Business Analysis Report: Eco-Fone's Expansion into Kingston

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

Business analysing information and data for problem
solving
1

Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Task 2...............................................................................................................................................5
Task 3...............................................................................................................................................7
Task 4...............................................................................................................................................8
Task 5.............................................................................................................................................10
Task 6.............................................................................................................................................13
Task 7.............................................................................................................................................14
Task 8.............................................................................................................................................16
Task 9.............................................................................................................................................17
Task 10...........................................................................................................................................18
Appendices....................................................................................................................................19
2

Introduction
Operating with two different stores in the areas of Putney and Richmond, the Eco-Fone is a seller
of various smart phones and its accessories. This business, however, does not deal with laptops
and tablets but has its concentration over the sale of smart phones as well. The report comprises
of a detailed evaluation of the market of mobile phones in the UK and includes an evaluation of
how smart phones are being used in the country for various work-associated activities and its
uses among elderly people as well. Since Eco-Fone is considering an expansion of operations in
Kingston, the mortgage amount for its building, the responses of its clients and various other
aspects have been considered in this report as well.
3

Task 1
For finding out the usage of smart phones in the UK for work-associated activities, Deloitte had
conducted a detailed research. From this research, it was seen that about 32 million is the entire
productive workforce of the nation and about 16 million of them are claiming to use smart
phones to resolve their problems associated with work, as 44% of them use smart phones for e-
mails (Deloitte.co.uk, 2019). It can also be seen that 23% of them use to manage their calendars,
43% for WhatsApp and related messaging applications and 34% for video calling
(Deloitte.co.uk, 2019). Kuss et al. (2018) has also mentioned the boost in the sale of smart
phones in the country and its accessories by elderly citizens since 2012. Citizens also say that
their movements to different places in the country have become easy because of smart phones
(Anshari et al., 2016).
The following mixed bar chart has been prepared in Deloitte based on the four major work-
related activities for which smart phones are used in the UK -
E-mails Making standard
calls Managing my
time/workload None of these
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2016
2017
(Source: Created by the learner)
4

Task 2
Depending on Deloitte’s research, the table and graph provided below has been prepared for
comparing the use of PCs, tablets and smart phones in the UK and forecasts have been made for
2018 and 2019 -
Table 1: Comparing the use of PCs, tablets and smart phones in the UK and forecasts
(Source: Created by the learner)
(Source: Created by the learner)
5
2012 2013 2014 2015 2016 2017 2018 2019
0%
20%
40%
60%
80%
100%
120%
Values Forecast
Lower Confidence Bound Upper Confidence Bound

To forecast market penetration in 2018 and 2019, the application of extended forecast method
will not prove beneficial. Buizza and Leutbecher (2015) mentioned that extended forecast is
advantageous only when variables are progressive or are digressive steadily. In case of the data
presented above, it can be seen that there is instability in the use of PCs, smart phones and
tablets, due to which moving average was put to use for the forecast. In case of inconsistent
variables, moving average acts beneficial (Xu et al., 2017).
6

Task 3
It is true that smartphone usage among senior citizens and elderly people has increased largely in
the past years and BBC’s research has been helpful in evaluating this topic. BBC News (2019)
presented that about 70% people between 55 and 75 are smart phone users, within which 1163
have been recommended smart phones by their family and have stated that smart phones have
made their lives much easier. The survey also showed the following reasons because of which
elderly citizens use smart phones in the present situation -
o It has made it easy for elders to book their cabs easily instead of waiting on the road
o Parking tickets can also be purchased and paid with smart phones
o The ones who have weak eyesight can be easily going through photos, videos and others
on their smart phones
o Leading day-to-day activities have become easy because of the smooth operating systems
and other features in smart phones
o Operating smart phones is also easy for them due to finger print detection, face detection
and such features
7

Task 4
For the derivation of expansion of Eco-Fone into Kingston and its benefits related to the
expansion, different methods require being used. In this case, a pros and cons table has been
developed for Eco-Fone and each point considered as a potential pro and con have been ranked
on their scores from 1.0 to 10.0 followed by determination of their averages. The table is as
follows -
Will the expansion of the business to Kingston be good?
Pros Score out of
10
Cons Score out of
10
Addressing the market demand 8.0
Lack or shortage of enough
cash 8.0
Achieving excess amount of
sales 8.50 Control distribution 6.0
Achieving more number of
clients 8.0 Funds externally available 7.50
Advantages from competitive
rivalry in the market 9.0
Increasing turnover of
employees 8.50
Improvements in the brand's
recognition as well as its name 8.50 Logistics related expenses 7.50
Effect on the prices in the
market 9.0
Improvement of the resources
of the company 7.0
Total Pros 58 Total Cons 37.5
Average Pros 8.285714 Average Cons 7.5
Table 3: Pros and cons of expansion to Kingston
(Source: Created by the learner)
8

The table above presents both the merits and demerits for expanding into Kingston. It can be
seen from the table that there are both advantages and disadvantages related to the expansion.
However, the advantages are higher than that of the disadvantages. Thus, in case if Eco-Fone is
able to deal with the potential cons or demerits of entering the Kingston market, such as the lack
or shortage of enough cash, increasing turnover of employees and such aspects, it can be
successful in the market of Kingston. Hence, it is recommended that Eco-Fone can enter
Kingston through developing proper strategies using which its potential challenges can be dealt.
9

Task 5
For expanding into Kingston, it is necessary for the Eco-Fone to acquire a new building to start
with its operations. However, to do so, Eco-Fone has to take a mortgage from a bank. The
following is the calculation of the mortgage loan to be taken by the business -
Principal amount = £350000
Interest rate (i) = 7%
Time = 15 years or 180 months
Per year rate = 0.00583
15 years’ rate = 2.85
Therefore, CI (compound interest) = 0.0089
Consequently, monthly payment needed to be done = £3145.90
(a) The calculations, which have been presented above, show that Eco-Fone will be able to
purchase the new building that it is considering to buy by the payment of £3145.90 every month
with 7% interest that it can be paying off in 15 years. Therefore, the new building of the business
can be purchased in case if Eco-Fone is able to pay £387740 inclusive of both principal and
interest from where it will take the loan.
(b) In the UK, there are different types and large number of commercial mortgage lenders from
which businesses can be taking loans (Cullen, 2018). The graphic provided below lists the eight
main commercial mortgage lenders of the nation -
Companies Logos
o Lloyds Bank
10

o Barclays
o HSBC
o RBS (Royal Bank of
Scotland)

11

o Santander
o Principality
o Accord mortgages
o Nationwide
12