Eco-Fone: Smartphone Market Analysis and Expansion Strategy

Desklib provides past papers and solved assignments for students. This report analyzes Eco-Fone's business expansion.

Summative Assessment

Table of Contents
Introduction............................................................................................................................. 2
Overview of the UK Mobile Phone Market (Task-1).................................................................3
The Usage of Tablets, Smartphones, and Laptops in the UK, 2012 To 2017 (Task-2)...............5
An analysis of Smartphone sales in people over 55 years (Task-3)..........................................7
Should Eco-Fone Expand Their Business? (Task – 4)................................................................9
Monthly mortgage calculation for the new shop (Task – 5)...................................................11
Comparison of the net earnings of the two shops owned by Eco-Fone (Task – 6).................12
Summarising the Questionnaire Findings (Task - 7)...............................................................13
Assessing the quality procedures of invoicing at Eco-Fone (Task – 8)....................................15
Reference List (Task-9)........................................................................................................... 16
Conclusion (Task -10)............................................................................................................. 17
Appendices.............................................................................................................................18
1

Introduction
The UK smartphone market is growing with a focus on sale value instead of sale volume
(Choudrie et al., 2014). The limited usage and exposure to enterprise solutions provide an
opportunity for expansion to the smartphone industry. The assignment considers a
smartphone and accessory seller Eco-Fone. It has two shops and is considering an
acquisition of the third shop. The practice of the company and its readiness for the
expansion is evaluated in the assignment. Also, the feasibility of expansion plan along with
adherence to the existing quality procedures is also considered. The assignment also focuses
on the customer feedback analysis as well as a comparison of net earnings of the existing
shops. The future prospects of the smartphone industry in the UK are also considered in the
assignment (Choudrie et al., 2014).
2

Overview of the UK Mobile Phone Market (Task-1)
After a continuous decline in terms of overall sales units, the UK mobile phone market has
balanced out. There’s still a decline in the number of mobile phone units beings sold but an
increase in the sales of models over £778 has relived the mobile phone makers and vendors.
In spite of the decline in sales volume, the profit and revenue of mobile phone makers are
increasing. This has made the mobile phone makers focus on the over £778 price segment.
According to the data available in the Deloitte’s research, over 87% of UK residents between
the ages of 18 years to 75 years own a smartphone while only 8% are still using the feature
phones (Lee et al., 2019). The smartphones are basically used for consumer applications
while the work-related application of smartphones still needs to catch up. The UK workforce
in 2017 numbered in 33.5 million employees and work-related usage was limited to a single
task in half the workforce number. In 2016, the smartphone was used for a number of work-
related activities such as it was used by 41% worker to access email, 33% for voice calls, 17%
for viewing work-related documents, and 3% for calendar management (Figure ) (Collins et
al., 2019). The uses of work-related applications are limited to applications that are
optimised for smartphone usage (Giessmann et al., 2012). Other applications that were used
by workers include mobile browsers, messaging, camera applications, and navigation. The
focus on using work-related application is primarily for communication and workflow
related application usage is lower (Sell et al., 2012). There's a need for work-related use of
smartphone but the modest work-related use of a smartphone is due to limited availability
of smartphone optimised work-related applications such as time sheet and scheduling
information related applications. The use of smartphones has increased significantly while
the PC usage is remaining confined (Collins et al., 2019). So, the focus on PC based
enterprise software needs to shift to the smartphone optimised ones. This can be achieved
by utilising the existing enterprise applications and modifying or customising them to make
them ideal for smartphone use (Collins et al., 2019).
3

Figure 1: Work-related Smartphone Usage in the UK 2016-17
Email
Voice Calls
Calendar management
Viewing Documents
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
41%
33%
3%
17%
37%
32%
0%
0%
2017
2016
Percentage of UK Workers using Smartphones
4

The Usage of Tablets, Smartphones, and Laptops in the UK, 2012 To 2017 (Task-2) (Lee et
al., 2019)
2012 2013 2014 2015 2016 2017 2018 2019
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
73% 76% 75% 79% 76% 78%
52%
62%
70%
76% 81% 85%
16%
36%
50%
60% 63% 68%
Figure:2 - Laptop, Tablet, and Smarphone Usage,
2012-2017
Laptop Smartphone
Forecast Smartphone Tablet
Linear Forecasting of the data
Linear forecasting is accurate and viable when the data is linear. It means data points should
represent a line that indicates a steady incline or decline (Box, 2015).
2012 2013 2014 2015 2016 2017 2018 2019
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
73% 76% 75% 79% 76% 78%
52%
62%
70% 76% 81% 85%
16%
36%
50%
60% 63% 68%
Figure:3 - Linear forecasting of Laptop, Tablet, and
Smarphone Usage, 2018 and 2019
Laptop Linear (Laptop) Smartphone
Linear (Smartphone) Tablet Linear (Tablet)
5

In figure 2, the laptop penetration data shows both upward and downward trend while the
data for tablet and smartphone penetration shows an upward trend but it's not increasing
at a steady rate. So, linear forecasting will give inaccurate results as shown in figure 3. The
Polynomial forecasting provides better results as shown in the below figure 4 (Box, 2015).
2012 2013 2014 2015 2016 2017 2018 2019
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
73% 76% 75% 79% 76% 78%
52%
62%
70%
76% 81% 85%
16%
36%
50%
60% 63% 68%
Figure: 4 - Polynomial Forecasting of Laptop, Tablet, and
Smarphone Usage, 2018 and 2019
Laptop Polynomial (Laptop) Smartphone
Polynomial (Smartphone) Tablet Polynomial (Tablet)
Forecasting of Laptop, smartphone and tablet usage in 2018 and 2019 (Box, 2015)
The expected Laptop usage in 2018 and 2019 is 80% and 82% respectively
The expected Smartphone usage in 2018 and 2019 is 88% and 92% respectively
The expected Tablet usage in 2018 and 2019 is 72% and 76% respectively
6

An analysis of Smartphone sales in people over 55 years (Task-3)
The customers at the UK smartphone market can be categorised on a number of different
parameters such as age and occupation. In the UK, the overall use of the smartphone in the
age bracket 18 to 75 years is over 87% (Lee et al., 2019). On finer scrutiny, the percentage of
people of the age group 55 to 75 years using smartphones is 71%. The smartphones gained
rapid popularity in the older consumer in the last five years. Although, there seems to be a
certain alteration in the daily usage of smartphones such as the national average of checking
the phone within 15 minutes after people wake up is 56% but is a measly 20% in case of
these older gentlemen (Kelion, 2017). The overall smartphone Facebook users are 70% of
the total smartphone users as compared to nearly 50% under the age group of 55 to 75
years. The following features are preferred by the people under the age of 55-75 years (Lee
et al., 2019)
Mobile payments and booking – The smartphones offers payment alternatives that can be
easily employed to pay at various places like at the parking meter. It also facilitates travel by
allowing the user to book a taxi; in fact, many taxi companies are promoting their
smartphone applications to facilitate taxi booking and other travel related services
(Berenguer et al., 2017).
Bigger screen size – The eyesight is a big problem among the elderly. As the age progresses
the eyesight deteriorates making it harder to see smaller prints. Another problem is the
deteriorating hearing capacity. The bigger screen size and louder internal speaker of modern
smartphones make its use convenient for older consumers (Kelion, 2017).
Easy usability – The smartphones software is continuously evolving and becoming more and
more user-friendly. Many smartphone manufacturers like Apple include various accessibility
features that make using a smartphone convenient for older people. Smartphone
manufacturers using Android as the smartphone software base have application launchers
made while keeping older people in mind (Berenguer et al., 2017).
Facial Recognition – The people in this age group prefer a facial recognition based lock
rather than using a password. This allows them to easily use the smartphone without the
need for spectacles or button fiddling (Kelion, 2017).
7

These features and uses of smartphones are contributing to the increasing demand for
smartphones among the people under the age of 55 to 75 years. The demand is expected to
grow further as more features are added and the smartphone becomes easier to use
(Berenguer et al., 2017).
8

Should Eco-Fone Expand Their Business? (Task – 4)
The current operation of the Eco-Fone is conducted from their two shops located at Putney
and Richmond. Whether they should expand the business to Kingston can be decided by
using the Pro and Cons Method (Sekaran and Bougie, 2016). The following table will be used
for analysing Pro and Cons of expanding the business to Richmond
Should we expand our business to Kingston?
Pros Score/10 Cons Score/10
Increased visibility 9 Higher capital requirement 10
Increased revenue 10 An increase in logistical
complications 7
Increased customer base 10 Weakening business
relationship and culture 5
Reduced risk of doing business 7 A thin spread of resources
and expertise 5
Reduction in acquisition costs
through bulk buying 8 Sharing of Control 4
Distribution of existing
marketing cost 6 Debt accumulation 8
Division of Overheads 6 Higher employee turnover 6
Total Pros 56 Total Cons 45
Average Pros 8 Average Cons 6.4
The pros of expanding the business to Kingston include an increase in the visibility, customer
base, and revenue of the company. It also helps in mitigating the risk of doing business and
reduces overall acquisition costs of mobiles and accessories through bulk buying. The
marketing and overhead costs will be divided between the three shops thereby bringing
them down. The total score of pros is 56 while its average comes to 8 (Sekaran and Bougie,
2016). The cons of opening a new shop at Kingston include an increase in capital
expenditure and a shortage of cash that may result in debt accumulation. Shops at three
locations will increase the complexity of day-to-day logistics like ordering, supplying etc. The
new shop will require its own management and supervision which will require sharing of
power resulting in a minor loss of control. There’s a potential of an increase in employee
9

turnover due to factors like longer work hours and a reduction in the frequency of
interaction with employees. The resources need to be divided between three shops making
the spread of resources and expertise too thin. All these cons lead to a total score of 45 and
an average of 6. It’s quite clear from the 'pro and cons' table that the Eco-Fone can expand
its business to Kingston to get the benefit of a growing smartphone market (Sekaran and
Bougie, 2016).
10

Monthly mortgage calculation for the new shop (Task – 5)
The mortgage amount (P) for the new shop is £350000 with an annual rate of interest (R) of
7% for a period (T) of 15 years. We will be using the PMT function of the excel program and
its formula is as follows (Excel tutorial: Monthly mortgage payments with Excel 2010, 2013)
PMT(rate, nper, pv, [fv], [type])
Here,
Rate is the monthly rate of interest = Annual rate divided by = 7/12% = 0.583
Nper is the number of the period or the total number of payments = 15*12 = 180 monthly
payments
Pv is the principal loan amount = £350000
[fv] and [type] are not required for the present calculation. So, the monthly mortgage
payment = PMT(0.583, 180, £350000) = £3145.90 (Appendix excel file 3, Mortgage
calculations) (Bluttman, 2013).
11