From the blogs: TomTom's new direction.

AuthorCrossman, Steve
PositionForum

TomTom, the Dutch company famous for satnav systems, has just published its latest set of financial results. It reported a drop of 29 per cent in quarterly profits, with net profits for the final quarter of 2010 of [euro]52m, compared with [euro]72m for the corresponding period in the previous year.

For CIMA students who are studying the "enterprise pillar" papers this is a timely, real-life reminder of some key strategic issues.

First, TomTom has been incredibly successful. It's quoted on the Amsterdam Stock Exchange with a market capitalisation of nearly [euro]1.5bn. A major weakness, though, is that it is a "single-product company"-solely selling portable navigation devices. The challenge is to make sure that there are replacement products in the pipeline in case your single-product company turns into a zero-product company. So why have profits dropped by nearly 30 per cent? Is it because everyone already has a TomTom, or is it because new cars now come with a satnav built in?

The answer is quite possibly in your pocket. Smartphones by the likes of Apple, HTC and...

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