Mobile Device Manufacturing Industry: Product and Industry Description

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Description

Mobile Device Manufacturing Industry: Product and Industry Description

Business Concept

The mobile phone devices manufacturing industry is oligopolistic in nature as it is characterised by a few firms who enjoy considerable market share in both their regional and global markets. The two mobile tech companies at the top of the industry are Apple Inc. and Samsung who have dominated the market for years and have managed to stay ahead of the competition. The industry is characterised by barriers to entry such as patent trolls and high initial capital outlay. This paper seeks to investigate the feasibility of establishing a mobile devise manufacturing company through financial forecasting and economic market research (Anacker).

Product Description

The traditional use of mobile devices includes making and receiving calls and also sending and receiving text messages. The common additional and functional features in smartphones include email access, music and video, camera functions, downloading and reading electronic books, navigation capabilities through providing the user with maps and directions, and web browsing among other functions. There are however, a number of features that users take into consideration before deciding to settle on one particular brand of mobile device. This features include: the design of the phone, the phone’s storage capacity and the camera quality among other hardware specifications (Edwards ).

The start-up will employ the use of innovative product design to create a mobile device to cater for the specific needs of disabled people. This will give it a competitive edge over some of the already existing mobile phone manufacturing companies. For instance, the device may incorporate a braille keypad and have voice support to enable blind users access to some of the applications that they find difficult to use in other mobile devices. The main strategy the company will use is product competition. The cost of production of the mobile phones is quite high, the customer will profit from reduced costs in the long run when the company will be able to streamline its production processes. However, in the short-run the firm will make normal marginal profits due to the high initial cost and later on make normal profits (Balasaa).

Mobile Device Manufacturing Industry: Product and Industry Description

The projected company cost and revenue analysis are contained in the table below

Start-up Funding Amount $’000’ Amount $‘000’
Legal   20
Plant Property and Equipment   7000
Rent   60
Research and Development   34
Advertising and Marketing   25
Others   45
Assets    
Non-cash Assets from Start-up   433
Cash Requirements from Start-up   654
Additional Cash Raised   223
Other current liabilities   44
Total Funding Cost   8538
Revenues    
Sales   20000
Cost of Goods Sold    
Total funding costs   (8538)
Inventory 832  
Add net purchases 700  
Cost of goods available for sale 1532  
Less closing inventory (532) (1000)
Gross profit   7538
Less operating expenses

Selling

24  
General and administrative 222 (246)
Operating profit   7292

 

Mobile Device Manufacturing Industry: Product and Industry Description

Industry Description

The mobile phone industry is also characterised by unequal bargaining power due to the fact that this companies engage in aggressive and very expensive widespread marketing and advertising in order to create and maintain their brand. This form of advertising is used to differentiate these products that are to a large extent homogeneous. These companies engage in product competition due to the fact that the prices of the premium mobile phones that the companies produce range around the same price. Companies like Samsung, however, produce mobile phones for a larger and less affluent global third world market while companies like Apple produce premium phones that enable them to enjoy a larger profit margin from the sale of these devices (Edwards ).

The mobile tech industry is one of the leading industry that generates huge revenue streams for companies. Take for example the revenue structure of Samsung and Apple, the two largest mobile tech companies in the world. Apple Inc. had its shares hit a new high of 147 dollars per share. In 2017, Apple Inc. had 217 billion dollars in sales, 45 billion dollars in profit and 331 billion dollars in assets. Its largest rival, Samsung, recorded $174 billion in sales $19 billion in profit and 217 billion in assets. Apple was the first US company to top the $800 billion market capitalization threshold and has been ranked by Forbes as the most valuable brand in the world for the seventh consecutive year in 2017. Apple is also the most valuable public traded company. Apple was the most profitable company in 2016 with a net income of $53.39 billion. The mobile tech industry is therefore largely oligopolistic and has major barriers to entry and in order to compete with these companies the start-up has to employ professional, skilled and innovative labour and management (Stoller, Kristin;).Mobile Device Manufacturing Industry: Product and Industry Description

Some of the other competitors of the start-up include Samsung, Sony, HTC who have also had considerable success and are among the top consumer preferred brands globally (Johnson , Li and Phan). The success of the start-up business in the industry will primarily be based on the ability of the company to create a brand. The business will employ some of the strategies of the integrated market theory through diversification in order to avert the trade barriers inherent in the industry. One of these strategies is diversification of products through engagement in intra-industry activities and making a variety of products cutting across different fields. The company will also engage in aggressive marketing and campaigns to establish a brand and consumer loyalty. This will enable the company to gain a considerable market share.

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Anacker, Katrin. The New American Suburb: Poverty Race and the Economic Crisis. Routledge, 2016.

Balasaa, Bela. The Theory of Economic Intergration. London: Routledge Publishing, 2013.

Edwards , Jim. Even When Smasung Gets it Right Apple Still Wins. 31 October 2015. <http://uk.businessinsider.com/samsung-v-apple-sales-and-revenue-statistics-2015-10?IR=T>.

Johnson , Katherine, et al. “The Innovative Success That is Apple Inc.” Marshal Digital Scholar (2012): 1-43.

Stoller, Kristin;. The World’s Largest Tech Companies 2017: Apple and Samsung Lead, Facebook Rises. 24 May 2017. <https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/kristinstoller/2017/05/24/the-worlds-largest-tech-companies-2017-apple-and-samsung-lead-facebook-rises/&refURL=https://www.google.com/&referrer=https://www.google.com/>.