Introduction
Organizations deploy strategic analysis to develop strategies for enhancing the working environment. Organization managers utilize strategic analysis to get a clear picture of managing the internal and external environment. The strategic analysis also helps a firm understand whether its business idea is feasible and strategically positioned in relation to its existing competitors. The significant steps of strategic analysis include identifying goals, data collection and analysis, strategy development, strategy implementation, and evaluation and control (Anokhina, Maksimov & Seredina, 2019). Currently, organizations are adopting innovative business approaches to develop and improve products and processes. This report aims to create a strategy for Garmin, a multinational technology company. The report will evaluate the risk factors and risk mitigation plan. This report will act as a blueprint Garmin company will use for the next five years. At the same time, the report is critical in addressing possible challenges and developing a clear path Garmin multination company will deploy to enhance its competitiveness and growth in global markets.
Company
Garmin is a multinational technology firm established in 1989 by Min Kao and Gary Burrell. The head offices of Garmin are located in Olathe, Kansas, in the United States. Garmin Company provides its customers with a wide variety of products such as global positioning systems for aviation, sport, automotive, outdoor, and aviation. Garmin Ltd also provided its international customers with wearable technology, smartwatch, avionic and activity trackers. The company has employed more than 16,000 workers. As per the 2020 financial report, Garmin’s annual revenue amounted to $ 4.19 billion, and its net income was approximately $992 million (Garmin, 2020). The operating income of Garmin Company in 2020 amounted to $1,095 million. The company shareholding is as follows individual stakeholders 32.45%, mutual fund holders 27.08%, and other institutions 22.64%.
Garmin deploys its numerous strength to increase its markets place. The company utilized its competitiveness to maintain its existing markets and establish new markets. Garmin Company has a strong dealer community and successful track record, which have attracted many partners such as suppliers and investors. The firm has employed trained professionals to conduct business activities and address recurring customer needs in different markets (Frenzel, 2019). Furthermore, Garmin multination technology company has a robust brand portfolio, enabling the firm to invest in new product categories. The company has automated its significant activities; this has enabled the company to produce consistent products and services that provide similar satisfaction levels.
Goals and Objectives
In the next five years, Garmin Company wants to make the competition irrelevant, create and capture new demand and align the whole system of a firm’s activities in pursuit of differentiation and low cost. Garmin wants to make the competition irrelevant using technology, products differentiation, and value proposition. The use of modern technology such as e-commerce, social media, and organization websites will help the company establish new markets. The company should adopt analytical technology to correct customers’ data from global channels; this data will be significant in identifying new emerging markets. Garmin Company currently has more than 19,000 associates worldwide in more than 34 countries (Szot et al., 2021). This means that the company has a huge opportunity to increase its associates and the countries it serves by establishing new markets. The company targets more than 20 new markets by 2025 in Asia and Europe using technology and product differentiation. For example, in the Asian market, Garmin Company intends to introduce a global positioning system for automotive and marine, which uses the insignificant time to locate a device.
Garmin Company intends to create and capture new demand. Today the company serves more than 18 million customers across the world. This customer base can increase if the company collaborates with influential partners such as automotive dealers and sports celebrities to promote its products. The company should direct its significant investment in developing its online platform; this will help the firm to become close to its global customers. People worldwide are adopting a modern form of purchasing products (e-commerce) due to the availability of internet connections and internet devices such as mobile phones. The online platform will help the organization increase its customers since these channels help the firm collect information regarding the customers’ current needs. In addition, Garmin Company will target more than 2 million new customers using its online channels such as social media and e-commerce sites by 2024.
Over the past year, Garmin Company has incurred a high cost of shipping products to its worldwide customers. Garmin should align the whole system of a firm’s activities with pursuing differentiation and low cost to address this challenge. This will maximize the company’s annual revenues, allow the firm to conduct more research on new products, and promote existing products to new markets. Currently, the total cost of shipping products is approximately 10-14%. Therefore, the new shipping product model is required to minimize this cost by 5% by 2024. The impact of reducing shipping costs includes maximizing the company’s net income and increasing investment. Garmin aims to minimize its shipping cost by negotiating with multiple carriers; this will allow the company to compare the shipping cost of different carriers. By 2026 Garmin Company intends to minimize its cost by 20% while increasing its annual revenues by 7-9% per annum.
Risk factors and Strategic Implementation
Various risk factors can limit the implementation of the blue ocean strategy. This section will highlight the risk factors related to making the competition irrelevant, creating and capturing new demand, and aligning the whole system of a firm’s activities to pursue differentiation and low cost (Agnihotri, 2016). Specific strategies will be used to address the risk factor associated with the strategy.
Make the competition irrelevant
Garmin will make competition irrelevant using modern technology, product differentiation, and values proposition. However, there are significant challenges to using this strategy. First, the world is experiencing continued innovation, which triggers modification of technology being used by the firm. This means that technology that Garmin will adopt to make competition irrelevant can become outdated. The risk associated with the use of obsolete technology includes poor performances, increase in cost while replacing the old technology, inappropriate operation, and can expose organization data to its competitors. At the same time, the differentiation approach Garmin intends to make completion irrelevant can have several risk factors. First, customers can change their preferences on products produced by the firm; this will affect the firm revenues due to reduction of sales. Secondly, competitors can make imitation products to confuse the customers who rely on Garmin brands. Lastly, through focus strategies, Garmin’s competitors can achieve more significant differentiation in their specific market segment.
Values propositions are the statement that differentiates a specific brand from its competitors. However, value proposition statements are superficial; hence they lack the capacity and ability of differentiating Garmin products from other competitors. For example, Garmin Company may develop deferential products that lack the capability of satisfying customers’ needs. At the same time, the value proposition statements that highlight the benefits of using company products may be similar to those of competitors. This led to the unfocused value proposition
Garmin should implement the following strategies to overcome risk factors related to making the competition irrelevant. First, Garmin Company should improve its technology by regular updates; this will help the company remain competitive in the production of unique technological devices. At the same time, Garmin can outsource specific technology that becomes absolute within a short time; this will help the firm enhance its productivity and minimize cost-related acquiring technology (Cusumano, Gawer & Yoffie, 2019). Garmin multination company should train its system users to enhance data security and mitigate low productivity and operation delay risk. Furthermore, an organization should develop technology management policies such as evaluating the return of investment in a specific technology, compliance issues, data privacy, record management, and data quality. The above policies aim to help Garmin company make appropriate investment decisions.
Garmin Company can resolve differentiation risk using the following approach. First, the firm should conduct a survey and focus group to collect customer information; this information will help Garmin company develop unique products that address customers’ needs and preferences. At the same time, the survey and focus group will help the company address customers’ concerns related to the firm’s existing product (Haque et al., 2021). Garmin can resolve imitation risk by modification of its products regularly and updating its customers on products using online platforms such as asocial media and websites. This will help the customers identify and buy original products from the company. Lastly, the company can resolve differential problems by enhancing customers’ experience by speeding up the process of shipping products and packaging products in an attractive manner.
Garmin can resolve values proposition risk using the following initiative. First, Garmin should address customers’ myths regarding the firm’s products by ensuring that there is enough information provided to customers when purchasing products (Mohd Satar, Dastane & Ma’arif, 2019). For example, the company should develop a product manual with full detail of commodities; this will help remove any myth within the customer’s mind. Garmin should develop a clear value proposition that will give stakeholders such as customers and employees have a clear direction of driving customers’ preferences.
Create and capture new demand
The following are some risk factors related to creating and capturing new demand. First, the organization may deploy ineffective communication channels to reach the target customers. Lack of appropriate communication channels will limit customers from interacting and engaging with the organization. At the same time, the language used by the company to inform new customers regarding products may be inappropriate. Further, ineffective communication will limit Garmin from responding to customers’ feedback; this will affect the company from improving its products. Secondly, new demand creation and capturing can be limited by cultural differences. Garmin may be limited by the existence of different cultural values, norms, and attitudes that can lead to disagreements (Hult International Business School n.d, b). Another risk factor Garmin may encounter while implementing this strategy is regulatory barriers. For example, different market segments have different taxation and minimum requirement policy that regulate product of the technological product. Garmin company employees may lack clear knowledge regarding the regulation that governs the business in new markets, leading to litigation and court fines related to violation of laws. In addition, political and social unrest are risk factors that can limit Garmin Company from creating and capturing new demand (Hult International Business School, n.d). For example, changes in government policies such as taxation policies may affect the company’s profitability.
To address the above risks factors Garmin should deploy the following strategies. First, Garmin should identify the most appropriate communication channel to create and capture the new market demand by influencing customers to engage with the firm. An appropriate communication channel will help Garmin appeal to its new target customers, create loyal customers, and fasten the good delivery process. Cultural issues can be resolved if the company conducts enough research to know people’s behavior within specific market segments (Andres, Poler & Guzman, 2022). The company can overcome regulatory requirement risks by recruiting local experts within the new market segments who will help Garmin understand local regulations and policies. Local experts will assist the company in complying with market control policies. In addition, the company should create and capture new demand in stable economies with less social unrest and conducive politics. This will help Garmin establish a stable and robust enterprise in new markets.
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
There are several risks associated with the pursuit of differentiation and low cost. First, Garmin may experience risks related to changes in technology which can nullify the previous investment that the company had initiated in its production and distribution channels. Secondly, a low-cost strategy may affect the company since it allows newcomers to incur insignificant costs of implementing this strategy due to the existence of resources and data for the implementation process (Tien & Ngoc, 2019). Therefore, other businesses can imitate the low-cost strategy used by Garmin Company at a low implementation cost. Thirdly, Garmin may lack the capability of noticing changes taking place in its existing company since it will pay to attain to cost rather than commodities or markets. Furthermore, the price of products sold by Garmin may change as a result of inflation costs within specific markets. Imitation of differential products of Garmin may lower the perception that the products produced by the company are different from others. A low-cost strategy may limit product innovation and overlook the significance of customers’ feedback. For example, a low-cost strategy perceives research and development costs as extraneous costs. Lastly, a low-cost strategy allows the firm to cut costs in critical areas such as customer service; this may harm the firm’s commercial activities by increasing employees’ turnover rate and bad brand reputation.
Garmin can utilize the following approach to resolve the above risk factors. First, the company should conduct rigorous research investing in new technology. This will allow Garmin Company to invest in modern technology that will increase the firm’s profitability in the long run. The research will also help the firm identify its competitors and their impact on low-cost strategy. Identifying competitors will help the firm identify how faster rivals can imitate Garmin’s low-cost and differentiation strategy. At the same time, research will allow the firm to improve its strategies such as technology, product design, and cost leadership plan, limiting newcomers in the market from duplicating these approaches. Garmin should develop high-quality products that will meet the customers’ demands. This will help the firm to limit customers from buying substitute products imitated by rival competitors (Hult International Business School n.d, c). At the same time, Garmin should create an effective communication channel to accommodate customer feedback. The customers’ feedback will allow Garmin multinational company to modify products according to customers’ current needs. Further, an effective communication channel will allow the organization to deploy innovative methods of developing products manufactured by the firm (Liu & Atuahene-Gima, 2018). The firm should cut costs using technology that does not harm the firm’s commercial activities. For example, the company can introduce online customer service to allow customers to engage with the company at any time or place.
Conclusion
The significant steps of strategic analysis include identifying goals, data collection and analysis, strategy development, strategy implementation, and evaluation and control. Garmin is a multinational technology firm established in 1989 by Min Kao and Gary Burrell. In the next five years, Garmin Company wants to make the competition irrelevant, create and capture new demand and align the whole system of a firm’s activities in pursuit of differentiation and low cost. Garmin wants to make the competition irrelevant using technology, products differentiation, and value proposition. The risk factors associated with the above goal and objective include technology may become outdated, customers can change their preferences, imitation products, lack of appropriate communication channel, cultural differences, allow newcomers to incur insignificant costs of implementation and price of products sold by Garmin may change as a result of inflation cost. Garmin can overcome these risks by deploying the following strategies: improve its technology by regular updates, conduct a survey and focus group to collected information, identify the most appropriate communication channel, conduct enough research to know people’s behavior, and develop high-quality products that will meet the customers’ demands.
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