Tom Ben is facing significant difficulties as a switch in technology has insecure its key revenue streams. Smartphones will be basically giving out for free what TomTom have been charging persons a lot of money for, and to nobody’s surprise this has resulted in the business losing earnings and getting a loss a year ago. If TomTom lost money inside the first yr of the mobile phone era, after they were continue to a niche technology, the writing is on the wall membrane for what could happen when cell phones become over loaded in the market.
An examination of you’re able to send strengths, weak points, opportunities and threats uncovers that all can be not hopeless for TomTom, however. You will find opportunities within the market which the company may leverage. While the strengths happen to be losing their very own ability to make competitive benefit, TomTom is still strong enough to formulate new marketplace opportunities for itself. 3 different tactical options will be presented, based on careful consideration from the marketplace as well as future course, and then tips are given as to what the best option could be for TomTom going forward.
TomTom, the satellite routing company, is usually facing decreasing revenues last season, the time period by which this case is placed. The company’s shareholders are correctly worried about a downturn in revenues, which includes come at any given time of increased competition and declining expansion rates. You can actually major markets are saturated, but growing markets continue to offer potential. The company’s 08 revenues were just over 1 ) 5 billion dollars, a slight fall over 2007 levels. The declining earnings trend has continued inside the first sectors of 2009. Net income received slowly until FY2007 however the company lost nearly one particular billion in FY 2008. Management at TomTom must correctly assess the causes of these types of declines, and shift you can actually strategy to restore profitability and develop a long term vision pertaining to the company.
TomTom has to this point in the history been driven with a mandate to “improve someones lives simply by transforming course-plotting that gets people in one place to one more safer, more quickly, cheaper and better knowledgeable. ” The business still maintains this kind of vision, although realistically the vision is among the biggest issues that the company encounters, because this is no longer something that TomTom alone can offer – it really is one of the many firms to deliver this basic benefit.
The aims that TomTom has arranged for its business are the following. The first is it may have better maps, something which its new acquisition of TeleAtlas should assistance with, for example. Having better maps is a very clear source of competitive advantage once seeking to help people find their particular way more proficiently. The second objective is better routing, something that as well reflects you can actually vision, and would provide a source of competitive advantage. This is also an area in which TomTom has started to really shed ground to the competition. The third objective is much better traffic data. This truly ties in the second aim of better course-plotting, since the maximum route is part determined by prevailing targeted traffic conditions. Again, this is very very much a potential way to obtain competitive edge, should TomTom outperform the competition.
The case would not appear to condition a mission for TomTom, but the company’s current site states a mission to “reduce traffic jam for all, inch something that ties into the third objective, nevertheless would appear being different from the actual company was pursuing last 2009. The situation also will not say everything with core ideals, but the company’s website today focuses on three: “community giving, ” environmental impact, and provide chain management. Environmental influence ties into the company’s focus on traffic and supply chain administration hints at the corporation having a position in logistics solutions, which in turn would be a imaginative use of their very own base technology.
There are a number of stakeholders intended for TomTom. Interior stakeholders consist of employees, administration and investors. External stakeholders include the public (especially given the traffic mandate), government authorities (for the same), competitors, suppliers and customers. The stakeholder on most concern at the moment is the shareholder, as the corporation is no longer profitable and its income are suffering. Should this trend continue, internal stakeholders will also be affected. Furthermore, TomTom needs to consider the customer, mainly because identifying and meeting customer needs will be essential to reversing the unfavorable financial tendencies the company is definitely facing.
The interior analysis of TomTom can focus on you can actually strengths and weaknesses. The corporation has detailed several of it is strengths, the factors where it features its record of success. These include the effectiveness of the TomTom brand, how big the user foundation, the size of the distribution network, and it may also be stated that the success the company provides enjoyed during the past has left it with a healthful balance sheet, nevertheless recent borrowings have sacrificed that. The majority of the borrowing may actually have been to finance acquisitions.
The TomTom brand and user base size are both valuable, but related. TomTom may be the market innovator in European countries, and #2 to United states, the two greatest markets in the world. This means that we have a significant installed base of shoppers who are familiar with the TomTom product and therefore are using it. The organization can sell further services to customers. The brand value comes from its early leadership inside the category, and having accumulated such a large customer base. Also, it is worth considering in which the value of the trademark does not are derived from – services. That will be talked about under disadvantages. The user basic is also a fleeting power, given decreasing revenues and new competition, and is consequently not the sort of durability from which the business can derive sustainable competitive advantage.
Likewise, the circulation network can be not a source of sustainable competitive advantage. TomTom has most likely misread this kind of. The company developed a strong circulation network, with retail, car dealers and car rental businesses among the leading points of distribution. This syndication strength features most certainly helped the company build out their market share in recent years. The problem to get TomTom is the fact distribution in the market is changing, and TomTom’s traditional strength in distribution is now well worth a lot less available on the market. TomTom is starting to be capable where division is more of your weakness to get the company than strength, as it sees division as product-focused rather than service-focused.
Flowing in the reduction in the strength of these three traditional advantages is that the company is less strong financially. That said, they only turned their first loss last year, and still have economic strength as a result. A healthy balance sheet gives the company time to workout a solution to its concerns; management does not have a financial crisis to avert and that is very much a strength the moment facing myriad strategic complications, as TomTom is.
With regards to weaknesses, TomTom has gone via a position exactly where it had handful of weaknesses just a couple of years ago to being in a position where it has a lot of them now. A conventional weakness happens to be service. The satellite course-plotting business offers basically recently been a duopoly, the additional competitor being the American company Garmin. Substitutes just like MapQuest or paper roadmaps were ineffective kludges for individuals that found satellite television navigation too costly. Within the framework of duopoly, neither business developed very much competency regarding service, which compromised client loyalty pertaining to both firms. With the switch in the characteristics of competition, this has arrive to harm TomTom.
This leads all of us to the second weakness for TomTom – technology. The business has always emphasized technology as a essential strength from this industry, in 2009 no one can honestly declare TomTom has technological brilliance. The reality is that with smartphones, satellite nav has become economical. TomTom have been slow to manage mobile. They now have an i phone app, but nothing for Blackberry mobile phones or the popular new Android os operating system. Furthermore, TomTom’s umschlüsselung, even with the TeleAtlas obtain, is poor to Google’s. With Google maps as common on iPhones (in 2009) and obviously about Android cell phones as well, TomTom is promoting an application that is inferior to the standard app of all new non-Blackberry smartphones. This kind of technological inferiority is a big part of the purpose that the business is losing sales.
While TomTom remains financially healthy, there is no doubt that another weak point is suffering financial well being. They will not stay wholesome for lengthy at this rate. Revenues will be declining, margins are suffering, and the business is now placing losses. This is certainly a major weak point because the firm needs to make investments more to restore technological superiority and get back into the game, precisely at an area in time mainly because it may encounter layoffs and also other cost-saving procedures to try to restore profitability. In case the company will not turn items around quickly, finances are likely to become a significant constraint in its future strategic implementation.
This analysis can focus on the threats and opportunities that exist within the external environment. Arguably, the