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L11+Mini+Case - Financial Management Fall 2010 Professor...

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Unformatted text preview: Financial Management Fall 2010 Professor: Erica Li 1 Mini Case: Garmin Forerunner 505 Garmin Ltd.’s Forerunner (FR) series has been the most popular GPS-enabled sports watches on the market. The most current model is FR 405CX. To sustain its market share, Garmin continuously engage in product innovation. In 2009, Garmin paid $50,000 to hire an outside consulting firm for a market survey. The survey indicated that the biggest shortcomings of FR 405CX are its lack of water/sweat proofing and the large size for female runners. Garmin however already spent $10M in R&D in 2009, and obtained the technologies to overcome these pitfalls. After intensive research, Garmin is ready to produce the newest version, FR 505, in 2010, which incorporates these new technologies to overcome the shortcomings. The production of FR 505 will utilize a machine that Garmin purchased a couples years ago but is currently idle. The market price of this machine is $90M. The FR 505 is estimated to have only a three-currently idle....
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