
offers their products through their company website which allows consumer to gain free
shipping of various goods sold by the company. Diversified channels for distribution of
products which include retail firms, online shopping and physical outlets increase reach
of Dyson which is highly valuable for the firm.
Support activities Human resource management: Recruitment and selection of skilled workers, employee
development, performance management and sustaining positive employee relation with
the aim of developing talented workforce is the main aim of this support acclivity. Dyson
has collaborated with universities to recruit talented employees at young age and focuses
on continuous professional development of workers to construct high skilled workforce.
Apart from this Dyson encourages employees from other division such as marketing to
utilise engineering prospective in their daily activities by challenging assumptions and
finding creative solutions to problems which others ignore. This support activity is highly
valuable for Dyson as it helps in construction of unique and innovative products which
helps the company achieve high profitability and is prominent feature of the brand which
attracts consumers from all over the globe. Information technology plays an important
role in effective completion of this support activity. Dyson utilises HR information
technology costs to reduce costs save time and increase efficiency of various HR
functions such as employee compensation (Liu and et. al., 2016). HR Information
technology tools are used by the respective firm to monitor and manage human resources
effectively which helps the company ensure continuous progress of their employees.
 Technology development: This support activity focuses on enhancing various aspects of
business operations such as manufacturing techniques through the use of technology. The
company has made £2.75 billion investment in robotics and artificial intelligence to

expand their product categories. Apart form this information technology tools used by the
firm in HR help the company effectively manage their workforce and encourage their
employees to maximise their potential and grow along with the company (Madon and
Krishna, 2018. Leading logistics provider of the company has given the company
effective information technology tools such as elementum supply chain software which is
a cloud based application system which allows the company too manage, monitor and
control transportation of products and reduce products distribution costs while
maximising efficiency of the supply chain. Technological development supports in
growth and development of the organisation as it not only increases efficiency of the
company but also creates workplace environment which encourages innovation.
Technological development and information technology tools provide the company huge
value and are the key drivers of growth and success of the company.
Identification of value adding activities with justification
Operations are is key business activities conducted by Dyson which adds value to their
products. The reason behind this is that the employees and automated manufacturing plant of the
company reduce production costs while maintaining high quality and unique features of the
product. Dyson is able to maintain high profitability as consumers are attracted to their unique
products. In addition to this technology development is another business activity which provides
consumers value and contributes to the success of the company, this is because technological
development in field of Robotics and AI allow the company to reduce costs, increase efficiency
and sustain innovative working environment which allows the employees to contentiously
modify their products, this allows Dyson to gain competitive advantage despite threat of
substitutes from cheap alternatives.
Summary and reflection on ways in which Dyson can utilise their business processes to gain
competitive advantage
The above report states that competitive forces present in an industry play a deciding role
in success of any organisation. Porters five forces analysis is tool which identifies competitive
forces of any company is applied to the British technology firm Dyson (Saffady, 2020). This
analysis reveals that the industry of Dyson is suitable for achieving high profits as industry
rivalry, threat of new entrants, bargaining power of suppliers and consumers is low. This is
because of the unique innovative product range offered by the company. Apart from this the

value chain analysis of Dyson reveals that technological development and operations are key
drivers of the growth and success of the company.
According to my viewpoint Dyson need to utilise various information technology
systems and tools to gain competitive advantage in their industry. The firm need to use
information technology increase the effectiveness of various process and monitor their daily
activities in real time such as employee progress and transportation of goods. Dyson needs to
utilise CRM tools which help the company manage every interaction with the consumers through
single platform. Dyson will be able to increase their sales, ensure effective sales management
through this IT tool. This is because each consumer will gain personalised experience during
their interaction with the company .This will result in the construction of loyal consumer base
and provide competitive advantage in the industry and help the company gain success in their
various business endeavours. Dyson needs to use work tracker which is Information technology
tool to track the progress of their production processes. Internet service provider is a part of the
information technology infrastructure of the company which focuses on providing faster internet
services to the firm is crucial for smooth functioning of various business process at Dyson. Well
constructed information technology infrastructure also helps the company maintain effective
workplace communication which connects various employees from all over the company.
Collaboration between various departments at Dyson will be made easier through IT tools which
enhance business communication. This will be helpful in creating innovative working
environment and the respective firm will be able to find creative solutions to various growth
obstacles. Dyson will gain competitor advantage as their overall organisational efficiency will
increase and the firm will be able to create innovative working environment due to easy
connectivity between employees. This will enhance uniqueness of their products which will
increase consumer retention, net profits earned and assists the company gain leading position in
their industry.

CONCLUSION
From the above report it is determined that in information technology tools and systems
enhance internal capabilities of the company and provide the company competitive advantage in
their industry. Business firms need to gain an understanding of their external environment
through analytical tools such as Porters five forces. This tool provides in depth information about
competitive forces present in the industry which can be utilised to identify the favourable
conditions of the industry to achieve high profitability. Porter's value chain analysis identifies
internal capabilities of the company which helps the organisation enhance practices which add
value to the firm. Information technology is a signification contributor in growth and long term
survivability of the company as it increases efficiency of various business operations.

REFRENCES
Books and journals
Avgerou, C. and Walsham, G. eds., 2017. Information technology in context: Studies from the
perspective of developing countries. Routledge.
Beirne, M. and Ramsay, H. eds., 2018. Information technology and workplace democracy (Vol.
6). Routledge.
Bueno, S. and Gallego, M.D., 2017. Managing top management support in complex information
systems projects: An end-user empirical study. Journal of Systems and Information
Technology.
Chuang, S.P. and Huang, S.J., 2018. The effect of environmental corporate social responsibility
on environmental performance and business competitiveness: The mediation of green
information technology capital. Journal of Business Ethics, 150(4), pp.991-1009.
Hills, J., 2018. Information technology and industrial policy (Vol. 20). Routledge.
Holm, D.B., Drogendijk, R. and ul Haq, H., 2020. An attention-based view on managing
information processing channels in organizations. Scandinavian Journal of
Management, 36(2), p.101106.
Libicki, M., 2016. Information technology standards: quest for the common byte. Elsevier.
Lioukas, C.S., Reuer, J.J. and Zollo, M., 2016. Effects of information technology capabilities on
strategic alliances: Implications for the resource‐based view. Journal of Management
Studies, 53(2), pp.161-183.
Liu and et. al., 2016. The configuration between supply chain integration and information
technology competency: A resource orchestration perspective. Journal of Operations
Management, 44, pp.13-29.
Madon, S. and Krishna, S. eds., 2018. The digital challenge: Information technology in the
development context. Routledge.
Saffady, W., 2020. Managing Information Risks: Threats, Vulnerabilities, and Responses.
Rowman & Littlefield Publishers.