TomTom 2012 Annual Report Download - page 16

TomTom Annual Report and Accounts 2012
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We aim to bring the highest calibre people into our organisation.
We have a rigorous recruitment process so that we can have high
levels of confi dence in the people we hire. To retain talent within
our organisation we monitor the organisational health of the
company and have programmes in place to retain key employees.
However, if we are unable to attract and retain the high calibre
people we require, our ability to operate our business successfully
could be signifi cantly impaired.
Supply chain
We depend on a limited number of third parties and, in
certain instances, on sole suppliers for component supply
and manufacturing. Any disruption to or termination of our
relationships with third party manufacturers, suppliers or
distributors, or any reduction in their ability to supply our needs
would adversely affect our business.
Our highest volume products rely on a system of dual-sourced
production from two different manufacturing partners. However,
our capacity to deliver innovative products to the market
means that we will continue to be dependent to some extent
on components that are only available from specifi c leading
technology organisations. Single-source component risk will
remain a part of our business model for the foreseeable future.
If we are unable to source any critical components, particularly
critical single-source components, our business could be
signifi cantly impaired and our fi nancial condition, results of
operations and liquidity could be materially adversely affected.
Product quality
Our industry is characterised by frequent technological advances.
In order to remain competitive, we need to continuously innovate
to introduce new and upgraded products and services. Diffi culties
may be experienced that delay the development, introduction or
market acceptance of our new or enhanced products.
Furthermore, we develop complex hardware and software
products which may experience material defects, errors or failure.
We have internal quality control standards and procedures to
mitigate these risks that require our contract manufacturers
to conduct additional quality control testing according to our
standards and guidelines. However, should any of our products
fail to operate as intended or otherwise experience quality
problems our reputation and brand value may suffer and we may
be exposed to increased operating costs and the possibility of
signifi cant consumer product liability which could adversely affect
our fi nancial condition, results of operations and liquidity.
Performance of real time services
As part of our service to our customers, we provide real-time
services such as WEBFLEET and HD Traffi c. To provide these
services to our customers we rely on our own, as well as
outsourced, information technology, telecommunications and
other infrastructure systems.
Innovation
Our markets are characterised by rapid technological change,
which challenges us to deliver highly competitive products.
We will continue to focus on producing high quality navigation
solutions, but there can be no guarantee that our products will
compete successfully against current or new market entrants or
competing technologies.
Our success depends on our ability to rapidly develop, market
and commercialise new and upgraded products and services.
The timing of our new product and service releases, our ability
to accurately forecast market demand, our product mix relative
to that of our competitors and our ability to understand and
meet changing consumer preferences are vital to this effort. Not
meeting these challenges could have a material adverse effect on
our fi nancial condition and results of operations.
Digital mapping
The competitive environment requires continuous investment in
new technology for creating and updating map databases. Maps
need to be continuously updated for changes in the environment
and we are continuously adding new geographies to our map
database to be able to meet the needs of existing customers,
bring out new products and expand into new markets.
If we are unable to invest suffi ciently to compete in terms of
both quality and coverage with other global map providers our
business, our fi nancial condition, results of operations and liquidity
may be materially adversely affected.
Dependency on GPS satellites
Our navigation products and services depend on GPS satellite
transmissions that provide position data to our customers. GPS
satellites are funded and maintained by the US government.
We have no control over their maintenance, support or repair.
The availability and free use of GPS signals to the level of accuracy
required for commercial use remains at the sole discretion of the
US government. GPS signals are carried on radio frequency bands.
Any reallocation of, or interference with these bands could impair
the functionality of our products. Alternate systems are in various
stages of development, but again these systems remain under
the control of sponsoring governments and we cannot be certain
that our products and services will be compatible with these new
systems.
Operational risks
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Human resources
In order to be a market leader in our industry you need to have the
most talented people working effectively together. The success of
our business depends on attracting, integrating and retaining highly
skilled personnel in all business units and development centres.
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