Garmin Capstone Project Update 10/151519 – word count 3818

Critical Success Factors

1. Leverage use of cash and control expenses

Garmin has the strength afforded a company with significant assets and no long-term debt. Garmin could put price pressure on smaller competitors by becoming even more efficient with its own expenses and use of inventory and build up a stronger cash position in order to reduce prices or use the cash for purchase into a marketplace through its competitors or incentives to partners.
2. Diversify Product Line

The popularity of Smart phones and online mapping software is a risk to Garmin’s business model as there will be less desire to purchase stand-alone navigation devices. Garmin must either diversify its product line by selling IP or find a new way to partner with auto and boat manufacturers. Of course Garmin could compete in the phone space as well either through partnership, purchase or innovation. The risk is the margins of these businesses are typically much less and have greater competition.

Garmin has sufficient cash to purchase its way into IP or the phone market; either through partnership with a phone manufacturer or buyout of smaller competitors that have valuable IP such as TOM-TOM.

On Sep 9th, Garmin launched its nüvifone with direct distribution with AT&T Inc according to the Wall Street Journal. According to the Wall Street Journal, “the nüvifone is Garmin’s entry into the cellular phone market and is considered key to the company’s future. Cell phone carriers have increasingly been chipping away at Garmin’s market, adding navigational features to the phones.” “In February, Garmin said it was teaming up with Taiwan-based Asustek Computer Inc. to develop and produce a cobranded line of feature-rich mobile phones.”