Garmin ltd is an American company founded in 1989 by Min Kao and Gary Burrell. The company mainly specializes in navigation devices to aviation, automotive, sport and marine activities (Garmin, 2019). The company was affected by changing market scenario because of mapping capabilities in smartphones. Due to that the company lost 87% of its value in the market in 2008.The company diversified its market and reach to sports, marine and aviation segment and because of this it become top performing technology company in 2018 (Sengul, 2019). This report is based on the case study of Garmin, and highlights the strategy that company can use for its growth and success in future. All these strategies are formulated with using external analysis tool such as PESTEL analysis and internal analysis with using toll of value chain analysis. Further, some recommendations are given for the strategy that the company can apply at corporate level and at business level.
The problems or threats that the company is facing are related to stiff competition and lack of innovation in its products as other competitors are launching automatic devices in fitness segment, marine and aviation segment with better features and by analyzing the changing demand of the customers. Garmin traditional approaches are not working in this technological era and its strategies need to be changed in order to survive in this competitive business environment (Yan, 2014). Further, the company is not able to stay ahead in the competition because of lack of investment on research and development. All these problems can be solved by changing the traditional strategies of the company according to the external and internal environment in which business is running.
In order to solve these problems firstly it is important to understand the external environment of the company and for that PESTEL analysis tool is used. This is important for designing strategy for Garmin that can increase the chances of the company to sustain and be profitable in the market (Jenkins & Williamson, 2015). PESTEL includes analysis of political, economic, social, technological, environmental and legal factors that affect not only Garmin but affect the whole industry. All these factors are analyzed below:
Political Factors: Political factors are important to be considered for the companies that operate across the world. Political factors are political instability, changes in laws, policies changes, taxation policy of the country and minimum wages policies of the country all these factors can affect the Garmin profitability and chances of survival (Snyder, Willoughby & Smith, 2019).
Economic Factors: Economic factors are related the condition of the economy of the country in which Garmin running its operations. This includes changes in foreign exchange rate, inflation rate, gross domestic product and interest rate. In America there is perfect competition in the technology industry where there are number of competitors, and growth is higher that indicate that the company if survived can get more return on its investment in near future.
Social Factors: In case of Garmin, the company failed earlier because of shift of customer’s habits and preferences to smartphones. In current scenario, US and Europe is captured by the company and population in these countries are mainly of teenagers and adult that prefer smartphones and can access technology easily and now demand technology advancement.
Technological Factors: This factor is mainly impact the Garmin ltd as the company works in technological industry and provides GPS services in various segments. Such as development of smartphones affected the company operations, so the space for innovation and technology updating in the country is important factor to consider (Fenwick, Kaal & Vermeulen, 2016).
Environmental Factors: Different industries have different standards for protection of environment. Weather condition in a country affect the transportation capability of Garmin and might affect the delivery of final products to the market. Using renewable energy for production can be an expensive option for Garmin but through that company can get support from the government.
Legal Factors: Garmin affected by legal factors as the policies related to workers and other acts of countries are different. It is important consideration for the company to look after the data protection laws and Intellectual property laws.
Garmin internal analysis is done with the help of value chain analysis tool that is refers to the process in which Garmin producers are analyzed individually. Garmin value chain analysis can be done with its main competitor in the industry that is TomTom. Garmin primary activities include outbound logistics, operations, inbound logistics and marketing and sales services. On other side, support activities consist of human resources management, technology, procurement and infrastructure (Stead & Stead, 2019).
Primary activities
Inbound Logistics: In this analysis it is known that Garmin use its internal connections to operate internationally, mainly in Taiwan. Garmin use components that are common and for that the company has competing suppliers and that give competitive advantage to the company. On other side, the company finds difficulty when suppliers are not able to provide technology advanced products to the company.
Operations: Garmin production process has higher efficiency as the company has expertise engineers and staff that gives a competitive advantage to the company in manufacturing sector. Further with the help of various acquisitions and mergers the company is able to gain competitive advantage in acquiring skilled people for their operations. Vertical integration helps the company to respond quickly to changes that take place in the operative environment. The design process of the company’s product takes place in the United States.
Outbound Logistics: the distribution process of Garmin is not different from its stakeholders because companies in this industry target same audience and have tie ups with other companies that use digital and GPS mainly in aviation segment, sport segment and automobile segment. Some of the distributors in the list of Garmin are Best Buy, Amazon, Wal-Mart and Halford. Garmin tie ups with some wearable companies and shifted its focus on watches for cyclist, swimmers, runners and hikers. Further, the company benefits from OEM sales and started selling them in bulk.
Firm Infrastructure: In technological industry it is important for the companies to innovate and respond quickly. “Garmin ability to respond and anticipate changes in the market is centered on their vertical integration of their processes”. The company is considered as the division structure with division of employees with resources, objectives and experience.
Human Resource Management: Company has valuable human resources that contribute best to their ability in the company and that leads to success of the company. Garmin invest lots of amount in training of their employees as in technological industry understanding and acquiring new skills are most important consideration.
Procurement: In GPS industry or in providing these services the important element is suppliers of navigation technology to Garmin. The company ensures long term relationship with their suppliers that provide digital maps and satellites (Sengul, 2019)
From the analysis of internal and external environment for Garmin it is known that in order to grow and expand in this competitive environment company should change its strategy. It is analyzed that company initially was generating more than half f its revenues from automotive sector and after hat diversified into other segments. It is recommended that Garmin should invest more in wearable sector as this will provide more growth opportunities. Further company should diversify its market portfolio and should target developing countries. In order to implement that Garmin should do huge investment in its Research and development department that give the company a competitive advantage to others and helps in producing more innovative products. Further this can be done with the help of more acquisition and mergers as the company gets new and advanced skills.
Conclusion
It is concluded from the above analysis that in order to survive in this competitive environment Garmin cannot depend on its traditional approaches. The company should focus more on its research and development department as in technology industry it is important to be updated with new technologies. Further, it is also identified that because of decline in revenue from automotive sector the company should focus more on wearable segment as there are more growth opportunities in this sector in near future.
References
Fenwick, M., Kaal, W. A., & Vermeulen, E. P. (2016). Regulation tomorrow: what happens when technology is faster than the law. Am. U. Bus. L. Rev., 6, 561.
Garmin. (2019). About us. Retrieved from: https://www.garmin.com/en-US/
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis. Routledge.
Sengul, M. (2019). Case Study: Garmin 2019. The Business school of the world.
Snyder, N. C., Willoughby, C. A., & Smith, B. K. (2019). Comparison of the Polar V800 and the Garmin Forerunner 230 to Predict V [Combining Dot Above] O2max. Journal of strength and conditioning research.
Stead, J. G., & Stead, W. E. (2019). Why Porter Is Not Enough: Economic Foundations of Sustainable Strategic Management. In Rethinking Strategic Management (pp. 67-85). Springer, Cham.
Yan, Y. (2014). The development of absorptive capacity in large firm: A longitudinal exploratory study on Garmin’s Automotive/Mobile segment over time span (Bachelor’s thesis, University of Twente).
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