Strategic management

Roboticists from the Massachusetts Institute of Technology (MIT), Helen Greiner and Rodney Brooks, launched the iRobot firm in 1990. The co-founders' initial goal was to bring practical robots to life, but as their prolonged existence has shown, the business has evolved through time to become the present world leader in the production of consumer robots (irobot.com, 2017).
Over the past two decades that the company has been in operation, it has spearheaded the development of innovative robots bringing about significant solutions. Robotic solutions that have been developed by the company include robots that have been used in: advancing scientific research in the pyramids of Giza; discovering harmful subsea oil in Mexico’s gulf; leading missions to save lives in conflict torn regions among others.

In addition, iRobot has inspired innovation in space travel by its significant influence on the development of micro rovers used by NASA on space, brought about change in hospitals with its self navigating remote presence robots, and most significantly, facilitated the development of smart homes with its innovative robots that are employed in cleaning and vacuuming around the house. The company’s innovative house cleaning products such as the Roomba vacuum cleaner and the Braava Jet mopping robot have brought about significant difference in people’s lives leading to further innovation of people’s lives.

iRobot serves a global market and its product range includes the Braava jet mopping robot useful in cleaning small areas such as bathrooms and kitchens, the Scooba floor scrubbing robot, the Mirra pool cleaning robot, the Dirt Dog sweeping robot, the Roomba floor vacuuming robot among others. The wide range of consumer robots have brought about innovation and development of smart homes. In addition, the company has also been at the forefront of developing intelligent security robots deployed in security operations.



The company’s management comprises of the Chief Executive Officer, Colin Angle, the Vice President, Alison Dean, who also serves as the Chief Financial Officer, the Chief Operating Officer, Christian Cerda, the Engineering Vice President, Tim Saeger, the Chief Legal Officer, Glen Weinstein, and the Human Resources and Corporate Communications Vice President, Russell Campanello. The management oversees the day to day operations of the company and as well, develop and implement strategy to further the company operations.

In addition, the company began trading in the stock market in 2005 and over time, it has continued to make great steps in revenue generation. Review of its annual reports showed that as of December 31st 2016, the company made revenue totaling to $660,604 which indicates its high profit levels. Its financial strength is seen to stem from its strong equity from shareholders and from its wide range of innovative robotic products that have been sold in millions globally.

2.0 Mission and Vision statement



Since its inception, the company’s vision has been to make practical robots a reality while its mission is to continually encourage and inspire the youth of today and tomorrow to take an interest in robotics and find a passion in science, technology, and engineering.

3.0 External Audit



According to Rao, Rao & Sivaramakrishna (2008), among the various external audit tools that iRobot can employ is the PESTEL analysis tool. PESTEL is an acronym for Political, Economic, Socio-cultural, Technological, Environmental, and Legal external factors that have potential influence on the operations of the company.

Politically, the influence of the current leadership on laws that govern employment, taxation, automation, and work policies has an impact on the performance of the business. First, an increase in taxation both in terms of export and import and also in terms of automation tax hampers growth of the business as it leads to an increase of costs of doing business. As a result, iRobot will be challenged in exporting its robotic products to its global markets with the increase in price. Second, the passing of legislation and policies that ban automation through robotics is also seen to hamper iRobot’s activities. Such policies are seen to be on the increase especially where the population fears extinction of their jobs by robots.

Economically, aspects such as interest rates, inflation rates, monetary and fiscal policies are also seen to influence the operations of iRobot. On the one hand, an increase in exchange rates hampers its export business as costs of exporting its products increase which has an overall negative impact on the marketability of their products. On the other hand, when exchange rates reduce, more products can be exported at a cheaper cost which favors the marketability aspect.

Secondly, an increase in both interest and inflation rates has an impact of reducing the disposable incomes of individuals in society. Consequently, with less money to spend on automated work machines, such as those produced by iRobot, most individuals resort to employing manual labour as they lack the financial capacity to purchase the robots. Thirdly, negative changes in fiscal and monetary policies has a negative impact on the sourcing of raw materials for production since most are silicon based and are sourced from different locations.

Socio-cultural factors including changes in consumer preference, demographic characteristics of the population, changes in population growth and mortality rates are also seen to influence the company’s operations. First, a negative change in preference of robotic products has a detrimental impact on the marketability of the company’s products since most individuals in society would vouch for other solutions in preference to the robots. Second, changes in population growth and mortality rates has an influence on the demographics of the population in society where on the one hand, an increase in mortality rates leads to an increase in the younger population which may lead to improved product sales as the younger generation appeals to technology. On the other hand, low mortality rates lead to an increase in the older generation which would negatively affect the marketability of the products as the generation appeals to more traditional work approaches where manual labor takes preference over automated robots.

Changes in technological factors have the highest impact on iRobot’s business since the company relies on technology to drive its business. First, with the increased ease of accessing information brought about by internet access, there has been an increase in the number of companies that rival iRobot in producing smart robots. Most countries from the Asian continent such as China and Japan are coming up with robots that rival iRobot’s products at a much cheaper cost which threatens its operations. The increased competition stems from the ability of the companies to innovate their technologies at cheaper costs thereby influencing the company’s marketability. Second, changes in consumer reaction towards technological trends similarly has an impact on the marketability of iRobot’s products where an increased adoption of robotic products leads to marketability of the company while reduced adoption lowers its marketability.

Environmental factors are also seen to have an impact on iRobot’s business in that, the passing of policies and legislation that bans both importation of significant raw materials such as silicon and the elimination of electronic waste negatively impacts the business. iRobot’s products are primarily electronic which implies that the company has to devise mechanisms to deal with waste products that are no longer useful. Similarly, the company has to source for electronic raw materials which may harm the environment. Consequently, these factors impact the business operation.



Finally, legal factors such as the regulation of the manufacturing industry and restrictions brought about by employment laws also impacts the business performance. Employment laws that ban manufacturing of automated products such as robots in an attempt to protect jobs consequently hinder the marketability of the company. Consequently, the company has to keep itself aware of changes in laws and regulations that directly impact its operations.

4.0 Internal Assessment



In addition to the external audit assessment of iRobot, various tools are also available to facilitate an internal audit of its operations. First, as Pahl & Richter (2009) recommend, is the SWOT analysis. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. It is a tool employed by both individuals and organizations alike to enable them evaluate their internal strengths and weaknesses as well as identify opportunities and threats that help inform their business strategies.

iRobot strengths stem primarily from its long tenure of operation which spans over twenty-five years. During that time, the company has developed diverse solutions for sectors such as defence, space exploration, environmental research, and home solutions in its consumer robotics. As such, it can be argued that its long tenure of operation has brought about increased expertise in addition to enhancing its business know how. Further, its founders are expert roboticists hailing from Massachusetts Institute of Technology who offer much needed expert guidance in developing its robotic solutions.

A second source of strength is its strong financial base which stems from its large number of shareholders. Financial capacity is important in enabling the company source for raw materials for the production of robots as well as funding its scientific research programs that are responsible for the innovation. Third, the company has established its market on a global scale which has a positive influence in increasing its brand awareness and enhancing its product marketability.

However, the company struggles with several weaknesses. First, innovative products take time to be developed as scientific research is involved. As such, the increased product development time negatively impacts its competitiveness as rival companies end up producing products much earlier thereby reducing its marketability. Second, development of robots requires high expertise which often lacks as the competition from rival robot producing companies often reduces available workforce.

A major opportunity for iRobot’s products is the positive trend in technological adoption following the increase in research in fields such as artificial intelligence and machine learning. As more individuals are becoming aware of the benefits arising from automation, iRobot is presented with an opportunity to showcase its innovative products thereby leading to organization success. Similarly, the adoption of internet of things is also seen to impact the adoption of robotics as individuals attempt to make their homes smart by having their devices interconnected.

A major threat on the other hand is the increase in the number of robot producing companies in the market. One major competitor is Google which has been at the forefront of producing intelligent droids that automate daily tasks. Other notable companies include Bosch, Northrop Grumman, Touch Bionics, and Accuray. These companies rival iRobot in producing intelligent devices which threatens its marketability aspect. A second threat stems from the passing of employment laws and policies that ban automation in an attempt to secure employment for individuals. As such laws are passed, the relevance of automated products that ease human life, such as automated pool cleaners and automated sweepers and floor cleaners, is easily phased out. Instead of banning robots, governments should advocate for them as they lead to creation of more employment opportunities.

5.0 Long term objectives



Owing to the increased threats to iRobot from rival companies such as Google, it is imperative for the company to formulate appropriate long term objectives that will provide strategic direction for the company (David, 2015). First, the company should target to increase awareness of the superiority of its products by targeting to increase its customer base by 50% within five years. The objective is achievable and realistic in the operations of the company.

Google supersedes iRobot by its ubiquitous online presence which enables it to capture wider audiences through its massive online campaigns. However, in as much as Google has an advantage of its online presence, iRobot can still capitalize on its twenty-five-year history in the robotics industry as a competitive edge to market its products. Methods to raise awareness consequently, will vary from advertising to running numerous online and offline marketing campaigns in an effort to appeal to more customers.

Secondly, iRobot should target to continue diversifying its product range to add more products that improve more aspects of human life. While it has ventured in production of smart home products such as pool cleaners, automated sweepers and floor cleaners, the company should target to increase its product range to include those that touch on aspects such as health and education as it attempts to improve its marketability aspect. As such, within a five-year period, it could target to produce new robot solutions both in the health and education sector.

Third, the company should also target to improve its revenue generation capacity by focusing on integration of the company’s products with mainstream technology. For instance, iRobot should focus on enabling mobile control of its robotic devices to encourage more individuals to adopt its technology. It should target to raise its revenue by 50% within a five-year period as it focuses on solving more problems with its innovative technology.

6.0 Selection of strategy



With the three long term objectives identified, formulation of strategy to help attain them is similarly imperative. David (2015) describes business strategy as the organization’s plan to achieve particular set objectives. Consequently, the strategy outlines particular activities to be undertaken to enable the objective to be attained.

With the first objective of increasing customer the customer base by 50% within five years, several strategies should be formulated. First, is to increase advertising efforts in order to appeal to as many customers as possible. Consequently, this would lead to an increase in online advertising efforts as well as social media adverting. Second, iRobot should increase its customer support service levels in order to appeal to its customers. It should also introduce loyalty programs to retain its current customers as it targets to add more customers.

For its second objective of diversifying its product range to add more solutions for the health and education sector, iRobot should focus on tweaking its current robotic innovations to adapt to existent mainstream products such as mobile phones. Similarly, it should focus on identifying related products that it would easily bundle its solutions with. For instance, with the health sector, it would offer training services to add more appeal. Thirdly, iRobot should engage in deeper technological surveys to identify the trends likely to bring about more sales and consequently, follow them.

Finally, with its last objective of increasing its revenue by 50% over five years, iRobot should focus on implementing strategies that will see it increase its customer base, increase the size of its customers’ average transactions, for instance, by bundling products, and eventually, increasing the frequency of its customer transactions in a given period.













7.0 Strategy Implementation Plan



The first strategy to be implemented should be the diversification of its product offering in order to facilitate both the increase in customer base and increase in revenue generation. Consequently, iRobot’s main priority should be to budget for scientific research in an attempt to tweak its current robotic products to adapt to mainstream technology and as well, come up with new products for diverse sectors. A budget of $500,000 should be appropriated for a period of two years in order to enable production of improved devices.

With the production of improved innovative robots at the end of the first two years, the company should then focus on increasing its customer base and revenue generation capacity following the introduction of the new products. A budget of $200,000 should be appropriated for advertising efforts on both online and offline platforms over the five-year period. As products are being developed within the first two years, part of the budget ($50,000) should be appropriated for the loyalty program in order to appeal to its existent customers. Upon development of new products, the remaining budget of $150,000 should be used to advertise the products and build on the existent customer base.

8.0 Conclusion and Recommendations



iRobot’s twenty-five tenure in production of robots has led the company to be recognized as a leader in the production of consumer robotics in various sectors. While its vision of making practical robots a reality has guided its operations ever since it was founded, it has in recent times, encountered stiff competition from other robot manufacturing companies such as Google which have threatened its survival in the market. In order to counter such competition, this report has highlighted three strategies for the company: increasing its customer base; diversifying its product range; and increasing its revenue generation capacity over a five-year period. Further, it has detailed the strategy implementation plan that will see it achieve the given targeted objectives.

9.0 References



irobot.com. (2017). History | iRobot. Irobot.com. Retrieved 27 November 2017, from http://www.irobot.com/About-iRobot/Company-Information/History.aspx

Pahl, N., & Richter, A. (2009). SWOT Analysis - Idea, Methodology And A Practical Approach. München: GRIN Verlag GmbH.

David, Fred R. (2015). Strategic management: A competitive advantage approach, concepts and cases (15th ed.). Prentice Hall. NJ: Pearson.ISBN: 9780133444797.

Rao, C., Rao, B., & Sivaramakrishna, K. (2008). Strategic management and business policy. New Delhi, India: Excel.