Eco-Fone Business Expansion Report: Kingston Market Analysis

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

Report for Eco-Fone 2019
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Report for Eco-Fone 2019
Introduction
Ecofone a company that manufactures and sells mobile phones from two shops that are situated
in Richmond and Putney. The company was formed in the year of 2014 and from then they are
performing very well. Currently, they have observed that there is a change in the trend where
the grown-up citizens have also started using mobile phones. This has encouraged them to
increase their business in Kingston, which seems to be a promising market from the research
that was conducted by BBC News and Delloite. The report will consist of details related to the
market, finance, product, and the recommendation necessary for the expansion.
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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”
The mobile phone market of the United Kingdom is increasing day by day as the smartphones
can now perform all the necessary activities that can be performed by the laptops. The
smartphones are now being used in the offices to perform any work in the Microsoft office
(Berenguer et al., 2016). This revolution has occurred in the market of the United Kingdom as
due to the improvement in the technology of mobile phones their sales have also increased.
Activities that are performed on the smartphones will be provided below:
“Figure 1: Graphical representation of activities of working people in UK”
(Source: Created by learner)
It can be observed that the mobile phones now provide activities like viewing the documents,
managing the calendars and even mail to people. These activities have given rise to the market
of mobile phones in United Kingdom, which needs to be taken by Ecofone in expanding their
business there.
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Report for Eco-Fone 2019
“1.2 Forecasting the UK Adult Smartphone use”
Smartphones now day’s performs almost all the necessary works that can be done by a laptop.
These can be purchased at a much lesser cost than that of laptops and can be taken to any place
very easily as they are very light. In a recent research conducted by Deloitte, it was shown that
85% of the people use smartphones every day, while 78% of the people use mobile phones. It
was observed that 12% of the adults of United Kingdom were using voice assistant, while 21%
of the adults use fingerprint for the verification in mobiles where necessary.
“Table 1: Forecast table of smartphones”
(Source: Created by learner)
“Figure 2: Graphical representation of forecasting table”
(Source: Created by learner)
The figures above show the market of smartphones of the United Kingdom, where in 2018
there was a rise of 94% in the use of smartphones. This will rise to 100.31% in 2019, which
shows a steep rise in the utilisation of smartphones in United Kingdom. This shows that it will
be feasible for Ecofone to expand their market in Kingston to capture the market in order to
increase their sales by a huge margin. The smartphones come with lot of applications that
makes the life of the people much easier (Lee, 2017). This is one of the reasons for them to buy
smartphones. Even most of the people change their smartphones after two to three years to get
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Report for Eco-Fone 2019
an upgraded version of it. This can be stated as another cause for the boost in the use of
smartphones in the United Kingdom.
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Report for Eco-Fone 2019
“1.3 Smartphones - A potential market for older customers”
The research from BBC News (BBC News, 2017) states that the old aged people are now being
accustomed to the new technology of smartphones. Their life has also changed due to the effect
of smartphones. This has led to a revolution among them, where they do not have to carry card
cash, which have a risk of being robbed. Instead of that, they can now carry the money on
mobile wallet. They can also watch movies, contact with people throughout the world with the
help of video calls. According to the research done by Deloitte (Deloitte.co.uk, 2017), they
found out that 71% of the citizens of the age of 55 years and above have their own smartphones
that consists of applications of different software. The research also stated that the use of
smartphones has increased for the age group of 55 and above but they do not use regularly for
all the purposes every day (Majeed-Ariss et al., 2015). The main reason for purchasing
smartphones for them is to connect with their friends and relatives who stay far away from
them so that they can see their faces and talk to them.
It is also observed that about 20% of this age group use smartphones to check notifications for
every fifteen minutes. The survey was conducted over approximately 1163 people, out of
which 50% of them are also using facebook in their daily life. This shows that the market of
smartphones for the older customers have become a potential one that is necessary for Ecofone
to capture in order to increase their sales and earn more profit.
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Report for Eco-Fone 2019
“1.4 Feasibility of Expanding business to Kingston using Pros and Cons table”
Should Eco-Fone consider expanding to Kingston?
Pros / Advantages Score on
10
Cons / Disadvantages Score
on 10
Strong base of customers 9 Increase in turnover rate of
employee
9
Demand of the market 8 Uncontrolled distribution
process
7
Turnover on sales can be increased 7 Fund reduction for companies 6
Enhancement in the market resources 9 External funds cannot be
accepted
8
Effect of market price in Kingston 5 Money used by logistics are
very high
8
Recognition and brand name
improvement
10
Competition in the market 7
Total points of Pros 55 Total points of Cons 24
Average Pros 7.857 Average Cons 7.6
Table 2: List of Advantages and Disadvantages
(Source: Created by learner)
The table presented above provides the affirmative and pessimistic sides for Ecofone in order
to expand their business Kingston. Some risky areas need to be performed well by them in
order to stay in the market. The first thing is that they need to reduce the employee turnover by
applying proper remuneration and appraisal systems. They need to bring in their own capital
and only funds from the country can be taken due to the effect of Brexit. The rates for logistics
are very high, which needs to be considered during its calculation. The good thing for the
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Report for Eco-Fone 2019
company will be the demand of smartphones in the market, the competition that is present in
Kingston, increasing the turnover of sales by expansion and many more.
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Report for Eco-Fone 2019
“1.5 Costs of a New Building”
For the mortgage to produce new building,
The principle amount of money to be taken as loan = £ 350000
Time for which the mortgage will be taken = 180 months
Interest rate for the mortgage = 7 %
Interest rate to be paid per year = 7 % / 1200
= 0.0058
Interest rate for the whole of 15 years = 7% / 1200
= (1 + 0.00583) 180
=2.849
Thus, the result of compound interest,
= 0.00583 * 2.8489 / (2.8489 - 1)
= 0.0089
Finally, the payment to be done per month to the bank = £ 350000 * 7%
= 350000 * 7 / 100
= £ 3145.90
The calculations presented above shows a view of the amount of money that will be taken as a
loan from the desired bank. The amount is £ 350000, which is the principle amount to be taken
as the loan. The interest rate that is fixed at 7% will be charged for the mortgage. The time that
will be taken to repay the loan along with the interest is 180 months or 15 years. Hence, the
interest to be paid every month for a total of 180 months is 2.849. The compound interest is
calculated to be 0.0089. Thus, the monthly instalment for Ecofone that is to be paid to the bank
for 15 years after taking the loan will be £ 3145.90 per month. Thus, it can be stated that the
organisation can take the loan, as the amount is not so huge for them to pay. It is necessary for
them to keep in mind to analyse the breakeven point so that all the expenses are being covered
from the revenue that will be earned from the shop of Kingston.
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Report for Eco-Fone 2019
Companies Logos
Lloyds
Santander
Nationwide
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Report for Eco-Fone 2019
Barclays
Royal Bank of Scotland (RBS)
HSBC
Halifax
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