1.

Introduction

In the international business environment, companies could not simply maintain their operations

internally, because some external factors such as geopolitical, economic, and legal in business

environment have caused great challenges. One top household appliances provider, Dyson, are

experiencing some problems caused by these external factors in a changing environment. In this

report, it will offer a macro analysis regarding Dyson international businesses influenced by the

external factors. In the first section, the report will discuss the current businesses and markets of

Dyson. Based on that, the second section will focus on three types of challenges faced by the

company, including geopolitical, economic, and legal. In the third section, how Dyson company has

conducted their internationalisation strategies will be analysed. Finally, recommendations will be

provided for addressing the macro environmental problems encountered by Dyson, with a conclusion

of this report.

2. Current Business and Market

Dyson company is headquartered at Wiltshire, England, and founded by Sir James Dyson in 1991

(Dyson 2020). It is a world-leading company in technology industry. The main focuses of Dyson are

designing and manufacturing household appliances such as vacuum cleaners, hand driers blade-less

fans and heaters. With its international operations in over 65 countries (Dyson 2020), it has a strong

growth in the current international business environment. From fiscal year 2010 to 2018, the

worldwide revenue has increased from £0.89 billion to £4.4 billion (Holst 2020).

Dyson maintains a highly upward growth due to its precise market strategies. Rather than serving for

the general market of household appliances, this company focuses on middle-class consumers which

is a fast-growing segment. While the British domestic market, the European market and the North

American market supports Dyson’s growth, its regional revenues in Asia-Pacific such as China,

Indonesia, and Philippines, have accounted for more than half of its sales and profits (Pooler 2017).。

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The view of a global technology companies is confirmed by Jim Rowan, the CEO of Dyson (Freedland

2019).

Moreover, Dyson is an innovation-driven company that boosts business success through long-term

R&D rather than continuing to sell ordinary products. In 2018, it spent around $12 million per week

on R&D, and by 2020, the company expects to hire additional 3,000 engineers globally, with £2.5

billion investment to further reinforce its international capabilities (McConnell 2018). Currently, the

company has R&D teams in the UK, the USA, Singapore, and Malaysia, whereas its production

activities are mainly based in Singapore and Malaysia. Apart from these core activities, innovation

has a positive impact on every stage of Dyson’s business process including design, engineering,

patenting, sales, customer care and after sales (Business Case Studies 2019). All the effort results in

better market performance than its international competitors such as Shark, Electrolux, Techtronic

Industries (TTI), Philips and Société d' Emboutissage de Bourgogne (SEB) (Denny'S Cleaning World,

2018).

A recent event may have a deep impact on the future strategic direction of this company. At the

beginning of 2019, Sir James Dyson announced that Dyson will move the headquarter to Singapore

due to the dissatisfaction with EU/UK bureaucratic restrictions (Neate 2019). The imbalance between

input and output in the UK may be an important reason. While more than half of the employees are

in the UK division, only 4% of its £4.4 billion annual sales were generated from the domestic market

（Pooler et al. 2019 ；See Figure 1). Although the tax rate for corporate in Singapore is 17% that is

2% below the tax rate in the UK, Singapore’s strongest appeals for foreign companies would sharply

decrease the tax to 0% if Dyson implemented the plan（Pooler et al. 2019 ；See Figure 1). In this

way, the change of market reliance and policy incentives promoted the company to do so. However,

this plan would be implemented in 2021, leaving the company another one-year-time to consider

whether and how the plan would be practiced (Pooler et al. 2019).

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 Dyson’s workforce and sales in countries

(Source: Pooler et al. 2019)

3. Geopolitical, Economic and Legal Challenges

Presented in Figure 2, there are different geopolitical, economic, legal, social, technological, and

environmental factors that are influencing Dyson company. This section will focus on the geopolitical,

economic, and legal aspects because they tend to become increasingly challenging for Dyson based

on the current situations of the international business environment.

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 • Brexit
Geopolitcal • Anti-globalisation sentiment

• Global supply chain

• Uncertainties of post-Brexit
Legal • intellectual property challenges in Asia

Social • Changing customer behaviours

Technological • Industry 4.0

Environmental • Sustainable operations

Figure 2 PESTEL Factors influencing Dyson company

One of the most challenging geopolitical problem for Dyson company may rise from the Brexit. Sir

James Dyson was an opponent of Brexit. However, once he announced the plan of moving the

headquarter to Singapore, a part of British public opinions accused this plan as a ‘staggering

hypocrisy’ because he received over £5 million European farming subsidies since the 2016

referendum (Duffield 2019). Once the company moves out of the UK, it would not be viewed as a

‘British’ company that benefits the domestic society through creating local employment, paying tax,

and training innovative labours, but a multinational institution offering such benefits to other countries.

The domestic criticism against Dyson company is related to the debate about the neoliberal

globalisation. Ideally, the neoliberal globalisation requires free market, international institution and

organisation, and multilateral trade agreement. However, the membership in the European Union did

not create benefits as much as the UK expected. Under this context, the success of the Brexit signals

a revival of nationalism and protectionism in the country, which becomes a strong willingness to not

be constrained by the EU membership (Blockmans 2016), but highlights the independence and

sovereignty of the country. Further argued by Peters (2017), Brexit also implies a peak of anti-

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globalisation sentiment which may result in an end of neoliberal globalisation but a rise of authoritarian

populism. In this way, while Dyson’s plan still follows a perspective of neoliberal globalisation to

maximise their self-interests, the timing may be inappropriate when the British national interests being

prioritised. The exponents of Brexit that developed the anti-globalisation sentiment may view Dyson’s

shift as an ‘escape’ that may lead to a credibility crisis for the company in the environment of the home

country, because it would fail to be responsible of the British society.

3.2 Economic Challenge

Due to the vulnerable economic globalisation, how to reallocate its supply chain becomes increasingly

complicated for Dyson, which would challenge its further economic growth. In a globalised

environment, supply chain of firms highlights the importance of interconnection among countries

based on international labour division and specialisation (Mittelman 1995). For Dyson, its supply chain

also follows this model. The R&D function is networked among the UK, the USA, Singapore, and

Malaysia, whereas the manufacturing processes based in Singapore, and Malaysia. These sites

support the company’s international sales (Dyson 2020).

However, some recent challenges are shaking the globalisation. The slowdown in international trade

growth, stand-off on trade agreements, and the growth of anti-immigration in some countries weakens

the international confidence in globalisation (Peters 2017). Moreover, the US-China trade war (Brown

2018) and the global threats of the Coronavirus (OECD, 2020) intensify the risks of economic

globalisation because stages of a firm’s supply chain have been highly connected from country to

country

Especially in the current Coronavirus epidemic, 94% of the Fortune 1000 companies’ supply chain

has been disrupted (Sherman 2020). This does not only mean production delays and inventory

shortages, but also show that the whole supply chain would be influenced even if only one procedure

stops. Dyson’s competitors, such as Shark, Electrolux, and Philips, heavily rely on manufacturing and

semi-finished components from sites in China (Denny'S Cleaning World, 2018). Compared to that,

Dyson may be less affected by the supply chain shocks of the Coronavirus.

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Nevertheless, the company would not maintain their supply chain efficiency and effectiveness at a

global scale, unless its supply chain has the improvement in resistance to those uncertainties and

side-effects of economic globalisation.

3.3 Legal Challenge

Whether Dyson would remain the UK-based market deployment or move to Singapore is still

questionable, the company must adapt itself into a new legal environment that evokes uncertainties.

If the headquarter remains in the UK, the legal adaptation depends on the relationship between EU

and the post-Brexit UK. Based on the current situation of the Brexit, the UK has a temporary ‘Norway’

model to shape its relationship with the EU, in which this country would have access to the Single

Market through exiting the EU but participating in both European Economic Area (EEA) and European

Free Trade Association (EFTA) (Clavero et al. 2017). However, this scenario will only keep in the

transition period from 1 February to 31 December 2020 (EFTA 2020). Once the UK quits from the

EEA and EFTA, the country has to seek an alternative free trade agreement. Otherwise, all the UK-

based companies should fully rely on the rules of the World Trade Organisation (WTO). Although

Dyson would still comply with EU laws about product standards and competitions, the company would

soon lose the four freedom rights (including free movement of goods, capital, services, and labour)

within its EU markets once the UK exist the Single Market position (Harmon, 2019).

Dyson would also face intellectual property (IP) issues after moving the centre to Asia. While

Singapore offers a legal environment with the Asian-top position of IP rights protection, the general

IP protection in Asia may be less well-run than that in Europe or in the North America. Although IP

protection laws in Indonesia have met the minimum standards under WTO’s Trade-Related Aspects

of Intellectual Property Rights, IP infringements and piracy are still rampant in the country (Reid 2012).

For China, the rise of IP protection is improved from legislative and legal foundation, but patents and

IPs held by both Chinese and foreign companies still experience misappropriation problems (Reid

2012).

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These two countries serve as important nodes in Dyson’s global supply chain and profitable end-

consumer markets. From 2013 to 2018, Dyson has won a legal battle over EU energy labelling laws

(Morrison 2018). However, it is less likely to see the similar success if it moves the headquarter to

Asia due to the less developed legal environment of IP protection.

4. Internationalisation Strategy

Dyson adopts different entry models for different types of foreign markets and focusing on particular

stages of its international supply chain. In particular, to enter some developed countries, Dyson

created its wholly owned subsidiaries, such as Dyson France, Dyson Canada Limited, Dyson Ireland

Limited, and Dyson Singapore Pte Ltd. Although this model is very costly and associated with

concentration of risks and lack of operational flexibility (Hill et al. 1990), these establishments support

the company’s strategic direction in a long-run perspective due to the high controllership of the

subsidiaries. Also, as the developed countries have better infrastructure conditions, a greater number

of highly skilled labours, and stronger economic and legal environment than developing countries, the

subsidiaries would develop organically with stable performance.

Joint venture is another investment strategy used in Dyson’s entry model. Focusing on R&D, joint

venture allows Dyson to combine its own advantages of technologies and IPs with local partners’ high

levels of understandings and knowledge about the local market environment and consumer

behaviours, so that better products adapted to the local market can be designed and manufactured

(Ireland et al. 2009). For instance, a joint venture with a total spending of RM 10 million is created

between Dyson and Meiban Group Ltd in order to increase its production of washing machine to 4,000

units a month (with a full capacity of 12,000 units a month) (Musa 2004). The latter company is

headquartered in Singapore and has manufacturing facilities in Malaysia and Shanghai. Through the

joint venture, Dyson does not only develop the familiarity of Asian markets, but also increase its

geographic diversification.

In countries that do not have a wholly owned subsidiary, Dyson manages sales through the model of

franchising. This entry model allows the company to increase its market presence in a new market
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quickly, with much less costs and risks (Sashi and Karuppur 2002). The Dyson (Shanghai) Co., Ltd

is a good example to articulate this. Established in 2013, this franchisee is responsible for export and

import of electronic components, end-sales and post-sales serves. In 2016, Dyson sales in China

increased 343%, and its market share of vacuum cleaner comprises 61% in China in 2018 (Shen

2019).Such a rapid sale growth is attributed to the advantages of the franchising model. Dyson itself

could not bring more profits out of Chinese market as the majority of income is owned by the

franchisee. However, this model allows Dyson brand to acquire high customer awareness through

both the online and offline presence.

In general, Dyson’s entry strategies fit the Uppsala Internationalisation Model (see Figure 3) in which

a multinational corporate improves the level of internalisation through increasing market commitment

and increasing geographic diversification (Johanson and Vahlne 1977). Based on particular

conditions in foreign markets, Dyson makes deliberate choices in using either direct investment or

contractual entry models. However, as the international business environment is dynamic, non-linear

and evolving (Benito et al. 2009), Dyson’s operations in internationalisation are much more complex

than the theoretical model.

Figure 3 Uppsala Internationalisation Model

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 (Source: Digitpro, 2012)

5. Recommendation and Conclusion

Based on the analysis above, the macro-environmental challenges faced by Dyson can be considered

as compositional. Within that, as the company has deployed its business process in different countries,

its international supply chain would be the most sensitive to those geopolitical, economic, and legal

issues simultaneously. In this sense, the supply chain must be improved in response to high

geopolitical and economic uncertainties and to possible operational barriers triggered by legal

problems.

In details, due to the existence of economic and political uncertainties, Dyson may choose to further

diversify its sites of supply chain. This may require the company to reassess its strategies and supply

chain with the influences of the disruption from of Brexit and the global Coronavirus epidemic. Based

on that, it may further decentralise its European centre in the UK and the Asia centre in Singapore

and Malaysia, which can be achieved through more contractual agreements and joint venture in

neighbouring countries and integration of more reliable partners. By diversifying the sites, it would

help the company to maintain the over supply chain operations when regional political or natural

threats disrupt a part of the system (Vakharia and Yenipazarli 2008). However, despite the risk

diversification, the negative impact of the Coronavirus would be inevitable for its international supply

chain. It may also urge Dyson to improve its resilience of supply chain, which can be developed

through supply alliance network, lead time reduction, and recovery planning systems (Tang 2006). By

doing so, the company’s global supply chain would be more agile and responsive to unpredictable

macro-environmental challenges.

Optimisation of supply chain is not adequate for Dyson addressing all the challenges. To fulfil its social

responsibilities if the headquarter is moved to Singapore, Dyson must follow Jim Rowan’s promise of

continuing to pay tax in the UK (Neate 2019). Otherwise, Dyson would lose more public trust of British

stakeholders because the CEO’s words may be treated as lip service for the UK society or an ethos

strategy that would never materialise (Amo-Mensah and Tench 2018). However, whether a
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multinational company should either be a national asset or a global one is still controversial. While

nationalism is increasing in the UK, the top managers and shareholders of Dyson should be very

careful about the strategies of public relation when communicating to the public.

In addition, the company has strong legal capabilities in dealing with IP problems internationally, but

itself could not solve all infringements and misappropriations, especially in the general Asian markets.

It must collaborate with third-party institutions related to IP protection in host countries, such as local

authorities, legal consultancies and industrial associations. In this way, all the geopolitical, economic,

and legal problems would be addressed.

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