Dyson, the British manufacturer of a variety of electrical appliances such as vacuum cleaners, hair dryers, and a future electric car, announced its decision to relocate the company’s headquarters to Singapore in early 2019. The move does not imply a reduction in its activities in the country, as it will retain all of its English facilities at full capacity, but it means that the company will no longer be registered in Britain. The change also suggests a shift in the focus of Dyson’s operations from Europe to the Asian market. This case study intends to analyse available information and determine the reasons behind the decision using several theoretical perspectives.
Official Reasons
The goal of every company is to achieve stable growth regardless of the state of the market. The notion aligns with one of the reasons provided by Dyson, which is future-proofing by focusing on the Asian market (Higgins, 2019). The area has a massive population and is undergoing rapid economic development at the moment. A company such as Dyson, which produces non-essential but convenient goods, is going to encounter increased demand as the wealth of Asian nations grows and they begin to transition into developed countries. By contrast, Europe’s need for the firm’s products is mostly stable and unlikely to grow at a significant pace. As such, the existing facilities in Britain should be able to maintain a sufficient supply while the company develops elsewhere.
Dyson has denied the existence of other motivations, maintaining that the growing importance of the Asian market is the primary motivator. According to Higgins (2019), its chief executive stated that while reasons such as the impending departure of Britain from the European Union and the difference in tax rates did not matter. However, it should be noted that James Dyson, the company’s founder and director, is in favour of Brexit and has used Singapore as an example of the success the UK could achieve (Higgins, 2019). While the political climate might not have influenced the decision to leave Britain, the businessman’s opinions may have helped the executives settle on the city-state as the destination.
Investigation Perspectives
Numerous economists have expressed the opinion that Dyson’s reasoning was not convincing and attempted to search for other motives behind the move. The first area of interest was in the refutations provided by the company, namely the political climate and taxation. While James Dyson is a proponent of Brexit, the move may be interpreted as an expression of the company’s lack of confidence in the country’s ability to sustain itself and its businesses. The damage in the relations with the European Union can also be compared with the situation in Singapore, which has established a free trade agreement with the bloc (Schaverien, 2019). As such, it is possible that Dyson did not want to deal with the complications that would result from the separation.
Taxation is another concern that permits for two opposing views to be adopted. Doward (2019) notes that the company’s claim that the differences are irrelevant is superficially valid, as its operations pay taxes locally. There would be few immediate changes in the structure of the company’s payments, and the overall amount would not change much in the short term. However, the situation changes considerably once a long-term view is adopted, and the future growth of the company is included. Doward (2019) notes that Singapore’s relaxed approach to intellectual property taxation would allow Dyson to gain significantly if its electric car business succeeds. The UK does not offer the same benefits, reducing its attractiveness despite its patent box remaining beneficial.
The notion that Dyson plans to concentrate its future business activities on electric cars and wants to move to a more desirable location in terms of intellectual property taxes is supported by its past actions. Jarvis (2019) notes that the company revealed plans to construct its automobile construction plant in Singapore in 2018. The choice is a part of an ongoing trend where Dyson’s manufacturing facilities have been moving to Asia (Jarvis, 2019). The decision to begin shifting its base of operations to the city-state was likely made back during that time or before it. The move would achieve the two goals of improving profits and capturing the Asian market at the same time.
Lastly, Singapore is an excellent environment for businesses in general, making a relocation desirable for many companies. According to Jamrisko (2019), Singapore has some of the lowest taxes in the world, many free trade agreements, a stable political climate, and a high propensity for innovation and contract enforcement that foster competition. The last trait is particularly relevant, as James Dyson has expressed its disapproval of the protectionist nature of the European Union in the past (Tsang, 2019). The location is not perfect, but it suits many of the needs of many varieties of companies, including those of Dyson. The firm is planning to participate in the growing trend of replacing traditional cars with electric ones, and an environment that is open to new ideas would assist it in its attempt.
Strategy Analysis
Dyson’s decision to move to a different country can be associated with numerous reasons. Each was likely considered by the management along with the disadvantages of adopting such a strategy. Ultimately, the executives determined that the change was consistent with the company’s goals and offered sufficient advantages over its situation at the time to warrant the investment. As such, an investigation using theoretical frameworks should be able to discover those considerations and provide an estimation of the soundness of the strategy. This part of the case study will give several perspectives on the circumstances surrounding the shift and attempt to determine the most important ones.
The Influence of the Asian Market
As the chief executive of Dyson mentioned in an announcement, an increasing proportion of its products are being sold in Asia, and much of its manufacturing power is located in the region, as well. Thus, the strategy may be analysed from a stakeholder perspective using the hypothesis that the relocation is due to the company’s intent to move closer to its primary parties of interest. As Wasieleski and Weber (2017) claim, some varieties of stakeholders can influence a company’s behaviour, while others may be affected by its actions. Furthermore, Bonnafous-Boucher and Rendtorff (2016) note that companies tend to identify such entities and compare their impact on the company to make decisions. As such, understanding how the framework of the parties associated with Dyson will change as a result of the move is vital to comprehend the reasons behind the move.
The primary stakeholders of most companies are customers, as they are the people who deliver an overwhelming majority of the profits. If Jim Rowan’s claim that Asia is its largest market (Gold, 2019) is valid, then the relocation is consistent with its consumers’ interests. Dyson will be able to cater to the needs and interests of the majority of its consumers through increased proximity to them. Gold (2019) also notes that Asia is the largest electric car market in the world, which suits Dyson’s plan for the future. It will be able to offer competitive prices due to the reduction in costs associated with transporting its products to the area, such as transportation costs and customs fees.
The move does not affect another prominent stakeholder group, employees, in a meaningful manner. “Dyson to move” (2019) notes that only two senior executives will move to the location and that the work at each of the company’s sites will continue as usual. Furthermore, Dyson plans to expand and create new jobs, creating opportunities for existing workers to attain pay increases and promotions. According to Jolly (2018), the expansion will not be limited to Singapore, with a considerable investment going to the UK division. Neither of the two categories of the company’s employees should have much reason for dissatisfaction with its new strategy.
Shareholders would most likely be highly interested in critical decisions, such as those that define a company’s strategy. However, as “Company Overview” (2019) states, Dyson is privately owned and does not have to concern itself with the stock market. The company’s suppliers should be satisfied with the increased proximity of its manufacturing plants. Local communities would most likely not perceive any significant changes and remain happy with the arrangement. Lastly, while the United Kingdom’s government most likely disapproves of the move, Dyson has complied with regulations. Thus, the strategy appears to be almost entirely desirable or irrelevant where the company’s principal stakeholders are concerned.
Relocation as a Necessity
Dyson has reported considerable growth in recent years, much of which can be attributed to its Asian market. It is also planning a significant investment into a new branch of production, which will be based in the area. As such, the success of the plan is essential to the company, and it will likely do everything it can to ensure the acceptance of its products. However, according to Kostova and Marano (2019), physical and institutional distance complicates management and strategy-making. The differences between the traditional European countries and the emerging Asian markets could force the relocation of senior executives so that they could take a more active role in coordination. As such, it is necessary to evaluate the institutional variance between the two environments.
Developed European countries tend to be capitalistic, with companies competing under minimal government regulation. Fainshmidt, Judge, Aguilera, and Smith (2016) describe those in the Western part of the region as coordinated market economies, where companies in a market prefer to cooperate instead of competing aggressively. The other member states have not achieved a similar level of development yet, and Fainshmidt et al. (2016) describe many of them as collaborative agglomerations. Ultimately, European governments tend to interfere in the market to a minimal degree, allowing companies to compete freely and establish equilibriums through a variety of methods. Dyson’s market experiences to date have been informed primarily by this environment, which does not exist worldwide.
Many Asian countries are transitioning from a period of economically disadvantageous policies and rapidly growing by adopting new, unique approaches. Fainshmidt et al. (2016) describe the most significant players in the market, China and India, as state-led economies, ones where the government plays an active economic role. The degree and power of the interference lead to monopolisation and centralisation of power, which may make entry challenging for a foreign company. Other members in the area, such as Hong Kong and Singapore, are approaching liberal market economies. Competition is intense in such countries, and there is almost no coordination. A prominent Western example of such an economy exists in the form of the United States, and so Dyson may be somewhat more familiar with the structures involved.
Eastern countries are significantly different from those in the West, mainly European states. As Dyson has chosen to invest heavily into the Asian market, success is crucial, and the company wants to eliminate factors such as misunderstandings due to institutional variation. By contrast, Europe is a familiar environment that does not require as much supervision due to the long history of the business in the area. As such, the firm has chosen to move its headquarters to the region to attain a better understanding of the circumstances. Singapore became its choice for the location as it represented a somewhat familiar economy and attracted praise for its qualities by James Dyson in the past.
The Need to Reorganise
Dyson built its brand on technological innovation and offering solutions that other companies could not match. Beginning with vacuum cleaners, it has expanded both its array of offerings and its area of business, eventually entering Asia. It has continued the trend, which culminated in the firm’s current plans to release an electric car, which have not yet gained widespread acceptance. As such, its decision to move to Singapore should have been motivated by a factor that would further the success of the project. This section will use the VRIO framework to determine the specific vulnerabilities or opportunities that are addressed by the move. Organisational structure and culture will receive particular attention due to the nature of the decision.
The VRIO framework concerns itself with a sustained competitive advantage and the factors that contribute to achieving it. According to Peng and Meyer (2016), these influences are value creation, rarity, imitability, and organisation. The model chooses the four terms, expands on their definitions, and concentrates on them for the purposes of analysis. In the case of Dyson, it had sufficient resources to create value, as the process was well underway before the decision to move the headquarters was announced, and the relocation is not associated with direct investments. The focus on creating new technology means that the firm’s facilities remain competitive in a rapidly growing market, such as that of China (McCarthy, 2018). The combination of nearby demand and current designs ensures that Dyson can compete once its cars go on sale.
While electric cars are gaining traction, the product remains relatively rare, as development is expensive and challenging. Hannan, Hoque, Mohamed, and Ayob (2017) highlight some of the issues that prevent environmentally friendly vehicles from becoming the norm in the immediate future. Furthermore, not many companies can offer competitive products due to the young nature of the industry, ensuring that electric cars remain rare. The development costs for electric vehicles also remain high, although Wolfram and Lutsey (2016) warn that this trend may change in the future as prices fall. However, currently, the first three aspects of Dyson’s electric car project remain highly competitive, as it offers an innovative and modern product in a sphere without many current or future competitors.
In terms of organisational culture, matters become more complicated, as there is no objective measure for the metric. Dyson’s headquarters were previously located in the United Kingdom, at a considerable distance from Singapore. As such, it is possible that different cultures evolved in two locations. Hartnell, Kinicki, Lambert, Fugate, and Corner (2016) note that the best results can be achieved when CEOs have an approach that is different from that of the overall company environment. On the other hand, if the views of the two entities are similar, the firm’s performance may suffer. As Dyson chose to move two of its chief executives to Singapore, the assumption that the cultures varied can be made, providing a rationale for the decision.
Conclusion
In addition to the perspectives that were stated by the company and the opinions of various investigators, Dyson’s choice to move its headquarters to Singapore represents a rational strategy. It aligns with the interests of the majority of the company’s stakeholders while not hurting most of the rest. The importance of the company’s electric car project mandates that its CEOs are present to evaluate the situation and understand Eastern institutions. Lastly, it is possible that the Singapore branch of the company has developed a culture that is different from its UK office, and the introduction of new directors can help improve performance.
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