Eco-Fone Business Report: Market Analysis and Expansion Strategy

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

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

Report for Eco-Fone 2019
Introduction
This study has been shaped in the form of a business report, analysing the financial
information of Eco-Fone, that is based in the UK. The company deals in smartphone and
accessory sales and has been experiencing a massive growth from 2014, since its
incorporation. However, certain recent trends have been noticed in the smartphone industry
in the country, whereby the customers in the age group 55-75 are increasing their
smartphone usage. Also, the two branches of the company in Richmond and Putney are
experiencing differences in net takings. Statistical tools have been employed to analyse the
reasons for the same, which will help Eco-Fone gain a competitive edge in the industry.
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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
As per research conducted by Deloitte UK in 2017, 32 million individuals in the UK used
smartphones in the workforce. Half of these individuals used their smartphones to solve
work-related issues. The report of Deloitte stated that among the total number of
populations, 44% of the individuals used smartphones to send and receive emails. 34% of the
individuals used their mobile devices to make and receive calls. The third most popular
application that is used by the workforce is the calendar management application, with over
23% of the people using it. The most prominent usage of the smartphone in the workplace is
for communication, and WhatsApp is the most popular application for this purpose, with over
43% of the people reporting to use it every day (Paik and Zhu, 2016). Even though this
number may seem high in the country, it is a worrying factor because the name should have
been much higher, owing to the convenience of smartphone usage. Applications in the
modern era are being optimised especially for the benefit of office-goers and individual users.
Deloitte (2017), also states in its report for annual smartphone usage in the country, that the
usage has increased significantly over the last decade. In 2012, smartphone usage in the
country amounted to 52%, which rose to 85% in 2017. Deloitte has forecasted that the
proportion of smartphone users will grow further in 2020 and years to come. Participants in
the survey conducted by Deloitte state that people preferred smartphones more than
desktops because of its convenience. They believed it is more convenient to use smartphones
than being glued to keyboards.
1.2 Forecasting the UK Adult Smartphone use
Year PC
Usage
Year Smartphone
Usage
Year Tablet
Usage
2012 73% 2012 52% 2012 16%
2013 76% 2013 62% 2013 36%
2014 75% 2014 70% 2014 50%
2015 79% 2015 76% 2015 60%
2016 76% 2016 81% 2016 63%
2017 78% 2017 85% 2017 66%
2018 75% 2018 87% 2018 75%
2019 78% 2019 91% 2019 84%
Figure 1: Forecasting smartphone, tablet and PC Usage in the UK
(Source: deloitte.com, 2017)
2
2012 2013 2014 2015 2016 2017 2018 2019
0%
20%
40%
60%
80%
100%
120%
Values Forecast
Lower Confidence Bound Upper Confidence Bound

Report for Eco-Fone 2019
The smartphone industry in the UK has been analysed with the help of a spreadsheet, using
the information procured by Deloitte. The chart shows that the market for the smartphone
has been experiencing a positive trend, with a continuous rise in usage. It has been predicted
that in 20180, smartphone usage will rise by 2% from 2017, and 4% from 2018. As a result,
smartphone usage in 2018 and 2019 stands at 87% and 91% respectively. However, PC and
tablet usage has been experiencing an inconsistent rise in sales throughout the decade.
1.3 Smartphones - A potential market for older customers
The report by Deloitte whereby it states that smartphones are becoming increasingly popular
among the elders in the country is supported by Bbc.com (2019). BBC recognises that 71% of
the elders in the UK prefer and feel comfortable to use smartphones. The study conducted by
BBC consisted of 1,163 individuals in the population, and the following reasons were
established for the increasing popularity of smartphones among the individuals in the age
group 55-75 years:
 Individuals find it easier to use smartphones to pay for parking meters
 Owing to the giant screens in the smartphones, the viewing area becomes more
significant for the elderlies, which makes it easier for them to use
 Booking taxis online is comparatively more accessible than the conventional method of
offline booking (Berenguer et al., 2017)
 The user interface in smartphones is highly optimised. Therefore, it is convenient for the
elderlies to use it
 Authentication of smartphones has become more comfortable over time. Owing to
advanced technologies like face-unlock and fingerprint-unlock, individuals in the age
group 55-75 find it easier to access their smartphone (Das and Khan, 2016)
1.4 Feasibility of Expanding business to Kingston using Pros and Cons table
Pros and cons table has been constructed to ascertain if the decision to expand to Kingston
will be a good idea for Eco-Fone. The schedule with the pros and cons has been determined
weights and has been presented below:
Should we expand our business to Kingston?
Pros Score/10 Cons Score/10
Attract more consumers 8 The need for additional cash 8
Generate additional revenue 9 Dispersal of ownership 5
Satisfy the market demand 6 Facing competition 6
Gain an edge over the rivals 10 Reduced employee-
retention
7
Increase the brand value 9 Expenses of logistics 6
Improve the market price 8 Funding from an external
source
8
Utilise the available resources 7
Total Pros 57 Total Cons 40
Average Pros 8.14 Average Cons 6.67
Figure 3: Pros and Cons table for expansion decision
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Report for Eco-Fone 2019
(Source: Created by the Author)
From the table, it can be ascertained that the pros outweigh the cons by a substantial
amount. It can, therefore, be concluded that Eco-Fone may consider expanding to Kingston. It
will prove to be beneficial for the company.
1.5 Costs of a New Building
Since Eco-Fone has considered expanding its business to Kingston, it is now stuck in deciding
whether to purchase a new building or lease it. The company has established that the cost of
buying a new building will amount to £350,000. The mortgage of the principal amount is
payable in 15 years, and the rate of interest is at 7%. The mortgage repayment has been listed
in a spreadsheet below. It can be seen from the table that:
i. The monthly payment of the principal amount (together with interest) amounts to £3,145.
Therefore, the total debt at the end of 15 years payable by Eco-Fone will amount to
£387,740 (together with interest)
ii. The funding can be arranged from HSBC bank, UK. It is one of the largest and most
popular mortgage banks in the country and provides attractive rates of interest
(hsbc.co.uk, 2019)
Mortgage
companies
Logos
HSBC Bank
Barclay’s
Bank
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Report for Eco-Fone 2019
Lloyd’s
Bank
Royal Bank
of Scotland
Santander
Coventry
Building
Society
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Report for Eco-Fone 2019
Virgin
Money
TSB Bank
Figure 4: Eight of the leading mortgage banks in the UK
(Source: Created by the Author)
1.6 Testing the Possible Difference in Net Takings in the Two Shops
A sample of the first shop – 40
Mean of the first shop - £100
The standard deviation of the first shop - £20
Net takings from the first shop - £ (100 * 40) = £4,000
A sample of the first shop – 40
Mean of the second shop - £90
The standard deviation of the second shop - £40
Net takings from the second shop - £ (90 * 40) = £3,600
Even though the cost per unit in the first shop is higher than the second shop (£100 v £90),
the first shop earns more than the second shop (£4,000 v £3,600). Moreover, the difference
between the standard deviation of the two shops shows that the units sold in the second
shop are more diverse than the units sold in the first shop.
1.7 Customer Satisfaction
The survey has been conducted by Eco-Fone to obtain information about customer
satisfaction. The study has been collected using a questionnaire, where fifty respondents
included the sample size of the survey. Six questions were included in the study, and each
dealt with gaining information about the customers of the company. The questionnaire has
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Report for Eco-Fone 2019
been prepared in the form of a checklist, whereby the respondents were asked to tick the
answer they feel is the most relevant with their experience with the company. The survey
concluded essential results about the customer’s perception of the company. The fifty
answers have been collected from the respondents, and mean for the data has been
calculated, to represent the average response from the respondents. The survey result has
been attached in the appendix of the report.
1.8 Quality Procedures
For identifying the sporadic variables in broad distribution, the Poisson distribution theorem
is used. Since Eco-Fone sends about approximately 10,000 invoices per month, the
distribution size is relatively high. As a result, identifying errors will be a tedious task. Poisson
distribution can be used to mitigate this effect, whereby a large number of deliveries can be
scrutinised to find the mistakes. It can be concluded that the company adheres to its quality
procedures. The quality guidelines of Eco-Fone state that the maximum number of invoices
with an error cannot exceed three. However, it can be seen that the total number of invoices
returned with an error amount to only two. Therefore, it can be said that the company
efficiently uses the Poisson distribution theorem and other quality control procedures to
maintain its quality (Collins et al., 2015).
1.9 Conclusions & Important Findings
The smartphone industry in the UK is currently experiencing a boom, and Deloitte forecasts
that the trend will continue in the future. This is a wholesome opportunity for the
smartphone companies to capture the market share, and create value for the brand (Appiah
et al., 2017). Eco-Fone has been efficiently able to build on the competition by supplying
smartphones to meet the demand of consumers in the UK. The company also looks to rely on
the increasing popularity of smartphones among the elders in the country and as a result of
which, has planned to expand its business in Kingston. For this purpose, Eco-Fone has decided
to purchase a building for its operations in Kingston, by borrowing an amount from one of the
leading mortgage banks in the UK. The statistics of the two operating shops of the company
reveals that the first shop is more profitable than the second one. Moreover, the company
also surveys its consumers to ascertain if they are satisfied with the service of the company
(Dedrick and Kraemer, 2017). To be successful in the market, Eco-Fone adheres to its quality
procedures and ensures that errors and blunders are minimised.
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Report for Eco-Fone 2019
2. References
Appiah, D., Ozuem, W. and Howell, K.E., 2017. Brand Switching in the Smartphone Industry: A
Preliminary Study. In Global Business and Technology Association Conference, Vienna, Austria.
https://www.igi-global.com/chapter/issues-with-the-importance-of-branding-brand-
personality-and-symbolic-meaning-of-brands-in-the-smartphone-industry/208067
BBC News. (2019). Smartphone sales boom with over-55s. [online] Available at:
Berenguer, A., Goncalves, J., Hosio, S., Ferreira, D., Anagnostopoulos, T. and Kostakos, V.,
2017. Are Smartphones Ubiquitous?: An in-depth survey of smartphone adoption by
seniors. IEEE Consumer Electronics Magazine, 6(1), pp.104-110.
Collins, D.J., Neild, A., Liu, A.Q. and Ai, Y., 2015. The Poisson distribution and beyond:
methods for microfluidic droplet production and single cell encapsulation. Lab on a
Chip, 15(17), pp.3439-3459. https://pubs.rsc.org/en/content/articlehtml/2015/lc/c5lc00614g
Das, A. and Khan, H.U., 2016. Security behaviours of smartphone users. Information &
Computer Security, 24(1), pp.116-134. https://www.emeraldinsight.com/doi/full/10.1108/ICS-
04-2015-0018
Dedrick, J. and Kraemer, K., 2017. Intangible assets and value capture in global value chains:
The smartphone industry–. The World Intellectual Property Organization, November.
http://www.wipo.int/edocs/pubdocs/en/wipo_pub_econstat_wp_41.pdf
Deloitte global mobile consumer survey, 2017
The Deloitte United Kingdom. (2019). Discover the latest trends via our Mobile Consumer
Survey. [online] Available at: https://www2.deloitte.com/uk/en/pages/technology-media-
and-telecommunications/articles/mobile-consumer-survey.html [Accessed 8 Apr. 2019].
Hsbc.co.uk. (2019). Welcome to HSBC UK banking products including current accounts, loans,
mortgages, credit cards. Also Premier and Advance banking and more…. [online] Available at:
https://www.hsbc.co.uk/ [Accessed 8 Apr. 2019].
https://www.bbc.com/news/technology-41319684 [Accessed 25 Feb. 2019].
Paik, Y. and Zhu, F., 2016. The impact of patent wars on firm strategy: evidence from the
global smartphone industry. Organization Science, 27(6), pp.1397-1416.
https://pubsonline.informs.org/doi/abs/10.1287/orsc.2016.1092
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Report for Eco-Fone 2019
3. Appendices
Appendix I
The formula to calculate mortgage repayment in excel spreadsheet:
Cell B4: B2/1200
Cell B5: = (1+B4) ^ B3
Cell B6: =(B4*B5)/(B5-1)
Cell B7: B6*B1
Appendix II
Survey to know customer experience:
The following information was obtained from the survey conducted by Eco-Fone, where the
respondents in the population were fifty:
Question 1 Question 2 Question 3 Question 4 Question 5 Question 6
2 3 2 1 2 2
2 2 2 5 2 3
2 3 3 2 4 5
1 5 1 3 4 4
3 4 4 3 2 4
3 1 5 1 2 1
4 2 4 4 1 1
3 2 2 5 2 5
4 1 1 3 4 5
4 4 3 3 4 3
2 2 4 2 1 3
2 3 1 3 1 3
3 3 1 2 2 1
2 4 2 3 2 1
1 1 4 2 2 4
3 1 3 5 3 2
3 2 1 2 5 5
4 3 4 2 2 3
3 1 4 4 1 3
2 2 5 1 4 2
1 4 3 2 4 4
4 3 2 3 1 1
5 2 1 1 3 1
4 2 3 3 2 4
5 1 4 2 5 1
1 3 3 2 5 2
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Report for Eco-Fone 2019
2 4 1 1 1 2
3 4 1 4 2 4
2 5 1 2 3 4
2 2 4 3 3 2
3 2 2 5 1 3
2 1 2 4 5 3
3 3 2 1 4 2
3 3 4 1 1 1
2 1 1 1 2 1
5 2 1 2 3 5
3 5 2 2 3 2
3 3 2 3 3 3
1 2 3 4 2 1
4 1 3 2 1 5
3 2 4 4 4 2
2 5 5 3 2 3
4 3 3 4 4 1
3 3 3 3 2 1
1 4 2 4 1 2
2 2 2 2 2 3
3 3 3 3 5 1
3 4 2 2 3 2
2.7142857 2.6530612 2.5714286 2.6530612 2.6326531 2.6122449
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