Guaranteed Higher Grade!
Free Quote
There is one major individual written assignment - A case analysis of Garmin 2019
External Analysis:
Internal Analysis: 30%
Recommendations:
Introduction
Garmin, a maker of personal navigation devices (PNDs), entered 2008 as the dominant firm in North America and in a leading position worldwide, with a higher market capitalization than General Motors. But technological substitution – smartphones with mapping capabilities – along with falling prices, product convergence and the installation of dashboard navigation devices hit the company hard, especially in the automotive segment, its main market. With the future of the PND industry in question, stock prices tumbled. In the year between the all-time peak in November 2007 and November 2008, Garmin lost 87% of its value, and its main rival TomTom lost 94%.
After struggling to find its footing amid drastic changes in the PND industry, Garmin charted a new course. Limiting itself to high-end products in the automotive segment, it turned its attention to other segments to leverage its GPS capabilities, expanding into the fitness and outdoor space with wearables and handheld products – the total share of these two segments grew from 11% to 50% of sales between 2008 and 2018. In addition, it continued its niche strategy in the marine and aviation segments, extending the product portfolio to sonars in marine and helicopters/military planes in aviation. As a result, despite the sudden decline of the PND market, Garmin weathered the storm better than its competitors (see Exhibit 1). It was one of the top-performing stocks in the technology sector in 2018 and some analysts predicted Garmin would “carry on the momentum” in the near term.1
However, new clouds appeared on the horizon. With a diversified portfolio of products – activity trackers, fish-finders, flight decks and smartwatches – Garmin had to compete in new segments against new competitors and threats. In the fitness segment, for example, players with mobile connected ecosystems (Apple, Samsung, Huawei) penetrated the high-end wearables market. The more mature marine and air navigation segments, although profitable, were also unlikely to provide major growth impetus.
As Garmin entered 2019, management had to reassess their strategy across the portfolio of businesses. Did the vertically-integrated, business portfolio approach which had proved successful over the years make sense in the face of disparate competitive pressures in different markets? Could Garmin respond to competitive pressures in its traditional markets by discovering new market opportunities? Or should it refocus on key markets or capabilities (and spin off other units or license their technologies externally) to remain competitive?
While the PND market continued to grow in 2008, it was on the back of aggressive price cuts. Over 41% of the 41 million PND units shipped worldwide cost less than $200.2 Entry-level models were around $100. Industry insiders and analysts were increasingly concerned that PNDs were becoming commoditized and their value proposition vis-à-vis smartphones was weakening. In the summer of 2008, a 3G iPhone—which allowed users access to music, phone, gaming, the Web, in addition to GPS functions—started at $200. Despite their significant superiority in navigation, PNDs were “not looking like a great deal”.3
Margins came under further pressure in 2008-09 as weak consumer spending wreaked havoc on the broader economy. Consequently, unit prices came crashing down in an effort to win customers. To increase PNDs’ appeal, incumbents and entrepreneurs contemplated adding features that were not (yet) available on smartphones. Silicon Valley start-up Dash Navigation, for example, developed PNDs that could display real-time traffic, weather and gas price information on a map, and sold them on Amazon.4
The most momentous development after the introduction of the iPhone (summer 2007) – for all players in the navigation market – was Google’s announcement (fall 2009) that it would offer a real- time, turn-by-turn directions service—the most requested feature by users of Google Maps—tapping into its existing products/technology for free in the US on Android phones.5 Immediately after the announcement, Motorola and Verizon announced the first Android-based smartphone, Droid. Three months later the world’s largest mobile phone manufacturer Nokia began bundling free navigation with its phones 6 – “another nail in the coffin for PND makers” according to an automotive analyst.7
Digital Maps - The upstream digital map industry was undergoing rapid changes, shifting from static maps stored on a car’s navigation system to a dynamic system that provided drivers with real-time information about traffic and road conditions.20 Following Nokia’s acquisition of Navteq in late 2007, Google switched its map data provision from Navteq to Tele Atlas (acquired by TomTom, also in late 2007) in September 2008 and sped up plans to develop its own digital mapping. In October 2010, Google finally switched to its own data gathered from its StreetView cars, starting in the US, instantly making it a major player in mapping (and soon after, navigation). TomTom developed closer ties with Apple and Tele Atlas eventually replaced Google Maps as the default mapping software of Apple products in June 2012. In China, e-commerce giant Alibaba acquired the number one Chinese mapping company AutoNavi, which held a rare mapping license from the Chinese government and supplied digital map data for China to both Apple and Google, in a two-part deal for nearly $1.9 billion between May 2013 and February 2014.21
How to Write a Term Paper (Format, Structure, Outline)
Did you get nervous every time you are asked to submit a term paper? If this is your first time
How to Write a Personal Letter Format?
With the advancement of technology, writing personal letters has taken a backseat. The only time yo
How To Write A Dissertation
You must have received a dissertation assignment and are wondering how to get started with it.
Essay Writing Guide for Beginners Step-by-Step
All students have to write essays. Whether you are in school, college, or even higher levels of edu
WhatsApp
