University of Queensland: Garmin Case Analysis - MGTS7303, Semester 2

This case analysis examines Garmin's strategic responses to the challenges posed by the evolving market for personal navigation devices (PNDs) in the early 21st century. Facing competition from smartphones and price pressures, Garmin adopted a two-pronged approach: developing new markets by hybridizing its products with smartphones and focusing on established markets like marine and aviation. The company's success in expanding its business into new ventures allowed it to maintain a high market share. Meanwhile, TomTom focused on leveraging its existing mapping figures by creating linked navigation systems, including traffic and street information, as well as providing navigation software for automakers, thereby focusing on leveraging its products with market dynamics. The analysis highlights the advantages and risks associated with each strategy, emphasizing Garmin's opportunity strategy. The recommendations include conducting thorough market research and promoting products effectively to ensure continued success and customer understanding of value.

Running head: CASE ANALYSIS
Case Analysis
Name of the Student
Author note

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1.The market for personal navigation devices looked bleak in the first decade of the 21st
century. While the PND market kept growing in 2008, it was backed by aggressive price
reductions. More than 41 percent of the worldwide delivered 41 million PND units cost less
than $200. Models at the entrance level were around $100. Industry insiders and analysts
have been increasingly concerned about the commoditization of PNDs and the weakening of
their value proposition owing to smartphones. In the summer of 2008, a 3 G iPhone, which,
in addition to GPS functions, enabled users to access music, phone, gaming, the Web , started
at $200. Despite their important navigational superiority, PNDs did not look like much.
Margins were further pressured in 2008-09 as the wider economy was devastated by the low
consumption expenditure. As a result, unit prices crashed to attract clients. To enhance the
attraction of PND's, incumbents and contractors considered adding non-smartphone
characteristics. In order to show real-time traffic, weather and gas price data on maps, for
instance, Silicon Valley's start-up Dash Navigation created PNDs and sold them on an
amazon. In the wake of this, Garmin and TomTom came up with their own strategies to
combat the issue.
Garmin believed in creating new market for itself. The nüvifone was the first ever navigation-
centered smartphone, combining the phone, internet access and GPS ability and aiming at a
distinct market, to hybridize traditionally a Garmin navigator with a smartphone. It had better
browsing technology, had voicing instructions and was able to manage navigation and calls at
the same time, years before other smartphones mastered them. Analysts were however not
persuaded of a navigation-centered smart phone's business viability in comparison with
iPhone and other business smartphones. The firm concentrated on milking what revenues
remained in the automotive sector, investing in specialized marine and aviation sub-markets
where it had long been a significant player, and expanding aggressively in the increasing
outdoor and fitness section. Eventually, the new approach worked. Garmin's sales in 2018

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rose to over 3 billion dollars and net revenues to 823 million dollars, making it one of the
best-performing technology stocks of the year. The company has remained extremely
integrated from manufacturing to warehouses, call centres, advertising, design and engines,
and even its own ConnectIQ app store. Despite the elevated overhead, both the firm and some
analysts asserted that this level of vertical integration was advantageous because it helped to
change manufacturing faster than competitors and to establish better relations with retailers
and end users.
On the other hand, TomTom continued to focus on PND software on another path to meet the
same difficulties. It leverages its mapping figures by creating linked navigation systems that
include traffic, street information and analysis, as well as navigation software for automakers
and vehicle deck suppliers to pump its OEM automotive company. In 2018, their electric
vehicle charging information in North America and road parking in over 100 European towns
were subsequently included in their schemes. The company also performed fleet
management. The management of TomTom's fleet initially only created a tiny portion of its
income base. After 2008, TomTom entered the expanding fleet management system industry
in Europe and other areas, delivering telematics for business cars, offering car diagnostics
and assisting fleet owners to monitor these cars more readily and effectively in actual time.
Therefore while Garmin focused on creating new market for itself by expanding its
businesses into new ventures, TomTom focused on leveraging its products with the market
Dynamics. The main advantage of Garmin”s strategy is that there are fewer competitors as a
result of a newly explored market, ensuring high market share for the company. The risk is
that some of the areas of innovation are unknown to the public and therefore the sales of the
products could be uncertain, meaning lower returns on investment, and lower profitability.
The main advantage of TomTom's strategy is that the public knows the benefits and uses of
the innovation which ensures the opportunity for high sales and profitability in the market.

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The risk lies in competition where several competitors in the market will leverage their own
products to get past the innovation of the company.
2. The approach of Garmin was to discover fresh markets that were not explored. The
business focused on milking which automotive revenue stayed, investing in marine and
aviation specialist submarkets, where it had been a major player for a long time, and
aggressively growing in the ever growing outdoor and fitness sectors. It is for this reason why
it could be said that the strategy that best resembles their approach, is opportunity strategy.
The main theme of this strategy is to capture attractive opportunities in the market before
competitors do. The competitive advantage for businesses that pursue opportunity strategy is
that they gain fleeting possibilities earlier, quicker and better than rivals. This approach,
usually connected with easy rules, involves the combination of two components: the selection
of a strategic focal method and the development of easy rules that guide this process. In
combination, they allow businesses to be sufficiently flexible to seize unforeseen possibilities
while still being widely consistent and effective. In selecting a strategic focus, the key is to
select one that offers constant and profound flow of appealing possibilities. This is exactly
what was done by Garmin.
Recommendations for Garmin include conducting a thorough market research in order to
come up with the proper risk assessment for the strategies that it has planned to implement.
This is because of the fact that some of the markets that it has ventured into has proven to be
not as profitable as the traditional market. The idea is to find the blue ocean in the existing
traditional market than venturing into uncertain niche markets. This is called disruptive
innovation. Secondly, the company must be focusing on promoting its products well enough
for the purpose of popularizing the benefits attached to them, so that customers understand

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the value of the products that they would be paying their money for. This would result in
attracting more customers than what the company has been attracting.