How Do Dixon's Dominate The Electrical Trade?

How Do Dixon’s Dominate The Electrical Trade?

Introduction

In this piece of coursework I am going to study the successfulness of Dixons. I will try to show how they got to be the leading company in the electrical market. I will compare other businesses to Dixons and show whether Dixons are the leading company in electrical goods. I will also present their methods of how they became a successful company.

Hypothesis

I will research certain websites to find information on Dixons and other companies Dixons own, such as The Link and Currys. The research I will be looking for is reports on how well Dixons is doing, and evidence that they are the market leader in electrical goods. Also I will look at how Dixons began and how it became successful. I am expecting to discover that Dixons is a market leader in electrical goods because they probably own half of the market. Dixons own PC World, Currys and The Link, these are the main companies they own in the UK. However abroad they own other companies like PC City, which is situated in Spain.

Desk Research

In studying my point I will be looking at the growth of Dixons, and how it is gradually taking over the electrical market.

Growth in an economy is the percentage change in total output from year to year. A growth in a company would mean that they are getting more and more income every year. Companies are enabled to grow because they are selling products, which are in high demand. When the industry, commerce and governments spend money on machines the country produces more. Making more jobs and higher income, giving more money for people to spend on products. When we keep on spending on different products the companies are encouraged to produce more and more products. Therefore the economy keeps on growing. However if the country cannot afford to spend on machines to produce more, the country cannot provide more money for people who work, therefore they are not able to spend on products from other companies which are not really necessary in everyday life. Furthermore if most of the population of the company is not spending their money on certain products the standard of living stays low. The standard of living is the way in people live, so the state of environment they live in. If the standard of living is low in a country the growth for companies will be almost impossible because the main body of the population can only spend there money on food. In some cases they don’t even buy food they hunt for food and cook on a fire.

Growth can be measured in the standard of living and taking the gross domestic (GDP) product for the country every year. This will indicate growth if the GDP goes up each year. The ways companies can grow is by:

Firms building extra factories to the ones they own and putting in new equipment.
Education and training
Improving communication and modes of transport e.g. roads, rail and telephone
Supplying energy where needed
Governments investing in companies, which lead to firms investing.
Research and development of new products and finding out ways of producing products ...

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Firms building extra factories to the ones they own and putting in new equipment.
Education and training
Improving communication and modes of transport e.g. roads, rail and telephone
Supplying energy where needed
Governments investing in companies, which lead to firms investing.
Research and development of new products and finding out ways of producing products more efficiently.

Growth can give countries and advantage over other countries. Other countries are just better at selling output than others. To have growth in a company it does not just involve the above reasons it involves original ideas, good leadership skills and government support.

How Dixons Got To Where They Are Now

Dixons started off as a plc for photography. Charles Kalms opened up a studio in 1937. In the thirties there was a high demand for portrait photography. To start off a successful company and make profit you have to fill a gap in the market. Basically make yourself a market niche. The son of Charles Kalms, Stanley Kalms quickly recognised that consumer’s interests was in photography. So they both started off selling simple cameras and accessories. However Dixons had to overcome where the consumers value the product more than it’s price and the price exceeded the cost of the production.

Dixons ended up with its customers valuing the cameras and accessories more than what the retail price was. Also the retail price was more than the cost of producing the products. Therefore they had a gap between the cost of the product and the cost of production, this gap meant the amount of profit they would be making. Clever management skills enabled this gap to be large enough to make a profit.

Dixons customers thought that the products were sold at incredible value. The customers enabled Dixons to have a big market share. To increase this market share they sold a wider range of products. In doing this they gave themselves a higher risk, in that they could loose everything if they did not sell the products they aimed at consumers. What the owners and management staff worked out was that electrical goods were having an increase in demand in the market. Consequently Dixons moved from also selling cameras and camera accessories to selling electrical goods e.g. hi-fi systems and TV’s. When widening their product range they helped the customers out as well as themselves. For example customers instead of having to travel and move to several different shops would only have to go to one shop, which sells everything they needed electrically. Also when a customer would come in to buy one product they could potentially buy several more because the products are right in front of them. Giving Dixons a chance to make more profit. However they also have the potential risk of Dixons collapsing because the cost of production is costing more than the amount of products they are selling.

Dixons won over the customers at first by giving a good service by providing good quality products at a reasonable price. Usually price is the key in certain markets, however at the time Dixons were the market leader of electrical goods. There were not many competitors apart for the department stores like John Lewis and Alders etc. Dixons grew by gaining more and more profit over time. They just got more and more customers allowing them to open up more and more Dixons stores. Dixons were market leaders during the fifties; they sold quality products at a competitive price.

Stanley Kalms found a faster way of making the company grow. He imported electrical goods from Japan. The products meeting UK’s standard. Importing products cost a bit more than they expected, however by buying in bulk achieving economies of scale they could still keep their prices competitive enough to be lower than the competition. Hard bargaining and buying in bulk gave Dixons the edge over its competitors. Achieving economies of scale made the total cost lower overall.

In 1962 Dixons stopped growing by making a profit, Dixons grew by taking over their competitors. They first took over Ascotts and Bennetts both increasing the amount of stores Dixons owned. They took over around 42 stores from the takeover of Ascotts and Bennetts. Ten years later Dixons took over 15 Wallace Heaton shops. Dixons was taking over all its major competitors; this could have led to total market domination. They could have become a monopoly. However whether or not the system would have let them was debatable.