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Garmin

In: Computers and Technology

Submitted By MikieFarrah
Words 1739
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Garmin is a Swiss company that develops consumer, aviation, and marine technologies for the Global Positioning System (GPS). It was founded in 1989 by Gerry Burrell and Min Kao in Lenexa, Kansas as ProNav, and in 2010 was incorporated in Schaffhausen, Switzerland, as the headquarters and successor to Garmin Cayman, which until then, had served as a holding company for Garmin corporation. Though their claim to fame came from their pioneering of marine and handheld GPS' for the US Army, they have since expanded into the commercial market focusing on the design, manufacturing, and marketing of a diverse family of hand-held, portable, and fixed navigation and communications products. According to the company, Garmin is a leader in providing “navigation, communication, information devices and applications, most of which are enabled by GPS technology”. Garmin’s stated goal in creating these devices is to enrich the lives of their customers, by providing high quality products that create value for consumers. Classified as a technology and scientific instruments company, it operates in five business sectors which serve the marine, outdoor, fitness, automotive, and aviation markets. The company advances the idea of their superiority in value and performance, ease of use, innovation, and ergonomics of its products, and offers an expansive array of solutions across its various segments. As a result of the variety in the nature of the products and types of customers they serve, the segments are managed and analyzed separately. Garmin products are sold in approximately 100 countries through a worldwide network of approximately 4,000 independent dealers, as well as through larger consumer product distributors such as Amazon.com, Best Buy, Wal-Mart, and Costco. In addition to these distribution channels, Garmin has several key relationships with Original Equipment Manufacturers (OEMs), which are of particular importance in the automotive, marine, and aviation industries. For market reach, Garmin has its primary company-owned distribution centers in the United States, the United Kingdom, Australia, and Taiwan. Within the automotive/mobile sector, Garmin provides Personal Navigation Devices (PNDs) as well as mobile applications which are offered across a broad range of smart phones and tablets including iOS, Android and Windows-enabled devices. In its OEM partnerships, it delivers in-car technologies and intuitive interfaces customized to manufacturers' demands. Some of its most important relationships in this sector include Chrysler, Suzuki, BMW, Mercedes Benz, and Volkswagen. Due to these close strategic alliances, it is rare for other companies to compete in terms of marketing and sales. In its contribution to the outdoor market, it provides handheld and wrist-worn devices popular in camping, hiking, and golf; pet tracking and training devices; and action cameras. Garmin is also a leader in providing several products designed for use in the recreational marine industry which use GPS-enabled sonar depth finders for recreational boating and fishing. In the aviation industry Garmin's product line includes GPS-enabled navigation, automatic flight control systems, and traffic collision avoidance systems, to name a few, many of which are collaborations with its OEM partnerships. In efforts to remain innovative and up-to-date with recent consumer trends, as well as to counteract losses in their Personal Navigation Device (PND) sector, Garmin is developing products designed to address growing fitness and wellness concerns. The fitness segment offers training assistants for athletes; personal training systems and pedal-based power meters designed for cyclists; watches designed for swimming pool use; and wellness devices, among others. A recent release from Garmin, and one which has received significant media buzz is Garmin Connect. Used in tandem with their vivofit and vivoki bands, this Web-based analytic tool can be used to store, analyze, and share fitness and wellness data received by personalized tracking information recorded in the bands. Garmin became a publically traded company in 2000, and it experienced formidable growth in NASDAQ all the way up until 2007, by which point it had doubled its sales in the insatiable consumer demand for its location-finding gadgets. However, with the introduction and proliferation of the Smartphone in the late 2000s, the industry for Personal Navigation Devices has greatly suffered. Smartphones have been described as the Swiss Army knives of consumer electronics, taking over the tasks once reserved for specialized hardware like cameras and GPS systems. In addition to Smartphone apps, as more cars are built with machine to machine (M2M) computer systems, they also include personal navigational systems. Findings from Berg Insight show that in 2012 global shipments of PNDs declined. Units shipped dropped from 33 million to 28 million, representing just slightly less than a 15 percent decline. Meanwhile, the number of mobile subscribers worldwide using a turn-by-turn navigation app on their handset at least once per month grew from 105 million in 2011 to 150 million in 2012. Garmin operates in several highly competitive markets and is exposed to substantial risk due to the breadth of its product line. In its automotive sector, TomTom N.V., MiTAC, and Navigon AG are its competitors, while Bushnell, Lowrance Electronics, and Woodsman Labs are its main competitors in the outdoors product line. Raymarine Ltd, Furuno Electonic Company, and Simrad and Lowrance are the principal competitors for marine products. In its aviation division Garmin faces competition from Aspen Avionics, Avidyne Corporation, CMC, Honeywell, Rockwell Collns, and UASC. In terms of fitness products, Garmin faces fierce competition from Nike, FitBit, Timex Corp, and Bryton. Even more notable is their competition in their mobile products line which includes Google and Apple. Despite the presence of so many competitors, Garmin is able to stay at the forefront of the industry due to its capabilities in several key areas which are crucial for success in the industry. These key success factors include establishing market share and brand recognition, investing heavily in research and development and innovation, having a strong, global distribution network, and implementing vertical integration. Successes in these areas are critical for firms competing in the navigation and information industry, and Garmin achieves a level of success in each area. Garmin has been able to achieve a competitive advantage through its penetration into international markets which give it majority market share and promote brand recognition. According to the company, Garmin owns around 36 percent of the personal navigation device market, making it the first in the North American market and second in the European market, and they are first in both the recreation and aviation markets as well These are key factors in an industry that suffers from overcrowding and product uniformity. Its economies of scale give it the ability to provide cheaper products while maintaining high quality management through its manufacturing and production processes. In addition, its OEM alliances with global retailers have provided it with more opportunity to expand its market share both domestically and internationally, which makes the threat of new entrants low. Garmin is a key investor in the research, development and production of innovative products in its industry, and in 2013, 14% of their net sales went towards R&D. Due to rapidly changing technology, evolving industry standards and changes in customer needs, it must rapidly develop new products or ideas in order to attract new customers or retain old ones. Tied together with the vast breadth of products, it is very difficult for even large companies to compete in all realms of its business, which also supports a low threat of new entrants into the industry. Even with smaller companies specializing in specific GPS sectors or penetrating the market through differentiation, it would be challenging to gain a large market share in the industry. Almost all of Garmin's design efforts, engineering and manufacturing, research and development, and marketing efforts are handled in-house, which results in increased efficiency and effectiveness at all levels of the production-line. The ability to design and produce new, innovative products are time and capital-intensive, and therefore, this vertical integration allows Garmin to solve common problems in the electrical industry, such as being quicker to market with products, streamlining the design and process functions, and minimizing logistical issues. Garmin believes its manufacturing capabilities to be one of the company’s core competencies, and these efficiencies set it apart from its main competitors. Finally, Garmin's ability to compete comes from their innovative and product development efforts, and proprietary technology. With an intellectual property portfolio of over 820 patents and 470 trademark, it relies on these and other protections to preserve their leading position in the industry. However, a significant risk in the business comes from the decline in demand for Personal Navigation Devices as a result of replacement technologies becoming available on mobile devices and factory-installed systems in new autos. The acceptance of this technology by consumers has halted growth and continues to reduce margins. Consequently, this stands as its biggest challenge to Garmin, as 50% of its revenues stem from the automotive/mobile segment of the business. Reuters online revealed that revenues from the company's struggling automotive mobile business fell 20 percent in 2013. Furthermore, Garmin's success is highly reliant upon overall economic conditions, as they affect the demand for the products in the markets in which it competes. As a result of economic instability and constrained consumer spending, the company has experiences decreased revenues, and it is a problem which still prevails. In addition, financial difficulties experienced by its retailer and OEM customers result in a significant level of bad debt write-offs, additions to accounts receivable, and adverse effects on operations. Finally, Google is a growing concern to Garmin as it owns the rights to the largest database of maps, and leases the maps out to other companies for a fee. Maps are a major factor in the GPS market, being that the more maps the system has the more points of interest and more routes that it can provide to the users. Although Google does not have a hand-held Navigation device it does have a Google Maps Navigation App for the Smartphone.

Leber, Jessica. "Garmin's Market for GPS Taken by Smartphones | MIT Technology Review." MIT Technology Review. MIT Technology Review, 8 Mar. 2013. Web. 07 May 2014
Ghosh, Sayantani. "Garmin to Sell Fewer Navigation Devices in 2013, Shares Fall." Reuters. Thomson Reuters, 20 Feb. 2013. Web. 07 May 2014.
Rizzo, Joe. "Report Shows a Major Decline in Personal Navigation Devices in 2012." Report Shows a Major Decline in Personal Navigation Devices in 2012. M2M Evolution, 22 Apr. 2013. Web. 07 May 2014.

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