The effects of the environment on a business
In this report I will be undertaking in-depth research into the environment in which businesses
operate and examine different business markets. To do this I will be focusing on one large business
that trades in the European Union (EU) as this will allow me to understand how they operate and
evaluate the different factors which may affect them within the market. The company that I have
chosen to investigate into is Dyson as they are a British international organisation which trade within
the EU.
What the business dose
Dyson is a private limited company that trades with many countries around the world, including
countries within the EU. The company Dyson originated in Wiltshire, England 1987 and was formed
by an entrepreneur called James Dyson. Dyson headquarters remain in Malmesbury which is a town
in Wiltshire (where it originated). The purpose of the company is the manufacture of electric
domestic appliances, such as: vacuum cleaners, hair dryers, washing machines, hand dryers, etc. His
success is due to the innovation of his technology and his self-motivation to make revolutionary
products and designs.
Ownership
Usually large organisations are owned by lots of different shareholders, like Tesco, Apple and
Vodafone because they are public limited companies. This means they can sell shares on the stock
exchange as a method of raising finance. It is rare to have a highly successful company like Dyson to
stay a private limited company because they can only sell shares to close friends or family. In Dyson’s
case the entire company is owned by founder Sir James Dyson because he owns 100% of the shares,
making him the controlling shareholder. Although this may have caused investment issues in the
beginning it is paying off for James Dyson now because he owns all of his company, meaning he
doesn’t have to pay dividends to any shareholders or get their permission for changes to the
company.
Scope
The company is international, selling its products to countries worldwide. Dyson became a global
company by selling its products in over 50 countries, which include: England, Canada, Spain, France,
Belgium, Netherlands, and Germany. Dyson’s main base country is England and the company trades
with the majority of countries in the EU, including: Spain, France, Belgium, Netherlands, Germany,
etc.
Sector
The sectors an organisation can be in are the public sector, private sector and voluntary sector. The
public sector is for organisations that are owned and operated by the government, for example:
NHS, public schools and BBC. The private sector is for organisations that are privately owned and not
part of the government, for example: John Lewis, Apple and Tesco. The voluntary is also known as
the community sector and is there to help the public without thinking about any profit. This means
the voluntary sector is mostly charities because they are focused on helping a specific cause as
,oppose to making a profit. For example: The National Trust, Oxfam and WWF. Dyson would fall into
the private sector because it wasn’t set up by the government and is there to make a profit.
Size
Dyson employs more than 7,000 people worldwide and according to the Telegraph Dyson owns
more land in England than the Queen, owning around 25,000 acres.
Liability
Private limited companies have their own legal identity; this means that their owners are not
personally liable for the firm's debts. This means that if Dyson were to get into debt or financial
trouble then James Dyson (sole owner of the company) wouldn’t lose any of his personal assets.
Main aim
Dyson’s mission statement is ‘Dyson promotes user efficiency and problem solving by ensuring a
customer’s personal and global environment is conducive to productivity.’ This mission statement is
proven through their extensive product lines and adaptation to battle environmental issues, like air
pollution. For example Dyson are currently in the research and development stages of an eco-
friendly car to help reduce CO2 emissions. An example of one of Dyson’s objectives is to launch 100
new products over four years by investing £1bn in research and development. Others include:
To build the most effective and efficient vacuum cleaners brand.
Be a world leader in the vacuum cleaners brand
To build world class cutting age electronic appliances for improving people’s lives
To be technologically innovative
To invest heavily in development for future sustenance of business
The external environment
There are many different methods that can be used by a business to understand the factors that
affect the performance and operation of your business. These factors are reviewed in two sections:
internal and external. Internal meaning a direct consequence due to the actions of the business and
external meaning anything that is completely unrelated and avoidable but still affects the business.
These factors can be negative or positive but are all used to improve the performance of the
business, hence why we use these techniques in business. First we will be looking at the external
environment that affects Dyson as a business; to do this I will be using a method called PESTLE.
PESTLE stands for:
Political
Economic
Social
Technological
Legal
Environmental
Political
, Political is probably one of the most important factors to stay informed about because all
organisations must follow the laws and regulations set out by the government which means
companies need to know how upcoming legislations may affect their business.
Dyson are all about innovation and new ideas which require a lot of research and development.
However, in Britain fund raising and getting a loan can be very difficult and expensive for large
organisations because of high interest rates. Therefore Dyson signed a contract with a Japanese
company who provide Dyson with the research and development they need to continue creating
innovative products and increasing their market share. Dyson did this to reduce his overall costs for
R&D which has had a positive effect for his company because it has allowed him to increase his
market share and continue to bring out new and impressive designs. This political factor of high
interest rates in Britain could have easily had a negative impact on Dyson if they hadn’t of analysed it
as an external factor and avoided it through outsourcing their R&D to where costs were lower,
because it would have cut into their profits and slowed their development as a company.
Dyson’s manufacturing centre is based in Malaysia where The Malaysia-Singapore War began in
January 20th, 2011. The conflict was begun when Malaysia declared Singapore a ‘natural enemy’.
War is an external political factor that negatively affects Dyson as they cannot control it and it could
potentially affect their production centre that is based in Malaysia. Although the war has yet to
affect Dyson it could cause them to move their production centre, which would affect costs due to
changes in transport costs, interest rates and the local economy. This could be a negative or positive
effect based on where they would relocate, however when Dyson decided to move production from
Britain to Malaysia they did so because it was the cheapest and best option for them, this means it is
unlikely they would find a better location for their production centre. However, in saying this Dyson
moved production in 2003 and so the economic and political state of other country’s will have
changed since then and may affect the costs dramatically.
Another political factor based on Dyson’s production move from Britain to Malaysia is the response
it gained from unions and political figure due to the resulting 800 job losses. The Trade Department
agreed to the move because of James Dyson’s contribution to innovation over the past few years;
however they did express regret at the extreme job losses. In 2002 Tony Blair (Prime Minister 1997-
2007) told MPs he was "deeply disappointed" at the Malaysian transfer. Also, secretary of Amicus
(the engineering union) Mr Simpson commented: "This latest export of jobs by Dyson is confirmation
that his motive is making even greater profit at the expense of UK manufacturing and his loyal
workforce. Dyson is no longer a UK product." These strong negative comments towards Dyson from
such high valued and known public figures caused a lot of bad press for the company, however in my
opinion Dyson made the right decision in moving to Malaysia for production because if they had of
stayed in Britain they wouldn’t of been able to put as much money into research and development
as they have. This would have led to a slower development in new designs and therefore longer
periods of time between new products. Furthermore, the higher costs in Britain may have caused
the company to go bankrupt due to lower profits in the earlier years, higher costs and then less
funds going towards developing new products. This is evidenced by the fact that Dyson made over
£40m profits after moving production to Malaysia compared with £18m profits the company made
the previous year when production was in Britain.
In this report I will be undertaking in-depth research into the environment in which businesses
operate and examine different business markets. To do this I will be focusing on one large business
that trades in the European Union (EU) as this will allow me to understand how they operate and
evaluate the different factors which may affect them within the market. The company that I have
chosen to investigate into is Dyson as they are a British international organisation which trade within
the EU.
What the business dose
Dyson is a private limited company that trades with many countries around the world, including
countries within the EU. The company Dyson originated in Wiltshire, England 1987 and was formed
by an entrepreneur called James Dyson. Dyson headquarters remain in Malmesbury which is a town
in Wiltshire (where it originated). The purpose of the company is the manufacture of electric
domestic appliances, such as: vacuum cleaners, hair dryers, washing machines, hand dryers, etc. His
success is due to the innovation of his technology and his self-motivation to make revolutionary
products and designs.
Ownership
Usually large organisations are owned by lots of different shareholders, like Tesco, Apple and
Vodafone because they are public limited companies. This means they can sell shares on the stock
exchange as a method of raising finance. It is rare to have a highly successful company like Dyson to
stay a private limited company because they can only sell shares to close friends or family. In Dyson’s
case the entire company is owned by founder Sir James Dyson because he owns 100% of the shares,
making him the controlling shareholder. Although this may have caused investment issues in the
beginning it is paying off for James Dyson now because he owns all of his company, meaning he
doesn’t have to pay dividends to any shareholders or get their permission for changes to the
company.
Scope
The company is international, selling its products to countries worldwide. Dyson became a global
company by selling its products in over 50 countries, which include: England, Canada, Spain, France,
Belgium, Netherlands, and Germany. Dyson’s main base country is England and the company trades
with the majority of countries in the EU, including: Spain, France, Belgium, Netherlands, Germany,
etc.
Sector
The sectors an organisation can be in are the public sector, private sector and voluntary sector. The
public sector is for organisations that are owned and operated by the government, for example:
NHS, public schools and BBC. The private sector is for organisations that are privately owned and not
part of the government, for example: John Lewis, Apple and Tesco. The voluntary is also known as
the community sector and is there to help the public without thinking about any profit. This means
the voluntary sector is mostly charities because they are focused on helping a specific cause as
,oppose to making a profit. For example: The National Trust, Oxfam and WWF. Dyson would fall into
the private sector because it wasn’t set up by the government and is there to make a profit.
Size
Dyson employs more than 7,000 people worldwide and according to the Telegraph Dyson owns
more land in England than the Queen, owning around 25,000 acres.
Liability
Private limited companies have their own legal identity; this means that their owners are not
personally liable for the firm's debts. This means that if Dyson were to get into debt or financial
trouble then James Dyson (sole owner of the company) wouldn’t lose any of his personal assets.
Main aim
Dyson’s mission statement is ‘Dyson promotes user efficiency and problem solving by ensuring a
customer’s personal and global environment is conducive to productivity.’ This mission statement is
proven through their extensive product lines and adaptation to battle environmental issues, like air
pollution. For example Dyson are currently in the research and development stages of an eco-
friendly car to help reduce CO2 emissions. An example of one of Dyson’s objectives is to launch 100
new products over four years by investing £1bn in research and development. Others include:
To build the most effective and efficient vacuum cleaners brand.
Be a world leader in the vacuum cleaners brand
To build world class cutting age electronic appliances for improving people’s lives
To be technologically innovative
To invest heavily in development for future sustenance of business
The external environment
There are many different methods that can be used by a business to understand the factors that
affect the performance and operation of your business. These factors are reviewed in two sections:
internal and external. Internal meaning a direct consequence due to the actions of the business and
external meaning anything that is completely unrelated and avoidable but still affects the business.
These factors can be negative or positive but are all used to improve the performance of the
business, hence why we use these techniques in business. First we will be looking at the external
environment that affects Dyson as a business; to do this I will be using a method called PESTLE.
PESTLE stands for:
Political
Economic
Social
Technological
Legal
Environmental
Political
, Political is probably one of the most important factors to stay informed about because all
organisations must follow the laws and regulations set out by the government which means
companies need to know how upcoming legislations may affect their business.
Dyson are all about innovation and new ideas which require a lot of research and development.
However, in Britain fund raising and getting a loan can be very difficult and expensive for large
organisations because of high interest rates. Therefore Dyson signed a contract with a Japanese
company who provide Dyson with the research and development they need to continue creating
innovative products and increasing their market share. Dyson did this to reduce his overall costs for
R&D which has had a positive effect for his company because it has allowed him to increase his
market share and continue to bring out new and impressive designs. This political factor of high
interest rates in Britain could have easily had a negative impact on Dyson if they hadn’t of analysed it
as an external factor and avoided it through outsourcing their R&D to where costs were lower,
because it would have cut into their profits and slowed their development as a company.
Dyson’s manufacturing centre is based in Malaysia where The Malaysia-Singapore War began in
January 20th, 2011. The conflict was begun when Malaysia declared Singapore a ‘natural enemy’.
War is an external political factor that negatively affects Dyson as they cannot control it and it could
potentially affect their production centre that is based in Malaysia. Although the war has yet to
affect Dyson it could cause them to move their production centre, which would affect costs due to
changes in transport costs, interest rates and the local economy. This could be a negative or positive
effect based on where they would relocate, however when Dyson decided to move production from
Britain to Malaysia they did so because it was the cheapest and best option for them, this means it is
unlikely they would find a better location for their production centre. However, in saying this Dyson
moved production in 2003 and so the economic and political state of other country’s will have
changed since then and may affect the costs dramatically.
Another political factor based on Dyson’s production move from Britain to Malaysia is the response
it gained from unions and political figure due to the resulting 800 job losses. The Trade Department
agreed to the move because of James Dyson’s contribution to innovation over the past few years;
however they did express regret at the extreme job losses. In 2002 Tony Blair (Prime Minister 1997-
2007) told MPs he was "deeply disappointed" at the Malaysian transfer. Also, secretary of Amicus
(the engineering union) Mr Simpson commented: "This latest export of jobs by Dyson is confirmation
that his motive is making even greater profit at the expense of UK manufacturing and his loyal
workforce. Dyson is no longer a UK product." These strong negative comments towards Dyson from
such high valued and known public figures caused a lot of bad press for the company, however in my
opinion Dyson made the right decision in moving to Malaysia for production because if they had of
stayed in Britain they wouldn’t of been able to put as much money into research and development
as they have. This would have led to a slower development in new designs and therefore longer
periods of time between new products. Furthermore, the higher costs in Britain may have caused
the company to go bankrupt due to lower profits in the earlier years, higher costs and then less
funds going towards developing new products. This is evidenced by the fact that Dyson made over
£40m profits after moving production to Malaysia compared with £18m profits the company made
the previous year when production was in Britain.
