TEAM B “Synergy”
” (Scott, Irene, April, Simplicious)
Garmin Capstone Project
Update 10/151519 – word count 3818
Contents
Garmin Company Description 1
Technological Innovations 2
Marketing strategy 3
Cited Sources: 5
Other Sources: 5
SWOT ANALYSIS 5
WEAKNESSES 6
OPPORTUNITIES 6
THREATS 6
Sources: 7
PEST Analysis 9
POLITICAL: 9
ECONOMIC: 9
SOCIAL: 10
TECHNOLOGICAL: 11
Sources: 11
Financial Ratio Analysis Garmin Ltd (GRMN) 11
Balance Sheet 13
CCash Flow 15
Critical Success Factors 17
Garmin Company Description
Creating navigation and communication devices that enrich their customer’s lives is what Garmin is all about. One year after a brain storming session around a card table with a small group of engineers, Garmin launched its first product in 1990. The GPS 100, a panel-mounted receiver intended for the marine market, debuted at the 1990 International Marine Technology Exposition in Chicago. The unit, which cost $2,500, was an immediate hit and Garmin left the exposition with an order backlog of 5,000 units.1
Garmin’s next product was a handheld GPS receiver used by military personnel serving during the first Gulf War in 1991. The company expanded industry application of these devices for the fitness and sports industries next. One of their most popular product lines are is the eTrek series of handheld GPS devices. The original eTrek offered a lightweight, waterproof, palm-sized 12-channel GPS receiver. It was enthusiastically received by backpackers, hikers, and others who made their way into remote areas. The battery life of the eTrek was an impressive 22 hours on two AA-size batteries. The eTrek product line continues. today and the technology offered within these units has continued to evolve over time providing advanced functionality such as an altimeter, digital compass, detailed road maps and more.2
Garmin’s focus on continual innovation, along with a desire to meet their loyal customer’s expectations, has fueled an ever-growing list of products. Today, application of Garmin’s products span a wide range of industries to include automotive, aviation, marine, fitness, outdoor recreation, and wireless. 3 One of Garmin’s strategies is to offer alternatives for their customers utilizing different price points to their products. This provides a broader base of enthusiasts an opportunity to take advantage of the GPS technology Garmin has to offer regardless of their budget.
The company designs, manufactures, markets, and sells its own products. This is viewed by Garmin as - a significant competitive advantage because they live and breathe their solutions. Research and development is paramount to Garmin’s long-term success. Within ten years, thetTh company went from a handful of employees in 1989 to 7,000 in 2007. The company is of the mindset thattheir employees must not only design, market and sell the product but also use it in all of its applications. This enables Garmin to remain focused on the continual improvement of their products. At the end of the day, their products must be making them easy to use, intuitive and to simple to navigate in order to meet theirtheirto the end of one objective 4
– to remove as much of the stress related to travel as possible.
Garmin sells over 100 products that can be found in all shapes and sizes, such as OEM installations on motorcycles and sonar fish-finders on boats. . Garmin is also leveraging their navigation software and selling sells the product for use on laptop computers. Most recently, Garmin announced they are launching athe launch of their new smart-phone, the nüvifone, “Nuvi” phone. Theyplan to partner with an exclusive wireless telephone companycompany when they become becomeavailable for purchase that is intended to compete with smartphones on the market. 5
.
Sources:
1 Garmin Company: About Us (2009).
Retrieved September 25, 2009, from Garmin Website:
**http://www8.garmin.com/aboutGarmin**
2 Garmin Culture: Stories from the Inside (2009).
Retrieved September 25, 2009, from Garmin Website:
http://www8.garmin.com/careers/culture.html?activeBranchId=careers
3 Wikipedia - The Free Encyclopedia: Garmin (Sept 18, 2009).
Retrieved September 25, 2009, from Wikipedia Website:
http://en.wikipedia.org/wiki/Garmin
4 Wichita Business Journal: Report: Garmin smartphone will cost $500 (Sept 22, 2009).
Retrieved September 25, 2009, from Wichita Business Journal Website:
http://wichita.bizjournals.com/wichita/stories/2009/09/21/daily23.html
5 Wall Street Journal: Garmin Tried to Find Ways Around Smartphone Threat (Sept 22, 2009).
By Ben Charney; Retrieved September 25, 2009, from Wichita Business Journal Website: http://online.wsj.com/article/BT-CO-20090921-703769.html
Technological Innovations
Garmin’s customers seek them out as the market leader for innovation, quality, reliability and support. This gives Garmin a strong, enthusiastic following in each of their market segments.
Garmin pioneered the standalone portable navigation device market. The market for stand-alone GPS devices is fast- growing and increasingly competitive as multi-capability devices, such as smartphones, are gaining market share. GPS technology moved onto cell phones a few years ago and is a fast-growing feature on the devices. Some 77 million GPS-equipped smart phones will ship worldwide in 2009, up 35% from last year. (Garmin, 2008)
The market for stand-alone GPS devices is fast-growing and increasingly competitive as multi-capability devices, such as smartphones, are gaining market share.
The United States Department of Defense controls the satellite system that enables GPS technology, and Garmin licenses maps from NAVTEQ, which is owned by Nokia NOK. (Becky, 2009) Garmin delivers value by combining these technologies to a user-friendly consumer package. Garmin relies on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements, to establish and protect its rights. Garmin hold rights to a number of patents and registered trademarks and regularly file applications. Garmin maintains a strong commitment to R&D.
One of the key strategic initiatives of the company for its future growth is continuous innovation, development, and introduction of new products. Garmin benefits greatly from the consistently expanding aviation, marine and fitness segments. Product development for these segments accounts for nearly 30% of Garmin's sales and approximately 45% of its operational earnings. (Kiley, 2009)
Marketing strategy
Garmin leverages its GPS expertise to deliver navigation devices for anything that moves. As the navigation component of its devices becomes more commoditized, Garmin is branching out into services and new devices such as the nüvifone to sustain its market share. Garmin also distinguishes itself from competitors through rapid research-and-development (R&D) cycles that deliver product refreshes quickly.
Garmin's primary marketing strategy is to "provide a quality product at an affordable price." The overarching mission of this strategy is: “to enrich the lives of customers, suppliers, distributors, associates and stockholders by designing, manufacturing and selling navigation and communication products that provide superior quality, safety and operational features, lower cost of manufacturing and ownership, and sufficient profits to support desired company growth.” (Garmin, 2007)
Product
Garmin designs, manufactures, markets and sells over 100 products worldwide for consumer, business and military applications. As customer demands have evolved - Garmin has launched new products. Their communication and navigation products serve the aviation, marine, outdoor, fitness, automotive, mobile and OEM markets.
As the navigation component of its devices becomes more commoditized, Garmin is branching out into services and new devices such as the nüvifone to sustain its market share. Most recently, Garmin announced the release of the nüvifone product line. With the nüvifone, Garmin will be and competing with mobile phone manufacturers. The company’s value proposition is to integrateintegrate navigationThe navigation into is integrated into the nüvifone mobile phone, making asit a prominent feature rather than an after-thought. There is a concern among analysts that the nüvifone could cannibalize Garmin’s existing product lines.
· Garmin's focus on R&D ensures the latest features are brought to market quickly through product refreshes.
· Garmin is betting on the nüvifone to help it stay relevant as GPS functionality becomes pervasive on cell phones. With no history of success in phones, Garmin faces. This stride comes with significant execution risk in a competitive industry.
· Adoption of GPS service by wireless carriers could cannibalize sales of Garmin's personal navigation devices.
Price
Overall, pricing for GPS products dropped by 15% year-over-year in February 2007 compared to the same period last year. The average price of GPS products as of 2007 was $433. With the onset of lower priced products introduced by Mio and via Michelin, we expect to see increased pricing competition between manufacturers. This will lead to further downward trending in pricing for GPS products, as more manufacturers realize the benefits of targeting mainstream consumers at low-end price points.
According to Pricegrabber.com O-- of the top ten most popular GPS products, seven out of the top ten are produced by Garmin. TomTom and Mio, both known for offering several affordable GPS products for the mainstream consumer, also made it on the top ten lists. In 2008, Being the main manufacturer on this list, Garmin’s GPS products had an asold for an average ofverage price of $467. Non NonOverall, the non-Garmin GPS products on the list had an average price of $307, priced 34% lower than Garmin GPS products. (Pricegrabber, 2008)
Garmin ranks ranked highest in a list of average price ranges for all GPS products by manufacturer:
· $500 average price range - Garmin
· $400 average price range - TomTom, Magellan, and Lowrance
· $200 average price range - Mio and ViaMichelin
Garmin
Garmin employs a niche product pricing strategy because the standalone GPS market is still considered a niche market. Though Garmin’s pricing is geared toward the higher-income consumer, 70% of the most popular GPS products listed are Garmin products.
pricing strategystrategy matches the overall impression of the GPS market which is still considered a niche market. Although Garmi. Although Garmin reaches the high-end consumer, offering GPS products in the average price range of $500,, 70% of the most popular GPS productslisted are Garmin products.
· With increased competition, Garmin is lowering prices -- adversely affecting their market share.
· Though priced competitively, weak consumer spending has slowed Garmin's sales growth recently.
· Average sale prices for Garmin's navigation devices continue to fall as competition increases -- adversely affecting their market share.
· Garmin recently benefited from lower input costs affecting their ability to remain competitively priced.
· (Pricegrabber, 2008)
PlacePlacePlace
Garmin products are available in a variety of retail channels on three continents: North America, Europe and Asia. As consumer demand for GPS technology increases, especially in the automotive market, Garmin has opportunities to meet the needs of consumers in more key markets with new and refreshed innovative products.
In addition to a more traditional distribution system, Garmin also has relationships with the many original equipment manufacturers. The consumer product distributors of the company include automotive OEMs giants such as Chrysler/Mopar, Toyota, Harley-Davidson, BMW Motorrad, and Honda Motorcycle.
In 2008, Stan Brajer, director of fitness sales and marketing for Garmin, announced that they wanted to focus more on specialty markets as part of their goal to win back independent bicycle dealers. (Norman, 2009)
· GarminGarmin’s has developed a strong distribution network withincludes that includes over 3,000+ independent dealers, including many ofand the largest electronics retailers. around the globe.
· Garmin's consumer products are marketed through local distributors who resell to dealers.
· Garmin's distribution reach is diminishes d as retailers such as Circuit City close stores.
Promotion
Garmin utilizes an in-house advertising agency that handles all of the company's promotional and communication needs. Included in this department are artists, writers, designers, media buyers, event coordinators, video producers and public relations specialists.
Throughout In 2008, Garmin’s strategy also includedincludedthey became a relationship as the exclusive navigation supplier to Kenwood’s new 2008 lineup of in-dash automotive electronics. With this agreement, Garmin aligned with Kenwood on print, radio and online advertising in addition to a dedicated internet site and point-of-purchase materials to inform customers. (Garmin, 2007)
Late 2008, Garmin announced a decision to shift its focus to the specialty retailer channel. The decision is attributed to the company's goal to win back independent bike dealers. Previously, Garmin's cycling-specific products could be found in three different channels with the same pricing. According to Stan Brajer, director of fitness sales and marketing for Garmin, they wanted to focus on the specialty market. (Norman, 2009)
· The company's focus on marketing its brand and products focusesis on increased consumer awareness of the Garmin name.
· Efforts include typical media placements (periodical ad space, billboard, radio)
Cited Sources:
· Becky H. GPS brownout unlikely. Colorado Springs Business Journal (CO). n.d.;Available from: Regional Business News, Ipswich, MA. Accessed September 25, 2009.
· Bertolucci J. Let a GPS Be Your Trail Guide. Kiplinger's Personal Finance. August 2009;63(8):p70.
· Event Brief of Q2 2009 Garmin Ltd. Earnings Conference Call - Final. Fair Disclosure Wire (Quarterly Earnings Reports).
· Garmin Signals The Worst Is Past. Wall Street Journal - Eastern Edition, August 6, 2009:pB5.
· Kiley D. THE RIGHT DIRECTION. BusinessWeek. September 28, 2009;(4148):p75.
· Mott G. Golf & GPS Technology. Cigar Aficionado. September 2009;17(6):pp81-85. Available from: Business Source Premier, Ipswich, MA. Accessed October 1, 2009.
· Norman J. Garmin Changes Strategy to Focus on Specialty Bike Channel. Bicycle Retailer & Industry News. April 15, 2009;18(6):p10.
Other Sources:
· http://electronics.pricegrabber.com/gps
· http://finance.yahoo.com/q?s=GRMN
· http://www.garmin.com
· http://www10.giscafe.com/nbc/articles/view_article.php?articleid=493609
· http://www.gpslodge.com
· http://www.mobilewhack.com/garmin-and-tomtom-sold-over-10-million-pnds-in-2007/
· http://www.tomtom.com
SWOT ANALYSIS
STRENGTHS
STRENGTHS
· Core competency of Garmin is its ability to leverage GPS technologies and in-house manufacturing to create trendy but useful products with the ability to targettargetfor high growth markets.
· Provides efficient after sales services with and superior customer support in areas like repairs, technical support and warranties services.
· They manufacturemanufactureManufacturing their products in-house, thus reducingreducingreduces mishaps and poor ensures quality products from having their products manufactured by a third party for bringing new products to the market...
· The company owns its manufacturing facilities which are located in Taiwan and also receives tax incentives from the Taiwanese government , but are slated to end in 2011. The existence of cheapercCheaper labor also allows the company to keep its operating costs low.
· Garmin produces quality products whichwhichproducts that are ISO certified and further approved for use in aviation by the FAA.
· The company is leadA robust team of subject matter experts in their respective fields champion The company is leadcorporate growth and commitment to quality. by a well rounded and robust team of individuals that are well versed in their specific field of expertise to champion the company’s values and commitment to superior products.