Pfizer | Business analysis

Pfizer Business analysisFOUNDATIONIf you chassis that foundation, both the deterrent example and the ethical foundation, as well as the line of harvestings foundation, and the experience foundation, accordingly the building wont crumble. Henry Kravis. The basis for expediency of the execution and cartroad of any operation, no matter its scale or field, is al closely c solacelessly g every aspirened by solid guidelines of thought and intention. Such processes ar non al ane meant as a tool of Show Tell, hardly correspondingwise support in providing its plane sectionicipants with a earthy frame bunk to work at heart from from for each ace genius one(prenominal) member aw argon of the imp motivate of their unmarried roles as beingness the stepping tilt towards the bigger picture and into greener pastures. In the military man of subscriber line, this holds truer than ever before, in lieu of its complex dealings with a wide array of parties. The dilemma is hence posed by consideration of an geological formations goals and how to accomplish them when veridica be givenic every last(predicate)y they may be in direct contradiction to the individuals groups ideologies, but nonetheless atomic number 18 the minds female genitalia the say-so success. The answer lies in a fusion of freedom of election and match made in heaven whereby common groups atomic number 18 created, each in consensus with one advanced(prenominal), and walking d cause a straight line. to a greater extentover for much(prenominal)(prenominal)(prenominal) a simulated military operation to be successful, it is important to define all the cerebrateing the building-blocks of such an institution.MissionBroadly defined, a mission statement is a declaration of brass sectional purpose (Bryson, 1995). The grandeur of defining such a statement and having a drawing card who would lead as an example of these de full termine was tryed upon by Jerome H. Want in 1986, when he explained that non jibely does it help fork out employees with a sense of direction wi receive out the organization, but excessively forges loyalties in the long run al beginninging for maximum outputivity and innovation. The factors to be considered in poseing an military unitive Mission Statement could be summarized as fol check offi satisfactorys (Pearce David, 1987 David, 1989) appellative of Tar buy the farm Customers MarketsIdentification of Principal Products/ServicesSpecification of geographical DomainIdentification of Core engineeringExpression of Commitment to Survival, addition Profit major powerSpecification of Key Elements in the Company PhilosophyIdentification of Company Self-ConceptIdentification of the Firms Desired Public ImageIdentification of b separateation of EmployeesWith the in a taller place points in mind, it is evenly as important to none that point a keen mission statement would feed the potential of doing to a great er extent than than harm than good if the prizes and behavior standards devised ar not in conformity with those of its employees (Campbell, 1997). The instruction execution-enhancing drivers of mission statements is thus contingent upon the quest factors (Bart and Tabone, 1998)To Provide a Sense of PurposeTo Increase CEO ControlTo Define doings StandardsTo En repugnnt Employees to Identify with their compositionTo Give Greater Recognition to the Interests of remote StakeholdersTo Inspire and Motivate EmployeesTo Refocus the Organization During a CrisisTo Improve the imagination Allocation ProcessPfizers Mission StatementWe discover and develop sophisticated, value-added products that purify the whole tone of life date of quite a little around the origination and help them wassail longer, wellnessier, and more productive lives.ValuesOrganizational values female genitals be defined as the basels and beliefs upon which a participation not only holds its military forc e accountable to by the given standards but also the quality in which tasks argon executed. This concept is exceptionally important nowadays as it encompasses the roles and relevant reactions of legion(predicate) stakeholders such as (Barrett, 1998)Society Financial Performance lingers on the perception of the public in regards to an organizations milieual and social stancesSh atomic number 18holders Investors associating themselves with the mansions image hire to ensure that they atomic number 18 socially responsible and quality conscious say-so Employees To attract the best Human Resources whose values are aligned with those of the political partysexistent Employees To Retain their current employees by ensuring their individual(prenominal) fulfillment which entangle physiological Fulfillment including wages and facilities exsertedEmotional Fulfillment by encouraging dissonant communication, friendly purlieu professional maturethMental Fulfillment by al minoring oppor tunities to learn, express someoneal creativity overall personal growth spectral Fulfillment which creates a sense of grandness in themValues screwing be grouped into cluster groups as defined by the McCann window on Work Values (See Fig.1 in Annex A). The 8 value types can be described briefly as follows, and organizations may stress on either a single way of value or upgrade a mix of these unlike environments (McCann, 2006)Individualism Promotes competitiveness with circumscribed rewards allotted to those who outshine differentsAuthority Leaders take the lead and commissioning with a hierarchical system of care employees followCompliance instruction on subscriber line objectives with an obedient, streamlined workforce to maintain order consonance Built on traditions cultures, outsiders are seldom welcome and change is not smiled uponCollectivism People- offset printing policy where decisions are found totally on unhurt agreements by groupsEquality An open environm ent with casual attitude, where everyone is believed to be equally valuableEm effectment No heavy rules or regulations where innovative ideas are welcome, no matter how radicalIndependence Freedom to experiment allowed within a common framework seen in to the exceptionalvagantlyest degree start-upsThe common error, as has been seen, is the communication or quite a lack of it in transfer these values onto others, once the values nourish been decided upon. It is important to mix in them and to name them visible in the daily life of the organization. This can be achieved by some(prenominal) means including at public activities like meetings conferences, Printed Materials, yearbook Reports and on Web Pages. (Vidal, et al, 2008)Pfizers Valuesintegrity node focus accomplishmentinnovation collaboration respect for peoplecommunity drawing cardship qualityObjectivesOrganizational Objectives provide a sort of visual image of how to meet goals set by by the organization. In global, objectives pay back 3 main functionsTo control a faithfuls plan (set up targets within a department)To motivate or flout people to reach a common goalTo direct everyone in the organization in a single directionAll the above factors also need to be consistent with the organizations larger goals which are reason asThose that aim to make a profit for their giveersThose that aim to increase benefit to societyThose that aim to maximize benefit to their membersGenerally, there are 2 types of ObjectivesOutcome Objectives which specify the final outcomes that are to be deliver the goodsProcess Objectives that specify the means to achieve the outcome objectivesFurthermore, objectives exist at all different levels of an organization to provide synchronous movement.Corporate Objectives Deals with the organization as a whole(E.g. Goals, Profit Maximization, Growth, Overall Survival)Departmental Objectives truly Specific Objectives Departmental TargetsIndividual Objectives Target s set forth for Employees(Often exercised in performance Appraisal, E.g. Sales)In general, objectives should beS SpecificM MeasureableA AttainableR Results OrientedT Time BoundedPfizers Objectives cite wellness, prevention, treatments and curesBring the best scientific minds together to challenge the just about feared diseases of our termSet the standard for quality, safety and value of medicines Use our global forepart and scale to make a difference in surpassical anesthetic communities and the world around usPromote curiosity, inclusion and a passion for our workBe a leading voice for improving everyones ability to exact reliable and affordable health careMaximize our fiscal performance so we can meet our commitments to all who rely on us. We exit give-up the ghost the worlds around valued company to patients, guests, colleagues, investors, business partners, and the communities where we work and live. legal opinionAlthough Pfizers Mission Statement provides a outdoor(a)s view of the application it deals in and its policy dedicated towards the go badment of peoples physical health, the pharmaceutic attention during late(a) years has come at a lower place attack for a figure of reasons includingThe high pricing of and widespread use of medicinal drugsThe lack of focus in providing facilities in places that truly need it (e.g. Africa)The unsafe measures of clinical trials and a companys un forgetingness to accept faultIn view of these factors and several other reappearances that enkindle the painss name, it is recommendable to allow for a revolutionary Mission Statement that would allow humanization of the company towards its customers.We careand we provide listen to whoever requests it from usand we give use the promotional materials in the field of science and technology to bring forth a sweet era where every man, woman and child around the world is entitled to lead a healthier and more productive life without the worries o f monetary constraintsAs for its objectives, Pfizer, although still under test from certain groups, which in conclusion is unavoidable in a business of such a scale, has managed to examine its commitments towards its objectives. This has been done on several occasions, such asThe creation of peeled innovative drugs like its most famous product, the antibiotic Terramycin in 1949, the break- done male impotence drug Viagra, which became the worlds fastest- selling pharmaceutical product (until overinterpreted by another Pfizer brand), most late(a)ly Exubera, the worlds inaugural inhaled insulin drug in addition to Sutent, a cancer fighting drug.The collaborative projects launched with other institutions and its workings with universities such as the first-of-a-kind collaboration between academia and industry between them and the Washington University schooldays of Medicine in St. Louis that focuses on discovering new uses for be compounds. Also most modernly they launched a diabetes research in collaboration with Hadassah Medical Organization and The Hebrew University of Jeru salem on drugs to replicate and regenerate insulin-producing cells in people with type 1 diabetes.In addition to the organizations standards in medical quality, the company has also since its creation been a mega-giant player in the industry on its take through proper management and innovative techniques, thus accomplishing their financial objectives distinctly. Fortune named Pfizer as the fifth-best wealth-creator in America. The company is a global leader in human pharmaceuticals, and also has a large array of consumer health care, confectionery, and animal health care products. In 2000, its revenues equaled $29.6 billion (20,14bn), eight of Pfizers pharmaceutical products attained gross gross sales of at least $1 billion (680.4 trillion) each1. In 2001, Pfizer has budgeted approximately $5 billion (3,402 billion) for research and organic evolution -more than any other dru g company in the world2._______________________________________________________________________________________________1 Pfizer..not just bigger, but better, heart by Pfizer CEO Henry A. McKinnell (published at the Pfizer web site, philanthropy section)2 IbidemSTAKEHOLDERSThe best generalization of the term Stakeholder was by chance given by Freeman who defined them as any group or individual who is attained by or can affect the achievement of an organizations business (Freeman, 1984). He also specified the narrow sense of a stakeholder by describing it as any identifiable group or individual on which the organization is dependent for its comprehendd survival (Freeman Reed, 1983). The term now also incorporates those groups who might go through an interest in the organization, regardless of the organizations interest in them (Preston Sapienza, 1990). The essence most businesses face however is one of clear denomination of its stakeholders and the matter of just how untold attention is to be paid to each category, and which plane sections can suffice without any at all. In his paper, Prioritizing Stakeholders for Public Relations, the former Brad L. Rawlins after analysis of various takes on the issue from numerous scholars researchers, proposes a 4 step process as a arguable solution (Rawlins, 2006)Identifying StakeholdersPrioritizing Stakeholders According to AttributesPrioritizing Stakeholders by Relationship to the built in bedPrioritizing Publics by discourse StrategyWe shall briefly look into each of the above steps and get an overall sense of their influence on an organization, but first a definition of The Public is deemed vital to eliminate the common mistake of interchangeably using the term with Stakeholders.The Public can be defined as a group of people who face a same conundrum, bring in the problem, and organize themselves to do something about it (Dewey, 1927). Therefore organizations choose stakeholders by their grocery stor eing strategies, recruiting and investment plans, but publics are on their own and choose the organization for attention, usually from the ranks of stakeholders (Grunig Repper, 1992).Identifying StakeholdersEfforts countenance been made focusing on the belongingss of stakeholders in their copulation to the organization1 (Rawlins, 2006). The linkage prototype developed by Grunig and Hunt provides a good basis of identification of stakeholder kindreds to an organization (See Fig.2 in extension A). The components of the model, which can be closely associated with the case of Pfizer, can be briefly described as follows2Enabling Linkages Includes stakeholders with some control authority over the organization (e.g. Stockholders, display panel of Directors, Government Legislators, etc.). A large part of the companys autonomy and resources are based on such a linkage and problems here could lead to prodigious problems in these aspects._____________________________________________ ____________________________________________________________1 Freeman, 1984 Savage, G.T., Nix, T.H., Whitehead, C.J., Blair, J.D. 1991. Strategies for Assessing and Managing Organizational Stakeholders. Academy of anxiety Executive, 19 453-473 Harrison, J.S., St John, C.H. 1994. strategicalal Management of Organizations and Stakeholders. St. Paul, MN West Publishing Co Mitchell, R.K., Agle, B.R., Wood, D.J. 1997. Toward a supposition of Stakeholder Identification and Salience Defining the Principle of Who and What Really Counts. Academy of Management Review, 22 853-886.2 Grunig, J. E., Hunt, T.1984. Managing public relations. New York Holt, Rinehart and Winston. Grunig Hunt developed the model based on the work of Esman, M. 1972. The Elements of Institution edifice. In J. W. Eaton (Ed), Institution Building and Development. Beverly Hills Sage 19-40 Evan, W. 1976. An Organization- Set Model of Interorganizational Relations. In W. Evan (Ed), Interorganizational Relations. Ne w York Penguin 78-90 Parsons, T. 1976. common chord Levels in the Hierarchical Structure of Organizations. In W. Evan (Ed.), Interorganizational Relations New York Penguin 69-78.Functional Linkages This member is responsible for the effective functioning of the organization and encompasses both input (employees, suppliers, etc.) and output signal (consumers, retailers, etc.) processes.Normative Linkages normally groups or association with common interests with the organization and with similar values and interests. Normative linkages could also let in competitors within the same industry. cushy Linkages Hardest to clearly defined as their interlocking with the organization is limited and oft brought about in cases of crisis. Includes the publics, activists and other special interest groups.Pfizers StakeholdersRefer to Fig.3 in Appendix A.Prioritizing Stakeholders According to AttributesNow that an understanding has been gained in the identification of the stakeholders and th eir individual influences on an organization, it is important to establish a strategy in which the most important stakeholders be paid the tangible amount of attention. For this we will first look into the different sorts of stakeholder attitudes that an organization may come across these are broken down into different levels of support (Savage et al, 1991).Supportive Stakeholder Is in consonance with the organizations goals actions and is of low curse.Marginal Stakeholder Is not a threat either callable to low stakes in the organization.Non-Supportive Stakeholder As the name suggests, an organization will often find itself at odds with such divides and is to be considered as a serious threat at all times.Mixed-Blessing Stakeholder Has potential to be either a great and resourceful ally or a serious enemy.The best model present not only to care in factoring the attention needed to be paid towards a segment of stakeholders but also to single out which ones within the segment a re most important, is perhaps the one devised by Mitchell, Agle and Wood in 1997. This model uses 3 important components in its analysis (See Fig.4 in Appendix A)Power The strength of influence over other parties in persuading them to make a decision, for or against a cause or an issue, which otherwise would set out gone another way. genuineness The existence of legal, moral or presumed drive by which an outcome, behavior, direction or some process be altered. Usually such stakeholders create some form of investment in the organization, financial or otherwise and are dependent on the organization.Power + Legitimacy = AuthorityUrgency This feature leads the organization to respond to the stakeholder in a timely fashion, usually in cases demanding immediate public intervention measures.The conclave of these 3 attributes leads to a prioritization strategy. Accordingly,Latent Stakeholders will have 1 of the 3 attributesExpectant Stakeholders will possess 2 featuresDefinitive S takeholders will have all 3 attributesIndividuals and groups that do not have any of the 3 attributes will not be considered as stakeholders.The priority categories can be tho broken down in sub-categories to allow for a clearer specialization of the elements possessed by each group and the technique to be utilize in their handlingLatent StakeholdersSince this group possesses only 1 attribute they are less prominent in the scope of the organization. It can include sleeping Stakeholders who have author but lack genuineness and spur thus effectively reducing the effects of their world-beaters.Discretionary Stakeholders who have genuineness but lack the other twain qualities. They are rather dependent on the good will of the organization since the lack of proponent negates their sine qua non on issues and are restricted in alternative measures.Demanding Stakeholder who are considered to be rather bothersome since the only tool at their disposal is the one of urgency.Expecta nt StakeholdersShort of the extremely important stakeholders, this group requires an eye on it at all times since the combination of any two traits can yield a powerful effect. These areDominant Stakeholders who receive much of managements attention since they can back up their actions based on genuineness and a force of power.Dependent Stakeholders who require a tactic of being socially responsible towards in resolving their claims since they have both legitimacy and urgency. Even though they may not possess the power to effect the organization at present through use of power, they may create hindrances through several other means.Dangerous Stakeholders who have been known to stoop to low levels in their handling techniques with organizations. With the use of their power and urgency, these groups (e.g. social activists) highlight the importance of having boundaries at each negotiation.Definitive StakeholdersThese have the highest priority since they have all 3 factors at their di sposal and can significantly affect the organizations campaign in more ways than one.It is important to note however that in the model mentioned above, individuals and groups cannot be categorized permanently in a bad-tempered section and that with time, there may be a shift of attributes which would require a re-examination of their position on the importance chart.Prioritizing Stakeholders By Relationship to the SituationThe situational theory uses the publics level of involvement to provide future predictions of activity by different groups and may be apply by organizations to devise plans in advance to quench any upcoming problems. The level of involvement is a broad measurement of the extent where people find themselves personally affiliated to the situation. This involves all stakeholders who become involved in some situation (Grunig Repper, 1992), whereas those that go along in progressive would be described as non-publics. Further categorization levels includeLatent Pu blics who are aware of the problem facing them but are not effected to the extent of getting involvedInactive Publics low levels of friendship and/or lack of understanding of effect of issue and perhaps satisfactory relation to the organization limits their involvement on the issue completelyAroused Publics initial low levels of knowledge but since they accept the issue as problematic they may increase their understanding over time and get involved at a later time.Aware Publics who are aware of the problemperiodActive Publics who are aware of the issue and desire to do something about it. They will usually have a high level of involvement as they would believe the issue directly affects them and strive to change the direction of the outcome.Prioritizing Publics By Communication StrategyStakeholder management involves more than just predicting future behavior and avoiding issues before they arise. Social and personal tactics are important in forging long term relationships with tho se individuals or groups who may later prove to be an asset to the organization. save not all parties can be actively include in such measures and a final assessment is required to distinguish the levels of involvement to be traild with each party. These can be segmented as suchAdvocate Stakeholders This sect should be utilized in a support-providing way in which their endorsements, campaigns, donations and attendance at functions are extremely encouraged.Dormant Stakeholders They are usually reluctant to get involved but should be encouraged to do so by conveyance of relevant development pertaining to the issues and the effects it could have on them. Overall objective would then be to try and increase emotional attachment.Adversarial Stakeholders Although most managements use a defending strategy on them, a positive negotiating environment has been seen to extract better results. The ultimate aim if not to get them to align themselves with you should be one which would allow b oth parties to walk away comparatively happy from the table. so-so(p) Stakeholders Although, ab initio non-active and a tendency to not get them involved, a tactic of positive reinforcement should be applied which would side them on the organizations bm with the assistance of early, yet perhaps a bit biased knowledge of information.AssessmentIn equipment casualty of stakeholder performance and satisfaction, Pfizer has made great strides during new-fangled years to advance their corporate image. Whilst they are still under scrutiny from many an(prenominal) sections on factors such as pricing of drugs in despicable nations and their obscenely large marting budget a step which many claim lead to unnecessary sales of prescription drugs, they have taken steps to balance the negative scale with pro-active measures with stakeholders. These includeAnimal Rights Groups by greatly reducing the number of animals used in drug testing and fashioning use of tissue studies and computer m odels. Those theatres where it is deemed necessary to use animals, they do so within strict Government Policies Laws dictating the Ethical Rights of Animals.Employees It introduced a sustainable transport class for the 3,600 employees at its trading operations in Sandwich, Kent. When developing its new UK headquarters at Tadworth, Surrey, Pfizer undertook extensive consultation to ensure that the companys desegregation into the areas real infrastructure was as smooth as possible.The Public Pfizers Health sentience Program in the UK is driven by its expertise in health, raising and science and by the recognition that it necessarily to be seen to be active in these areas. The company does this through forming partnerships with organizations and people who are active in the health arena and through raising public awareness of health issues. In 2003 Pfizer UK launched a cardiovascular disease awareness campaign bring out the need to treat cholesterin and the risks of not doing so. The campaign also aimed to encourage individuals to seek get along information from their GPs. It was launched in partnership with essence UK and Diabetes UK, two established health awareness charities. The campaign was driven by Pfizers local food tradeing team, working within the companys sales team using a CHD awareness campaign of advertisements at over 60 poster sites, a website and a telephone hotline giving members of the public an opportunity to get further information. As part of the campaign, in June 2004 Pfizer helped to sponsor one of the flagship events the Big Heart Festival at Aintree Racecourse. Sponsorship covered a series of seminars featuring Merseyside cardiologists, which were open to the general public. This approach was chosen as it provided a means of getting the experts and a large number of the general public together to debate and converse heart disease from experts in the field. different activities at this event included fittingness training and health screening blood pressure and cholesterol testing advice from dieticians and other experts a heart information c read and advice on how to stop smoking. The main challenges were coordinating the event, raising awareness about it, making it happen and making the public know that it was an event for all and not just the professionals. A focused advertising campaign and the use of the networks of the partners helped to switch several of these challenges.Shareholders Regional events, such as those on Merseyside help build relationships with customers and the wider community. Regional events demonstrate how Pfizer supply support the community in the locality and add a business benefit in terms of staff interest and motivation. This Program was set up to help build strategic relationships with Pfizers customers. These relationships help inform the companys understanding of issues at the surgery and patient level. This program is one of many that Pfizer operates across the co untry to reduce inequalities in advance to quality health care, to promote the think global but act local concept and to raise awareness of serious health issues a business objective. This is part of Pfizers business strategy of regional promotion. Similar programs are being replicated by Pfizer end-to-end the UK to raise health awareness and rear advice on health issues this provides the opportunity to link business benefits to staff involvement.Elsewhere, Pfizers CR actions have included reducing the environmental impact of its operations through water and energy conservation and active participation in the united Nations Global Compact._______________________________________________________________________________________________Article 13 and CBI CSR Case Study Series, February 2005APPENDIX AFig.1 McCann Window on Work ValuesFig.2 Linkage ModelFig.3 Pfizer StockholdersFig.4 Stakeholder Typology One, Two, Three Attributes PresentGarmin The Worlds Largest CompetitorGarmin Th e Worlds Largest CompetitorGary and Min started their venture in Lenexa, Kansas with inauguration capital of four million dollars. Not even a hug drug after launching Garmin, sales are at 105 million dollars with a profit of 23 million dollars. Just to give you an idea of how quickly the company expanded, by 1999 Garmin had a hold of 50% of the GPS market in magnetic north America, has a presence in 100 countries worldwide, and is carried by over 2,500 independent distributors. Garmin ride outs to innovate and expand below we discuss the environment Garmin is battling in, the companys core fencencies, and where it stands among competitors in greater detail.External AnalysisAs most people know, Garmin is the worlds largest competitor in the market for Global Positioning musical arrangement (GPS) devices, and particularly in the Personal Navigation Device (PND) market. According to the company, Garmin is a leader in providing soaring, communication, information devices and, appli cations, most of which are enabled by GPS (global aligning system) technology1. Garmins stated goal in creating these devices is to enrich the lives of their customers, by providing high quality products that create value for consumers2. The industry for navigation and communication devices consists of a number of highly competitive firms that, like Garmin, foundation, create, and swoon GPS devices for a variety of uses. The areas where Garmin specifically creates products for are automobiles, outdoor use, marine fomites, and aviation3. The industry has become extremely populous in recent years due to expert advancements and high demand for GPS devices, but Garmin has remained near the top of the industry throughout this time frame -as of today, Garmin sits sixth among firms in the scientific and technical puppet industry in terms of total revenue, fifth in terms of market capitalization, and second in terms of net profit edge4. Most of these firms follow distinctly similar business processes as well, relying on innovation and vertical desegregation, making for an even more competitive industry. In order to stay ahead, Garmin has had to pay close attention to the actions of both consumers and competitors. condescension the presence of so many competitors, Garmin is able to stay at the knife edge of the industry due to its capabilities in several mark areas which are critical for success in the industry. These key success factors include establishing market fortune and brand recognition, investing heavily in research and development and innovation, having a affectionate, global distribution network, and utensiling vertical consolidation. Successes in these areas are critical for firms competing in the navigation and information industry, and Garmin achieves a level of success in each area.Market share and brand recognition carries a huge importance for companies like Garmin, particularly in an industry that suffers from overcrowding and very uni form products. Garmin initially created a niche market for itself, distributing quality, cutting-edge navigation products. At the time, top competitors included giants such as Sony and Philips, creating a situation where Garmin had to create a niche for itself if it wanted to compete. Over time, Garmin has grown into an industry leader with a strong reputation for producing great products. According to the company, Garmin owns around 36 portion of the personal navigation device market, making it the first in the North American market and second in the atomic number 63an market, and they are first in both the recreation and aviation markets as well5. In order for companies to compete in such a populous market, one dominated by large, successful companies such as Garmin that distribute highly similar products, they must create some sort of recognition for themselves. Garmin has already done so, creating a brand well-known by most consumers and allowing success to build upon prior suc cess.Emphasizing research, development and, producing innovative products also grow in importance in such a large, parallel industry. referable to the dynamic nature of the technological and scientific industries, firms must promptly develop new products or ideas in order to attract new customers or retain old ones. Garmin describes their industry in such a way The market for our products is characterized by rapidly changing technology, evolving industry standards and changes in customer needs. If we fail to introduce new products, or to modify or improve our existing products, in response to changes in technology, industry standards or customer needs, our products could rapidly become less competitive or ob mendte6. Consumers today will almost always look for the product with the latest and coolest features. Technology giants such as apple and Google are proof that those firms that can either constantly improve their existing products or introduce new products will stay ahead o f the curve. The market for GPS-driven navigation equipment certainly falls under the same category. Garmin places a heavy emphasis on research and development as a means of constant innovation-in 2009 they spent nigh 240,000 dollars on RD, or roughly 8.1 percent of sales7. Other firms in the industry, such as TomTom at around 9 percent of sales, spend same amounts8. Garmin also currently holds over 1 billion dollars in gold on hand, allowing the company plenty of resources for investing in RD9. With technology changing at such a rapid pace any firm that fails to fully invest in discovering the next great technological advancement will only fall desperately behind firms such as Garmin and TomTom, or even Google and Apple.Also, due to the nature of the operations of firms like Garmin and TomTom, it is utterly necessary for companies to create and maintain strong distribution networks. Garmin and TomTom, and many other firms who distribute PNDs, do not actually operate individual stores that sell the products they make. Instead, they sell the devices through other retailers or through their websites. Selling through third parties can create a lot of functional problems, such as increasing costs and poor customer service, so creating and managing a strong, effective distribution network is an essential activity. Garmin, for instance, uses an extensive network of nearly 3000 dealers in about 100 countries, while relying on regional sales managers and in-house sales staff to provide support10. Moreover, many of Garmins largest dealers are among the largest, most recognized retailers in the world, including Best sully (which accounts for 13.4 percent of Garmins revenues), Target, Wal-Mart, Amazon.com, and Costco11. They also ordain with in-country subsidiaries and local dealers around the world to manage their global sales, a task that would be nearly impossible without an established and well-managed distribution network. It is a will to the importance of str ong global connections that Garmin owns a significant share in the European market despite their late entrance into that particular segment. Without a strong distribution network, a firm competing in the industry could not reach the levels of profitability that firms such as Garmin and TomTom reach-instead, they would be incurring extra costs and losing revenues through inefficient supply mountain ranges.Furthermore, due to the capital-intensive nature of the business and the importance of RD, a certain amount of vertical integration is expected. A huge part of the industry, as we have seen, is the ability to design and stool new, innovative products. Such endeavors require large amounts of time and money commitments, making it much more logical for firms in the industry to take the product all the way through the production phase, from developing the idea to manufacturing the product. The industry leaders such as Garmin operate their own design and manufacturing facilities-in fac t, Garmin believes its manufacturing capabilities to be one of the companys core competencies12. Vertical integration allows Garmin, and other firms, to solve common problems in the electrical industry, such as being quicker to market with products, streamlining the design and process functions, and minimizing logistical issues13. The efficiency and effectiveness of vertical integration makes it a common practice among firms in electronic fields, and any firm wishing to compete against leaders such as Garmin would most plausibly need to employ similar processes.Undoubtedly, any firm wishing to compete in the market for GPS-powered navigational and information equipment must excel in the key areas above. However, such practices do not guarantee success in such a complex industry. There are many factors that affect the profitability of firms such as Garmin, and one can rate the industrys attracter by considering the five forces model the threat of new entrants, the threat of substit utes, the power of suppliers, the power of buyers, and the competitiveness of the industry.A significant risk of new entrants into the market exists due to the low barriers of entry that exist in the industry. One such low barrier to entry involves the extensive growth of the technology PND devices require. GPS technology, like most every other technology, is now easy to copy and implement due to its widespread use, and since the satellites GPS relies on are available for civilian use, it is not exactly difficult to establish a GPS system for use in products. When you factor in the decreasing prices of necessary components such as semiconductors and microprocessors, it becomes clear that the technology for PNDs represents a very small obstacle for new firms. The ease of obtaining the technology has lead to the current trend of modishnessphones, specifically the Apple iPhone and the phones Google sponsors, containing GPS technology14. One must also consider the channels of distribut ion to be a very low entry barrier for potential entrants, specifically firms that are already large and successful. As previously discussed, Garmin (and most other PND makers) sells through third party retailers such as Best Buy and Wal-Mart unfortunately, this channel is easily accessible by top electronic companies such as Sony and Samsung. More than likely such large companies already own connections with the large retail chains, and the vast resources of electronic giants such as Sony offer them a strong good in dominating the retail channel. Google and Apple both own similar advantages. The low entry barriers are leading to an influx of companies entering the industry, and, most ominously for Garmin, new competitors such as Google are able to offer the same technology with features Garmin cannot replicate.The threat of substitutes in the navigation industry does not represent such an apparent problem per se since all PND products use basically the same GPS technology, no real substitute exists. However, there are now substitutes to the PNDs companies like Garmin sell. Most notable, of course, are the smartphones with GPS capabilities. These phones offer a huge problem in that no person with such a phone would need to own a PND due to the phones equal capabilities. Another substitute is the current practice of car companies including inbuilt GPS systems into their vehicles. Garmin is managing to limit this threat by entering the market itself-they currently have contracts for built-in GPSs in 15 Dodge/Chrysler/Jeep vehicles15. Still, the company considers the in-dash vehicle segment, along with the phone segment, to be their biggest threats going forward.In such a competitive industry, and with all devices requiring vital components such as semiconductors and LCD screens, suppliers plainly own a decent amount of power16. Suppliers of these absolutely crucial components are, in effect, selling to everyone in the industry, creating a substantial amount o f supplement for the suppliers. Garmin relies on these components, and so shortages or rising costs are withering to the business17. Garmin is, however, able to slightly circumvent this issue by having mend source providers for some key components18. Even so, supplier power represents a significant issue in the industry.Even more alarming is the power of buyers in the industry. Prices for PNDs in the automobile market have been falling rapidly over the past several years due to the number of quality products the market offers19. As with any competitive industry, it is difficult to charge price premiums when products are virtually the same in terms of functional use, and firms are then forced to compete on price. Buyers are able to deceive around for the best prices, and are more willing to choose a product because of auxiliary features such as appearance and ease of use. Garmin does own a distinct advantage in their other markets though, as prices in the aviation, outdoor/fitnes s, and marine markets are rising due to advancements in these markets over competition. However, the majority of Garmins sales still come from the automobile segment, making the power of buyers a very real threat.Just how competitive is the PND industry? The list of Garmins competitors is quite extensive. The threat from Google, Apple, and other electronics companies such as Sony, Samsung, and Motorola has been well documented. TomTom corpse the biggest threat in the self-propelling segment, and the two companies are currently waging a battle for world domination of the PND market (Garmin currently leads in the US market, while TomTom leads the European market). MiTAC and Navigon AG are also strong competitors in the automotive market20. MiTAC is also a competitor in the outdoor segment (through subsidiary Magellan) along with Lowrance and Delorme, while Nike and Timex Corp. represent threats in the fitness area21. Raymarine Ltd., Lowrance, and Furuno are the biggest competitors in the marine segment22. Finally, competition in the crowded aviation industry comes from Honeywell, Avidyne Corp., L-3 Avionics Systems, and Rockwell Collins, Inc., among others23.Judging by the five forces model, the PND industry appears to be a very unattractive industry. The threat of new entrants, the power of buyers, and the competitiveness of the industry are all very high, while the threat of substitutes and the power of suppliers are at least moderately high. Garmin remains bankable due to its achievements in the key success factors of the industry, but those factors are not easily replicable by incoming firms. Most importantly, overcoming the market share advantage Garmin, TomTom, and others own seems nearly impossible. Even if one is able to penetrate the market, the strong competitive nature of the industry is sure to keep margins razor thin and profits very low. Overall, the PND industry looks like an overly risky environment for any firm.However, that does not mean Garmi n can no longer be profitable. Garmin has built a highly successful business model, and despite recent struggles, they should be able to rebound. There are several strategies they can pursue to combat the new industry issues they face. For one, they can shift some of their focus to their other product segments. Right now, Garmins main threat is competition in their automotive segment from other PND producers and smartphones consequently, it may be beneficial to place greater emphasis on the marine, outdoor, and aviation segments that may be more profitable anyway. Garmin can attempt to penetrate these markets even more, entering into new agreements with specialty retailers for the marine and outdoor segments and airlines for the aviation segment. Increasing RD ventures in the other segments might also give Garmin a new competitive advantage in those fields. Since prices have been increasing in these areas, Garmin may be able to substantially increase revenue by renewing focus in oth er segments. Overall, though, Garmin may need to do very little else. Garmin has already introduced their version of the smartphone to compete with Google and Apple, and there is no doubt that the poor saving has played a role in Garmins recent downturn. A recent study by Forrester Research analyzing the PND market found that, although companies like Garmin have suffered from competition from smartphones and price cuts, the Garmin should be fine for the foreseeable future-Charles Golvin, the author of the study, says, I think Garmin and TomTom will be successful going forward because theyre innovating and differentiating, and theyve got the computer software and skills and knowledge with maps that the phone makers dont24. In other words, it may be a case where Garmin needs to just trust in their successful business model and continue to produce high-quality devices. As the economy improves, and the devices continue to improve, sales will eventually rise.Internal AnalysisGarmins mi ssion is to enrich the lives of its customers, suppliers, distributors, employees and stockholders by designing, manufacturing and selling navigation and communication products that provide superior quality, safety and practicable features, lower cost of manufacturing and ownership, and sufficient profits to support desired company growth.25Garmin follows a first mover, differentiation strategy. Through heavy investment in research and development they are able to develop new products that users encompass as more valuable and are willing to pay a premium for. The first mover aspect is most easily spy in their aviation division where they have received numerous awards as well as FAA certifications for being the first to market with new and innovative products. A recent review of recreational GPS receivers revealed 38 of the top 50 receivers26were Garmin products. With the Oregan 400t coming in at number one, and products from the Rino, GPSMap, and eTrex product lines all rank in t he top 10. This speaks for itself that the company has been able to define their products as superior. We have 36% of the PND market share, are number one in air power and Recreation, and number two in the marine division.27Garmin has been able to develop a high quality product while still striking a balance of costs, with their products costing only slightly more than their competitors. They have been able to achieve this in two ways, heavy investment in RD and acquisitions that have vertically integrated value chain operations. In 2009 alone the total expenditures on RD totaled $238 million or 8% of total revenue, up from 6% of total revenue in 200828. The fruit of this labor is reflected in the ownership of more than 400 patents as well as 250 trademarks. This has also allowed the firm to not only be the first to market with new products, but also be able to design manufacturing processes that allows the company to oblige and be dynamic29. Garmin uses multi-disciplinary teams in cluding industrial designers, various engineers as well members from manufacturing operations to develop products allowing them to quickly move from concept to manufacturing. The company has also used a series of acquisitions to vertically integrate itself creating a supply chain that has given it a competitive advantage. The company believes manufacturing operation in Shijr, Jhongli and LinKou, Taiwan, Salem, surgery as well as Olathe is one of its Core Competencies30. Vertical integration combined with the engineering methods described above has allowed for reduced time to market, design and process optimization and logistical agility. Logistical agility is one area where vertical integration has really given Garmin an advantage. By operating its own manufacturing facilities, Garmin is able to re-engineer products when they experience component shortages. This is an advantage over competitors because manufactures in the electronics industry typically require long lead times.31Gar min has also used strategic alliances to enter new markets. When they began development of the nvifone Garmin partnered with ASUSTek Computer Inc. to design, manufacture and distribute co-branded location-centric mobile phones.32The business model was subsequently remodeled, stating that no new Garmin-ASUS phones will be developed, and Garmin will expand its own, inside development of mobile phones.33This hardship further reinforces Garmins vertical integration strategy that has given them an advantage in the past.A SWOT analysis performed by Datamonitor in December of 2009 revealed the following Strengths and Weaknesses Robust inorganic growth, Strong product innovation, and Intellectual property.34During 2008 Garmin made several acquisitions strengthening its presence in the European market. Another asset Garmin possesses is their relationship with auto manufacturers. Garmin currently has contracts to install Garmin devices with Hyundai, Suzuki, Chrysler, Ford, BMW, MINI, Citroe n as well as motorcycle manufacturer Harley Davidson. A challenge Garmin is facing the rapid growth they undergo leading up to the weak economic climate experienced in 2009. We grew very rapidly through the late 2000s and when we finally got fully staffed in 2009, poor economic conditions hit. Developing management skills is one problem we face.35Other weaknesses included overdependence on the North American market, dependence on sole suppliers, and declining margins.36It is also very important to discuss the potential for a spurn in demand for the automotive products. Almost 70% of 2009 sales were from the automotive/portable segment. It is becoming more and more common for consumers to use navigation technology built into smart phones they already own. It is our recommendation that Garmin leverage its existing assets to continue to be successful. We do sense it is wise to try and enter into the smart phone segment, however, it is already saturated and carving out a niche would be difficult. Manufacturers such as Apple, Motorola, and BlackBerry control the smart phone market and offer an opportunity for Garmin. While Garmin already offers an app for BlackBerry, we feel that licensing Garmins technology to other existing manufactures could create more value for the company. By developing apps for other platforms such as the iPhone, Android and Windows 7, Garmin could capture more of the phone segment, while keeping in-line with their current strategy of primarily internal development. Charging a monthly fee for use of the app would also help prop up up the declining margins by generating a recurring revenue stream. A timeline should be set to terminate the venture should it turn out to be unrealised with specifics determined on a case by case basis. The key to success in developing a smart phone that would compete directly with Apple, Motorola and the like would be to develop the phone completely in-house and continue the legacy of high quality, innovati ve products. The joint venture with ASUSTek clearly did not work, and historically Garmin has had the most success with products they engineer themselves. The major risks are the potential high costs of developing the technology, however one of Garmins core competencies is their ability to integrate the user interface and the software.37This provides them the ability to develop a product that will differentiate itself from current products and open the company up to a new product line. Garmin should also continue its efforts to vertically integrate. While they already own their own engineering and manufacturing operations, and also a large part of their distribution system, continued forward and backward integration could further sheer the time to market for the highly dynamic electronics industry. Further backward integration into the manufacturing of more of the parts would negate the need for re-engineering of existing products when there are shortages by easily being able to ob tain the data to more accurately forecast demand, streamlining the entire manufacturing process. The major downside is the heavy investment in equipment to begin manufacturing more of the components however, with no debt on the balance sheet, it would be rather inexpensive to finance such a venture. Further forward integration would also benefit Garmin by allowing them to capture more of the profits from the sale of their merchandise by once again leveraging their existing assets such as their ISO 9001 certification. A fully integrated distribution system would further decrease time to market, the potential for stock-outs and also increase the flow of minute information about demand conditions to all aspects of the value chain allowing Garmin to continue to adapt and be dynamic. We believe these recommendations are consistent with Garmins mission, broadening its product offering, delivering a superior product and increasing share and stakeholder value.Competition OverviewGarmin has leash top competitors and they are MiTAC foreign Corporation, TomTom N.V., and Google. Each competitor has unique aspects different from Garmin that allow them to be successful. MiTAC owns several different GPS companies that are competing to steal market share away from Garmin. TomTom has the greatest market share in Europe and is competing head-to-head with Garmin for world-wide share. Google owns the rights to a wide variety of maps allowing it to have huge leverage in the purchasing of mapping rights. Each of these companies has the opportunity to over-take Garmin as the fall in States market leader in GPS devices.MiTAC is the maker of Mio GPS, Navman GPS, and Magellan GPS. Mio is a subsidiary of MiTAC International established in 2002 that develops products in the Personal Navigation Devices (PND), GPS TV, GPS phone, and Mobile network Devices (MID) markets38. Mio claims to be a Brand focused on customer needs who are a great user-focused provider of great customer experie nces with the tagline look for More. They believe that mobile business and communications will be a great part of life in the future and try creating products that follow to that lifestyle. Navman GPS provide PNDs similar to Garmin and also are a major vender of marine GPS. Navmans advantage over Garmin is in the marine market segment rather than the PND market. Navman has a strong fan base, but has a low market share compared to its competitor Garmin. Magellan offers GPS products for hand-held outdoor devices and in-car navigation. It was purchased by MiTAC in 2009 and has been ranked by many as one of the top manufacturers of GPS devices39. Magellans most unique attribute compared to Garmin is that it has the ability to select up to 20 destinations at once allowing the user to select the order in which to arrive at each destination. This feature is good for long, cross-country trips that include many pit stops along the way. Another difference between Magellan and Garmin is tha t Magellan devices generally have a larger screen size than the opposing Garmin products. One product, the Magellan RoadMate 1412 has a 4.3 inch-wide screen whereas the comparable Garmin nuvi 360 is only 3.5 inches40. A larger size could make the routes easier to read, but it may not be preferred due to winning up too much space.TomTom is a top manufacturer of GPS devices in competition with Garmin. TomTom is the European leader in the GPS market while Garmin is the leader in the United States. TomTom mostly competes with Garmin