Capstone Project PresentationPresented by: Team “B” - Synergy

Scott, Irene, April, Simplicious

Company OverviewGarmin is founded on the principles of innovation, convenience, performance, value, and service by co-

founders 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.

Employees must design, market and sell the product and

use it in all of its applications

Keys to Success

Continual

innovation

and focus on

research and

development

Marketing Strategy 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.

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.

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)

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

PRODUCT

PRICE

PLACE

PROMOTION

PEST Analysis

•US Air Force Concerns•China adoption of

manufacturing standards

•Public awareness and desire for navigation increasing•Green Compliance

•Market Shrinking•Increased Competition•World Economy• Margins lower

•NAVSTAR US Only Dependency•EU Admin of Tariffs•China VAT unpredictable

ECONOMICPOLITICAL

SOCIAL TECHNOLOGICAL

SWOT AnalysisStrengths

• 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

Opportunities

• Brand awareness drive to increase visibility• GPS trend has caught on with the masses• The need for all in one devices

Weaknesses

• GPS devices are only accurate to within 15 meters• GPS satellite monitored by US Defense Department• Seasonality of sales cycle

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 AnalysisTarget Markets Porter’s 5 Forces

Aviation

Marine

Outdoor/fitness

Automotive/mobile

Degree of Rivalry/Competition •Very Strong

Threat of Substitutes •Weak

Suppliers Power •Strong for data supplier and Weak for manufacturing

Buyer Power •Medium

Financial Analysis SummaryINCOME STATEMENT SUMMARYPERIOD 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

Net Income Applicable To Common Shares $732,848 $855,011 $514,123

BALANCE SHEET SUMMARYPERIOD 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

Total Stockholder Equity 2,225,854 2,350,614 1,557,899

Net Tangible Assets $1,994,900 $2,154,584

$1,490,319

CASH FLOW SUMMARYPERIOD ENDING 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

•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• 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.

Leverage Use of Cash and Control Expenses

• 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.

• 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.

Diversify Product Line