This paper analyzes TomTom's strategic position in 2009, when the company faced sharply declining revenues amid the rise of smartphones and free navigation apps. Using a SWOT framework, the paper identifies TomTom's remaining strengths — including brand recognition, a large installed user base, and relative financial health — alongside serious weaknesses in service capability and technology. The external analysis highlights three major threats: smartphone disruption, broader technological change, and market saturation. Three strategic options are then evaluated: entering the enterprise logistics market, expanding into emerging markets, and accepting a managed decline into niche segments. The paper recommends pursuing the first two options simultaneously, supported by a mobile-as-loss-leader strategy to sustain data collection and competitive relevance.
The paper demonstrates effective use of the SWOT framework as both a diagnostic and a generative tool. Rather than treating SWOT as a static checklist, the author uses it to build a causal argument: declining strengths and rising external threats directly motivate the three strategic options presented, and the recommendation is justified by returning to the internal financial strength identified earlier in the analysis. This shows how analytical frameworks can drive strategic reasoning rather than merely organize information.
The paper opens with an executive-style overview, then proceeds through six clearly delineated sections: introduction (company context and financials), mandate and stakeholders (vision, objectives, and key parties), internal analysis (strengths and weaknesses), external analysis (threats and opportunities), strategic options (three alternatives), and a final recommendation. This mirrors the structure of a professional strategy report, making it a useful model for business case writing at the undergraduate level.
TomTom, the satellite navigation company, faced declining revenues in 2009, the time period in which this case is set. The company's investors were rightfully worried about a downturn in revenues, which came at a time of increased competition and declining growth rates. The company's major markets were saturated, while emerging markets still offered some potential. TomTom's 2008 revenues were just over €1.5 billion, a slight decline from 2007 levels, and the declining revenue trend continued into the first quarters of 2009. Net income had grown slowly until FY2007, but the company lost nearly €1 billion in FY2008. Management at TomTom needed to correctly analyze the causes of these declines and shift the company's strategy to restore profitability and develop a long-term vision.
TomTom had, to that point in its history, been driven by a mandate to "improve people's lives by transforming navigation that gets people from one place to another safer, faster, cheaper, and better informed." The company still maintained this vision, but realistically the vision itself had become one of the company's biggest problems — TomTom was no longer the only company capable of delivering this basic benefit.
The objectives TomTom set for its business were as follows. The first was to have better maps, something that its recent acquisition of TeleAtlas was intended to address. Having better maps is a clear source of competitive advantage when helping people navigate more efficiently. The second objective was better routing, which also reflects the company's vision and would provide a meaningful source of competitive advantage — though this was also an area where TomTom had begun to lose significant ground to competitors. The third objective was better traffic information, which ties directly into the second objective, since the optimal route depends in part on prevailing traffic conditions.
The case does not state a formal mission for TomTom, but the company's website states a mission to "reduce traffic congestion for all" — something that connects to the third objective but appears to differ from what the company was pursuing in 2009. The website also identifies three core values: community giving, environmental impact, and supply chain management. Environmental impact aligns with the company's focus on traffic, while supply chain management hints at a potential role in logistics solutions — a creative application of TomTom's core technology.
TomTom has a number of important stakeholders. Internal stakeholders include employees, management, and shareholders. External stakeholders include the general public (especially given the traffic mandate), governments, competitors, suppliers, and customers. The stakeholder of most immediate concern was the shareholder, as the company was no longer profitable and revenues were declining. Should this trend continue, internal stakeholders would also be affected. TomTom also needed to focus on customers, since identifying and meeting customer needs would be essential to reversing the negative financial trends.
The internal analysis focuses on TomTom's strengths and weaknesses. The company identified several factors to which it attributed its record of success: the strength of the TomTom brand, the size of its user base, the scale of its distribution network, and a relatively healthy balance sheet — though recent borrowings, primarily to finance acquisitions, had begun to erode that financial cushion.
The TomTom brand and user base are both valuable and closely related. TomTom was the market leader in Europe and second in North America, the two largest markets in the world. This meant a significant installed base of customers familiar with the product. The company could potentially sell additional services to these customers. Brand value stemmed from early leadership in the category and the large customer base that had been built over time. However, it is worth noting what the brand value did not reflect — service quality — a point discussed further under weaknesses. The user base itself was a diminishing strength given declining revenues and intensifying competition, and was therefore not a source of sustainable competitive advantage.
Likewise, the distribution network was not a source of sustainable competitive advantage. TomTom had built strong relationships with retailers, car dealers, and car rental companies. This distribution strength had certainly helped build market share in prior years. The problem was that distribution in the industry was changing. TomTom's traditional distribution model was product-focused rather than service-focused, and this was increasingly a liability rather than an asset.
The erosion of these three traditional strengths had weakened the company financially. That said, TomTom had only posted its first loss the prior year and still retained meaningful financial strength. A healthy balance sheet gave management time to develop solutions; the absence of an immediate financial crisis was itself a strategic asset when facing the range of challenges TomTom confronted.
In terms of weaknesses, TomTom had moved from a position of few weaknesses just a couple of years earlier to one with many. A persistent weakness had been service quality. The satellite navigation market had essentially been a duopoly, with Garmin as the main competitor. Substitutes such as MapQuest or paper maps were inefficient alternatives for consumers who found dedicated navigation devices too expensive. Within this duopoly, neither company had developed much competency in customer service, which undermined loyalty for both firms — and when the competitive landscape shifted, this became a serious liability for TomTom.
The second weakness was technology. Although TomTom had emphasized technology as a critical strength, by 2009 it could not honestly claim technological superiority. Smartphones had made satellite navigation inexpensive, and TomTom had been slow to respond to the mobile shift. The company had released an iPhone app, but had nothing for BlackBerry or the rapidly growing Android platform. Furthermore, TomTom's mapping capability — even following the TeleAtlas acquisition — was inferior to Google's. With Google Maps as the default on iPhones and Android devices, TomTom was marketing an app that compared unfavorably to the free, built-in alternative on most new non-BlackBerry smartphones. This technological gap was a major driver of declining sales.
A third weakness was the company's deteriorating financial health. Revenues were declining, margins were shrinking, and the company was now posting losses. This was particularly problematic because TomTom needed to invest more to restore its technological standing at precisely the moment when cost-cutting pressures were mounting. Without a rapid turnaround, financial constraints would increasingly limit future strategic options.
TomTom.com. (2014). Mission and facts. TomTom. Retrieved November 6, 2014, from
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