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Millennials

Growing competition

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Garmin has achieved spectacular growth since its founding in 1989. Mainly due to its skilled workforce and focus on continual innovation, along with a desire to meet their loyal customer’s expectations, has fueled an ever-growing list of products.

Benefiting from a first mover advantage, Garmin has reduced its environmental threats by investing in R&D and reinforcing its global presence and has elaborated a strong global distribution system generating strong brand awareness.

Furthermore, Garmin was capable of increasing its production capacity and therefore realizing economies of scale. Since the products belong to the same product-line, the resources of the company are put together and used in more than one segment, enabling it to benefit from economies of scope, mainly operational and financial. These economies of scope allowed Garmin to be cost efficient, take advantage of core competencies from its partner businesses and share its operational activities. Also, Garmin was able to face the growing competition. By producing several products in different segments of the market and geographical areas, Garmin not only reduced the risk of failure if one of them had to become less profitable, but also increased its profits and expertise. Making its geographic scope wider, the company could benefit from tax advantages. As of today, Garmin is an important player in different industries, owning significant market shares.

This is what makes Garmin’s diversification strategy valuable and rare. Its core competencies and ability to exploit market power are costly to imitate for competitors. Finally, the company is organized to exploit its resources and capabilities, which makes its competitive advantage sustainable.

 

Strengths

  1. Core competence of Garmin is its ability to leverage GPS technologies and in-house manufacturing to create trendy but useful products for high growth markets, ensuring their quality (they are ISO certified)
  2. Skilled workforce
  3. Provides efficient after sales services and superior customer support in areas like repairs, technical support and warranties services
  4. The company owns its manufacturing facilities in Taiwan and receives tax incentives from the Taiwanese government.
  5. Cheap labour allows the company to keep its operating costs low

Weaknesses

  1. GPS satellites are monitored and controlled by the U.S Department of Defense, potentially limiting sales to certain clients
  2. Endures a low sales cycle

Opportunities

  1. Brand awareness drive to increase visibility
  2. The use of GPS technology within varying age groups is rising
  3. Garmin could capitalize/invest in the technology of applications such as Google-Maps

Threats

  1. Increase of new entrants offering personal navigation devices
  2. There is a risk of market saturation of GPS devices
  3. Substitution from smartphones and other high tech devices

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