Global Strategy- Dyson and electric car industry
On September 26, 2017, Financial Times announced that Dyson, a British technology group led by Sir James Dyson, famous for its bag less vacuum cleaners was working on a premium electric car to go on sale in 2020. Dyson enters the motor industry at a time of intense change and disruption. The company behind the eponymous vacuum cleaner and hand dryers has been working on electric battery technology for almost two decades. Over the past two years it has built an automotive team of 400 engineers, drawn from manufacturers including BMW, Aston Martin and Tesla, and is preparing to use its research to give it the edge in a ferociously competitive sector. “We know this is a crowded market,” said founder James Dyson as he announced that the company would spend £2bn on the car and battery technology. He also predicted that the automotive business would outgrow the rest of the company “quickly”. It will spend £1bn on the battery and £1bn on designing and making the car, with the promise of future models to help recoup the investment. Sir James said he expected to make a profit on the venture. The money is part of a £2.5bn investment plan that had already been announced by the company. He said the remaining £500m would be used on the group’s other products. Andrew Bergbaum, managing director for automotive at AlixPartners consultancy, said the timeline of building a plant and launching a car by 2020 was “very ambitious” and the company was likely to incur “years of losses” before recouping its investment. Familiarise yourself with Dyson’s commitment to enter the electric car industry by reading research around Dyson and electric car industry. Selection of research to get you started is available on Financial Times. Dyson plans 2020 launch of electric car, Financial Times, September 26 2017 Dyson’s plan to join electric car race a big gamble, Financial Times, September 27, 2017 Dyson aims to clean up where other car maker’s failed, Financial Times, September 29, 2017 Electric vehicle ambitions spark race for raw materials, Financial Times, October 27 2017 Dyson bets on electric cars to shake up industry, Financial Times, February 14, 2018 (all articles available online) Question 1: Using Porter’s five forces and PEST framework analyse the main forces that have an impact on profitability in the electric car industry. (500 words) Question 2: Dyson is at the ‘introduction’ phase of the electric car industry lifecycle. What according to you could be the first mover advantage (if any) in this industry for Dyson? (250 words) Question 3: What are Dyson’s unique resources and capabilities (if any) that gives it the market power to enter this fiercely competitive market? (250 words) Question 4: If you were invited to a lunch with James Dyson at his home in Gloucestershire with a specific mandate to provide a set of strategic recommendations that will enable Dyson to build a sustainable competitive position within the fast-changing electric car industry, what would your strategic recommendations consist of?