Group 5 - Written Report Session 7.

Written Report

Tutorial Session 7.2

Group 5

Le Ngoc Luu Ly
Le Huynh My Nhu
Nguyen Thuy Huynh
O Ngoc Minh Thu

Chapter 8 - Case 2

“Shifting Direction”
Group 5 - Written Report Session 7.2

Chap 8 - Case 2

“Shifting Direction”

Garmin Ltd. is an American global technology company founded by Gary Burrell and Min Kao
in 1989 in Lenexa, Kansas, USA. Their products vary from wearables, fitness tracking, satellite
communicators, car navigators, and many more. However, in this case study, we focus on the old
but famous individual GPS navigator provided for a range of customers: motorists, geocachers,
and runners, who mostly rely on the company’s equipment to show the way. Garmin was able to
sell 100 million of these GPS devices so far. However, the technological industry is known for
being rapidly obsolete. As other companies created more convenient GPS-integrated smartphones
or car dashboards, Garmin saw a decrease in sales of its personal navigation equipment, leading
to the once spearheaded company losing almost 80% of its market value. (Knapp, 2018) To stay
in business, Garmin needs to shift its direction.

8-18. What role do you think goals would play in planning the change in direction for the
company? List some goals you think might be important. (Make sure these goals have the
characteristics of well-written goals.)

Exposed to many aspects of change, in competitors, customers’ values, market position, etc,
Garmin’s managers might face uncertainty and confusion. Therefore, proper planning and goal
setting would be of utmost importance in order to carry out the changing plans.

Aside from that, there are two reasons why strategic planning and goal setting is necessary for the
success of any company. Firstly, planning means evaluating the environment and creating a set of
directions on how to react. By plans and goals, employees are aware of the change they are
currently facing and the path or mission that the company is pursuing. By understanding these
things, uncertainty is reduced, resulting in motivated and focused employees who would make
wiser decisions. Compared to those that lack goals, they are perplexed and may perform many
unnecessary actions that would not contribute to the organizational goal.

Secondly, because goals are communicated clearly to employees, they may increase their
productivity and help the company to achieve positive financial results. According to the study
made by Thune and House in 1970, there is a strong correlation between positive economic
outcomes and formal planning. Although contemporarily it is argued by many researchers that
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planning alone cannot contribute to the success of companies, but is also affected by some other
factors such as the size of firms, types of industry, and business unit contexts, our group still
harbours the point of view that strategic planning and goal setting plays a crucial role in the
performance of a company.

Regarding the goals that Garmin might consider making, we think that since the company is
outdated in the current trends, its main organizational purpose would be to adapt to the new
environment and technology to retain its market share. To achieve the big mission, it is necessary
to set several specific functional goals. To illustrate this, we think of two examples:

1. To increase investment in the Research and Development department to come up with

more innovative and up-to-date GPS technology

According to the statistics, Garmin invested approximately 395 million dollars to develop new
types of equipment in 2014, but this expenditure rose rapidly to more than 840 million dollars in
2021. In accordance with the investment the company paid, the gross profits of the companies
were reported to be 2.7 billion dollars and approximately 5 billion, respectively. The successful
development of new technologies is demonstrated through these numbers.

2. To expand the network and cooperate with at least three brands in the segmented markets
to boost sales

At the time this case was published (2018), Garmin was working with the two biggest Asian
automobile companies – Honda and Toyota – to deliver in-car technologies. This goal was set for
Garmin to expand its B2B sales. When we are writing this report (2022), Garmin has been able to
become the main dashboard manufacturer for two more influential brands – BMW and Mercedes.
In the future, the company may continue to sign contracts with other companies to reach
untapped markets in other countries such as South America or Europe.

8-19. What types of plans would be needed in an industry such as this one? (For instance,
long-term plans or short-term plans, or both?) Explain why you think these plans would be
important.

In the technology industry, we think both long-term and short-term goals are needed by Garmin
to determine its success.
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Regarding long-term plans, of which the timeframe is above three years, Garmin should
concentrate on positioning their brand and securing the brand’s market share. They should show
their commitment to becoming the innovators in the segment by carrying out new development
projects and promoting themselves to become market leaders in promising markets such as Asia
and North America. Garmin might want to become part of shoppers’ consideration when it comes
to technology.

Turning to the short-term plan, which would cover a year or less, Garmin should do a competitor
analysis and study the current competitors' tactics and objectives to operate better. Customers’
wants and expectations should also be Garmin’s priority. The company needs to continuously
enhance its current products to satisfy what customers value. Aside from product-oriented and
customer-oriented goals, Garmin should also fulfill its social responsibilities by raising awareness
of safety when driving by opposing the use of smartphones when driving.

Aside from the time frame of long-term or short-term, we think Garmin’s goals also have the
characteristics of being specific and flexible. As aforementioned, technology industry is a
constantly changing one, opportunities and threats are uneasily evaluated and predicted. Specific
goals should be set to help employees from different departments clearly understand their
responsibilities in achieving the big organizational mission. Although specific, these goals also
need to be adaptable to the constantly changing environment if necessary.

8-20. What contingency factors might affect the planning Garmin executives have to do?
How might those contingency factors affect the planning?

Three contingency elements influence the choice of plans, in this case, are organizational level,
amount of environmental uncertainty, and duration of future commitments.

Since Garmin applies a hierarchical management system, the roles of top executives and
nonmanagerial employees are very different. The senior and top managers may be assigned to
make significant choices. As a result, planning at the highest organizational level will be of a
strategic character. Meanwhile, lower-level managers will be involved in operational planning
when the functional components of the decision begin to show.

Although all levels of management are typically involved in the planning process, upper-level
managers usually spend more time planning than do lower-level managers. Top management lays
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down the objectives and broad policies of the enterprise. It issues necessary instructions for the
preparation of department budgets, procedures, and schedules. However, when planning,
communication issues might arise. Because communication must pass through several people
before reaching its intended recipients, organizations with many levels are frequently plagued by
misunderstandings or slowdowns in the process.

Secondly, the planning process will be impacted by environmental uncertainty. As mentioned

above, business is exposed to constant changes, such as new technology, shifting consumer needs,
or a variety of other unanticipated events that may prompt management to reconsider the
company's course. Managers should consider amending the plans even if they are already
implemented, if necessary.

Third, the concept of commitment is necessary when choosing a plan. Plans should be prolonged
long enough to be achieved efficiently and effectively. For instance, in the case of Garmin, if the
organization wants to reach partnerships with 4 more brands in the future, one year or two is not
enough. The plan should be 3 to 4 years for Garmin to be able to accomplish this.

8-21. What planning challenges do you think Garmin executives face with continuing to be
the global market leader?

When Garmin reached out to international trade, it met with many competitors from all over the
world, and it might be required to change the products’ designs and functions to cater to the
preferences of customers in each country. Additionally, their products are required to always be
on the cutting edge of the most recent trends and as user-friendly as possible. If the company
does not put in the effort to adjust and upgrade the products, competitors will be able to outdo
them and take away the role of a global market leader. Aside from the cultural differences,
regional legal regulations must also be considered if Garmin continues to expand further.

How should they cope with those challenges?

We believe that this company, as a global leader, should be cognizant of the numerous.
Businesses are vying for the same position. Garmin should keep updated on the current
competition and anticipate what opponents will do next to avoid being surprised. By doing so, it
can gain a competitive advantage and offer better services.
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Aside from that, being a leader now does not mean the company will always be a leader,
businesses must secure their position by focusing their efforts on new product development and
technological research and development. It needs to plan the tasks as an ongoing process of
improvement and advancement if they want to keep it at the top. Garmin should conduct monthly
environmental scanning to know what consumers want, need, and demand and serve rightly.
Garmin assessed, filtered, and screened data so that they can spot emerging trends and decide
whether or not to follow them. For example, there are still some uses of GPS that smartphones are
unable to support. In the case of casual hikers, free navigation may be sufficient, but serious
mountain climbers will require a more advanced product. To be specific, the company took
advantage of what it found and developed free traffic reports, lifetime map updates, and local
searches added to its already robust offering.

Regarding the legal regulations, Garmin’s managers should learn the region’s culture and laws
whenever the company enters a new market. With adequate knowledge of laws and regulations,
the operation of the company will be ensured. Legal procedures are tiring and we are sure that no
company wants to be engaged in them since their reputation might be damaged. Therefore, an
adequate understanding of the law and regulations where the company operates would be the only
solution to this problem.

Conclusion

Through the case study about how Garmin, a global technology company, successfully shifted its
direction after suffering a plunge in sales, we learned the importance of strategic planning and
goal setting in business. By being prepared, Garmin was able to conquer the challenges and
maintained its position of being a leader in the technology industry.

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Garmin Infotainment Systems. (n.d.). Garmin. Retrieved June 26, 2022, from

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