Garmin Analysis: Looking To The Future
Dr. Steven Tippins
Jack Welch Management Institute
In marketing, my role is to develop a plan to monopolize the GPS market and decrease threats that enter the industry to sabotage our product of GPS. In this case study, I will reveal the opportunity of NPV, ROIC, and ROE in which will build revenue for the company. My capital will compromised by inquiring capital by an outside source. I will develop a strategy, which will include acquisition, research that will grow the needs of the company. The segment of my company, which is fitness aviation and marine units, will deteriorate. In 3 years time I will ...view middle of the document...
The rapid rises of volume tempered by a slowdown in the PND segment in which the analysts of the company focus on the growth over pricing. Garmin volume will continue to ascend rapidly. In the next 1-3 years, Garmin would adoption higher rates and increasing popularity of the market in regards to Smartphone. Garmin aggressiveness and determination will excel the expectation of the market by expanding and developing in the new market.
Garmin cash-flow valuation suggests an intrinsic value of $116.00 and about 25% discount this based on current price market. Garmin NPV to date is 1,285,791, IRR to date is 86, 858, ROIC to date is 822, 334 and the ROE to date is 4,471,338.
Development of Non-Business Core
Garmin long-term ability to change direction is possible due to the consumer preference. PND and Smartphone’s place a serious threat with the industry. The change is not imminent, in 2006, Garmin announced the Dollar Thirty Auto Group would offer a customized version of Garmin’s StreetPilot c330 portable automotive navigations fro rental and a server-based navigation system would be available for Sprint selective handsets PCS network. “While these initiative in an of themselves would not in Garmin opinion, secure a high growth future if Smartphone’s dominate the navigation device market, we think they’re a good start. Garmin also believe that as long as the company maintains its focus on cutting-edge technology, it is likely to have a place in the navigation market no matter how it develops” (www.garmin.com)
The Decline of the Automotive Segment
Smartphone industry has caused a decline in the automotive segment due to the fact consumers can use their phones to program a map for GPS aid. The automotive sales have decrease by 20% not to significant but enough to improve Garmin product. The lower prices do not result in increase of volume; future margin erosion may be the threat. The LCD and the GPS chip sets have come down in price and this effectively decrease the automotive segment.
CEO Min Kao of Garmin states “A significant risk, yes-but beyond this, the company still maintain a healthy balance sheet: it has history of net income growth, and when all is said and done , we believe Garmin is taking the right steps to position itself for the future—and we don’t even need a GPS system to say so”. Garmin automotive segment has suffered in a decline 8% operating profit. The automotive segment is responsible for 59 % of Garmin’s revenue. Smartphone threats can injury the revenue and the future of Garmin Automotive segment
Price Competition is aggressive with PND but PND market will likely result in lower margin. Garmin High Competitive Industry such as Apple, Blackberry, Google, Nokia, and HTC has significantly slowed down. When Garmin originally started GPS, especially for consumer/public (everyday people) the consumer spending showed a discretionary confidence that...