Case Analysis - The Strategic Responses Of Garmin And TomTom

Case Analysis Student Name Institutional Affiliation Case Analysis Question 1 Both Garmin and TomTom experienced a disruption in personal navigation devices (PNDs). Technological substitution, due to the emergence of smartphones with mapping capabilities and product convergence caught both companies unawares. The companies lost most in the automotive segment, which constituted a majority of PNDs sales. The future of the companies was uncertain, with Garmin and TomTom losing 87% and 94% of value respectively (Sengu, Gimeno, & Wee, 2019). In order to avoid going out of business, the two companies used different strategies to survive in the ever-changing industry. The various strategies have advantages and risks. For Garmin, the decision to shift to high-end products in the automotive industry was critical in saving the shrinking market. The company acknowledged that it was losing a large segment of the automotive industry which was the main market in the early 2000s. Hence, the decision to concentrate on high-end products was critical in assisting the company to regain the shrinking market segment in the automotive industry. The disadvantage of this strategy is that the Garmin risks losing the high-end product segment in the automotive industry in the future. Manufacturers of cars are shifting to the manufacture of driverless cars which means that in the future they may not need the services of the products currently supplied by Garmin. It is also challenging for the company to expand in the same segment which indicates that it will keep on losing base in the high-end products. Additionally, Garmin diversified into other market segments. Losing a large portion of the automotive market prompted the company to identify alternative segments. Garmin has since expanded into other areas including aviation, marine, outdoor and fitness. Diversification is been crucial in ensuring that a company does not over-rely on a particular segment (Iqbal, Hameed & Qadeer, 2012). Expanding into other areas has enabled the company to take advantage of the emerging market segments which are profitable. Without diversifying, the company would not be operating today since the industry has remained dynamic. The disadvantage with diversification has been the huge costs involved in the initial investment. For Garmin to expand into other areas, it has been forced to make huge investments, which have often reduced the profitability of the company. The need to develop new products has forced the company to spend more resources on research and development. Further, Garmin has been forced to acquire other companies which have also been expensive. On the other hand, TomTom has reacted to the disruption by focusing more on PND software. The company has realized the huge need to develop software that can be used for different products. With the decline in the sale of devices, the software has proved to be a viable option for the company. The move has allowed TomTom to have the freedom to license the software to other companies like Apple and Uber. This means that the company has continued business since it can keep on licensing its software to different companies. The challenge with this move is that without collaborating with other companies, TomTom will not...