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Contents
Company introduction: .................................................................................................................................................... 3
Part 1 Analysis and reflection ........................................................................................................................................... 4
Introduction: ................................................................................................................................................................ 4
Analysis of current situation of TomTom : .................................................................................................................... 4
Internal Analysis .............................................................................................................................................................. 4
Business Model- ....................................................................................................................................................... 4
Value Chain- ............................................................................................................................................................. 5
External Analysis .............................................................................................................................................................. 7
PEST models-............................................................................................................................................................ 7
Porters Five Model .................................................................................................................................................. 7
SWOT analysis .......................................................................................................................................................... 8
The core Problem ..................................................................................................................................................... 9
Current strategy of TomTom: ......................................................................................................................................10
Current Challenge and Risks for applying these strategies: ......................................................................................10
What I think about TomToms current strategies?! ..................................................................................................11
Recommendations of Strategies options .....................................................................................................................12
Summary ........................................................................................................................................................................13
Part 2 Self reflection .......................................................................................................................................................14
Bibliography....................................................................................................................................................................15
Company introduction:
TomTom is a navigation technology company which was found in the Netherlands in 1991 with a focus on
developing software products for mobile devices. It currently has 3500 employees, 57 offices in 35 countries
worldwide and the headquarter is in Amsterdam, Netherlands. TomTom is also now the leader of navigation in
Europe. While the biggest competitor Garmin still holds the largest market shares in global market. TomToms
products are both stand-alone units and software for personal digital assistants and mobile phones.
Key partner
1. Outsourcing partner companies. It outsources the manufacturing of all its products, logistics, also part
of the customer cares and product contents.
2. Distributors
3. Joint ventures. For example, the company has been working with Nike for produce sportwatch. (2012,
p. 5)
Key activities
TomTom is the world's leading supplier of in-car location and navigation products and services focused on
providing the world's best navigation experience. Its products include portable navigation devices,
smartphone apps, GPS sports watches, in-dash infotainment systems, fleet management solutions, and
maps and real-time services, including the award winning TomTom HD Traffic.
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Key resources
Its contract manufacturers order the required component parts from their suppliers on the basis of the
number of units TomTom require. (2012, p. 66)
Value proposition
The companys value proposition is to become the worldwide leader in market share for GPS products.
Customer relationship
TomTom is engaging in building strong customer relationships by offering high quality service.
Channels
Its distribution channels are wholesalers, retailers, and online shops.
Customer segment
The company aims to target any individuals or business customers who need navigation system.
Value Chain-
Infrastructure
According to its official website, since the company completed the acquisition of Tele Atlas and transforming
into a broader navigation Service Company in 2008, a new structure has been introduced in order to provide
complete navigation and mapping solutions for car drivers across different platforms and to the wider markets
for digital maps. The structure consists of four customer-facing business units which are TomTom, Tele Atlas,
WORK and Automotive. Each business unit has a clear focus on a specific customer group and they are
supported by two shared development centers.
The TomTom business unit sells PNDs to consumers via retailers and distributors. Tele Atlas sells digital maps
and related content and services to various industries. WORK offers professional solutions for commercial
fleets. Automotive develops and sells navigation systems and services to car manufacturers and OEMs
worldwide. Handset manufacturers and network operators are serviced with mobile navigation solutions, map
content and services by the business units TomTom and Tele Atlas.
Serving the business units are the two shared development centers. They are responsible for the
development of the next generation of fundamental navigation technologies, services and content, which are
tailored to all navigation markets through the business units. Dynamic Content & Publishing (DC&P) is
responsible for the creation and publishing of content and services on robust and scalable delivery platforms.
It acquires, validates and assembles dynamic content that is relevant to motorists and publishes this
information in real-time to its customers and partners. Shared Technologies develops and maintains the
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technology components of the Group. It develops the routing algorithms, navigation software and user
interfaces that continue to be some of our unique strengths. (Tomtom website)
Human Resource Management
At TomTom, the human resources function is organized centrally. All its staff worldwide is serviced by the
Human Resources department based in Amsterdam. However, there are also dedicated Human Resources
staff in the US and Taiwan; while our London, Paris, Leipzig and North Ryde (Australia) sites each have staff
who combine human resources work with other functions.
In order to attract the best people and maintain the quality of its human force, TomTom serves its HR
management with three competencies: Open Spirit, Passion for Results and Innovative Thinking. These core
competencies, combined with role-specific competencies, are at the heart of its Human Resources strategy.
They are used as the basis for recruiting, training, developing and compensating employees, and form the
backbone of the General Performance Scheme (GPS), our performance appraisal scheme.
With a strong HR management, the company is proud to say At TomTom we have always developed all our
core technologies in-house, from the ground up. Technological innovation is at the core of everything
TomTom does. (Tomtom website)
Procurement, Logistics, and operation
It outsources the manufacturing of all its products, logistics, also part of the customer cares and product
contents. Its contract manufacturers order the required component parts from their suppliers on the basis of
the number of units TomTom require. (2012, p. 66)
Marketing and sales
It has decreased its marketing expenses by 27% year-on-year from 78 million to 57 million (2011: 77
million excluding restructuring charges). While it also scaled down its marketing spend this year in line with
Consumer revenue development (PNDs), it focused on campaigns on increasing awareness of the quality of
our maps and traffic information. (2012, p. 7)
Service
TomTom provides online simple problem shooting for customers, and with the product serial number
registration customer can easily know about the details of warranty and where is the nearest repair center to
them.
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External Analysis
PEST models-
Political
TomTom is a global company with offices in 35 countries in the world. Therefore, it is facing more complex
laws and regulations from different countries. For example, GPS is prohibited in certain countries due to the
concern of terrorism and security. In some states of U.S like Minnesota, there are laws to prohibit drivers from
installing on devices on a windshield and California has restrictions on placement of those devices. (Woodyard,
2012).All these legislative restrictions would affect and increase limitations to the navigation market.
Moreover, the possibility of legislative banning navigation devices in cars is increasing since it could cause
traffic safety issues from the distraction of drivers. The legislative concern of privacy also threats the market
since the use of these devices as tracking devices. (2012, p. 15)
Economical
The global financial crisis is still recovering, and it still has negative impacts on the revenue, meanwhile
average people consider these navigation products as luxury goods and not a necessity to their daily life. (2012,
p. 13)
Social
Most people still consider navigation products as a luxury product, and in many poor and rural areas people is
still lack of technological education, therefore the demands of navigation products are not high.
Technological
Navigation is relied on satellites and some satellites are aging. Old Satellites might cause the failure of GPS
system globally. Moreover, GPS function has become the standard feature for smart mobile phone and it will
affect the portable stand- alone navigation devices. (2012, p. 14)
Demographical
North America and Europe market are mature for Navigation industry, however there are still many
unexplored market in the world such as China, India, and Latin America. (2012, p. 13)
This industry needs very high standard technology. PND market is consolidated and as a stand-alone product it
prevents companies from entering the market, on the contrast, it causes the exit of smaller companies.
Strength:
1. High and trustable satellite navigation technology.
2. The strong capabilities of R&D and manufacturing.
3. The strong TomTom brand name.
Weaknesses:
1. Its products are generic.
2. Weak Marketing capability.
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Based on the analysis above, I conclude that the core problem of TomTom comes to the organization itself. It
has outsourced its manufacturing, logistics, and products patents. However, outsourcing may help to control
its operational expenses, but the quality control becomes rather more difficult. Moreover, the marketing
abilities of the company are very weak compared to its main competitor Garmin due to its scale-down policies
for marketing.
Restore revenue growth through greater growth from non-PND product sales while limiting revenue
decline in the PND category.
Joint ventures
Decrease its marketing expense, especially to scale down the marketing expense for PND products.
According to its annual report 2012, I summarize the risks for the key strategies TomTom currently executes.
There are rapid technological developments in consumer electronics. These are having major impacts in
the consumer space, and the challenge is to keep up with consumer expectations.
Although TomTom has established many strategic partnerships and joint ventures to bring competitive
product and service offerings to market. If any of these strategic partners fail to perform as planned or if the
company fails to find suitable partners for its business activities, it may be unable to bring its products and
services to the market and maintain a competitive market position.
The impact of global economic situation on consumer demand could affect its ability to generate sufficient
cash flow to support its investment activities and may render it unable to implement its strategic agenda as
planned and consequently could have a material adverse effect on its financial condition, results of operations
and liquidity.
The automotive market is continuously evolving with respect to navigation. There are lots operational and
technical challenges in growing TomToms automotive business and maintaining profitability over the longer
term in such a rapidly evolving environment. Furthermore, new map providers may choose to enter the
automotive market which could significantly increase the competition it currently faces.
The company depends on a limited number of third parties and, in certain instances, on sole suppliers for
component supply and manufacturing. Any disruption or termination of those relationships with third party
manufacturers, suppliers or distributors, or any reduction in their ability to supply TomToms needs would
affect its business operation.
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Restore revenue growth through greater growth from non-PND product sales while limiting revenue
decline in the PND category.
The PND market has been shrinking due to the emerging smart phone devices, and meanwhile, build-in
navigation system and software application in cars or mobiles has become the new trends of Navigation
market due to the cost efficiency and convenience.
This strategy does fit the industry and the market trends. With the wide variety of products such as PND
(portable navigation device), in dash devices, software navigation application, digital map and real time traffic
service, they are well aligned with customers demands and industry requirements. By working on establishing
the foundations for its non-PND related business since 2007, it reached an important performance result in
2012: over 50% of revenue was derived from non-PND sales. Revenue is the most important performance
indicators for a company, so I conclude the strategy is correct, however, I believe even the PND market is
shrinking especially in U.S and European markets, there are still many unexplored markets for the company in
the rest of the world such as Asia, South America, and even Africa.
Joint ventures
Another strategy of the company is Joint Ventures. TomTom has been ambitiously building up joint venture
partnerships. One remarkable event is to work with NIKE for the sportwatch production which has made
TomTom successfully into the fitness industry and meanwhile the revenue from the cooperation with Nike has
been strongly growing based on its annual report 2012. I think the strategy is also successful and there are
many successful cases in other industries before for example Coca and Shiseido have their mineral water
products. (Nutra ingredient USA)
But as far as I concern, the strategy to start joint ventures with companies from other industries may also
confuse consumers about what TomTom exactly sells. However, if TomTom wants to explore its business in
Asia or other markets, it is a good start to arise its brand awareness in those areas by establishing joint
ventures with local famous companies.
Decrease its marketing expense, especially to scale down the marketing expense for PND products.
TomTom has rather weaker marketing abilities compared to its competitors due to this strategy which still
need to be reinforced. In Europe TomTom still holds the largest market share, but this is also attributed to it is
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an European brand, however its biggest competitor Garmin, an American company, has much strong
marketing abilities and ambitious. I would suggest TomTom to improve its marketing abilities by a deep insight
of its organization and the whole industry as well to increase their budget for marketing activities.
Establish partnerships with mobile networks or smart phone operators and manufacturers and automotive
companies.
Develop its own mobile handset devices to stable its PND market while joining the competition in mobile
industry.
Reinforce and improve TomToms marketing strategy by a deep insight of the industry and organization.
Suitable
acceptable
Feasible
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Penetrate of GPS into European intelligent system, trams, and buses. For example the establishment of
partnership with ICE and Thalys for their navigation systems can help TomTom to restore its revenue and
ensure its long term survival.
Reinforce and improve its marketing strategy by a deep insight of the industry and organization, and
Moreover, TomTom should monitor the market trends, industry, and competitors in order to adapt itself
better with the trends of the industry and reduce the risk of operations.
Summary
Although TomTom is still one of the leaders in Navigation industry, however, due to the changing market and
strong competitors, it is now facing the biggest challenge since its start up in 1991. TomToms revenue has
been decreasing from 2010 to 2012 from 1521 million Euros to 1057 million Euros. The decreasing sales of
PND is the root cause of the revenue decreasing, even though revenue from other non-PND products has been
climbing but still cannot compensate the loss from PND sales. This can be accounted by the downturn of the
world economy but also indicates that it didnt change its strategy fast enough to adapt the changing of the
market. Meanwhile, TomTom is also suffering from the price war for retail prices of GPS units.
The conclusion is that I realize it does have competitive strategies but not proactive enough to deal with the
change of the market and increasing competition. They need to examine themselves and the navigation
industry more. On the other hand, it has some policies to scale down its operational expenses by outsourcing
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its manufacturing, logistics, components procurements, and the marketing expenses, the results of cost-down
also expose the organization to other risks, for example the difficult quality control, too much reliance on the
third parties, poor marketing abilities.
I hope some strategy options I have recommend above can be the reference for its future development.
However, it is important for TomTom to observe the market trends more and understand its competitors and
industry in order to develop more suitable strategies while lowering the risks and meeting its expectations.
Our group did the presentations for Apollo case as a consulting team and the article Can you say what
your strategy is?!. Therefore, I have learnt most from these two from the preparation and discussion
with my team members. From the Apollo case, I experienced how it is like as a member of consultant team
and also learned from the process of studying of the case, analysis, and strategy providing. From the
article Can you say what your strategy is?!, I understand the difference between a strategist and a
manager and expect myself will be able to not only succeed in the management role in the future but also
become a real strategist who sees things further and bigger.
The role of creativity is very important in the process of strategy management and implementation in my
opinion. After the complete analysis of the industry and organization, it is very important to be creative to
have the ideas of right strategies. Creativity is also crucial as a role to deal with the risk and challenge for
the strategy management.
To reach a strategic thinking level, a person, a group or an organization need to have the qualities to
analyze the current status of the industry, organization, and forecast the trends for the future in order to
figure out the long term vision, the whole scope, and strategy for the long term development and survival
of the organization.
Company culture and corporate strategy are like the relationship between eggs and chicken. It is very
difficult to say which comes first. A companys culture can affect its corporate strategy management, but
on the other hand, the strategy the company choose can affect its company culture as well.
I expected myself to succeed in the management role and also can participate in the strategy decision for
the organization in the future, so I can apply what I have learnt from this course and entire MBA courses to
the career field.
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To become an influential person in the future office or company, it is very important to be prepared for all
the important meetings or any other circumstances before them, and the most important thing is to speak
out your suggestions and idea in a structural way to convince people.
This class teaches me about strategy management in a more vivid way no matter it is about the academic
knowledge or actual examples from real world outside school. Mr. Velu always encouraged us to learn and
think from a more free and creative way. The professional role plays and different way of presentations
(no power point) make me understand and absorb more easily and quickly.
Bibliography
GPSmagazine. (2007). Retrieved from
http://www.gpsmagazine.com/2008/05/gps_brands_market_share_data_f.php#.UbDYeNj_KSo
Nutra ingredient USA. (n.d.). Retrieved 2004, from http://www.nutraingredients-usa.com/Suppliers2/Coca-Cola-linksup-with-Shiseido
(2012). TomTom annual report 2012.
(2012). TomTom Revenue Down 17% in 2012, Outlook for 2013 is Challenging . GPS News.
Tomtom website. (n.d.). Retrieved from www.tomtom.com.
Woodyard, C. (2012). GPS navi on windshield may be prohibited in your state. USA TODAY .
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