Eco-Fone Ltd Business Expansion and Financial Management Report

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

Summative Assessment 2019
1

Table of Contents
Overview:...................................................................................................................................3
Question 1:.................................................................................................................................4
Question 2:.................................................................................................................................5
Question 3:.................................................................................................................................7
Question 4:.................................................................................................................................8
Question 5:.................................................................................................................................9
a):............................................................................................................................................9
b):..........................................................................................................................................10
Question 6:...............................................................................................................................11
Question 8:...............................................................................................................................13
Question 9:...............................................................................................................................14
References:...............................................................................................................................15
Appendix:.................................................................................................................................16
2

Overview:
This report is based on the business expansion and financial management activities of Eco-
Fone Ltd which is a leading phone company of UK. During the creation of report, Phone
market of UK will be evaluated to explain the growth chances of business in other sectors.
Some statistical methods like Z-Test and Poisson distribution will also be explained in report
to explain the utilisation of statistical concepts in solving of business problems. Currently
Eco-Fone is planning for the expansion of business into other areas and this report will
evaluate the suitability of such expansion through the ‘Pros & Cons’ Model.
3

Question 1:
In modern life style, Smart-phones are became basic necessities for everyone. Modern smart-
phones are available with several advanced functions so people are utilising these devices in
numerous personal and professional works. In respect of UK market, More than 30 Million
people are utilising smart-phones in which more than 50% are utilising phones in completion
of professional duties. Results of market research are sufficiently indicating that huge market
is available for the Eco-Fone to grow the business in UK. From the analysis of user data,
more than 40% people were utilising phoned devices to handle the Emails in 2016 and the
figure declined to 37% in 2017 (Deloitte, 2017). Decreasing is indicating the shifting of
people to other similar devices for the handling of business E-mail accounts. Majorly,
calendar management, E-mail handling, calling and time management are some popular uses
of Smart-phones. Application of Phone-devices can be understood through following data:
Above sheet is showing that use of Smart-phone devices is not restricted to the calls and
messages. Gaming, internet suffering, time management, video calls, document viewing
and more are only some examples of Smart-phone uses. Increment in significance of Smart-
phone devices in human life can be understood that higher than 15% people are adapted
phones in document and time management activities (Deloitte, 2017). Thus, it can said that
huge chances of growth are available for the Eco-Fone in uk market but unique features are
required to be added to the devices to attract more consumers.
4

Question 2:
The chart that is provided below is explaining the utilisation of Smart-Phone devices by the
adults in recent five years. From the data, it has been identified that usage of Laptop devices
is increasing with a lower rate but tablet and mobile-phone devices are becoming suitable for
people rapidly. For instance, approx. 12% people were utilising tablet devices in 2012 and the
same reached to more than 65% in 2017. Some conclusions that are identified in respect of
Adult mobile usage are provided below:
Line chart of the comparison of different devices:
2012 2013 2014 2015 2016 2017
0
50
100
150
200
250
laptop
Smartphones
Tablets
Line chart of the usage of Smart-phone:
2012 2013 2014 2015 2016 2017
0
10
20
30
40
50
60
70
80
90
Smartphones
Smartphones
5

From the charts, it can be signify that adults are adopting mobiles very rapidly because ratio
of mobile adoption reached to 85% which was approx. to the 50% just before five years.
Results of Liner forecast is indicating that growth rate of mobile usage will remain same in
2018 and 2019 also. Here, utilisation of Liner model will not be appropriate for the
evaluation of growth forecast because study of two different variables is not possible through
this model. To apply the Liner forecast model, relation of dependent and independent
variable should be existed among the two selected variables. Similarly, impact o shifting of
consumers one to another product is not determinable through Liner model (Office, 2016).
Thus, regression model should be adopted by the Eco-Phone managers.
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Question 3:
It is a traditional assumption that modern smart phones are not for older people, but the
perception is changing rapidly because smart-phone adoption rates among old people of UK
are higher than the rate of adoption among adults. With data resources, it has been found that
over 65% of old people in the UK are using smart phones in their daily lives. The above rate
of phone adoption is being understood between the people of age group 50 to 75 years.
Following are some major reasons which are forcing the old age people to adopt Smart-
phones rapidly:
Clear sound quality with larger screen:
Due to increase in incomes, older people are adopting Smartphone devices quickly and
mobile companies are understating the business opportunities among these trends. Modern
mobile phones are coming with feature of clear sound quality which helps the older people to
overcome from the issues of hearing (Kelion, 2017). At the same manner, larger screens and
HD resolutions are leading to resolve eyesight matters.
Unique developments;
Older people are huge market for the Smartphone companies so they are offering several
unique features so that day to day life of older people can be made more easer. For example,
modern phones are available with ‘voice control system’ which is utilised to operate the
phone through voice. These types of developments are main motive for older people to adopt
mobiles.
Mobile applications:
There is a large list of applications that can be accessed through the Smartphone. Online food
delivery, taxi booking, shopping and assistance services can be accessed through the use of
Smartphone (Kelion, 2017). These applications are motivating the older people to use mobile
phones to handle the complexities of older age.
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Question 4:
Business expansion plan of Eco-Fone Ltd
Pros Score/10 Cons Score/10
Access to new markets 10 Capital requirements 9
Access to large consumer base 9 Managerial efficiency issue 8
Access to more financing
soruces with low fianncing cost
6 Chances to the sacrifice in
quality of offered products
6
Brand creation and stable
goodwill
8 Competitive forces 6
Gain of larger profits 7 Threat of non-compliance of
legal guides
4
Sum of 40 Sum of 33
Positive results ( average) 8 Negative results ( average) 6.6
During the decision-making about the business expansions, detailed analysis and research
should be made by the managers to assure that expansion efforts will not become dangerous
for the present sustainability (Charyk, 2017). Here, ’Pros and Cons analysis’ Model has been
applied to evaluate the appropriateness of expansion decision for the future of company. For
instance, positive aspects of expansion includes access to larger markets, more consumers,
more profits whereas negative aspects for project includes threat to product quality,
managerial issues and capital requirements (Charyk, 2017). The analysis is signifying that
positive aspects are solid rather than negative matters so project will be beneficial for the
Eco-Fone.
8

Question 5:
a):
Total value of new building 400000
Payable through own funding 50000
Interest arte 7%
Loan required 350000
Loan tenture in years 15
Monthly repayment
obligation ($3,145.90)
Repayment schedule:
Amount of
Loan
Tenture of
Loan
Payment
required Total Instalments
Obligation of
instalment
350000 15 Y Monthly 180 3145.90
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b):
Above mentioned companies are leading brands of UK banking and financial services
industry. Each banking group is offering different type of mortgage products along with
different offers. For example, HSBC is offering fixed interest mortgages which protect the
borrower from the variations in interest rates (HSBC, 2019). ABC bank is offering the facility
of earlier closer of loan without any chargers. Low variable interest rate loan of Barclays is
also popular among small lenders due to interest benefits (Barclays, 2019). From this, it can
be said that all companies are offering different facilities on mortgage products and Eco-Fone
can select any loan product as per suitability.
10

Question 6:
One of the tools used for the statistical analysis of the variance of two different populations is
known as AZ test tool. With the help of this tool it becomes easy to analyse the two
population difference that is whether the 2 populations are diverse or similar when sample
size is big (n>30) and the variance if already known (Minitab, 2019). Comparing with the T-
test performed by student has similar sample size; it is found that z is better due to its discrete
value of all sample size. The similar sample size makes t-test more effectively, efficiently and
smoothly. But the t-test is done when the people in the population are known previously and
the sample size is small, whereas the Z-test on other hand is called hypothesis test which the
scholar considers the true basis of this phenomenon. Another test is the null hypothesis (HO)
which individual who investigate try to invalidate the outcome which comes in range -
0.5>n<0.5.
In the statistics several kind of the tests are used. One of them is Z-test used in the conditions
as follows;
 Data must be distributed normally.
 Data must be present independently
 Sample size must be greater than 30
 Sample size is equal (S, 2018)
 Randomly selected data from population where each data item have same probability
of getting selected.
After the evaluation of the case study given,
= 1.41.
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Question 7:
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