A tool operates with a guide system to identify the orientation of a tool on a work piece. In one implementation, the tool identifies its orientation with respect to a guide signal supplied by the guide system. In an alternate embodiment, the tool determines its absolute orientation, such as a (x, y) coordinate. The tool includes an action component adapted to alter the work piece, such as a cutting head in a router. A guide detector in the tool detects a position of a guide signal from the guide system. A location detector in the tool receives the position data and employs it to determine the tool's orientation. Based on the detected orientation, the tool decides whether any tool adjustments are necessary. Examples of tool adjustments include the following: adjusting the position of the action component, enabling or disabling the action component, and providing operating indicators to direct a tool operator's use of the tool.