A STUDY ON MOBILE HANDSET INDUSTRY Management Research Project -I Submitted In the partial fulfillment of the Degree of Master of Business Administration Semester-III By Name

Exam No.

Nikunj Donda. 12044311021 Pavan Modh. 12044311049 Naitik Modi. 12044311051 Ankit Moradiya. 12044311054 Nikhil Nair. 12044311055 Bhavdip Vaghasiya. 12044311162 Under the Guidance of: Prof. (Dr.) Mahendra Sharma Prof. & Head, V. M. Patel Institute of Management. & Prof Harsha Jariwala, Asst. Professor Prof. Abhishek Parikh, Asst. Professor V. M. Patel Institute of Management. Submitted To: V. M. Patel Institute of Management, Ganpat University, Kherva.

(2013)

CERTIFICATE BY THE GUIDE

This is to certify that the contents of this report entitled “Mobile Handset Industry” by Nikunj Donda (12044311021),PavanModh(12044311049),NaitikModi(12044311051),AnkitMoradiya(12044311054) ,Nikhil Nair (12044311055),Bhavdip Vaghasiya (12044311162)submitted to V. M. Patel Institute of Management for the Award of Master of Business Administration (MBA Semester -III) is original research work carried out by them under my supervision.

This report has not been submitted either partly or fully to any other University or Institute for award of any degree or diploma.

Prof. (Dr.) Mahendra Sharma, (Professor & Head) V. M. Patel Institute Of Management, Ganpat University.

Date: Place: Kherva

CANDIDATE’S STATEMENT

We hereby declare that the work incorporated in this report entitled “Mobile Handset industry” in partial fulfillment of the requirements for the award of Master of Business Administration (Semester III ) is the outcome of original study undertaken by us and it has not been submitted earlier to any other University or Institution for the award of any Degree or Diploma.

Date: Place: Kherva

Nikunj Donda. Pavan Modh. Naitik Modi. Ankit Moradiya. Nikhil Nair. Bhavdip Vaghasiya.

12044311021 12044311049 12044311051 12044311054 12044311055 12044311162

PREFACE

It is a great experience being a part of corporate world. Real MBA can be achieved only with such practical implications. We are very thankful to Department of Ganpat University who planes such learning programs for its students. It is matters of proud to be students of such great university where in students are helped to extract hidden potentials from their selves. We are highly Thankful to all the Faculties of the department who guided us all the way long as how the entire MRP-I report is to be conducted. As a management student, we must have some practical knowledge regarding research and research methodology. The education institutions offering management programs play a significant part in un-calculating the much needed managerial skills in their students, the aspiring managers. The real success of management lies in applying the professional management techniques in all managerial activities. Practical study is eminent, and plays vital role for the students of management, because classroom coaching and theoretical study alone are not enough. To survive in this highly competitive world, practicality outweighs theoretic. Students are supposed to learn the various principles of business administration conceptually but accuracy and efficiency in their implementation is possible only through exposure to practical environment. We have tried our best and have applied all our efforts, knowledge and sources available, in this project. Here we try our level best for finding data.

ACKNOWLEDGEMENT It is with profound in-debthness that we acknowledge the efforts of all the well-wishers who have in some or the other way contributes in their own special way to the success of this project. We would like to thanks to (Dr.) Mahendra Sharma, Prof. & Head, for provide us this golden opportunity for preparing report and provide us guideline regarding project report. We would also thankful to Prof. Harsha Jariwala and Prof. Abhishek Parikh Lecturer, V.M. Patel Institute of Management, for their advise, constant encouragement and timely help throughout the course of our project. Last but not the least we thank all the persons who have directly or indirectly support in this project report.

Thanking you, Nikunj Donda. Pavan Modh. Naitik Modi. Ankit Moradiya. Nikhil Nair. Bhavdip Vaghasiya.

12044311021 12044311049 12044311051 12044311054 12044311055 12044311162

INDEX No 1

Particular Introduction And Historical Background Of Industry

Page no 6

1.1 World Mobile Market

7

1.2 Historical Background Of Mobile Industry 7 1.3 Indian Mobile Market 8 1.4 Market Players 9 1.5 Mobile Handset Market In India: Current Scenario & Future Prospects

10

1.6 Future Prospects:

2

3

1.7 Contribution Of Mobile Industry In Indian Economy

11 12

1.8

14

Market Trend Of Mobile Industry In The World

1.9 Latest Updates From The Handset Industry 1.10 Future Estimates

15 16

PLAYERS IN DEPTH INFORMATION

17

2.1

18

Nokia

2.2 Samsung Mobile

22

2.3 Micromax

27

2.4 Sony

33

Strategic Analysis

35

3.1 Introduction of chapter

36

3.2 Objectives Of Chapter

38

3.3 Pest Analysis

39

1

3.4

Industry Dominant Economic Features

42

3.5

Porter’s Five Force Analysis

47

3.6

Challenges of mobile handset industry in India:

61

3.7 Driving Forces

62

3.8 Strategic Group Mapping

67

3.9 Key Success Factors:

69

3.10 Competitive Profile Matrix (CPM)

72

3.11 Opportunities and Threats Analysis

74

4

Financial analysis

75

5

BUSINESS PLAN ON DEALERSHIP

76

5.1

Company Profile

77

5.2

Documentation

78

5.3

Products Of “ Sumsang”

79

5.4

Process To Get Agency

80

5.5 Other Competitor Dealers In Mhesana District

82

5.6

Chart Of Choice Mobile & Accessories

82

5.7

Marketing Strategies Of Choice Mobile

83

5.8

Promotion Strategies Of Choice Mobile &

83

Accessories 5.9

85

Dealer Margin

5.10 Extra Sales Facility Available

86

5.11 Sales Outline

87

2

5.12 Source Of Finance At Starting Time

88

5.13 Profit & Loss Account For The Year Ended 2013-14 To 2017-18

89

5.14 Balance Sheet For The Year Ended 2013-14 To 2017-18 5.15 Projected Cash Flow

90

6

FINDING

92

7

CONCLUSION

94

3

91

Chart index No

Chart name

Page no

3.1

Pest analysis

40

3.2

Porter five force model

47

3.3

Factor of buyer

50

3.4

Factor of supplier

53

3.5

Factor of new entrants

56

3.6

Factor of substitute

58

3.7

Factor of competitive rivalry

60

3.8

Group maps

69

4

TABLE

No

Table name

Page no.

3.1

Number of rival

44

3.2

Driving forces

63

3.3

C.P.M

73

5

Chapter 1

Introduction And Historical Background Of Industry

6

1 INTRODUCTION AND HISTORICAL BACKGROUND OF INDUSTRY 1.1 World Mobile Market Global Mobile handsets market has seen an exponential growth since its first commercial launch in 1983. There were 12 million global mobile phone subscribers in 1990 and by the end of 2010; the number of mobile phone subscribers reached 5.2 billion. However, the growth had slowed a bit between 2006 and 2009 on the account of economic slowdown and lack of strong telecommunication infrastructure in emerging countries. Smartphone are fast becoming a viable alternative to feature phones, PDAs and laptops, offering phone features such as voice and SMS coupled with mobile internet applications, multimedia functionality, high speed data processing capabilities, and inbuilt GPS capabilities. The smart phone market is currently witnessing high growth due to a host of factors, including lower product cost, improved handset design and functionalities, the expansion of global mobile email and browsing services, the emergence of 3G and 4G network technologies, the rising competition among mobile carriers, and the standardization and upgrades of operating systems. This report will identify the key players in each application market; focusing on their growth strategies and other developments such as geographic expansion and the development of patented technologies. Finland-based Nokia held the maximum share of the global smart phones device market in 2010, followed by the U.S.based companies “Research in Motion” and “Apple”. Nokia and Symbian command almost double the nearest competitor’s market shares in the devices and OS segments respectively. The emerging companies in these two segments are Samsung (in device manufacturing) and Google’s android (in the OS market).1

1.2 Historical background of Mobile Industry The first mobile telephone call made from a car occurred in St. Louis, Missouri, USA on June 17, 1946, using the Bell System's Mobile Telephone Service, but the system was impractical from what is considered a portable handset today. The equipment weighed 80 pounds (36 kg), and the AT&T service, basically a massive party line, cost $30 USD per month (equal to $337.33 today) plus $.30 to $.40 per local call, equal to $3.37 to $4.5 today.

7

Martin Cooper, a Motorola researcher and executive is considered to be the inventor of the first practical mobile phone for handheld use in a non-vehicle setting, after a long race against Bell Labs for the first portable mobile phone. The first commercially automated cellular network (the 1G generation) was launched in Japan by NTT in 1979, initially in the metropolitan area of Tokyo. The first 1G network launched

in

the

USA

was

Chicago-based Ameritech in

1983

using

the Motorola

DynaTAC mobile phone. The first "modern" network technology on digital 2G (second generation) cellular technology was launched by Radiolinja (now part of Elisa Group) in 1991 in Finland on the GSM standard, which also marked the introduction of competition in mobile telecoms when Radiolinja challenged incumbent Telecom Finland (now part of TeliaSonera) who ran a 1G NMT network. In 2001, the first commercial launch of 3G (Third Generation) was again in Japan by NTT DoCoMo on the WCDMA standard.

1.3 Indian Mobile Market 

The first mobile phone was launched in India during 1990s



And the first mobile phone company was Nokia.



First Mobile service provider was Modi Groups in 1995 and started in Kolkata, somewhere it was signed that mobile service provider was launched in 1994

India has come in a close second in the sale of mobile phones in the year 2006. China has led the race of mobile sales being the highest in the world. In India however the GSM phones rule over the CDMA handsets. Leading the categories are Nokia, Samsung, Sony Erickson while Reliance takes a large size share in the corporate segment. The Indian mobile phones market had total revenue of $6.1 billion in 2009, representing a compound annual growth rate (CAGR) of 23.1% for the period spanning 2005-2009. In comparison, the Chinese market increased with a CAGR of 16.4%, and the Japanese market declined with a CARC of -2.1%, over the same period, to reach respective values of $23.1 billion and $13.2 billion in 2009. Market consumption 8

volumes increased with a CAGR of 29.8% between 2005 and 2009, to reach a total of 117 million units in 2009. (Source – Data monitor)

Cellular phone penetration in India stood at 45 percent in 2009, and the market is entering into a second phase of growth, with replacement sales increasing from 45 percent in 2009 to 50 percent of total sales in 2010. Moves to high-speed 3G networks is bringing in more challenges in terms of innovation and keeping up with fast changing consumer demand. Shortening product life cycle times and declining sales of voice-centric devices will bring changes to the market during the next five years.2

1.4 Market Players Recently till 2009, Indian mobile market was dominated by large global players like Nokia, Samsung, LG and Sony Ericsson. According to latest data available, in the financial year 2009 – 10, the market share of Nokia in India stood at 52.2% versus 64% in the last financial year. Samsung share stood at 17.4% versus 10% last year while LG stood third with 5.9% market share. Fall in share of Nokia was mainly due to the entry of many Indian handset makers whose combined market share was just lurking between 3 to 4% in the previous financial year has grown up to 14%.Micromax mobiles topped the chart (of Indian makers) with 4.1% share followed by Spice (3.9%) and Karbonn mobiles (3%). Recent entrants such as Lava mobile, Lemon mobiles and Max mobile too are hovering around that 1% market share. Success of the new players is mainly attributing to the low price and introduction of dual sim phones whose demand increases as a result of the fall in call rates.3

However, the Dual sim craze might not last longer as consolidation is expected in the Indian market when maintaining 2-3 Sim cards would prove to be heavy. And not to forget the 3G entrance to India last year so people would certainly look for 3G handsets. Entry of New Handset Vendors The growth of mobile handset market can be gauged from the fact that 27 new handset vendors entered India just in 1 quarter. India also witnessed the launch of high-end phones as 9

well as entry level phones and Indian mobile users bought nearly 700,000 high-end/smart phones in the April-June quarter (2009). 1.5 Mobile Handset Market in India: Current Scenario & Future Prospects The Indian mobile handset arena, at present, appears fully packed with numerous options to look at, with models varying from the cheapest across the world, the Vodafone 150 (VF 150) sold for INR 799 (USD 18) featuring only the basic attributes of a cell phone, to the likes of iPhone that feature some of the most sophisticated technologies. At the first look, this reflects the focus the domestic market is receiving from some of the world leading handset players such as Nokia, Samsung, Sony Ericsson and Motorola, which are betting high on the fast-growing demand for mobile handsets across the country. The same understanding has exactly been the trigger behind the flood of new handsets launched in the past couple of years, as players struggle to capture a larger pie of this hot cake. Taking a look back to the past decade, when owning a handset symbolized a high status among people, the Indian cellphone market has come up very strong, riding on the wave of rising wireless subscriber base, which recently crossed 600 million mark in mid 2010, and consistent decline in the Average Selling Price (ASP) of handsets, which has come down to INR 2500 (USD 50) in 2010. A few other key factors known to have contributed to this phenomenal growth are rising disposable incomes, affordable SIM registration and airtime charges. All these factors have assisted in owning a handset increasingly affordable to masses in the past 10 years. Additionally, with the rapid advancements in the technological field, the introduction of innovative features with sophisticated technologies that have potential to live up to the customers growing expectations has become more of an industry norm and a challenge for existing players to survive in the market. Understanding the growing appetite of Indian consumers, a large number of local players such as Micromax, Spice, LAVA, and Lemon have jumped into reap profits on the back of local advantage such as relatively better consumer understanding. And, to everyone surprise, these players have also been successful in their drive as they now enjoy a huge share in the domestic handset market. While the leader, Nokia is way above other players, in terms of market share (volume), accounting for more than 50% of the domestic handset sales, the new players have miraculously grabbed approximately 14% share of the overall market, as per the industry figures. 10

These are the companies which seem to have hit a jackpot in the domestic market in terms of volume sales, as they now jointly stand at the 3rd spot in the Indian handset market, right behind the market leader Nokia, and Samsung. The level of achievement for these players seems way higher when one comes to know that almost all the global handset manufacturers are already present in the market. A key point which has enabled these players to grow so fast is the level of innovation they have brought into the market, something which seems to have forced even the leaders to follow. The trend is validated by the recent launch of dual-SIM handsets by domestic leader NOKIA. It were these local players, which introduced such innovative and value-added features in mobiles, as the one with nearly 30 days of battery back-up, and dual SIM card options. 1.6 Future Prospects: Presently sprinting on a high speed track, the Indian handset market is poised to touch record levels by 2015 in terms of volume sales. A major sales growth is expected to come on the back of rising disposable incomes, growing demand for innovative features, applications, and offerings such as the ones recently introduced by local players Micromax, KARBONN, and LAVA. The mobile handset teledensity (handsets per 100 inhabitants) in India currently stands at nearly 45%, representing a huge untapped market, especially the rural sector. The industry leader, Nokia seems to have felt the market pulse as, during the period 2009-10, the company introduced more than 20 devices through a vast distribution network of 200,000 retail outlets, out of which nearly 45% were based in rural areas. Moreover, with the urban markets touching saturation levels, the focus is bound to shift towards rural sector, where customers are highly price sensitive and most of the purchase decisions are taken on the POS (point of sale) only. Additionally, in the rural sector, sales are primarily driven by factors such as easy affordability, quality, and at times easy-to-use features. The introduction of 3G services is expected to be another crucial growth driver in the domestic market as it is expected to push demand for high-end handsets to new highs, especially for the ones with 3G feature. This would certainly work in favour of handset manufacturers which are increasingly strained by the ever declining handset ASP. The forecast is validated by the huge interest received from mobile network operators during the recently completed auction of 3G 11

licenses, reportedly generating a whopping INR 650 million for the government, as operators realise the untapped potential of these services across the country. However, in contrast to the global counterparts, India, though being a developing nation, lags way behind many developed nations, such as South Korea, Japan, and the US, where 3G entered almost at the start of the 21st century. That one of the reasons India offers a lot of potential for global handset manufacturers in terms of both new and replacement handset sales, compared to the developed economies where mobile tele density ranges between 90%-100% and hence offer less scope for new handsets. Hence, it can be inferred that as the country enters the 2nd era of revolution in mobile handset market, where focus shifts from mere owning a cell phone with limited features to the one featuring all the advanced capabilities, such as QWERTY keypad, 3G, and high quality camera, the high-end models, especially the smart phones, are expected to witness a steep growth curve through 2015. On the other hand, despite the estimated growth in demand for high-end handsets, it would not be illogical to forecast that the low-cost handsets would still account for a majority share in the handset market in terms of volume sales, considering the fact that this category continues to witness consistent decline in ASP, as majority of the new players are targeting this category with innovative offerings.

1.7 Contribution of mobile industry in Indian economy According to a study conducted by the reputed international agency, Ovum on “The economic benefits of mobile services in India ”the Indian mobile industry is a major contributor to the social and economic growth of the country, in terms of employment generation, revenues to the Government, GDP growth and rural development. The Ovum Repo rt has assessed the contributions of the Indian mobile industry as below: Employment • 3.6 million jobs generated directly or indirectly • Ovum has also estimated that employment dependent on the industry is expected to rise by atleast 30% over the next 12 months.

12

Government Revenues • Rs. 145 billion per annum generated by Mobile industry forthe Government through License Fees, Spectrum Fees, Import Duties, Taxes, etc.

GDP • The mobile services industry generates an annual GDP contribution of Rs.313 billion

Rural Development • Research shows that having access to telecommunications would substantially improve the social and economic conditions of people living in rural areas by improving access to family, education, health and financial services and by enabling the development of non-agricultural economic activity. • Government has set a target of 20% for rural mobile coverage by the end of 2004 and 75% by the end of 2006.

Taking the OVUM findings as the base, COAI has tried to estimate the benefits from mobile communications for the future years. The benefits listed by OVUM are for a subs base of 48 million in January 2005. Pro-rating the data on a simplistic estimate (assuming a conservative 70% realisation of the potential benefit), at a mobile subs base of 200 million in 2007, the industry would contribute: • 10 millio • Rs 5 n jobs 0,000 crores annual revenue to the Government

13

1.8 Market Trend of Mobile Industry in the World

A mobile paradox—huge growth and customer demand, yet significant business and market challenges—is causing many companies in the mobile value chain to question where the industry is heading. They’re struggling to understand the key drivers that will shape the industry and what this new world will mean for them in terms of new challenges and opportunities. Most of all, they want to know the winning strategies for achieving success in this new mobile world.

A number of major disruptions, or strategic inflection points, in the mobile industry are radically altering the entire mobile ecosystem as we know it. Some of these disruptions have been slowly building up steam over the last couple of years, although many of these have just started and have yet to really play out. In the white paper, “The New Mobile World Order: Perspectives on the Future of the Mobile industry,” Cisco IBSG identified eight strategic inflection points that are causing—and stand to cause even greater—disruption and uncertainty in the industry:

•

Explosive demand for mobile data—a 13-fold increase between 2012 and 2017

•

The rise of software platforms—from “walled gardens to walled ecosystems”

•

Availability of new, fast mobile networks—LTE everywhere and the rise of Wi-Fi

•

A more active regulator in many countries—spectrum, net neutrality, consumer protection

•

Changing industry structure—consolidation and concentration

•

Growth of network connected devices—Internet of Things

•

Move to cloud delivery models—“everything as a service”

•

The rise of the OTT threat—largely the battle for video distribution and services

These disruptors are defining the scenarios of how the future mobile industry may look and operate. While there are several plausible future scenarios, I believe two key scenarios are both 14

more likely to transpire and are the most informative in identifying key business choices and helping develop winning strategies for future success. The Mobile Segments scenario is primarily a continuation of the mobile world today—large players dominate each segment of the value chain, focusing on their core strengths and capabilities and cooperating with their fellow segment giants. Conversely, Mobile Explosion is a world where most things are wireless, interoperable, and cloud-based, increasing competition and further blurring the lines between the value chain segments. While it is impossible to predict the future, some of the current trends and early indicators suggest that the tipping points, or industry drivers, are pushing the industry in the direction of the world of Mobile Explosion. Given this trend, players in the mobile value chain are rightly asking, “What are the solutions to the key challenges and business choices that this new world presents?” The following are highlights of the paper’s conclusions on the top strategic considerations to ensure future success for players in each of the six key segments of the mobile value chain.

1.9 Latest updates from the handset industry - Recently, Mindtree announced the acquisition ($6mn all cash deal) of Kyocera’s captive unit in Bangalore, where it would design and build ready-to-brand 3G handsets for telecom service providers and original equipment manufacturers (OEMs). - Hong-Kong stock exchange-listed China Wireless Technologies’ Indian subsidiary, Cool pad Communications has announced partnership with Reliance for its dual sim phone, i.e. GSM and CDMA

and

is

setting

up

its

mobile

handsets

in

the

Indian

market.

Cool pad is targeting Rs. 800 crore revenue in the next five years from the Indian market.

15

1.10 Future Estimates The market's volume is expected to rise to 206.7 million units by the end of 2014, representing a CAGR of 12.1% for the 2009-2014 periods. The performance of the market is forecast to decelerate, with an anticipated CAGR of 16.3% for the five year period 2009-2014, which is expected to drive the market to a value of $12.9 billion by the end of 2014. Comparatively, the Chinese and Japanese markets will grow with CAGRs of 17.2% and 7.3% respectively, over the same period, to reach respective values of $50.9 billion and $18.8 billion in 2014. (Source – Data monitor)

16

Chapter 2 PLAYERS IN DEPTH INFORMATION

17

2

PLAYERS IN DEPTH INFORMATION

2.1 Nokia History: Nokia Oyj, Swedish: Nokia Abp; Finnish pronunciation: nokiɑ, English is a Finnish communications and information technology multinational corporation that is headquartered in Espoo, Finland. Its Nokia Solutions and Networks company provides telecommunications network equipment and services, while Internet services, including applications, games, music, media and messaging, and free-of-charge digital map information and navigation services, are delivered through its wholly owned subsidiary Navteq. As of 2012, Nokia employs 101,982 people across 120 countries, conducts sales in more than 150 countries, and reports annual revenues of around €30 billion.By the fourth quarter of 2012, it was the world's second-largest mobile phone maker in terms of unit sales (after Samsung), with a global market share of 18.0%. Now, Nokia only has a 3.2% market share in smartphones. They lost 40% of their revenue in mobile phones in Q2 2013. Nokia is a public limited-liability company listed on the Helsinki Stock Exchange and New York Stock Exchange. It is the world's 274th-largest company measured by 2013 revenues according to the Fortune Global 500. Nokia was the world's largest vendor of mobile phones from 1998 to 2012.However, over the past five years its market share declined as a result of the growing use of touchscreen smartphones from other vendors—principally the iPhone, by Apple, and devices running on Android, an operating system created by Google. The corporation's share price fell from a high of US$40 in late 2007 to under US$2 in mid-2012. In a bid to recover, Nokia announced a strategic partnership with Microsoft in February 2011, leading to the replacement of Symbian with Microsoft's Windows Phone operating system in all Nokia smartphones. Following the replacement of the Symbian system, Nokia's smartphone sales figures, which had previously increased, collapsed dramatically. From the beginning of 2011 until 2013, Nokia fell from its position as the world's largest smartphone vendor to assume the status of tenth largest. 18

PRODUCT NAME: 1. digit series 2. Nokia 1xxx – Ultrabasic series (1996–2010) 3. Nokia 2xxx – Basic series (1994–2010) 4. Nokia 3xxx – Expression series (1997–2009) 5. Nokia 5xxx – Active series (1998–2010) 6. Nokia 6xxx – Classic Business series (1997–2010) 7. Nokia 7xxx – Fashion and Experimental series (1999–2010) 8. Nokia 8xxx – Premium series (1996–2007) 9. Nokia 9xxx – Communicator series (1996–2006) 10. Lettered series (C/E/N/X) 11. Cseries (2010–2011) 12. Eseries (2006–2011) 13. Nseries (2005–2011) 14. Xseries (2009–2011) 15. digit series since 2011 16. Worded series (Asha/Lumia) 17. Asha (2011–) 18. Lumia (2011–) 19. Other phones 20. N-Gage – Mobile gaming devices (2003–2004)) 21. Cardphones (PCMCIA) 22. Concept phones

Mission Statement:  1-To guide and focus decision making  2-To create a balance between the competing interest of various stakeholders 19

 3-To motivate and inspire organizational members

 However, it is important to point out that mission statements do not always deliver the promised benefits. In reality, mission statements are often unreadable and uninspiring, and articulate values that are unrealistic or are not aligned with day-to-day organizational behaviour.

 Previous mission statement research focused primarily on the content of mission statements and/or on the manager’s perception of the mission statement. Meanwhile, the mission statement perception of individual organizational members received little attention.

Vision Statement:  Nokia wants to create a new world; to transform a big planet to a small village. Their vision is to create, build, and encourage people from all countries to communicate with each other in order to create a world where everybody is connected.

 Humans learn from people around them, but men also seem to forget that beliefs and thoughts differ from person to person. The way of thinking, experiences, believes are simultaneously related in a logic approach. Similarly, Nokia wants to create a world of creativity and experience, shared experiences. mill in Tammerkoski in southern Finland. Frederick Idestam then built another mill by the Nokiavirta River where he gave the name Nokia to the mill in 1871. Originally, the Nokianvirta River was named after a dark furry animal, locally known as the Nokia – a type of marten.

20

 Following a major industrial force, the company merges with a cable company (founded by Eduard Polon) and a rubber firm (founded by Arvid Wickstrom) which sets Nokia on the new path of electronics. Nokia’s first electronic device was a pulse analyzer designed for use in nuclear power plants in 1962. Their interest in telecommunication systems began in 1963 when they started developing radio telephones for the army and the emergency services, prior to the manufacturing of televisions, radio phones, data transfer equipment, radio link, analyzers and digital telephone exchange. Nokia will change its production and focus on the telecommunication expertise until it becomes the core of its future work from 1998 to 2012.

SWOT Analysis STRENGTH• Largest distributor of mobile phone in mobile phone industry.• Highly qualified personnel.• User friendly with many accessories.• High re-sale value compared to other brands of mobile phones. WEAKNESS• No promotion undertaken to target the lower class of the society.• Poor after sales service.• Very few service centres. OPPURTUNITIES• To expand with a wide range of products, features and different price range to suit different people. THREATS• To maintain the position as one of the best in the market because Apple i-phone and devices running on Googles Android operating system have come to stand of tough competition with Nokia.• Cheap phones, advanced features and good after sales services.

21

2.2 Samsung Mobile History Samsung Group is a South Korean multinational conglomerate company headquartered in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand, and is the largest South Korean chaebol (business conglomerate). Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over the next three decades the group diversified into areas including food processing, textiles, insurance, securities and retail. Samsung entered the electronics industry in the late 1960s and the construction and shipbuilding industries in the mid-1970s; these areas would drive its subsequent growth. Following Lee's death in 1987, Samsung was separated into four business groups – Samsung Group, Shinsegae Group, CJ Group and Hansol Group. Since the 1990s Samsung has increasingly globalized its activities, and electronics, particularly mobile phones and semiconductors, have become its most important source of income. Notable Samsung industrial subsidiaries include Samsung Electronics (the world's largest information technology company measured by 2012 revenues, and 4th in market value), Samsung Heavy Industries (the world's 2nd-largest shipbuilder measured by 2010 revenues), and Samsung Engineering and Samsung C&T (respectively the world's 13th and 36th-largest construction companies). Other notable subsidiaries include Samsung Life Insurance (the world's 14th-largest life insurance company), Samsung Everland (operator of Everland Resort, the oldest theme park in South Korea),[6] Samsung Techwin (an aerospace, surveillance and defense company) and Cheil Worldwide (the world's 16th-largest advertising agency measured by 2011 revenues). Samsung has a powerful influence on South Korea's economic development, politics, media and culture, and has been a major driving force behind the "Miracle on the Han River". Its affiliate companies produce around a fifth of South Korea's total exports.[11] Samsung's revenue was equal to 17% of South Korea's $1,082 billion GDP. In 2013, Samsung began construction on building the world's largest mobile phone factory in the Thai Nguyen province of Vietnam. 22

PRODUCT NAME Tablet Smartphone (6) Smartphone (29) Smart Feature Phone (4) Dual Sim Phone (18) Multimedia Phone (3) CDMA Phone (5)

VISION AND MISSION OF SAMSUNG Welcome to SAMSUNG. For over 70 years, SAMSUNG has been dedicated to making a better world through diverse business that today span advanced technology, semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance, hotels and more. Our flagship company, SAMSUNG Electronics, leads the global market in high-tech electronics manufacturing and digital media. Through innovative, reliable products and services; talented people; a responsible approach to business and global citizenship; and collaboration with our partners and customers, SAMSUNG is taking the world in imaginative new directions.

Vision and Mission SAMSUNG is dedicated to developing innovative technologies and efficient processes that create new markets, enrich people's lives, and continue to make Samsung a digital leader. Our Vision Samsung is guided by a singular vision: to lead the digital convergence movement. 23

We believe that through technology innovation today, we will find the solutions we need to address the challenges of tomorrow. From technology comes opportunity-for businesses to grow, for citizens in emerging markets to prosper by tapping into the digital economy, and for people to invent new possibilities. It’s our aim to develop innovative technologies and efficient processes that create new markets, enrich people’s lives and continue to make Samsung a trusted market leader.
Vision 2020 As stated in its new motto, Samsung Electronics' vision for the new decade is, "Inspire the World, Create the Future." This new vision reflects Samsung Electronics’ commitment to inspiring its communities by leveraging Samsung's three key strengths: “New Technology,” “Innovative Products,” and “Creative Solutions.” - and to promoting new value for Samsung's core networks - Industry, Partners, and Employees. Through these efforts, Samsung hopes to contribute to a better world and a richer experience for all. As part of this vision, Samsung has mapped out a specific plan of reaching $400 billion in revenue and becoming one of the world’s top five brands by 2020. To this end, Samsung has also established three strategic approaches in its management: “Creativity,” “Partnership,” and “Talent.” Samsung is excited about the future. As we build on our previous accomplishments, we look forward to exploring new territories, including health, medicine, and biotechnology. Samsung is committed to being a creative leader in new markets and becoming a truly No. 1 business going forward. Our Mission Everything we do at Samsung is guided by our mission: to be the best “digital-εCompany”. Samsung grew into a global corporation by facing challenges directly. In the years ahead, our dedicated people will continue to embrace many challenges and come up with creative ideas to

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develop products and services that lead in their markets. Their ingenuity will continue to chart Samsung’s course as a profitable, responsible global corporation.

SWOT Analysis Definition:-

The SWOT Analysis is a strategic planning tool that stands for: strengths, weaknesses, opportunities, and threats. The SWOT analysis is essential to understanding the many different risk and rewards of any investment. Analyst, investors, students and professionals or all types can use a SWOT analysis to categorically break down a project or businesses' strengths, weaknesses, opportunities, and threats. Strengths . Low production costs Largest share in mobile phones No. 1 place in smartphones sales Ability to market the brand Weaknesses 1. Patent infringement 2. Too low profit margin 3. Lacks its own OS and software 4. Focus on too many products 5. Main competitors are also largest customers Opportunities 1. Growing India’s smartphone market 25

2. Increasing demand for quality application processors 3. Growth of tablets market 4. Obtaining patents through acquisitions 5. Growing mobile advertising industry Threats 1. Saturated smartphone markets in developed countries 2. Declining margins on hardware production 3. Breached patents 4. Apple’s iTV launch 5. Rapid technological change 6. Price wars

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2.3 Micromax

History:Micromax is an Indian consumer electronics company located in Gurgaon, Haryana, India. It is in the business of manufacturing of Mobile Telephones, Tablet Computers, 3G Datacards and LED Televisions. It has 23 offices in India and an international office in Hong Kong. The company has about 656 employees. Micromax started as an IT software company in the year 2000[5] working on embedded platforms. In 2008, it entered mobile handset business and by 2010. it became one of the largest Indian domestic mobile handsets company operating in low cost feature phone segments. This transformation was steered by four friends who divided responsibilities on functional lines, which haven’t changed since: Rajesh Agarwal, Rahul Sharma, Vikas Jain, and Sumeet Arora. The company has a 22% market share in the smartphone segment in India. As per IDC for Q2 2013. The company's product portfolio has more than 60 models ranging from feature rich, dual SIM phones, 3G Android Smartphones, TabletsPC's, LED Televisions and 3G data cards. The company claims it has many firsts to its credit in the Mobile handset market – including the 30-day battery backup, dual SIM, QWERTY Keypad, Universal Remote Control Mobile Phone etc. Micromax has presence in more than 560 districts through 125,000 retail outlets in India. The company has sales presence spread across Bangladesh, Sri Lanka and Nepal.

History

Micromax started their mobile phone manufacturing operations in 2008 when multinationals ruled the telecom industry. With an understanding of the rapidly changing consumer preferences. coupled with the use of the latest technologies; Micromax differentiated itself from the other players with its pricing Everything started with a truck battery in the year 2007. In the powerless city of Baharampur[11] in the Indian State of West Bengal, Mr. Rahul Sharma

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saw an AirtelPay Phone being powered by a truck battery. Every night, the PCO owner would lug the battery 12 km to an adjoining village on his cycle, charge it there overnight, and lug it back to Berhampur

in the morning. Rahul was fascinated by the nature of innovative

adaptation to suit the difficult conditions which the payphone operator had employed and his interest only grew when he found out that to everyone’s surprise, the operator was also able to earn a tidy sum of money. Based on this experience of innovation arising from constraint, Micromax soon launched its first phone which had a battery back-up of one whole month known as X1i.[12] In 2011, Micromax entered the phablet market with the Canvas series. Micromax aims to be a company with a double digit market share by 2014. Now the company has entered the smartphone segment and tries to change the status quo that innovation and technology comes at a price..

On 28 July 2011, Micromax withdrew its 4.66 billion rupees (about $106 million) initial public offering(IPO) due to volatile market conditions. The withdrawal was recommended by its board in order to allow the company to focus on new product launches and product development.

On October 2013, the company made an announcement that Hollywood actor Hugh Jackman will be endorsing the soon-to-be-launched Micromax smartphone called Canvas Turbo. Micromax will roll out Android 4.3 JellyBean for selected models. So far the list includes A250 Canvas Turbo, A240 Canvas Doodle 2, A210 Canvas 4, A117 Canvas Magnus and A116 Canvas HD

PRODUCT NAME:-

Mobile phones Innovations 30 day battery standby phone-X1i 28

Micromax X1i Xtra is a Bar phone weighing g. It's dimensions are 120.5MM x 52.5MM x 13.50MM . The talk-time of the phone is Up to 6.5 hours. The phone operates at frequencies of GSM 900 / 1800 MHz | GSM 900 / 1800 MHz. The Phone has a Display of 6 cms (2.0 inches), QVGA TFT Display Screen. This model comes with Camera of 0.3 Mega Pixels, VGA Camera with Digital Zoom Gravity GC700 GC700 was a dual sim device which enabled GSM & CDMA in one device with just a flip of the device. Micromax GC700 is a Dual SIM (GSM + CDMA) bar style phone having 2MP camera with, motion sensor, multi format music player, video recorder. Universal Remote Control Phone-X235 X235 was a feature phone that could also be used as a remote control device for air conditioners, TV, DVD players, etc. Micromax X235 mobile phone has universal Remote Control. The X235 had 176×220 pixel screen, Bluetooth, GPRS/WAP/MMS, Dual SIM, Camera, Music player, video player and FM radio. Gamolution- G4 Along with a phone G4 could be doubled up as a wireless gaming device which enables gaming on desktop and laptop. Games like badminton, tennis, bowling, etc. could be played. The device was similar to Nintendo Wii. The Gamolution came preloaded with motion sensor gaming console. A contraction of Gaming Evolution, the device offers Bluetooth Game Dongle, Lanyards – Wristband, Games CD, Game Codes and Game Manual. Bling Q55 Q55 was a women centric phone. It was the first phone[23] with a Swarovski crystal on it. Micromax Bling Q55 is a dual SIM phone with a swivel form factor and QWERTY keypad. The Bling is endorsed by Twinkle Khanna. Van Gogh X450

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X450 was a device with a detachable Bluetooth device. It provided a convenience to people who carried 2 devices, 2 chargers. Micromax X450 Van Gogh, has Bluetooth headset dock built right into the back of the phone. The Bluetooth headset could charge from the phone. Gesture control phone – A85 A85was the first Gesture recognition phone in India, the phone functioned with gestures and needed no touch. The A85 SUPERFONE is equipped with a 1 GHz dual core NVIDIA Tegra 2 processor. It was the first product to integrate Gesture recognition. ModuT Modu T was the worlds lightest touch screen phone and holds the world record for the same. Micromax Modu T is a Bar phone weighing 62.2g. It's dimensions are 75MM x 46.5MM x 11.00MM. The phone operates at frequencies of GSM 900 / 1800 / 1900 / UMTS 900 / 2100 MHz . The Phone has a Display of 2.2 inches QVGA Display, LCD Touch Display. MTV Music phone X360 X360[18] was the first MTV phone with Yamaha chipset for better sound quality. X360 had Multi Format Music Player with Yamaha & Wolfson Amplifiers and Stereo FM Radio/Recorder. QWERTY Keypad Q3 was the first qwerty keypad chat device under 100$ Funbook- P300 7-inch Multi-touch Capacitive screen, 1.2Ghz Cortex A8 CPU with 400Mhz Mali 3D GPU, 512MB RAM, 4GB Memory, Android 4.0 OS, WiFi, HDMI Port, HD Video, VGA Front-facing camera Micromax Canvas A250 Turbo Canvas A250 Turbo[18] was the first phone with Object Eraser app for the camera. It lets you erase unwanted parts of an image right on your phone.. Other innovative apps on this device include Cinemagraph and 360 Panorama capture.Screen 12.7 cm (5) SHARP FHD CGS 30

(Continuous Grain Silicon). Canvas Turbo was officially announced in India on 24 Oct 2013. The device surfaced in retails on 26 Oct at price of INR 19,990

MISSION AND VISION Micromax is on a mission to successfully overcome the technological barriers and constantly engender “life enhancing solutions”. The company’s vision is to develop path-breaking technologies and efficient processes that incubate newer markets, enliven customer aspirations and continue to make Micromax a trusted market leader amongst people. The Micromax ideology stems from its rooted belief in ‘Innovation’ and delivering “nothing short of the best”. SWOT Analysis Strengths: Innovative products and features- Marathon battery mobile phones with a 30-day battery life, phone which is programmable as a universal remote control, gravity phones are some of the features which have increased the popularity of the product. Low cost of production – With its plants located in China, Micromax bears a low cost in production due to availability of labour at cheaper rates. Effective promotion campaigns- Micromax has been promoting its products through famous celebrities and has also had tie ups with MTV. Weaknesses: Weak brand image in urban areas- Micromax has still not been able to establish itself well in the urban market as its main concentration had been on the rural population. Perception of lowquality Chinese brand- Micromax has a manufacturing unit set up in china which has strengthened this perception among people.

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Opportunities: Increase penetration in urban market- Since Micromax has not yet entered this market; it has a very huge opportunity to establish itself in this market. Entry into international marketsMicromax has the potential to make its presence felt on global scale eventually as it establishes itself in the domestic market.

Threats: Increasing competition from local and international players- With well established players like Nokia, Samsung, etc Micromax faces a tough competition from these players. Replication of business model by competitors- Micromax’s business model has been replicated by many new players which again pose a threat to Micromax.

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2.4 Sony HISTORY:Sony Mobile Communications (formerly Sony Ericsson Mobile Communications AB) is a multinational mobile phone manufacturing company headquartered in Tokyo, Japan, and a wholly owned subsidiary of Sony Corporation. It was founded on October 1, 2001 as a joint venture between Sony and the Swedish telecommunications equipment company Ericsson, under the name Sony Ericsson. Sony acquired Ericsson's share in the venture on February 16, 2012. Sony Mobile Communications has research and development facilities in Tokyo, Japan; Lund, Sweden and Beijing, China. Sony Mobile is the fourth-largest smartphone manufacturer by market share in the fourth quarter of 2012. The current flagship device of Sony is the Sony Xperia Z1, a waterproof and dust-resistant premium smartphone featuring a 20.7MP camera.

Products Sony Mobile's current products include: XPERIA range - launched with the Sony Ericsson XPERIA X1 at the 2008 Mobile World Congress in Barcelona, which carried the Windows Mobile operating system with a Sony Ericsson's panel interface. The Xperia X10 model features the Android operating system. Additionally, Yahoo! News reported that Sony would align with Google to run Android on its upcoming smartphone.

Mission and Vision

MISSION“To experience the joy of advancing and applying technology for the benefit of the public.” vision “To create exiting new digital entertainment experiences for consumer by bringing together cutting – edge product with latest generation content and services.

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SWOT analysis Sony Ericsson SWOT Analysis

Strength Diversity among products. Sony as a brand name. Weakness Lack in understanding Customer Preferences Less technology advancement Lack of user centered designs. Lack of Brand awareness globally Opportunities Mobile phones market in developing High % of young market Strong Customer demand for innovative product High Disposable income in emerging markets. Network capabilities and low tariff of service providers. Threats Landline penetration and introduction of Sky phones for rural areas. Intense competition. Bargaining power of consumers.

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Chapter 3 Strategic Analysis

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3.1 Introduction of chapter Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the future direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue particular courses of action. Generally, strategic planning deals with at least one of three key questions:  "What do we do?"  "For whom do we do it?"  "How do we excel?" Many organizations view strategic planning as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.

Tools and approaches

Among the most widely used tools for strategic planning is SWOT analysis which means (Strengths, Weaknesses, Opportunities, and Threats). The main objective of this tool is to analyze internal strategic factors, strengths and weaknesses attributed to the organization, and external factors beyond control of the organization such as opportunities and threats.

Other tools include: 36

Balanced Scorecards, which creates a systematic framework for strategic planning;

PEST analysis (Political, Economic, Social, and Technological)

ATM Approach (Antecedent Conditions, Target Strategies, Measure Progress and Impact). Once an understanding of the desired endstate is defined, the ATM approach uses Root Cause Analysis (RCA) to understand the threats, barriers, and challenges to achieving the endstate.

Situational analysis It is important to analyze the organization and its environment as it is at the moment and how it may develop in the future when developing strategies. The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organizations.  There are several factors to assess in the external situation analysis:  Markets (customers)  Competition  Technology  Supplier markets  Labor markets  The economy  The regulatory environment

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3.2 Objectives of chapter

Analyzing Organization Goals and Objectives Organizations must have clearly articulated goals and objectives in order to channel the efforts of individuals throughout the organization toward common ends. Goals and objectives also provide a means of allocating resources effectively. A firm’s vision, Mission, and strategic objectives form a hierarchy of goals that range from broad statements of intent and bases for competitive advantage to specific, measurable strategic objectives.

Analyzing the External Environment Managers must monitor and scan the environment as well as analyze competitors. Such information is critical in determining the opportunity and threats in the external environment. We provide two frameworks of the external environment. First, the general environment consist of several elements, such as demographic, technological, and economic segments, form which key trends and events can have a dramatic impact on the firm. Second, the industry environment consists of competitors and other organizations that may threaten the success of a firm’s products and services.

Assessing the Internal Environment Useful frameworks for analyzing a firm’s internal environment helps to identify both strengths and weaknesses that can, in part, determine how well a firm will succeed in an industry. Analyzing the strengths and relationships among the activities that constitute a firm’s value chain (e.g., operations, marketing and sales, and human resource management) can be a means of uncovering potential sources of competitive advantage for the firm.

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3.3 PEST Analysis It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up from:  The internal environment  The micro-environment  The macro-environment e.g. Political (and legal) forces, Economic forces, Socio-cultural

forces, and Technological forces. These are known as PESTL factors. A PEST analysis is one of them that are merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. PEST is useful when a company decides to enter its business operations into new markets and new countries. The use of PEST, in this case, helps to break free of unconscious assumptions, and help to effectively adapt to the realities of the new environment.

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Figure 3.3 PEST analysis

3.3.1 POLITICAL/LEGAL FACTORS

Nokia has recently shifted its production unit to India. Samsung faced 2 week strike from its employee. In the India at the moment mobile industry is highly regulated and ministry of telecom intervention does take place. In the de-regulated market telephone operators and manufacturers are free to act independently of govt. intervention.

3.3.2 ECONOMIC FACTORS

Economy has a key role in profitability of the mobile industry. India’s growing economy & people’s income which is rising is positive factor for Samsung. There is only few affect by recession on Indian economy.

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3.3.3 SOCIO-CULTURAL FACTORS  In India mobile users are more aware of mobile handset choice & advancement. Indian young generation and youth are focusing maximum feature’s mobile handset. Indian rural residents like farmers are focusing low cost handset  Now-a-days consumers are not brand loyal as they were previously, now they can easily switch to another product. the many difficulties involved in producing a useful overview of new mobile technologies on a global scale. The variety of languages in which mobile Communication takes place and in which research is done is obviously formidable, but even more so is the pace at which the development and spread of these devices is taking place; it is almost impossible to keep up but then too due to increasing competition and consumer expectation every companies are working accordingly by keeping the aspects of socio-cultural factors.

3.3.4 TECHNOLOGICAL FACTORS

Mobile industry is marked by drastic technological changes. Indian markets are more technological advanced then European counterparts, Ex.- 8 years ago 4% mobiles had cameras, whereas in India 90% did. Every handset manufacturer has updated themselves with advanced technology like camera, internet, GPRS, MMS, WAP, Wlan etc. In India all handset manufacturers have to keep up to date with all newest technological advances, if they want to capture & share the market

Generation of mobile handset:  GSM : Global System For Mobile  CDMA: Code Division Multiple Access  First Generation  Second Generation  Third Generation  Smart Phone 41

 3.4 Industry Dominant Economic Features: The major dominant economy features which are related to mobile handset industry are as follows: 3.4.1 Market size & Growth Rate:  Market Size:

Nokia once dominated the Indian mobile handsets industry. But it has suffered a steady loss in market share, primarily owing to the competition mounted by Samsung, Micromax, Karbonn, Apple, HTC and BlackBerry.

In fact, according to a survey done by Voice and Data, Nokia’s market share was down to nearly 27.2 per cent, even as the Indian mobile handset market revenues grew in 2012-13 to Rs. 35,946 crore, up 14.7 per cent, from Rs. 31,330 crore in 2011-12.

Nokia, which held the numero uno position for more than 10 years, was overtaken by Samsung, which claimed 31.5 per cent market share with a revenue of Rs.11,328 crore. During 2012-13, top 10 handset providers increased their revenue with the exception of Nokia, which lost 18 per cent, down to Rs.9,780 crore, over the previous year, along with BlackBerry, which lost 23.1 per cent.

Samsung is said to have beaten Nokia with a wide range of product portfolios, priced between Rs.1,500 and Rs. 50,000 in India. The three Indian brands in the top 10 include Micromax, which has a market share of 8.7 per cent, Karbonn (6.4 per cent) and Lava (2.8 per cent). Nokia’s flagship Lumia phones are likely the best-selling window phones in India. Nokia also continues to attack the dual SIM and low-end smartphone market with cheaper devices, mostly manufactured at its Chennai plant. I  Growth Rate: Samsung’s brand strength and wide device portfolio has allowed it to take advantage of the high growth opportunities in Indian market. Samsung’s share has risen from 15 per cent in 42

the first quarter of 2011 to 49.8 per cent in 2Q12. If Samsung continues this strong growth, it could end 2012 with more than 60 per cent share — exactly where Nokia was at the start of 2011. (Source: Hindustan business line)

3.4.2 Scope of competitive rivalry: The cell phone industry has become increasingly larger within the last three years as a result of smore affordable cellular phones as well as lower service costs. Companies are competing in an advance technology and communication sector in which success attracts customers to buy their products and services. The market is very competitive because they offer the same products and services, but has different physical attributes to the phones and different costs, which buyers have choices to choose from. Companies want to provide the best products and services to attract buyers by lowering cost and improving products, which makes the cell phone industry very competitive. Here are the main factors of competitive rivalry:  Cell phone cost: Customers wants better services and products at a lower cost.  Bundle functions into just one cell phone: For example E-mail, text messaging, internet  New technology improvement

3.4.3 Number of Rival:

As we seen above, there are major more companies in India which are working in mobile handset industry. Yet mobile handset industry is dominated by main four companies namely : 1. Samsung 2. Nokia 3. Micromax 4. Sony

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Total Company

Total

handset sales handset sales value

in value

FY11-12

in

FY12-13

Value

Value

market share market share in FY11-12

in FY12-13

Samsung

7891

11328

25.18

31.51

Nokia

11925

9780

38.06

27.20

Micromax

1978

3138

6.31

8.72

Sony

1327

2297

4.23

6.39

Total market size in value

23121

26543

terms Revenue in Rs crore, marketshare in% Source: Voice&Data Survey of Indian Mobile Handsets Market 2012-13 Table 3.1

3.4.4 Product innovation:

In the cell phone industry, the products and services are highly standardized. Today, with more technology enhancement, the products in different companies are essentially similar. Since this is a cell phone industry, there is a maximum amount of products and services that consumers can choose from. Yet, consumers do not want to purchase cell phones at a higher price value unless the companies are able to make it attractive and innovative.

3.4.5 Scale Economies:

There are two types of economies of scale pertaining to the cell phone industry. They are the internal and external economies.

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i.

Internal

Internal economies of scale are economies made within a company as a result of mass production. So as a company produces more and more products and services to consumers, the average cost begins to fall so the companies should focus on the following six factors:  A technical economy: when the companies use its entire means to generate revenues and increase profitability. This includes spending a large amount of money on capital to start the company.  Managerial economies: when the company splits up managerial duties to meet specific company goals and values. This in turns helps to complete specific tasks and improve the company to better service consumers.  Financial economies: cell phone companies borrow lots of money to purchase capital in order to create products for consumers.  Marketing economies: where cell phone companies spends a lot of money to advertise their products and services on television and in newspapers everyday to reach consumers across nations. Companies resorts to marketing in hope of attracting more consumers to try their products and to generate higher profits and revenue.  Commercial economies: cell phone companies order their products and supplies in bulk at a lower rate rather than buying them separately.  Research and development economies: the cell phone companies are continuously developing new and advance technology cell phone to be in pace with the competitive market.

ii.

External

The external economies are made outside of the company as a result of its location. Most cell phone companies have a corporate headquarter that concentrates on the following to keep track of the company’s progress.

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 Cell phone companies have licensed franchises that operate to sell products and services to consumers. They have a network that connects them to manufacturers, service carriers, and main corporate officer that is the backbone of the stores and products it sells.  The cell phone companies works closely with service carriers to provide phone service such as clear phone calls, not lost calls, and good receptions.  The companies work and communicate directly with manufacturers reputable for the new phones enhancement, upgrades, and features.

3.4.6 Learning & Experience Effects: The major complaint found in the cell phone industry was cost and services. So to improve their service, the company has increased the training for customer service employees to 10 days a year, and introduced a new plan to address common complaints; also tied executive compensation to customer satisfaction.

There are more options that buyers can choose from, whether it be the actual phone itself or the service plan. Companies are now giving customers a series of contract terms and costs as well as giving them a sample of how their first bill will look like so they understand the contract before signing it.

Service carrier is a very important factor to maintaining consumer satisfaction and to keep consumers. With that, companies are all pushing new data services for business customers to increase new revenue sources.

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3.5 Porter’s Five Force Analysis

Figure 3.5 Porter’s five force model:

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3.5.1 Bargaining power of buyer (demand scenario): Buyers in the market fall into two categories. Firstly, independent retail outlets and big store retailers, purchase handsets to sell on to end-users. Mobile network operators constitute the other section of buyers in the market, although some of these operators are vertically integrated and have their own retail outlets. There are a small number of large mobile network operators, giving them some negotiation muscle when bidding for contracts with market players. However it is necessary for all buyers to stock the latest innovative products if they want to meet end-user demand and this diminishes their strength in the supply chain. Both: network operators and retailers are occasionally able to win exclusive deals with manufacturers. Overall buyer power is moderate. 1. Buyer Size – Since there are so many small and different buyers, they are source of attractiveness for new players. Thus the strength is high and rating given is 5. 2. Low cost switching – Switching cost is very low for buyers as there are so many different handsets available at different prices. Thus the buyers have power to switch easily. Hence the strength of this factor is high and it decreases the attractiveness to some extent. However due to brand loyalty they might not switch easily which result in rating of 2. 3. Price sensitivity – Since India is growing at an average rate of 8% since last decade, income level has gone significantly. Lifestyle of people has changed to a great extent. Status is one of the desirable factors in the handset. But still much of Indian population lives in rural and semi-urban population, people are somewhat price sensitive. Thus the strength of this factor is medium and rating given is 3. 4. Tendency to switch – Since the switching cost is not so high, people tend to switch mobile phone if they are unsatisfied with the current phone or if some other phone with better feature is launched. Thus the strength of this factor is high and rating given is 2 as buyer has some power.

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5. Undifferentiated product – Majority of mobile phone provide all the basic facilities like calling, texting, alarm, calendar, camera, radio etc. Thus point of differentiation lies mainly in price and other special feature like GPS, Music player quality, WiFi etc. Thus if we look across different segments, we can see many differentiated product and also some phone are highly differentiated. Thus the strength of this factor is medium and rating given it 3. 6. Financial Muscle – Since the wholesale buyers and distributors are in good financial position, mobile manufacturer need not worry much about the business with them. Hence the strength of this factor is medium and rating given is 5. 7. Background Integration – Since it requires very high investments and high expertise, small retailers and distributor cannot background integrate easily. Also as of now we have not seen any backward integration. Thus the strength is low and rating given is 4.

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Factors of buyers: Parameters

Attractiveness Strength Low 1

Backward Integration

Low

Buyer Independence

Medium

Buyer size

High

Financial Muscle

High

Low cost switching

High

Oligopsony Threat

Low

Price Sensitivity

Medium

Product Dispensability

Medium

Tendency to switch

High

Undifferentiated Product

Medium

High 2

50

3

4

5

3.5.2 Bargaining power of supplier (supply scenario): Suppliers within the mobile phones market are those entities providing technology, equipment and parts for mobile telephone manufacture. This includes highly specialized software

and

electronic components. Other suppliers are those providing advertising and marketing services. Manufacturers are much larger companies than suppliers and therefore they have the ability to influence supply contracts. For example, Nokia carry out assessments on their suppliers to make sure they meet standards. However this is partly because market players are so heavily reliant on the quality and efficiency of the software and products provided. Moreover, some of the software, such as integrated circuits, can be specific to the company, which again increases dependence upon suppliers. Ethics is important in the supply chain too and manufacturers have to be careful who they choose to provide their supplies. Currently there are ethical issues concerning the usage of tantalum purchased from the Congo, as it is believed to help fund civil war in the region. Suppliers provide services to a wide range of industries, particularly in the electronics field, and therefore revenues generated from supply to mobile phones are not highly important to them. The same can be said for marketing and advertising companies that provide services to the mobile market. There has been an increase in raw material prices such as steel in recent years, which could adversely affect manufacturers’ margins. The trend for smart phones has strengthened supplier power as operating systems such as Windows, RIM, Android, Apple and Symbian is now an essential component for Smartphone manufacturers. As entry barriers fall in markets throughout the world it is likely that profitability is likely to flow away from handset manufacturers to manufacturers of key performance enhancing components and modules (both hardware and software). Overall supplier power is moderate.

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1. Differentiated Input – Since basic type of input (keypad, screen) required for handset manufacturing is more or less same so they don’t create much of the differentiated input. However for high end premium mobile phones, material and technology required is of very different type for different manufacturer. Companies could switch suppliers for non critical components but are closely tied to them for critical components and sub-systems. Thus strength of this parameter is medium and attractiveness of industry is given 4 points. 2. Forward Integration – Suppliers do not pose any credible threat of forward integration even though they are outsourced. Thus strength is low and rating is 4 points. 3. Importance of quality/cost – Due to increased competition in the industry, quality is becoming a necessity for any player to survive. Indian people are becoming more quality conscious day by day and they want good quality phone at low cost. Thus strength of this factor is high and it can decrease the attractiveness of the industry hence rating given is 2 points. 4. No Substitute inputs – Due to availability of large number of substitute supplier for non critical components, the strength of this factor is low and attractiveness rating is 5. 5. Supplier Size - Manufacturers are much larger companies than suppliers and therefore they have the ability to influence supply contracts. For example, Nokia carry out assessments on their suppliers to make sure they meet standards. . However this is partly because market players are so heavily reliant on the quality and efficiency of the software and products provided. Moreover, some of the software, such as integrated circuits, can be specific to the company, which again increases dependence upon suppliers. Thus the strength of this medium and rating given is 3. 6. Switching Costs – Since requirement of high quality supplies and huge volume requirement, it is very tough for any manufacturer to switch its suppliers easily. Also due to requirement of specific technology for particular handset, switching costs are very high. Thus the strength is medium and attractiveness rating given is 2. 52

Factors of suppliers:

Parameters Strength

Attractiveness Low

High 1

Differentiated input

Medium

Forward

Low

Integration Importance

of

Very

quality/cost

high

No

Medium

substitute

inputs oligopoly threat

Low

Player

High

dispensability Player

Medium

independence Supplier size

Medium

Switching costs

Medium

53

2

3

4

5

3.5.3 Threat of new entrants: The overall threat to mobile handset industry due to new entrants is moderate. The reason for moderate risk is due to the fact that companies in electronic equipment manufacturing can easily venture into mobile industry owing to similar technology. Examples are success of Blackberry, HTC and other smart phones. All of the established mobile phone manufacturers are now following suit by launching their own smart phones, which suggests that this section of the market is likely to see significant growth over the next few years, luring newcomers with revenue perspective. Problems: 1. For entirely new entrants, the scenario is difficult because they have to compete in technology with already established big players like Nokia, Samsung, and Motorola etc. They will require huge capital outlay not only in production facilities but also in research and development. 2. There are stringent laws relating to science-based regulation and the adoption of emission guidance by the International Commission on Non-Ionizing Radiation. Furthermore mobile manufacture is closely monitored with studies being conducted on the possible side effects of electromagnetic fields produced by mobile phones. 3. Though buyers may have good disposable income and youngsters may have fad to change their handsets very frequently but they rely on established players who in recent times are coming up with new, fancy and cost effective models catering to the needs of the consumers. So new entrant will find it difficult to establish itself and compete at the same level of innovation by creating not only a share of market but also share of mind.

54

Factors of new entrants 1. Market growth: The mobile handset market is growing at a very fast pace. “India’s mobile handset market touched 100.9 million units in the year ended June 2009, recording a growth of 6.7% from 94.6 million units in the previous year ended June 2008, according to IDC India.” 2. Low cost switching: Since there are huge number of mobile handset providers with similar features and similar price range, it poses threat with new entrants as market share of existing players might come down. 3. Little Regulation: Very few regulations like “International Commission on Non-Ionizing Radiation” check that harmful radiations and environmental norms are followed by the manufacturers thus making their entries easy. 4. Undifferentiated product: Since products offered by this large gamut of providers differ very less in terms of features, style, price and durability, they make entry of new players fancy and attractive. 5. Weak Brands: If we look at the mobile handset industry, brands are very strong. Nokia, Samsung, LG, Motorola etc command respect because of their quality, affordable prices, availability and variety thereby making new entrants think twice before entering this arena. 6. Low Fixed costs: Though fixed costs are low in setting up of the industry but continuous investment in R&D and other marketing related expenses make it difficult for entrants to invest freely or venture into mobile handset industry. 7. Distribution Accessible: it is quite attractive because number of mobile dealers in India had grown manifolds. Opening of stores like ‘Mobile store’, ‘Nokia priority centre’ and other stores owned by RPG and Virgin makes it attractive for entrants because they do not need to setup their own distribution centres. 55

Factors of new entrants: Attractiveness Strength

Low 1

Market Growth

High

cost switching

Low

Fixed Cost

Low

Regulation

Low

Access

to

channel

High 2

3

4

5

of Medium

Distributions Other Brands

Very high

3.5.4 Threat of substitutes: Threat from substitutes is very low because potential substitutes are landlines, e-mail, networking sites, messengers (skype, gtalk, yahoo messenger) etc. But it can be said that threat from such substitutes is quite low. Landline, once dominant player is in declining stage. E-mails and networking sites can never be perfect substitutes for mobile phones. Many mobiles now provide their users with the internet, TV, GPS and mp3 functions. With these features in offering and complete mobility at affordable prices, any significant threat from the substitutes is ruled out. 56

Statistics: (Source: economic times)  Telephone Subscribers (Wireless and Landline): 787.28 million (Dec 2012)  Land Lines: 35.09 million (Dec 2012)  Cell phones: 752.19 million (Dec 2012)  Annual Cell phone Addition: 227.04 million (Dec 2009 - 2012)  Monthly Cell phone Addition: 22.62 million (Dec 2012)

It can be clearly seen that number of cell phone users is far above than that of land line users. Also looking at the number of monthly cell phone addition, it is quite close to the number of land line users. It can be conveniently concluded that there is no serious threat from landline which is close substitute of mobile users. Factors of substitute: 1. Availability of close substitutes: This poses a very low threat because advantages offered by mobile phones include voice services at affordable rates, complete mobility and value added services. This list not being exhaustive clearly surpasses any other substitute. 2. Switching Cost: As far as switching costs are concerned, they are low but lack of potential substitute dismisses the threat that could have cropped because of low switching cost. 3. Beneficial alternative: There may be services offered on internet which cannot be availed on mobile phones but it can never replace mobile phones. Recently i-pad and palm computers have come up but they are very costly and at the same time not convenient to carry. Landlines on other hand do not offer any other service apart from voice calling which is not what generation look out for.

57

Strength

Attractiveness Low 1

Availability

of

High 2

3

4

5

close Low

substitutes Switching Cost

Low

Beneficial alternative

Very low

3.5.5 Competitive rivalry: This market is mostly dominated by a few large well known companies such as Sony, Samsung, Nokia and Micromax, which intensifies competition. Also present in the market, however, is a second tier of small manufacturers with phones that are targeted towards niche markets or produced for specific regions. Market penetration is high and in such conditions well established mobile phone firms, such as Motorola, have responded by creating growth opportunities through a high generation of replacement handset sales. Number of Competitors: penetrated by large number of brands, still it poses little threat because each has their own production facilities, distribution centers and clientele base which it needs to retain by investing regularly in R&D which till now companies have been able to do so. With growing market if competitors are close competitors, they still have lot of untapped potential in terms of rural market.

58

1. Industry growth: Mobile handset industry is growing very fast with giving lot of opportunities to not only existing players but also new entrants and thus this is an area of high opportunity and threat at the same time. India Mobiles Phones Market value forecast(Source: Data Monitor) 2. Fixed cost: the fixed cost involved in this industry is not very high but still it is high on attractive parameter because this is an advantage to all the players who have to spend high on R&D and marketing and building efficient supply chain. 3. Differentiation: Apart from physical touch and few advantages here and there, most of the features offered by handset providers are almost similar. It makes very necessary for companies to invest a lot of time, money and resources in it to make their products stand out from other players offerings. 4. Switching Cost: it is costing very less to customers to change their handsets. Also offerings of different players with similar features fall almost in similar price range. Thus it makes difficult for companies to retain customers who are not loyal by constantly offering new products. 5. Competitor size: very important factor as established players who are very big in size are able to price their quality products at low price. 6. Exit Barrier: with lot of investment made in set up, R&D and marketing, lot of things are at stake and it becomes difficult for companies to exit from the industry so easily

59

Factors of competitive rivalry: Attractiveness Strength

Low 1

No

2

of

Competitors

High

Industry Growth High Fixed Cost

Low

Differentiation

Low

Switching Cost

Low

Storage cost

Low

Exit Barrier

High

High

60

3

4

5

3.6 Challenges of mobile handset industry in India:  Most of the Indian mobile phones are used just to make and receive calls.  If we leave out the miniscule percentage of users with BlackBerry, iPhone, or an Samsung note 3 kind of device, the majority of the Indian users face serious problems in using their phone to access Internet like services.  The problem in data connectivity; it is too expensive, slow, and unreliable.  The second problem is the prevalent complete mistrust about the mobile operator’s Value Added Services (VAS) offerings.  The bigger challenge to mass adoption of mobile phones is obviously the language barrier, which has created the infamous ‘digital divide’ in India where English language literacy is pegged at 8-10 percent.  Now certain phones in India are available with localized menu language. But it is still a challenge with uncommon Hindi words like ‘kunjipatal sakriya’ being used for ‘keypad active’.  Another problem faced by the application developers in India is the revenue share demanded by telecom operators.

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3.7

Driving Forces

Driving force 1: Changes in who buys the product and how they use it: The usage of mobile handset has increased drastically in past few years. Before 5 years, only 24% of the respondents had mobile phones. The number increased to 48% in following two years. Two year before, 72% of the respondents were using mobile handsets. We can see the high growth rate in the number of consumers. Multimedia mobile handsets are popular in the village. Table 2 shows the use of different mobile handsets by the respondents. It was found that usage of Chinese and Micromax mobile handsets are more (Fig.2). This is so because they are cheap and they offer multimedia features. People appreciate these mobile handsets for its long battery back-up as well. 69% of the respondents use mobile handsets with multimedia features. Black and white mobile phones are used by 11% of the respondents that too mainly by people of more than 40 years of age (Fig.3). 40% of the total respondents use mobile handsets for call purpose only (Fig.4). Rest 60% use other features as well. 9% of the multimedia handset owners were not using the multimedia features of their mobile handset but it was being used by the young members in their family. A peculiar thing was found that youth use mobile handsets not only to watch movies. They get movie loaded in the mobile phones in Rs.5 from market and watch it in mobile.

MOBILE HANDSET TYPE

NO. USERS (%)

Black and white mobile handset

11

Colour mobile handset

20

Multimedia handset

69

Total

100

62

OF

USAGE

NO.

OF

RESPODENTS (%) Call Only

40

Call and message

12

Call, message, music and 35 camera All features

13

Total

100

INFORMATION SOURCES

NO. REPONDENTS (%)

Family

09

Friend

07

Newspaper

14

Retailer

37

Television

33

Total

100

Table 3.2

63

OF

Driving force 2: GROWING USE OF INTERNET AND EMERGING NEW INTERNET: The revolutionary success of India’s mobile industry is well known. What is not as well articulated is how the mobile ecosystem is driving Internet penetration in India. The following facts present a glimpse of that phenomenon:  India has more than 160 million Internet users, of which 86 million access Internet using their mobile devices  In the last 3-4 years, the number of users who access the Internet through a 3G connection has grown to round 22 million, To put things in perspective, compare this with the 15 million fixed line broadband connections accrued over the last 17 years  There are over 36 million Smartphone users as against c. 60 million PC users  9% of overall Internet page views in India come from mobile devices  Over 40% of searches on Google originate from mobile device  30% of Facebook users in India are mobile-only Internet users and 30% of new registrations are coming through mobile  LinkedIn ranks India among its top 4 growth markets for mobile usage While e-commerce and digital advertising are acknowledged to have attained a certain critical mass in India, mobile Internet is yet to break into public consciousness. Mobile Internet based businesses have not scaled to levels where belief in the ability to monetize through the channel is established. Several models are still in the trial stage, but there are enough leading indicators to prove we may be on the cusp of a very exciting phenomenon. Some of these include:  Bookmyshow launching its mobile app, bookings through the app increased to 25% of its overall bookings  20% of overall searches and 12% of bookings for Cleartrip come from its mobile app  ngPay has built a mobile mall with considerable revenue traction 64

Driving force 3: Technological change and manufacturing process innovation: Globalization accelerates the change of technology. Every day it seems that a new technological innovation is being created. The pace of change occurs so rapidly many people are always playing catch up, trying to purchase or update their new devices. Technology is now the forefront of the modern world creating new jobs, innovations, and networking sites to allow individuals to connect globally. The timeline below shows the rapid transformation of how technology has accelerated within the last 20 years to 2012. 

18 years ago: Internet commercialized



17 years ago: first mobile phone with Internet connectivity



15 years ago: Google named the search engine of choice by PC magazine



12 years ago: Blackberry launched



9 years ago: Facebook launched



7 years ago: Twitter launched



6 years ago: iPhone, the first of the smart phones, introduced



years ago: Groupon introduced



2 years ago: 17 million smart tablets sold — estimated that 100 + million by 2014



1 year ago: Google Glass announced



Every 60 seconds (so it seems): new apps, tailored to users’ specific needs created

Driving force 4: Changing societal concerns, attitudes and lifestyle  There has been an up rise in problems and with the use of articles, books, statistics and

surveys there will be proof that social changes have clearly been made because of cell phones.It is evident that cell phones make life easier. It is basically like a hand held computer with the addition of making calls. An example of this is the new generation of mobile devices called the “Smartphone”.  Every adult with a cell phone feels safer because of the device; 91% of cell phone users

agree that their phone makes them feel safer because they can always use it to get help. Women are more likely to say they feel safer because of their cell phone than men. Nearly nine in ten cell phone users (88%) also believe that the phone makes it easier to 65

arrange plans with other people, corroborated by the findings detailed earlier in this report that adults with cell phones are very likely to use voice and text to coordinate meeting in person and to check in with others. Heavy text and cell voice users (more than 50 texts or more than 30 calls per day) are more likely to agree that their cell phone makes it easy to arrange plans with others. Similarly, parents and adults with a college education or greater are more likely to agree that they appreciate the ability to check in and arrange plans that their cell phone offers.

66

3.8 Strategic Group Mapping Strategic Group Analysis (SGA) aims to identify organizations with similar strategic characteristics, following similar strategies or competing on similar bases. Such groups can usually be identified using two or perhaps three sets of characteristics as the bases of competition.

Examples of Characteristics •

Extent of product (or service) diversity

•

Extent of Geographic coverage

•

Number of Market segments served

•

Distribution Channels used

•

Extent of Branding

•

Marketing Effort

•

Product (or service) quality

•

Pricing policy

 Use of Strategic Group Analysis This analysis is useful in several ways: •

Helps identify who the most direct competitors are and on what basis they compete.

•

Raises the question of how likely or possible it is for another organization to move from one strategic group to another.

•

Strategic Group mapping might also be used to identify opportunities.

•

Can also help identify strategic problems.

There are five steps to make strategy group:

1. Identify two important competitive characteristics that strategically differentiate firms in an industry from one another: So here there are two factors identify are reported net profit and net assets of the company they are taken on X axis and Y axis

67

2. Plot the firm in two variable In the chart sawn different companies are plotted in X axis and Y axis in respect to their performance. 3. Draw circles around the firms that are cluster together. In this step actually find out the close firms which are nearby similar factor that we have taken in X, Y axes. 4. Indicate potential movement of firms with arrows. At the last have to saw the potential movement means the strategy for future movement.

MOBILE HANDSET COMPANY

TOTAL NO. MODELS (approx)

NO. OF COUNTRIES

Nokia

800

68

Samsung

950

92

Sony

550

16

Micromax

320

04

Total

2620

180

68

Fig no: 3.8 120 C o u n t r i e s

100

Nokia, 950, 92

80 Samsung, 800, 68

60 40 Sony, 550, 16

20

Micromax, 320, 4

0 -20

0

200

400

600

800

1000

1200

Total no. of models

3.9 Key Success Factors: There are factors that are necessary to attract customers, compete, and ultimately be successful in the cell phone industry. For a company to be successful in the cell phone industry they can create value by providing the basic features, technical features, and support to back up those features. Basic These features are assumed to be included and expected in a basic cell phone package to satisfy the simplest customers.  Caller ID Line Block  Call Forwarding  Call Hold  Call Waiting  Caller ID 69

 No Answer Call Forwarding  Three-Way Calling  Voicemail

Technical These features go beyond the basics and provide the technical features to attract the savviest of cell phone subscribers.  Internet capabilities to receive billing, make payments, and download ringtones.  Detailed Billing either in paper form or downloadable from the internet.  High-Resolution Camera, most important feature among subscribers.  Text Messaging, 3 billion wireless text messages are sent each month.  Web Access to get stock quotes, sports scores, weather, and up to the minute news.  Insurance to protect yourself in case of malfunction.  E-mail Messaging can now be done from the palm of your hand  NO Domestic Long-Distance Charges, not available with landlines.  Ability to Download Ringtones, free is better.  Battery Power is the second most important feature among subscribers.  Bluetooth is wireless technology that communicates with a wireless hands-free headset.  Video capability at least 15 seconds of video is the standard.  Prepaid Minutes typically useful for an individual that requires minimal talk time.

70

 Mp3 Capable, subscribers want to be able to use their iPod’s with their handsets.  Ability to Record Music and play it back or use as a ringtone.  FM Radio can now be transmitted through a handset.  FLASH Memory Cards can hold up to 100 songs and are removable. Support Every company can provide the basic and technical features but the ultimate test for success or failure is decided by the support the cell phone company can provide to their subscribers.  Pricing Plans that provide a reasonable amount of minutes and coordinate with the basic and technical features. A family plan allows the whole family to share their minutes on one plan.  Wireless Service Satisfaction, a strong signal reception for a network is a must to provide the subscriber with clear call quality minus the static/interference, voice distortion, echoes, and dropped/disconnected calls.  Wireless Customer Care Performance, the customer service is as important as the basic and technical features.  Wireless Retail Sales Locations can provide a physical location to get hands on experience with a handset and face-to-face contact with a representative. Wireless Phone Handset Satisfaction can offer multiple options from size, weight, design (folding, swivel, rectangular, or sliding can affect the performance), and antenna.

71

3.10 Competitive Profile Matrix (CPM)  The CPM identifies a firm’s major competitors and their particular strengths and weakness and relation to a sample firm’s strategic position. The scales and total shaps(weight) scores in both CPM and EFE have the same meaning. However, the factors in the CPM include both internal and external issues; the rating refers to strength and weakness.  There are some important differences between the EFE and CPM. First of all critical success factors in a CPM are broader; they do not include specific data and may even focus on internal issues. The critical success factors in a CPM also are not grouped in to opportunities and threats as they are in an EFE.  In a CPM the ratings and total weighted scores for rival firms can be compared to the sample firm. The comparative analysis can be provide important internal strategic information  The following are the steps of CPM: 1. We identified critical success factors. We include total of 6 factors which consist both external and internal factor affecting the firm and its industry. 2. Assign to each factor a weight that ranges from 0.0(not important) to 1.0 (very important). The weight indicates the relative importance of that factor to being successful in the firm’s industry. Opportunities often receive higher weights then threats. 3. Assign a 1 to 4 rating to each critical success factor to indicate how effectively the firm’s currents strategies respond to the factor. The ratings values are as follows: (a) 4 = Major Strength (b) 3 = Minor Strength (c) 2 = Minor Weakness (d) 1= Major Weakness 4. Then we multiply each factor’s weight by its rating to determine a weighted score. 5. Sum the weighted scores for each variable to determine the total weighted score for the organization.

72

Table: 3.3 CPM Critical Success Factor

NOKIA

MICROMAX

SAMSUNG SONY

Variables

W

R

WS

R

WS

R

WS

R WS

Market Share

0.16 3

0.48

3

0.48

4

0.64

2

0.32

Price

0.12 3

0.36

4

0.48

2

0.24

1

0.12

Financial Position

0.23 2

0.46

3

0.69

3

0.69

3

0.90

Service Quality

0.17 3

0.51

3

0.51

3

0.51

2

0.34

Customer Loyalty

0.18 3

0.54

2

0.36

4

0.72

1

0.18

Reputation

0.14 3

0.42

1

0.14

3

0.42

3

0.42

TOTAL

1

2.77

Competitiveness

2.66

73

3.22

2.28

3.11 Opportunities and Threats Analysis

Opportunities  With fastest growing population in India, it proves to be one of the largest market in the world..  Government policies for mobile banking provides great opportunity ahead Threats Very lucrative industry, and low barriers to enter in the industry Unorganized sector  The present penetration of mobile industry in India is only about 43% which is highly contributed by urban market, thus rural market is yet to be tapped.

Threats  Due to changing behavior of consumer every company need to provide upgraded technology and for the same they need to invest more in research and development department.

74

Chapter 4 ( Due To Non Availability of Separate mobile industry’s Financial Data, We are not able to do the Data Analysis, So Chapter 4 has been Skipped by us.)

75

Chapter 5 Business plan

76

CH-5 BUSINESS PLAN ON DEALERSHIP 5.1 Company profileDealership Name

:-

CHOICE MOBILE & ACCESSORIES “……..Choice of People”

Address

:-

26,tirupati plaza, Nr. Modhera cross Road, Mehsana.

Contact Detail: E-MAIL ID:

(O) 02744-226242, (M) 9904233636 [email protected]

Partners Mr. Naitik modi Mr. Nikhil nair Mr. Ankit moradiya Mr Nikunj Donda Mr. Bhavdip Vaghasiya Mr. Pavan modh Authorized Dealership of:

Sumsang.

77

 Vision: To become the leading mobile dealership in mhesana and other district in Gujarat state in coming years.  Mission: To obtain and empower the consumers’ loyalty towards our company through superior quality of service.

5.2 DOCUMENTATION  VAT registration number.  Nagarpalika corticate .  Bank a/c statement.  Address prof of office and warehouse.  Partnership stamp.  C.S.T VAT tin number.

78

5.3 PRODUCTS OF “ SUMSANG”

Android

Other

Samsung note

Samsung Guru

Samsung Grand

Samsung 3310

Samsung Galaxy

Samsung metro

( s,s2,s3,s4) Samsung Galaxy Core

Samsung primo

Samsung Galaxy Tab

Samsung E2220

79

5.4 Process to get Agency

Process to get Agency

Interview

Application on latter pad

Agreement on stamp paper

\ Open an agent code

Order for the product

80

Distributing channel

Company

Whole seller

Dealer/Agent

Shop

81

5.5 OTHER COMPETITOR DEALERS IN MHESANA DISTRICT

DEALER NAME

COMPANY

Krishana telecom

Micromax

Ram telecom

Nokia

5.6 CHART OF CHOICE MOBILE & ACCESSORIES

manager

Salesman

Rural salesman

Mechanic

Computer operator

82

cleaner

5.7 Marketing Strategies of choice mobile Advertising is one of the most common ways to make buyer aware of the new launch of mobile special price available or special offer available on mobile. choice mobile can use below types of marketing Strategies which can increase sales.  Loan cum Exchange Mela  Local TVC  Hoardings  Paper advertisement in local newspapers.  Focus on the rural area  Relations with the industrialist  Political contribution

5.8 Promotion Strategies of choice Mobile & Accessories Promotional Strategies also plays very important role in increasing sales. The choice mobile can use below types of Promotional Strategies which can help us.  Special Gifts (Small electronics items)  Festival Offers  Lucky Draw  Discounts  Special loan scheme (Low EMI)  Extended Services and Warranty Scheme  Exchange Benefits

83

Marketing areas: •

Palanpur city

•

Himmtanagar city

•

Mahesana city

•

Patan city

•

Ujha Taluka

•

Visnagara city

•

Ambaji Taluka

•

All Rural area nearby city

For the above all sales area there is a special marketing men we appointed. These both men will go to for the marketing and sales on daily basis. It is decided that everyday each man will go to in two areas, for this, as a transportation facility we allotted the bike to both man.

84

5.9 Dealer Margin

MODEL

MARGIN

Android

2% (on latest price)

Other

1.5%

( depends on Achievement Additional 0.5% margin) ( Global Mobile, near sakabhai complex, mhesana)

Fix Assets Sr. No. 1.

Description Service Equipment a. Display & Battery

74,000

b. Tools

53,000

c. Body Components

59,000

d. Other

20,000 Total Service Equipments (A)

2.

Amount

Other Fixed Assets a. Field Bikes (Rs.45,000 X 2 bikes) b. Vehicles Heavy

2,06,000 90,000 3,00,000

c. Computers

50,000

d. Air Conditioner & Television

90,000

e. Water Purifier

10,000

f. Mobile

40,000 Total Other Fixed Assets (B) Total Fixed Assets (A)+(B)

85

5,80,000 7,86,000

5.10 EXTRA SALES FACILITY AVAILABLE  Easy Finance Option  One year service free

Salary structure

Designation

No of Persons

Monthly expenditure

Total Expenditure

Yearly expenses

manager

01

15,000

15,000

1,80,000

Salesman

03

4,000 + 10% Comm. On sales

12,000

1,44,000

Rural Salesman

02

5,000+10% commission on sale + allowance

10,000

1,20,000*

Mobile repairer

02

2875

5750

69,000

Cleaner

01

2,500

2,500

30,000

Computer Opt & Accountant

01

4,000

4,000

48,000

5000

5000

60,000

Showroom Rent (800 sq feet) Total Salary

11

6,51,000*

86

5.11 Sales Outline Sales Forecast Product

2013-14

2014-15

2015-16

2016-17

2017-18

ANDROID

400

460

581

747

890

OTHER

200

236

240

250

270

Total

600

696

721

997

10,60

For the sales forecast it is analyzed that at every year sales will be increased by the average 20% growth rate and it is forecasted for the next 5 years.

SERVICE CHARGES Model

ANDROID

OTHER

Service Charges

200

100

Repairing Charges

500

100

87

5.12 SOURCE OF FINANCE AT STARTING TIME (Amount in PARTICULARS

AMOUNT

Promoters Contribution Naitik modi

1,50,000

Nikhil nair

1,50,000

Ankit moradiya

1,50,000

Nikunj donda

1,50,000

Bhavdip vaghasiya

1,50,000

Pavan modh

1,50,000 TOTAL

9,00,000

88

)

5.13 Profit & Loss account for the year ended 2013-14 to 2017-18 Particular

2013-14

2014-15

2015-16

2016-17

2017-18

Commission on selling on mobile. Incentives on achieving target Repairing & service charges

16,00,000

19,12,000

22,86,000

27,32,000

32,64,000

75,000

1,25,000

1,50,000

1,65,000

1,93,000

40,000

60,000

73,000

79,000

87,500

Total (A)

17,15000

20,97,000

25,09,000

29,76,000

35,44,500

1,80,000 6,51,000 18,000 25,000 30,000 10,000 45,000 50,000 30,000

2,00,000 7,81,200 32,000 34,000 16,000 47,000 38,250 65,000 56,000

2,00,000 9,37,440 35,000 38,000 22,000 58,000 32,512 71,000 59,000

2,50,000 11,24,928 36,500 38,500 23,300 63,000 57,635 72,000 64,000

2,50,000 13,49,914 40,500 39,300 28,800 78,000 48,990 74,000 86,000

28,000 13500 20,600

25,200 11,475 18,540

22,680 9,753 16,686

20,412 8,290 25,017

18,370 7,047 22,515

5,000

4,500

4,050

3,645

3,080

Total (B)

11,06,100

13,29,165

15,06,121

17,87,227

20,46,516

PBT (A-B) Tax on profit

6,08,900 1,82,670

7,67,835 2,30,350

10,02,879 3,00,864

11,88,773 3,56,632

14,97,984 4,49,395

Net profit

4,26,230

5,37,485

7,02,015

8,32,141

10,48,589

Income: -

Expenses: Office rent Salary Electricity bill Telephone bill License fees Stationary expenses Dep. on vehicle Advertising expenses Fuel expenses Dep. on assets Dep. on furniture Dep. on tools & equipments Dep. on computer

89

5.14 Balance sheet for the year ended 2013-14 to 2017-18

Particular

2013-14

2014-15

2015-16

2016-17

2017-18

2,80,000 3,00,000 90,000 50,000 1,00,230 1,00,000 2,06,000 2,00,000

2,52,000 2,55,000 76,500 45,000 1,23,585 3,00,000 1,85,400 2,00,000

2,26,800 2,16,750 65,025 40,500 2,24,080 4,62,000 1,66,860 2,00,000

2,26,800 4,16,750 65,025 40,500 2,24,080 2,92,126 2,66,860 2,00,000

3,33,708 3,26,603 2,46,981 32,805 2,24,080 3,59,255 2,25,157 2,00,000

13,26,230

14,37,485

16,02,015

17,32,141

19,48,589

9,00,000 4,26,230

9,00,000 5,37,485

9,00,000 7,02,015

9,00,000 8,32,141

9,00,000 10,48,589

13,26,230

14,37,485

16,02,015

17,32,141

19,48,589

Assets: Other assets Vehicles Furniture Computer Cash balance Bank balance Tools and equipment Deposits Total Liabilities: Owner funds Net profit Total

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5.15 PROJECTED CASH FLOW  Net present value (NPV)

YEAR

CASH FLOW

1

4,26,230

2

5,37,485

3

7,02,015

4

8,32,141

5

10,48,589

DEPRECIATION 112,100

NET CASH FLOW

P.V. FACTOR @10%

5,38,330

0.909

6,35,450

0.826

7,87,696

0.751

9,47,140

0.683

11,48,591

0.620

97,965

P.V. OF CASH FLOW 4,89,341.97 5,24,881.7

85,681

5,91,559.696

114,999

6,46,896.62

100,002

7,12,126.42 29,64,806.406

Total Here cash outflow = Rs. 9,00,000 Required rate of return= 10% NPV= P.V of cash flow- cash outflow 2964806.406-. 9,00,000 2064806.406

Here we can say that if NPV is greater than 0 then the project is accepted and we can see that in our project NPV is greater than 0 i.e. 2064806.406our project is accepted.

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Chapter 6 FINDINGS

92

6. FINDINGS •

Mobile economy in India, world's second largest market by subscribers, will contribute around USD 400 billion to the country's GDP and create 4.1 million jobs by 2020.

•

The mobile ecosystem generated about 5.3 per cent of GDP for India in 2012, directly supported 730,000 jobs.

•

India is the 2nd largest producer of silk in the world. India produces world's 18% total silk.

•

Samsung handset tops among other as compared to total no. of mobile handset and areas served.

•

In order to give rise to mobile industry in India the government has revised the regulations which were followed earlier.

•

9% of overall Internet page views in India come from mobile devices

•

India has more than 160 million Internet users, of which 86 million access Internet using their mobile devices

•

LinkedIn ranks India among its top 4 growth markets for mobile usage

•

100% FDI is allowed in mobile handset industry by the Indian government.

•

The present penetration of mobile industry in India is only about 43% which is highly contributed by urban market, thus rural market is yet to be tapped.

•

Text Messaging, 3 billion wireless text messages are sent each month.

.

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Chapter 7 CONCLUSION

94

7. CONCLUSION After preparing a MRP-I report on In Depth Study of Indian mobile handset industry, we have finally reached to the following conclusions;  Indian mobile handset market has grown by 14.17 percent year-on-year to Rs 35,946 crore in 2012-2013, on the back of increasing sale of smartphones, according to a survey. The 18th annual survey ‘V&D 100′ said that the Indian mobile handset market posted a revenue of Rs 35,946 crore in 2012-2013, compared to Rs 31,330 crore in the earlier fiscal year.  It further said South Korean electronics behemoth Samsung has taken the top position in the country replacing Nokia. The Finnish handset maker had been holding fort in the Indian market for over a decade. Samsung’s rise in India was attributed to its rich product portfolio catering to customers of all categories.  The company’s handset prices ranging from Rs 1,500 to Rs 50,000 in varied screen sizes, besides product quality and new features, helped the company grab customers’ attention, the survey report said. Samsung ended the year with revenues of Rs 11,328 crore compared to Rs 7,891 crore last year showing a growth of 43.6 per cent. The company also became the market leader with a 31.5 per cent market share.  Samsung ousts Nokia to become the No 1 smartphone manufacturer in India  Nokia was down by a rank to be placed at number two in the Voice&Data survey with a 27.2 percent market share following a significant 18 percent drop in revenue, the report showed. In the 12 months ended March 2013, Nokia’s revenue from Indian operations was placed at Rs 9,780 crore compared to Rs 11,925 crore in the last financial year, it added.  Homegrown handset company Micromax captured the number three position among V&D100 Top10 mobile handset brands for FY’13 and enjoyed a market share of 8.7 per cent and earned revenue of Rs 3,138 crore.

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