Tomtom Case Study Essay

The aim of this work is to examine a case study on the navigation company TomTom. TomTom is a company who specialise in the design, manufacture and supply of Personal Navigation Devices (PND). The company, based in Amsterdam is a market leader in the PND industry. The company supplies these devices to the end user, designs maps, provides real time traffic information to users and also works with automotive producers with regard to integrating their technologies into modern vehicles. TomTom provide navigation devices for car and motor bike drivers.

The following pages will analyse TomTom’s current strategy, examine its internal and external environment, examine the macro and micro economic factors in which TomTom operate and also examine the

The case study clearly states that rival companies are offering similar services to TomTom. A threat to TomTom could be a smart phone application from its rivals. A smart phone device would eliminate the need for a PND.

Power of Buyers: TomTom depends on retailers and distributors to sell its product to the consumer. The retailers and distributors have a high buying power and could be swayed by competitors through discounting of their product. Distributors can put pressure on TomTom for discounts on products. This could affect the company’s profit margins.

Power of Suppliers: This case study identifies the fact that TomTom’s supply chain system is outsourced. The company depends on a small number of suppliers for crucial components in its manufacturing process, meaning high dependency on its suppliers. There is a very high switching cost associated with changing of suppliers. If suppliers chose to increase their prices, TomTom would see a drop in their profit

Include a SWOT analysis. What strategy suggestions can you provide for TomTom?

SWOT Analysis

Strengths

TomTom, in conjunction with TeleAtlas offers a live feeds on traffic in real time. This is not something currently offered by its competitors.

TomTom has grown its customer base to 50 million customers.

Its products are available in 37 countries, and growing.

The company holds a 48% market share in Europe and just under 30% in North America.

Growth and diversification in the area of smart devices. Its mobile app is currently one of the fastest growing navigation apps in the Apple Store.

Strategic partnership with Nike. TomTom joined forces with the sports company to deliver an app targeted at runners.

Further partnerships within the motor industry could allow TomTom to integrate their technologies with automotive producers.

By having its supply chain outsourced, TomTom can scale up or scale down without having excess costs associated with it.

Comprehensive Map database. By covering 12 more countries than its rivals, it retains its competitive advantage in this respect.