Case Study: Irobot Corporation

iRobot Corporation is a Delaware based Robotics Company that was founded in 1990. iRobot designs and builds robots focused on home, military, and industrial purposes. Research and development (R&D) is a big emphasis company investing 6% into R&D and over 50% of the workforce is in R&D. The emphasis iRobot put on R&D has helped it see growth over the years in the market. It has been able to produce popular, profitable and efficient robots like the Roomba. The problem iRobot is faced with is a drop in revenue for the company. The company saw a 3% drop in total revenue from 2008 to 2010. The reason for this is because iRobot’s product revenue has slowed down and drop in the more recent years. From 2005 to 2007, iRobot had a consistent growth

This does not bode well for a company which 56.4% of its total revenue is based on the sale of its products. 88% of the growth in total revenue iRobot saw from 2005 to 2010 was because of product revenue. There are some possibilities for the reason of iRobot’s drop in product revenue. The first is a drop in demand in consumers due to the recession. iRobot’s consumer products are considered to be a luxury good and the market for luxury goods dropped with the economy. iRobot would need to produce a product which is considered a need by consumers to get back those consumer sales. Another possibility to explain a drop in product revenue for iRobot is its marketing strategy. iRobot has not used traditional media such as television or radio for marketing. They have only used social media such as Facebook and Twitter for marketing. This strategy is not bad but can miss out on potential customers. Also, iRobot focused on funding education on robotics to get the public more aware of robotic products. This strategy takes more money away from the business and doesn’t promise a good return on investment in terms of

Expenses in R&D dropped by $3,000 from 2007 to 2010. It increased its general and administrative by $10,000 from 2007 to 2010. This is not a good shift of focus for a company who found success in R&D. iRobot has opportunities to capitalize on which can get the company to see growth in total revenue again. Globalization is one of those opportunities. In 2009, while iRobot dropped in domestic sales, it gained 23.2 million dollars in international sales. The company went from a 38% increase in international sales in 2008 to 53.8% in 2009. There are few competitors in its market and has the cash position to take a share of the global market. Another opportunity iRobot has is the growth in contract sales. The military research can help make the company less reliant on consumer products and even out the 88% to 12% consumer to military revenue ratio. Also, the market for military spending on robotics is expected to grow by 10 billion dollars in 2009 to 2012. This is better compared to the 3 billion dollar growth expected for the consumer side of