Analysis of Issues for Eco-Fone Smartphones

This report consists case study of EcoFone sells smartphones and accessories from two shops; Putney and Richmond. Company was established in 2014; this project consists of situations and circumstances face by EcoFone while expanding its business in Kingstone through Pros and Cons analyses model.

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REPORT FOR ECO-FONE
B10250
Date: April ??, 2019

Report for Eco-Fone 2019
Table of Contents
Introduction...................................................................................................................................2
1. Analysis of Issues for Eco-Fone Smartphones......................................................................3
1.1 An Overview of the Mobile phone market in the UK........................................................3
1.2 Forecasting the UK Adult Smartphone use........................................................................4
1.3Smartphones - A potential market for older customers.......................................................5
1.4Feasibility of Expanding business to Kingston using Pros and Cons table.........................6
1.5Costs of a New Building......................................................................................................7
1.6Testing the Possible Difference in Net Takings in the Two Shops.....................................8
1.7Customer Satisfaction..........................................................................................................9
1.8 Quality Procedures............................................................................................................10
1.9 Conclusions &Important Findings....................................................................................11
2. References...........................................................................................................................12
3. Appendices..........................................................................................................................13

Report for Eco-Fone 2019
Introduction
This report consists case study of EcoFone sells smartphones and accessories from two
shops; Putney and Richmond. Company was established in 2014; this project consists
of situations and circumstances face by EcoFone while expanding its business in
Kingstone through Pros and Cons analyses model. This report also caries analyses tools
like line graph, forecasting model for estimated usage in 2018 and 2019. To support
mortgage method for finding monthly instalment; excel calculation has been used.
Poison distribution helps in identifying whether quality of supplying invoice is met or
not. Additional to this; effect of smartphones on old customers explained in report.

Report for Eco-Fone 2019
1. Analysis of Issues for Eco-Fone Smartphones
1.1 An Overview of the Mobile phone market in the UK
A recent study on UK population reveals that out of 33.5 million people; 32 million are
workers and employees and rest are teenagers, retired and children. Further studies shows
that half of the population of employees utilized their phones for atleast one business apps.
It was also found that there are some most usage apps preferably having importance for
workers; like email users are 44%, voice call used by 34%, calendar management
important for 23% and remaining uses their smartphones for other features. Still there are
some features which are only preferred by fewer users like legacy information and
reporting systems apps. According to survey report; there are still some unofficial apps
which are used for entertainment purposes like instant messaging, mobile browsers,
navigation and photo application to record special moments and share it with friends and
relatives on social Medias like facebook, whatsapp and instagram. Report also shows that
around 43% people have addicted to use whatsapp at least once a day. Some field job
works like vendor, selling and marketing find no use of laptop and tablet but smartphone
to do feedback, reporting through messages and other smartphone related activity for their
work (Karlis, 2003).
As their job requires only activities like walk and interact with people directly; it become
inconvenient for them to carry heavy gadgets like laptop and tablet everywhere but this
latest featured smartphone solve their problem through providing all to do activities
through phone itself like receiving timely based contextual messages which help them to
respond quickly and conveniently (Adelson, 1966).
Figure 1: Usage of smartphones in 2016-17
Email
Making Standard Calls
Viewing Documents
Managing my
time/workload
None of these
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
37%
32%
0%
60%
50%
41%
33%
17%
80%
44%
2016
2017

Report for Eco-Fone 2019
1.2 Forecasting the UK Adult Smartphone use
By the mid 2017; it was found that 85% of smartphones users are UK adults. Forecasted
result of 2017 shows that every year growth rate of smarphone usage by adult increased by
4%; penetration is raised 9% from 2017 to 2019. While adoption rate of smartphones five
year ago was only 52%. Estimation by expert’s shows that it will further increase by 3%
and total usage by UK adults by the mid 2018 will be 88%. Younger age groups between
18 to 45 years adoption rate is recorded at 90% over many years. On the basis of data
analyses; it is clear that the usage of smartphones over other electronic devices such as
laptop and tablet is increasing year by year (Grainger and Garcia, 1996).
Figure 2: UK adult smartphone use in the period 2012-2017
2012 2013 2014 2015 2016 2017
0%
20%
40%
60%
80%
100%
Figure 2
Laptop Smartphone Tablet
YEAR
U
S
A
G
E
Figure 3: Expected usage of smartphones in 2018 and 2019:
2012 2013 2014 2015 2016 2017 2018 2019
0%
20%
40%
60%
80%
100%
120%
Laptop
Smartphone
Tablet

Report for Eco-Fone 2019
For calculating forecasted usage of smartphones by UK adults moving average method is
used rather than linear forecasting method because this model is only useful to forecast
when there is continuous growth with constant rate. But past data’s of smartphone from
2012 to 2017 shows continuous growth but with variance in growth rate; hence moving
average method is best use for meeting such variations (Lintner, 1948).
1.3Smartphones - A potential market for older customers
A study carries on older sections of UK shows that 71% people age between 55 – 75years
prefers smartphones rather than normal keypad handsets. Past five year research report
shows that these age group shows unexpected faster adoption rate as compared to adults
(Acharya Richardson, Van Nieuwerburgh and White, 2011). But the usage rate of
smartphones is recorded more by younger like for example; report says 20% old customers
see their phone within 15 minutes after wake up and only 50% has installed facebook
which rose to 70% in case of adults. On the basis of sample study done on 1163 people
usually aged between 55 to 75years, the following best futures of smartphones identified
which force these age groups to buy smartphone (Smartphone sales boom with over-55s,
2017):
 Smartphone app use for the payment of parking meters online.
 Booking taxi in cities with the help of Ola app.
 Bigger screen of new handsets make it easy to read text by old persons.
 Loudspeaker facility provided through modern handsets make it easy to respond
well.
 Machine software’s provided in new smartphones make it easy to understand its
features and uses.
 Facial recognition authentication software helps in avoiding the situation of
wearing glasses for manually typing and pressing key to unlock the phone.
 Photo filters encourages more old man to adopt this latest modern technology to
post their photos on social media like instagram and facebook (Kelly, 2011).


Report for Eco-Fone 2019
1.4Feasibility of Expanding business to Kingston using Pros and Cons
table
Should we expand our business to Kingston?
Pros Score/10 Cons Score/10
More diverse
customers 7 Shortage of cash 9
Raise in Income 8 Compromised
quality 7
More opportunities for
business 6 Loss of control 5
Boost in brand
awareness 6 More working
capital
requirement
5
Less Competition 5 Risk of failure 7
More market
penetration 7 Increase work
load 6
Visibility in the
market 7
Failure in
meeting
unexpected
demand
5
Total Pros 46 Total Cons 44
Average Pros 6.57 Average Cons 6.28
On the basis of table above it is clearly indicated that the average of pros of expanding
business in Kingston is more than cons. Therefore it is feasible to expand business in
Kingston to get several advantages like new opportunities, extra revenues and decreasing
in competition. As the previous analyses shows that smartphone market is rapidly growing
in UK, hence this can provide opportunity and less risk in opening new market in Kingston
for having hassle free earnings (Immergluck, 2011). On the other hand; ignoring cons can
cost company, so it’s suggested that EcoFone should make strategies to minimized these
risks like increase in workload, loss of control, compromised quality and shortage of case
by reducing the average of Cons; if not controlled than EcoFone could face failure in
implementing strategies for expansion in Kingston.

Report for Eco-Fone 2019
1.5Costs of a New Building
For expanding new business at Kingston EcoFone requires building premises to open its
new office. After analyses it was found that management has come up with two choices;
whether acquire a new building on monthly mortgage or lease building in Kingston. But
the amount of leasing and mortgage found no difference and company decided to acquire
building by paying monthly instalment of £3145.90 per month which has to be paid for the
terms of 15 year @ 7% annually (Ford, Burrows and Nettleton, 2001). The additional
benefit receives by company by acquiring the building over lease financing is getting
ownership for life time. Company can also adjust this interest amount in their income
statement to get tax benefit which was not possible if purchased in cash (Ford, Burrows
and Nettleton, 2001).
Popular mortgage brands of UK
(Small business prices, 2020)

Report for Eco-Fone 2019
1.6Testing the Possible Difference in Net Takings in the Two Shops
A test was conducted on two retail shops of Eco-Fone’s to find whether the net taking
received by both shops have any isolation or similarity. For this test; sample of 40 daily
net takings by both shops were taken; and the mean of first shop was calculated as £100
and standard deviation of £20; while for shop two the calculated mean is £90 and standard
deviation of £40. By analysing both shops’ data it was found that second branch has more
variations in net takings as compared to first shop. The method applied to find relationship
between both is “Coefficient of Variations” because no other information except mean,
standard deviation and sample size provided (Correlation in excel, 2013). Additional to this p
value is calculated to make adjustment with 5% significance level. The outcome from the
test shows P-value of 0.099017 and data limit has been calculated on the basis of 95%
confidence level which consist lower data limit -0.20552 and upper data limit 0.264094.
Hence, P-value calculated lies between upper and lower limit; so it can be said that there is
similarity between net takings of both shops. Here sample size taken 40 but it is not
population; the value of n is deducted by 1 (Appendix).

Report for Eco-Fone 2019
1.7Customer Satisfaction
Customer satisfaction is a feeling get by customers after consuming product; there’s no
identical measurement for knowing how much satisfaction customer received. But rating
system found effective to get idea about customer response towards usage of smartphones;
later these feedbacks helps EcoFone in implementing changes to increase customer
satisfaction level. EcoFone is active towards its customer services and what its clients
preferred; hence for this it take survey every year by distributing questionnaires among
selected sample.
A survey conducted by company through questionnaire shows responses from 103
respondents. The outcome consist averages of all questionnaires of survey which is
discussed below:
The average of 103 responses shows that consumers visit EcoFone’s stores between 3 to
6months. That means satisfaction level and engagement of client rate is average. Outcome
shows that on an average people use smartphones maximum for 3 years. People rate
product as good and fair for service; which means they are not much satisfied; sales staff
service also found good and Price of product also found average by respondents. Average
respondents found overall satisfaction from product neutral. Also clients are not sure
whether they will continue doing business with EcoFone as they rate neutral. But
maximum respondents were chosen likely recommending smartphones products and
services to others.
Hence, from overall response analyses from survey it was found that only 50 to 60 percent
customers were satisfied with EcoFone’s product and rest of them were not sure about
continuing business with company. This might result in moving of traffic to its competitors
which is critical issue for the company.
1.

Report for Eco-Fone 2019
1.8 Quality Procedures
The accounts department found an average of two returned invoices out of 10,000
invoices; quality team has set the target of having such error not more than 15% in a given
month (Poison Distribution, 2020). Here method of Poisson distribution is applied because
the size of the data is 10,000 with error percentage of 1% on an average; to test such large
sample only Poisson distribution method best suits available case (Poison Distribution,
2020).
Therefore for above mentioned reasons Poisson distribution method found best fitted with
above case. Calculation of probability having more than 3 errors in invoices has done
below:
P(x ≤ 2, 2) = P(0;2) + P(1;2) + P(2;2)
= [(e-2)(20)/0!] + [(e-2)(21)/1!] + [(e-2)(22)/2!]
= 68%
There's 68% chance of error less than 2 in one month
Hence, probability of error more than 3 in one month will be:
= 100 -68 = 32%
The minimum percentage to meet quality was set not more
than 15% but actual data shows that probability of error
occurring more than 3 in one month is 32%; therefore it can
be declared that quality has not met
Hence, on the basis of above result it can be concluded that quality procedures have not
been met which was 15% and actual variations is 32%. EcoFone requires more steps to
improve its quality and reduce 30% chance to below 15%.

Report for Eco-Fone 2019
1.9 Conclusions &Important Findings
After analysis of whole report; it can be concluded that EcoFone has bright future if it
expands its business in Kingston; it should buy new building premises rather to lease it for
100 years. Company should also focus on engaging more old people towards its modern
new handsets by providing good discount and attractive schemes. During various tests
such relationship between both shops, checking customer satisfaction level and quality
assurance tests; it was found that there is positive relationship between net takings by both
two shops of EcoFone as their net earnings are similar. Customer satisfaction level of all
103 respondents’ shows neutral response; which is critical issue for the company and
initiative action should be taken by company to increase satisfaction level of clients.
Poisson distribution test conducted to find error level in invoices and result found show
that probability of occurring error is more than 15% and hence doesn’t meet standard
quality level; EcoFone requires controlling its quality to reduce these errors.

Report for Eco-Fone 2019
2. References
Books and Journals
Acharya, V.V., Richardson, M., Van Nieuwerburgh, S. and White, L.J., 2011. Guaranteed to fail:
Fannie Mae, Freddie Mac, and the debacle of mortgage finance. Princeton University
Press.
Adelson, R.M., 1966. Compound poisson distributions. Journal of the Operational Research
Society, 17(1), pp.73-75.
Ford, J., Burrows, R. and Nettleton, S., 2001. Home ownership in a risk society: a social analysis
of mortgage arrears and possessions. Policy Press.
Grainger, R.J.R. and Garcia, S.M., 1996. Chronicles of marine fishery landings (1950-1994): trend
analysis and fisheries potential (p. 51). Rome: FAO.
Immergluck, D., 2011. Foreclosed: High-risk lending, deregulation, and the undermining of
America's mortgage market. Cornell University Press.
Karlis, D., 2003. An EM algorithm for multivariate Poisson distribution and related
models. Journal of Applied Statistics, 30(1), pp.63-77.
Kelly, R., 2011. The good, the bad and the impaired: A credit risk model of the Irish mortgage
market. Central Bank and Financial Services Authority of Ireland.
Lintner, J., 1948. Mutual savings banks in the savings and mortgage markets. Division of
Research, Graduate School of Business Administration, Harvard University.
Online:
Correlation in excel, 2013, Online Available through: <https://www.youtube.com/watch?
v=AjQA78tI39Q>
Small business prices, 2020, Online Available through:
<https://smallbusinessprices.co.uk/commercial-mortgages/>
Smartphone sales boom with over-55s, 2017, Online Available through:
<https://www.bbc.com/news/technology-41319684>
Poison Distribution, 2020, Online Available through: <https://stattrek.com/probability-
distributions/poisson.aspx>

Report for Eco-Fone 2019
3. Appendices
Figure 1
Activities 2016 2017
Email 41% 37%
Making Standard Calls 33% 32%
Viewing Documents 17% 0%
Managing my time/workload 80% 60%
None of these 44% 50%
Figure 2
Products 2012 2013 2014 2015 2016 2017
Laptop 73% 76% 75% 79% 76% 78%
Smartphone 52% 62% 70% 76% 81% 85%
Tablet 16% 36% 50% 60% 63% 68%
Figure 3: Forecasted usage for 2018-2019
Products
201
2 2013
201
4 2015 2016 2017 2018 2019
Laptop 73% 76% 75% 79% 76% 78% 79.5%
80.5
%
Smartphon
e 52% 62% 70% 76% 81% 85% 91%
97.3
%
Tablet 16% 36% 50% 60% 63% 68% 74.8%
82.3
%
Forecasted usage of Laptop
Yea
r (X) Usage % (Y)
Y1 = (Ȳ̅ -
Y)
X1 = ( -X̄̅
X) Y1X1 (X1)2
1 73% -3% -2.5 8% 6.25
2 76% 0% -1.5 0% 2.25
3 75% -1% -0.5 1% 0.25
4 79% 3% 0.5 2% 0.25
5 76% 0% 1.5 0% 2.25
6 78% 2% 2.5 5% 6.25
21 457% 15% 17.50
Mean of X
( )X̄̅ 3.5
Mean of Y
(Ȳ̅) 76%
b1 = Y1X1/(X1)2 = 15%/17.5 = 1
= 76% - 1(3.5) = 72.5%X̄̅

Report for Eco-Fone 2019
Fitted Equation: Y = 72.5% + 1(X)
Note: For Smartphone and Tablet moving average @ 7%
growth rate for Smartphone and @10% for Tablet
Mortgage
calculation
Loan amount £350,000
Term in years 15
Interest rate 7%
Formula (monthly installment) = PMT(rate/12, term*12, -C4)
Monthly
Payment
£3,145.9
0