Capstone Project Presentation
Presented by: Team “B” - Synergy
Scott, Irene, April, Simplicious
Company Overview
Garmin is founded on the principles of innovation, convenience, performance, value, and service by cofounders Gary Burrell and Dr. Min Kao. From their world HQ in Olathe, Kansas, Garmin’s employees
design their innovative products with the customer in mind. Sidestepping the stress of navigation or
travel begins with easy-to-use menus, logical options and intuitive features.
Continual
innovation
and focus on
research and
development
Keys to
Success
Employees must
design, market and
sell the product and
use it in all of its
applications
Marketing Strategy
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R&D focus ensures the latest features reach
market quickly; frequent product refreshes.
nüvifone to keep company relevant with GPS
now pervasive on cell phones; significant
execution risk in competitive industry.
Adoption of GPS service by wireless carriers
could cannibalize sales of Garmin's personal
navigation devices.
Average sale prices for Garmin's navigation
devices continue to fall as competition increases
-- adversely affecting their market share.
Garmin recently benefited from lower input
costs affecting their ability to remain
competitively priced. (Pricegrabber, 2008)
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Garmin’s distribution network includes 3,000+
independent dealers and the largest electronics
retailers.
Garmin's consumer products are marketed
through local distributors who resell to dealers.
Garmin's distribution reach diminishes as
retailers such as Circuit City close stores.
Promotional focus is on increased consumer
awareness of the Garmin name.
Efforts include typical media placements
(periodical ad space, billboard, radio)
Media partnerships with OEM’s
PEST Analysis
•NAVSTAR US Only
Dependency
•EU Admin of Tariffs
•China VAT unpredictable
•Market Shrinking
•Increased Competition
•World Economy
• Margins lower
POLITICAL
• Public awareness and desire
for navigation increasing
• Green Compliance
SOCIAL
ECONOMIC
TECHNOLOGICAL
•US Air Force Concerns
•China adoption of
manufacturing standards
SWOT Analysis
Strengths
• Leverages GPS technologies and in-house
manufacturing
• Efficient after sales service
• Good leadership
• Leader In GPS devices
• Great US mind share
• Largest dollar share of GPS market
Weaknesses
• GPS devices are only accurate to within 15 meters
• GPS satellite monitored by US Defense Department
• Seasonality of sales cycle
Opportunities
• Brand awareness drive to increase visibility
• GPS trend has caught on with the masses
• The need for all in one devices
Threats
• Emergence of new entrants providing PND’s
• Long-term inoperability of GPS satellites
• Market saturation of GPS devices because of their
long life cycle and usability
Competitive Analysis
Target Markets
Porter’s 5 Forces
Aviation
Marine
Degree of
Rivalry/
Competition
Threat of
Substitutes
•Weak
•Very Strong
Outdoor/fitness
Automotive/mobile
Suppliers Power
Buyer Power
•Strong for data
supplier and Weak
for manufacturing
•Medium
Financial Analysis Summary
INCOME STATEMENT SUMMARY
PERIOD ENDING
27-Dec-08
29-Dec-07
30-Dec-06
Gross Profit
1,553,515
1,463,255
882,386
Operating Income or Loss
862,017
907,351
554,559
Net Income
732,848
855,011
514,123
$732,848
$855,011
$514,123
Net Income Applicable To Common Shares
BALANCE SHEET SUMMARY
PERIOD ENDING
27-Dec-08
29-Dec-07
30-Dec-06
Total Current Assets
1,984,425
2,332,775
1,169,084
Total Assets
2,924,581
3,291,460
1,897,020
Total Current Liabilities
479,176
801,883
337,682
Total Liabilities
698,727
940,846
339,121
2,225,854
2,350,614
1,557,899
$1,994,900
$2,154,584
$1,490,319
Total Stockholder Equity
Net Tangible Assets
CASH FLOW SUMMARY
27-Dec-08
29-Dec-07
30-Dec-06
Total Cash Flow From Operating Activities
862,164
682,088
361,855
Total Cash Flows From Investing Activities
(56,349)
(175,695)
(226,385)
Total Cash Flows From Financing Activities
(808,051)
(136,117)
(132,650)
Change In Cash and Cash Equivalents
($11,354)
$370,368
$2,969
PERIOD ENDING
•Healthy financially although less efficient over
the last 2 years.
•Current equity return and profit margin is above
the S&P 500 average
•Carries almost no risk to solvency and its ability
to cover its liabilities as the
•Has more than 4.5 times assets to liabilities.
•Carries no debt.
Because Garmin’s growth trend has slowed
significantly it will need to become more efficient
and expand its revenue base either through a
better use of cash or a reduction of inventory for
a better return on capital.
Critical Success Factors
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 to reduce prices or use the cash for purchase into a
marketplace through its competitors or incentives to partners.
• 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.
Diversify
Product
Line
• Garmin must either diversify its product line or find a new way to collaborate
with auto and boat manufacturers.
• Garmin can continue to compete in the phone space or expand nüviphone
partnerships.
• Garmin has sufficient cash to diversify in the phone market or buyout a
smaller competitor that has valuable IP such as TOM-TOM.