Question

CASE APPLICATION 2 Shifting Direction As the global leader in satellite navigation equipment, Garmin Ltd. recently hit a milestone number. It has sold more than 100 million of its products to customers from motorists to runners to geocachers and more who depend on the company's equipment to "help show them the way." Despite this milestone, the company's core business is in decline due to changing circumstances. In response, managers at Garmin, the biggest maker of personal navigation devices, are shifting direction. Many of you probably have a dashboard-mounted navigation device in your car. and chances are it might be a Garmin. However, a number of cars now have "dash- board command centers which combine smartphone docking stations with naviga- tion systems." Sales of Garmin devices have declined as consumers increasingly use their smartphones for directions and maps. However, have you ever tried to use your smartphone navigation system while holding a phone to look at its display? It's dan- gerous to hold a phone and steer. Also, GPS apps can "crash" if multiple apps are running. That's why Olathe, the Kansas-based company, is taking explicitly aggres- sive actions to team up with automakers to embed its GPS systems in car dash- boards. Right now, its biggest in-dash contract is with Chrysler, and its Uconnect dashboard system is found in several models of Jeep, Dodge, and Chrysler vehicles Garmin also is working with Honda and Toyota for dashboard systems in the Asian market. Despite these new market shifts, customers have gotten used to the GPS devices, and they've become an essential part of their lives. That's why Garmin's executive team still believes there's a market for dedicated navigation systems. It's trying to breathe some life into the product with new features, better designs, and more value for the consumer's money. For instance, some of the new features include faster searching for addresses or points of interest, voice-activated navigation, and highlighting exit services such as gas stations and restaurants DISCUSSION QUESTIONS 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.) 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. 8-20. What contingency factors might affect the planning Garmin executives have to do? How might those contingency factors affect the planning? 8-21. What planning challenges do you think Garmin executives face with continuing to be the global market leader? How should they cope with those challenges?

Answer 1

1. Goals play a substantial role in an organization’s planning for situations requiring coordination of resources. In this case, the goals for Garmin are driving its direction to form new partnerships in order to remain active in the GPS market. Garmin’s planning should follow the SMART format introduced by Drucker. In addition to being written, have students suggest ways that the goal can meet the qualities of S (specific), M (measurable), A (attainable), R (relevant), and T (time bound).

2. Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work. Determining a direction for Garmin considering that most cell phones now have GPS function, involves both a long-term and short-term goal. Have students think of short term plans involved relationships with car manufacturers and then long-term plans on product development in other areas. In addressing the importance of these plans, have students think of the possibility of Garmin competing in other markets.

3. Three contingency factors affect the choice of plans: organizational level, degree of environmental uncertainty, and length of future commitments. A decision this important will ultimately be managed by the top executives at Garmin. Therefore, at the top organizational level, the planning will be strategic in nature. As functional aspects of the decision start to manifest themselves, lower-level managers will be engaged in operational planning. Second, environmental uncertainty will affect the planning process in that new technology, changing customer demands, or a myriad of other unexpected occurrences could cause the executives to rethink the company’s direction. And third, the time frame for contracts with partners and introducing new products is important. Students might think in terms of a five-year plan, but shorter and longer plans are also possible if properly supported by the students.

4. A plan involving such a fundamental change in products would be quite challenging. Very likely, not all the executives will agree on the ultimate direction of the company. Reaching consensus on what new products should be introduced and the features of those products could be a difficult process. In addition, once agreed, others (partners, stockholders, and customers) may view the direction of the company in a negative fashion – in other words, executives might face some scrutiny. Students should be able to identify the importance of effective communication throughout the organization once the plans and goals are set. Getting buy-in from others will facilitate the plan’s acceptance by constituents.