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Question:

Task A:  Provide a table that presents a brief description and key references of concepts and tools with respect to organisational resources and capabilities.

Task B:  Provide table(s) and/or figure(s) to illustrate the application of value chain analysis to this case study. Show where and how key capabilities are developed, employed and managed.

Task C:  Drawing on your value chain analysis and on concepts / tools outlined in Task A:

Undertake a VRIN analysis. Identify the capabilities which underpin Dyson’s sustained and / or temporary competitive advantage.

Develop strategy implications in relation to Dyson’s strengths and weaknesses.

 

Answer:

Patch 1 “Inside Dyson-a distinctive company”

Task A:

Concepts and tools with respect to organizational resources and capabilities

Inside Dyson- Resources

Capabilities

Physical resources

·         “Inside Dyson- the distinctive company ” has its head quarters at the rural part of West England

·          The company has the collaboration of 350 engineers and scientists working together along with countless ground staffs and usual personnel (MacIntosh and Maclean, 2014).

·         “Inside Dyson” has 20 specialized laboratories and 120 testing stations in operation with the largest testing facilities at Malaysia

·         The business operation in UK employ around 1200 varied workforce: some are freshly qualified, some with experience, whereas some invent ‘way out’ ideas.

·          

Corporate

·         “Inside Dyson” has the capability to apply engineering to functional problems in a pattern that respect design as an art (Bianchi, 2012).

·         Clear corporate level of commitment in the process of product development with half of organization’s profit is channelled in creativity of new ideas

·         Creativity of new ideas is based on the following four key attributes: thinking, testing, breaking and questioning (Bowen and Bowen, 2014).

 

Human Resource

·         Engineers are given the freedom to develop innovative ideas and bring them to life

·          Organizational culture support the adaptation of unconventional routes and taking new risks (Kunc and Kazakov, 2014).

·         Creative and courageous employees are given the opportunity to make a difference

Business

·         As the name suggest “distinctive”, the company is established on the ground of innovative products distinctive from its competitors in design and engineering (bag less vacuum cleaners, time and energy efficient hand-dryers, desk fan with no blades)

·         Products by Dyson are distinctive and marketed as robust in the developed economy (Antràs and Chor, 2013).

·         The company has developed sound-absorbing panels to in order to ensure privacy of business conversation

 

Functional

·         Advertisement of products in bright colours featuring James Dyson

·         Products are produced in vibrant eye catching colours that stand out of the crowd (Levchenko et al. 2011).

·         The firm’s central focus of promotion is through personal brand and James Dyson’s own image

·          The organizational culture of Dyson is defined by its adaptation of unconventional routes and risks

 

 

Task B: Value chain analysis

Value chain is a vital form of analysis on businesses by which the company decompose into its constituent parts, seek to identify sources of competitive advantage in the value generating activities of “Inside Dyson”. Moreover, the company can achieve competitive advantage in the industry, if it is enable to develop and integrate its value chain activities in a cheap rate or better differentiated than its competitors (Drost et al.2012).  Thus, the value chain of “Inside Dyson: a constructive company” is developed by the activities generating added value and the margins it contribute.

Value Chain is divided into two distinct parts i.e. Primary activities and Support activities

Inbound Logistics

Operations

Outbound logistics

Sales and Marketing

Services

The “Inside Dyson” manufacturing plant is located at rural part of West England, consist of 350 engineers, scientists and countless personnel  invent distinctive products. Company maintain control on its secrecy, by access to building and subsequent areas via thumb print and develop sound-absorbing panels for product meeting and inbound logistics

Vacuum cleaners, hand dryers, desk fans, control sliding kitchen, robotic vacuums with the success of iRobots(Porter, and  Kramer, 2011).

The manufacturing of Vacuum value chain is in Malaysia and hand dryers at China, as the labour and cost of warehousing are cheap (Dyson, 2014). Testing facility nearer to the supplier maintains the quality standards. The consumer products are distributed across 45 countries, including competitive markets of china, Japan and UK(home)

Dyson products are distinctive and innovative, be it bag less vacuum cleaner, energy and time efficient hand dryers or with no blades (Churchill et al.2013). The products are easily identifiable with its bright colour variation and robust feature, promotion is done through Dyson’s own image and personal brand. Dyson won online and retail outlets to conduct the major distribution functions

Design is deeply embedded in engineering and protected by IP rights

 

Infrastructure

The company has large testing facility in Malaysia and operating continuously over 120 testing stations. With its head quarter at West England, the operation in UK employs 1200 varied workforce: some freshly qualified, some experienced and some with ‘way out’ ideas (Genn et al.2014).

Human Resource management

Creative ideas of employees are encouraged and rewarded who promotes engineering and design. Staffs are encouraged to process their ‘way out’ ideas’ and cost is rewarded for their efforts. Dyson HQ is the home of 350 engineers, scientist and countless ground staffs (Stickney et al.2011).

Technology development

The company emphasize on design and development of innovative products with amalgamation of engineering and art. Half of its profit is ploughed back for developing and testing 1000 of prototypes. Dyson’s commercially successful vacuum product is developed using cyclone technology.

Procurement

Procurement is done nearby the suppliers of raw materials, and the prototypes are tested thoroughly for zero defects in procurement stage (Ogasawara et al.2014). The manufacturing part of vacuum value chain is in Malaysia, and later the hand dryers in Nanjing in China

 

Task C: VRIN analysis and Strategy implication respective to Dyson’s strengths and weaknesses

 

Valuable

Rare

Imitable

Non-substitutable

The prestigious brand name Dyson, and brand awareness is an asset that possess intangible value to the firm.

The product design at Dyson is deeply embedded in engineering and has the capability to operate in a radically different way, thus making their products rare in comparison to competitors. Resources are rare, each product is patent thus preventing other companies to use such technologies.

Dyson considers that the amalgamation of design engineering with and manufacturing is magnificent in development of innovative products and also generate inimitable competencies that are protected through patent(Friedlander et al.2013).

Patent and innovation makes its products non-substitutable that starts from bag less vacuum cleaners, time and energy efficient hand dryers, desk fans without blades (Takashima et al.2012). Dyson’s vacuums are patented with ball technology, hand blender wipes off water using less energy, and desk fan has 11 patent applications and thus are non-substitutable.

 

The strength of Dyson Company is centred on its protection of Intellectual copyright by the patenting process of every innovative product. It private ownership, secrecy and international availability of the product has allowed the company to give consumers value for their money. The weakness will incur when a patent expires or when the government changes its policy towards the proprietary technology, which finally generates great deal of dependence on the promotion part (Friedlander and Yeh, 2012).

Dyson has strictly protected its secrecy from competitors who might attempt to find the company’s strategy, however owing to the value chain it has created; competitors of Dyson find it difficult to imitate its product characteristics and price in terms of quality and durability (MacIntosh and Maclean, 2014). Such an approach will maintain sustenance of the company, till a more powerful technology intervention appears with the aim to develop better R&D capacities.

 

PATCH 2- Reorganization of “Sony Corporation”

Task A: Organizational structure and management system

Organizational structure

Management system

The plan of a new organizational structure for Sony involve the following:

·         8 out of 57 manufacturing sites are closed

·         Reduction of 16000 workforce

·         Expectation to reduce cost by ¥300 billion (Bowen and Bowen, 2014).

·         All parts of Sony to work together and transformation of company into more innovative, agile and integrated company

The management plan was focussed on:

·         Revitalizing the electronics business

·         Improvement of profit by reducing the business categories and models of product.

·         It aimed at removing the redundancies and overlap business processes

·         Focus on resources that constitute high growth business of Sony i.e. Mobile products, HD products, network-enable appliances and products, semi-conductor component device (Bianchi, 2012).

·         “Sony United” was an initiative to unite company and enhance cross-collaboration

Business groups

·         Electronics business group

·         Entertainment business group

·         Games business group

·         Sony financial holding group

·         Unite and streamlining of Sony’s existing and professional equipment businesses

·         B to B solution services and Felica businesses (Kunc and Kazakov, 2014).

·         Development and growth in the emerging market

·         B2B solution business group

Short term management measures, such as:

·         Reduction in operational expenses and lowering of inventory cost

·         Planning include adjustment of product pricing

·         Withdraw from downsizing unprofitable businesses

·         Delay of investment in semiconductor and television plants

·         Realignment of overseas and domestic manufacturing sites

 

Development of two cross-company units

·         Common software technology team that develop and implement integrated technology and software solutions (Antràs and Chor, 2013).

·         The other unit looks after manufacturing, logistics,

·         procurement team was responsible for efficient supply chain solutions

 

Structural constraints to their structure

The “Silo culture” of Sony corporation prevent effective communication and cooperation across different divisions, when a problem arises

Tradition bound mentality and its prime focus on developing Analog machines in a competitive digital world(Levchenko et al.2011).

The recession reduced the rate of consumer spending on premium electronics product thus affecting the business

High manufacturing cost of playstation 3 and reduced sales

Task B

The adverse implications of frequent restructuring at Sony Corporation

The several restructuring programs of Sony Corporation initiated since 1994, however the initiatives have failed to attain the desired result. The adverse impact gives rise to “silo culture” within the organization that prevents effective communication and cooperation across its departments whenever a problem or issue arises. Frequent restructuring has adverse impact on its earning (Drost et al.2011). On slash down of its net profit from ¥520 billion to ¥120 billion, the Japanese export became uncompetitive thus affecting the sales of its digital cameras and LCD television. The drastic reduction in workforce (elimination of 16000 employees) and closing down of 9 factories were not profitable. Moreover, out of 1000 Sony subsidiaries and affiliates, one-third of them were not involved in the core business of electronics and entertainment business (Porter and Kramer, 2011). This has significant impact on customer loyalty and reliability of the brand was questioned by Sony customers.

Although initiating short term measures like reduction in operational expenses and inventory cost, product pricing and downsizing from unprofitable business, realignment of manufacturing sites, Sony had failed to deliver operational efficiency and ineffective to anticipate challenges and fail on execution every time due to its inappropriate management system(Dyson, 2014). According to various analysts, the challenge of changing culture of an iconic brand is more difficult than to deal with the electronic industry of consumers. The various costs incurred during the restructuring process which in turn impact the profitability and operational efficiency of company.

Task C

Reorganization in February 2009

Stringer’s reorganization plan focussed on electronics and game business of Sony. This was aimed to strengthen the company’s competitiveness and profitability. Stringent propose two forms of business groups eliminating five business groups mentioned in the previous context. The two groups were- New consumer product group and network product service group.

The network product & service group consider Sony personal computers, mobile products, Sony media software and services (Churchill et al.2013). It aims to develop new products using Sony technology and intended to increase the pace of innovation and lead to higher profitability.

Expansion of Playstation network platform was another reorganizing initiative by Stringer. Again, the new consumer product group consider digital camera, television, home audio and video business of the company. Another area of interest encompasses the Sony’s development in the emerging target market (Genn et al.2014). The plan also involved closing of 8 manufacturing sites out of 57 and reducing 16000 workforce.

As a significant part of reorganization efforts, Stringer created two-cross company units. The first team was Common software technology emphasize on implementation of integrated technology and software solution. This group also concentrated to coordinate software development services (Stickney et al.2011). The other unit include manufacturing, logistics and procurement team. This team was successful to ensure efficient supply chain solutions for Sony Corporation.

The reorganization by Stringer speed up the network production of products and services. This approach proved to be helpful in coordinating various divisions of Sony to work together in tandem.  The reorganization initiatives effectively address the issue of prevailing “silo culture” within the organization. Moreover, the reorganizing effort reshuffles the position of top executives giving out all power to Stringer (Friedlander et al.2013). However, the proposed reorganization was neither successful in changing the business model of Sony Corporation, nor it intensify the operation fundamentals of Sony. The last attempt by Stringer failed in May 2009, where the Japan-based multinational company, Sony Corporation experienced a loss of ¥98.9 billion at the end of fiscal year March 2009(Takashima et al.2011).His attempt was unsuccessful to dissolve the “silo culture” as Stringer’s effort was to unite different silos that existed within the organization failed.

 

Reference List

MacIntosh, R., and  Maclean, D. (2014). Strategic Management: Strategists at Work. Palgrave Macmillan.

Bowen, G., and  Bowen, D. (2014). STRATEGY FORMULATION AND UNCERTAIN ENVIRONMENTS. READINGS BOOK, 22.

Bianchi, C. (2012). Enhancing performance management and sustainable organizational growth through system-dynamics modelling. In Systemic management for intelligent organizations (pp. 143-161). Springer Berlin Heidelberg.

Kunc, M., and  Kazakov, R. (2014). Visualising Strategies: The impact of user interpretation of a strategic decision support system

Antràs, P., and  Chor, D. (2013). Organizing the global value chain. Econometrica,81(6), 2127-2204.

Levchenko, K., Pitsillidis, A., Chachra, N., Enright, B., Félegyházi, M., Grier, C., ... and  Savage, S. (2011). Click trajectories: End-to-end analysis of the spam value chain. In Security and Privacy (SP), 2011 IEEE Symposium on(pp. 431-446). IEEE.

Drost, S., Van Wijk, J., and  Mandefro, F. (2012). Key-conditions for successful value chain partnerships. The Partnerships Resource Centre Working Paper,33.

Porter, M. E., and  Kramer, M. R. (2011). Creating shared value. Harvard business review, 89(1/2), 62-77.

Dyson, S. (2014). Recognition of lameness: Man versus machine. The Veterinary Journal, 201(3), 245-248.

Churchill, J., Dyson, J., Gammack, P. D., Hackwell, P. C. C., Nicolas, F., and  Macnaughton, R. (2013). U.S. Patent No. 8,347,521. Washington, DC: U.S. Patent and Trademark Office.

Genn, S. L., Lesniowski, C., and  Courtney, S. B. (2014). U.S. Patent No. 8,776,310. Washington, DC: U.S. Patent and Trademark Office.

Stickney, T. N., Gammack, P. D., and  Dyson, J. (2011). U.S. Patent Application 13/248,803.

Ogasawara, S., Ito, M., Ishihara, H., Hamada, N., and  Miyazaki, S. (2014). U.S. Patent No. 8,672,767. Washington, DC: U.S. Patent and Trademark Office.

Friedlander, S., Young, D., and  Yeh, S. T. C. (2013). U.S. Patent No. D682,856. Washington, DC: U.S. Patent and Trademark Office.

Takashima, K., Uchida, J., and  Takahashi, Y. (2012). U.S. Patent No. 8,174,495. Washington, DC: U.S. Patent and Trademark Office.

Friedlander, S., and  Yeh, S. T. C. (2012). U.S. Patent No. D667,023. Washington, DC: U.S. Patent and Trademark Office.

Grünig, R., and Kühn, R. (2015). Strategy Planning Process. In The Strategy Planning Process (pp. 41-52). Springer Berlin Heidelberg.

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