TomTom New Competition Everywhere Case Solution

1. Analyse TomTom’s at the business level, corporate level, and network level. Evaluate strategies? Are they suitable considering internal and external environment?

Before considering an in-depth analysis of the strategic implications and evaluations, it is of prime importance that the internal and external environments are analysed so that the various short comings of TomTom can be covered with potential strengths. Therefore, a comprehensive SWOT analysis would concur with our findings, streamlining the prospects of potential strategy creation and implementation.

i. Strengths

• Strategic backward integration by acquiring Tele Atlas allows TomTom to control the map creation process. This move against the competition of Garmin, who was also intending to buy Tele Atlas but withdrew its bidding after TomTom bid $2.9 billion. Tele Atlas provided TomTom with certain additional edges including but not limited to more accurate navigation information, improved coverage, new enhanced features such as map updates and IQ routes.

• Tom Tom’s range of products and emphasis on R&D activities provides customers with an extremely personalized gadget which is why it is truly “the smart choice in personal navigation”. TomTom Go and TomTom One are basically devices with LCD screens that can be utilized with a touch user interface providing the facility of downloading additional Points of Interest (POI). TomTom Rider essentially targets the bikers who would appreciate the portability of a navigation device with a headset fitted inside the helmet. TomTom Navigator and TomTom Mobileare applications that provide with navigation software along with digital maps. These are easily synchronized with most cell phones and PDA’s provided by companies like Sony, Nokia, Acer, DELL, and HP. TomTom for iPhone was created in 2009 and is sold on the market at US$99.99. The map in iPhone comes with exclusive IQ Routes technology, which utilizes real time experiences of millions of users rather than providing with an estimated time assumptions.

• Strategic Automotive partnerships with two major players Renault and Avishave allowed TomTom to tap an extension of their market whereby they can provide their navigation system to these automobile companies to fit in their cars. This created the strength for the automobile companies to lower their cost by nearly a $1000 for each system. Additionally, these companies had a wide network of business through the globe of renting and new car manufacturing, which allowed for expansion of profit base for both partners.

ii. Weaknesses

• Decrease in revenue from 2008 onwards is partly cross-referenced to the global economic downturn but also partly due to the business deterioration due to a variety of factors including litigations, costs and competition. The year on year change in revenue from 2008-09 is negative, which is35 percent. The brunt of this change came from North America, which depicts a decrease of approximately 54 per cent from the first quarter of 2008 to the first quarter of 2009.

• Inability of TomTom to concentrate on B2C marketing activities. TomTom directs most of its marketing expenditure towards B2B advertising that is directed towards its retailers and distributors. Statistically speaking, only 21 percent of US adults own a PND, whilst 65 percent of US adults neither own nor use navigation devices or facilities.

• Long term debt is another major concern for TomTom because it is a public company; such indication can cause fluctuations in its market capitalization. This debt is majorly accumulated due to the acquisition Tele Atlas in 2008 which was funded by cash, new shares, and long term debt.

iii. Opportunities

• TomTom presence has been limited within the confines of certain developed countries due to the ease of creating, and implementing digital mapping. Therefore, ability to tap most developing nations would create a wide array of opportunities and inflate the profit base.

• Take steps to enter the army navigational devices industry that could help TomTom cut through the clutter of numerous legal actions with respect to terrorism activities worldwide that may hamper its growth otherwise.

iv. Threats

• Terrorism threats on a global level have hampered the business activities of numerous companies. Navigational devices play a large role in the proliferation of such activities and also in terms of countering information to speculate the commencement of such activities.