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Political, Economical And Technological Factors Influencing The Growth Of Mobile Phone Handsets Industry In UK (3758 Words)

There is no introduction and conclusion. It is straight to the point. So you start with political factors . you can describe them

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You have to discuss the impact of political factors on the industry as a whole. It is good to provide information about the market share of each the companies, for example apple, Samsung, htc, etc. the main issue for political factors  will be Brexit.

Johnson et all (2014) defines the political factors as follows: 1. The role of the state. In many countries and state is important as a direct economic actor for instance as a customer, supplier, owner or regulator of the business,

2. Exposure to civil society organisations. Civil society comprises a whole range of organisations that are liable to raise political issues , including political lobbyists , campaign groups , social media or traditional media. ( May be used as a reference but this a direct quotation from the book)

According to Lynch ( 2012) political factors include : political parties and alignments as local, national and European or regional trading – block level. , legislation, e.g on taxation and employment law, relations between the government and the organisation ( possibly influencing the preceding items in a major way and forming a part of future strategic management). Which of these factors have impact on the industry as whole. In what way. Critically evaluate

Then economical factors include interest rates and currency fluctuations , inflation, consumer expenditure and disposable income, cyclicality – for example the kitchin, the juglar, the Kuznets cycle , etc. Which of these factors have or will have impact on the industry as a whole? In what way? Critically evaluate the significance and impact

Technological – government and eu investment policy, identifies new research initiatives, new patents and products, speed of change and adoption of new technology, level of expenditure on R and D by organisation’s rivals, developments in nominally unrelated industries that might be applicable. Which of these factors affect the handset retail industry and how?  Critically evaluate to identify the significance and the impact

Expert Answer Preview (3758 Words)

Political, Economic And Technological Factors Influencing The Growth Of Mobile Phone Handsets Industry In Uk

Political factors that will affect the mobile handset industry include foreign trade regulations as well as government regulations.  First, UK government implemented an investigatory power act that would enable the intelligence agencies spy everyone in the country (MacAskill, 2016). The government will be in a position to access all data in mobile phone handsets as well as internet connections records (Lee and Brierley 2016). However, the act has faced much opposition as it puts the privacy of citizens at stake (MacAskill, 2016). Apple opposed the law as it offers the government powers to force organizations to make their phones less secure (Hern 2015). It will ensure that the government is able to listen and spy with a lot of ease. Microsoft also denounced the act, as it maintained that it will have dire consequences (Vincent 2016). Weakening of encryption will hurt the good people rather than the bad individuals.

Moreover, the law would require organizations such as Apple to assists them break or hack into phones. Apple claims that the investigatory power act might affect the relationship with their clients (Hern 2015). Additionally, companies such as Apple argue that most of the provisions in the bill apply to organizations irrespective of where they are located (Hern 2015). Therefore, the bill can apply on an international scoop.

The affected companies will have to deal with various overlapping foreign and domestic laws. In case this happens, the companies will be forced to decide between them, and they may risk sanctions (Hern 2015). Apple has its customers in the rest of the world where surveillance measures are not enhanced meaning that the users data become open to terrorism. Though an expensive action, Apple can only opt to have products meant for UK only and have other encrypted to other parts of the world to retain their trademark. The change in the cost of production may be passed on to the consumers hiking the price of mobile handsets. Microsoft also argues that the implementation of the Act would have major consequences on its operation. Therefore, together with other tech companies, Samsung opposed its implementation (Vincent 2016).  The UK handset industry £30.2 billion contributes to the UK economy (Burkitt 2017). Also, the UK has the leading telecom services sector in the EU. Broadband Stakeholder Group that represents the tech organization and the UK companies maintain that Brexit would have a huge impact on the mobile handset industry……..[cmppp_restricted]

Many regulatory reforms such as the Competition policy are expected as UK will have to come up with new networks that match with other parts of the world (Kauders 2016). Mobile handset companies in the country have to come up with new innovations that will work with the reforms hence they will need to invest more. Vodafone has 11% of the sales from the UK consumers only (Ayris 2017). The company is highly affected by the proposition of Brexit as the single market policy will no longer take effect in the UK. They are considering shifting their headquarters in another European country in the event Brexit takes place. The shift will be expensive and hurt it will have to hurt financial their status.  Therefore, it shows the political factors impact on the mobile handset industry.

Competition policy in the country has also affected the big mobile handset companies.  The industry is a very competitive with more than ten brands in the country. Apple and Samsung take the lead in the market (Arthur 2012). They have the capacity to impose low prices of products so that they can wipe the small companies from the market. In oligopolistic competitions with Apple holding 48% market share, Samsung 34%, Sony 4%, HTC 3%; Nokia, LG, Motorola 2%; Huawei, Microsoft, and BlackBerry 1%  (Hill and Jones, 2012 ). It is clear that they can absorb or kill the smaller ones but thanks to the UK competition policy that curbs all those malpractices. The government ensures that there is fair competition in the market. Brexit would be a threat to the companies such as Motorola, Huawei and Microsoft and Blackberry because they may not be sure whether the UK would continue upholding such rules. The competition policy also controls some companies colluding to have high prices for their products. It is also considered illegal for the leading companies to sign agreements to determine the price range of goods (Coutts and Gudgin 2016). The competition policy operates the favor of consumers (Coutts and Gudgin 2016). Brexit would mean that the UK is no longer bound to the single market system and the country can impose tariffs to promote revenues. This would hurt mobile handset companies such as Samsung badly since the products have to be sold at higher prices reducing sales or if the prices remain the profit margin would be very minimal (Hern 2017).

All business grants UK has been receiving from EU will be cut down meaning less money in the economy (Waters 2017).  Therefore, the government may be forced to impose high taxes imposed on goods which will affect the mobile handset negatively.  This is because the number of people who can afford to buy the products will reduce as the prices go high. Much of the growth experienced in this industry has been brought up by their innovations that spring up on a daily basis. Therefore, lack of funding from the government may affect innovations.  Also, people always tend to be attracted to what seems more refined (Dirik et al. 2016). With low purchasing power, a large population would choose to remain with the old technology hence slowing down industrial growth (Johnson et al. 2011).  For instance, Smartphone is the most demanding among teenagers with 81% users (Zafar et al. 2014).  People always tend to be attracted to what seems more refined. (Dirik et al. 2016) With low purchasing power, a large population would choose to remain with the old technology hence slowing down industrial growth. (Johnson et al. 2011).

The government also plays as a regulator, whereby, it stimulate the competence amongst the organizations to enhance as well as plan when there is a 5G to sell the license and use the revenue (Proud, 2017).

Economic Factors

Also, there are several contributors to the economic growth of mobile handset companies. They include; bank interest rates, currency fluctuations, inflations, consumer expenditure, disposable income, and cyclicality. UK government has continually brought interest rates down to 0.25% (Allen and Elliott, 2016). By so doing the bills that go to the mortgage go down thus, minimizing their expenditure. Citizens also find it easier to borrow loans from the banks to set up businesses which in return boost UK economy (Lee and Brierley 2016).

On the other hand, the low bank rates have played a key role in discouraging foreign companies from investing in the UK which affects its economy (Martin 2016).  Therefore, the purchasing power goes down when the economy gets hurt which in return affect the companies indirectly. Low-interest rates also discourage savings since the accruing interest falls which is the biggest incentives for many savers (Gitman et al. 2015). This in return could deny citizens access to loans. Access to loans enables them to get the startup capital (Johnson et al. 2011). Nevertheless, the big players can decide to exploit low interest rates.  In this case, the organizations are already established, hence, the low bank rates will have minimal effect.

Since June 2016 pound has weakened due to the UK vote for Brexit (Ojo,2016). This has resulted in hiked prices of mobile phone handsets amounting to lower sales (McGoogan, 2016). As the currency weakens, foreign investments have gone down meaning a more deteriorated economy (Passlack 2016). Importation has also become very expensive since it would require more pounds to purchase products from other countries. (Ayris 2017) All the big players of mobile handset industry are from other parts of the world, not Europe. For instance, Apple which is the largest player is from United States of America, Samsung, and LG from Southern Korea and HTC and many others from China (Hill et al. 2014). This means that all these products are imported hence the prices have to increase.

In the past two years, UK citizens experienced a rise in their average disposable income with more than five hundred pounds (McCann 2016). Production of mobile handsets has been on the rise for the last five years. There are various mobile handset companies in the UK with each company having so many brands (Giachetti, 2013). There are various mobile brands in the market resulting in low prices which are an advantage to the consumer but the companies gain lesser profits (Grant 2016). Juglar cycle refers to a medium-term economic cycle; it has a particular period between seven and eleven years. The cycles can be said to be macroeconomic fluctuations when the economic downtown replaces the economic growth and boom (Grinin et al. 2016). Therefore, the UK mobile handset industry may face Juglar cycle in the coming years. On the other hand, the kitchin cycles have a period between forty and fifty-nine months that are characterized by fluctuations of companies’ inventories. The mobile handset companies may experience kitchin cycles as the sales drop.

Technological Factors

Disruptive technology is one that has been so clear in the mobile handset companies. (AlShowarah 2017)  Telecom was the only way of communication which was later replaced by cell phones. This move was such a great rift since they were the fast, portable phone that enabled people to communicate with their loved ones in any part of the world. The industry has been on the move. With the introduction of smartphones, cell phones have been swallowed away. The technology has also eaten up other products such as pocket cameras, watches as well as GPS gadgets. (Bort-Roig et al. 2014) It is now easier to have all those programs in one gadget

Due to an increase in cyber-crime and terrorism UK government an investigatory power act that would enable the intelligence agencies spy everyone in the country (MacAskill 2016). The government will be in a position to all data in mobile phone handsets as well as internet connections records. However, the act has faced much opposition from mobile handset companies as it puts the privacy of citizens at stake. Apple has an encryption system that ensures that no one can read a message sent apart from the intended person (Hern 2015). This has made iPhone very popular hence increasing the sales. With this enforcement the company will lose its value proposition lowering the sales. For those who opt iPhone for privacy reasons can now go for any other option if the prices differ. (Lee and Brierley 2016)

The company has its customers in the rest of the world where surveillance measures are not enhanced meaning that the users data become open to terrorism. Though an expensive action, the company can only opt to have products meant for UK only and have other encrypted to other parts of the world to retain their trademark (Hern 2015). The change in the cost of production may be passed on to the consumers hiking the price of mobile handsets. (Kim and Mauborgne 2015)

EU allows a single market type of trading whereby any country can do business with another without trade tariffs or restrictions (Macshane 2015). This gives companies like Apple an open platform to operate their businesses freely in the UK. The company can sell its products at a fair price which many UK citizens can afford hence boosting their sales. Brexit would mean that the UK is no longer bound to the single market system and she can impose tariffs to promote revenues. This would hurt the company badly since the products have to be sold at higher prices reducing sales or if the prices remain the profit margin would be very minimal.

Economic Factors

There are several contributors to the economic growth of mobile handset companies. They include; bank interest rates, currency fluctuations, inflations, consumer expenditure, disposable income, and cyclicality. UK government has continually brought interest rates down to 0.25% (Allen & Elliott, 2016). By increasing inflation the disposable income goes down. This move is a plus for the mobile handset company because people will purchase more now that they money. Citizens also find it easier to borrow loans from the banks to set up businesses which in return boost UK economy. Local purchase of the products continues to rise. (Lee and Brierley 2016)

On the other hand, the low bank rates have played a key role in discouraging foreign companies from investing in the UK. (Martin 2016) There is a perception that lowering bank rates is as result of country’s weak economy.  Therefore, the purchasing power goes down when the economy gets hurt which in return affect the companies indirectly. Low-interest rates also discourage savings since the t accruing interest falls which is the biggest incentives for many savers (Osborne, 2016). This in return could deny citizens access to loans. Mobile phone companies rely solely on retail traders who set up stores for their products (Kodama 2016). Access to loans enables them to get the startup capital (Johnson et al. 2011). Nevertheless, the big players can decide to exploit low interest rates (Lansley 2016).  In this case, the organisations are already established, hence, the low bank rates will have minimal effect.

Since June last year pound has weakened due to the UK vote for Brexit (Piercy 2016). This has resulted in hiked prices of mobile phone handsets amounting to lower sales (Hern, 2017). As the currency weakens, foreign investments have gone down meaning a more deteriorated economy (Piercy 2016). Importation has also become very expensive since it would require more pounds to purchase products from other countries (Ayris 2017).  All the big players of mobile handset industry are from other parts of the world, not Europe. For instance, Apple which is the largest player is from United States of America, Samsung, and LG from Southern Korea and HTC and many others from China (Hern, 2017). This means that all these products are imported hence the prices have to go high resulting in low sales.

Technological Factors

Disruptive technology is one that has been so clear in the mobile handset companies. (AlShowarah 2017).  Telecom was the only way of communication which was later replaced by cell phones. This move was such a great rift since they were the fast, portable phone that enabled people to communicate with their loved ones in any part of the world (Yonazi et al. 2011). The industry has been on the move. With the introduction of smartphones, cell phones have been swallowed away. The technology has also eaten up other products such as pocket cameras, watches as well as GPS gadgets. (Bort-Roig et al. 2014) It is now easier to have all those programs in one gadget reducing the bulkiness. Any profession has a device or software that is a basic requirement, for instance, surveyors use maps and GPS, architects requires good cameras, and an accountant need excel. All these programs are supported in a Smartphone making it a necessity to a large population in the UK (Barney and Hesterly 2012).

In their work, (Yun, Won and Park 2016) argues that mobile handset companies also invest very much in research and development resulting in rapid growth of their technology. However, this has played a negative role in improving their financial position. Very many new technologies are introduced into market. They do so to avoid competition from other companies, but they end up releasing products that compete. For instance, HTC can release a phone with certain features into the market, but after a short while, they release another one with more advanced features.  Some of the innovations that have been introduced by mobile phone companies include contactless payment App (Gibbs 2015). The App allows clients to purchase items using their Smartphones instead of using their credit card. Apart from Smartphone owners, individuals who own Apple watch can also buy items by touching it to a payment terminal.

Clients will end up abandoning the first one to go for the second hence lower sales are done before a new feature is introduced in the market (Grant, 2016). For instance, Samsung included a heart rate monitor to the Galaxy S5. However, the startup are taking control of the market as they have big idea to reinvent the little black box (McGregor, 2014).  Also, Kazam has introduced the Kazam rescue that enables them to offer clients fast assistance without visiting their offices.

Conclusion

Various political, economic as well as technological factors influence the mobile handset industry in the UK. Some of the political factors that will affect the mobile handset industry include foreign trade regulations as well as government regulations. Investigatory power act is one of the regulations that threaten to affect the mobile handset industry. Different mobile phone companies have opposed the law, for instance, both Apple and Microsoft maintain that the act will have an adverse impact on their clients. Additionally, Brexit will influence the industry, as there is uncertainty about whether the country will continue upholding the competition policy. Moreover, some of the economic factors that influence the industry include bank interest rates, currency fluctuations, inflations, consumer expenditure, and disposable income.  For instance, Brexit led to the weakening of the pound which has forced the mobile handset companies to hike their prices.  Also, disruptive technology is one that has been so clear in the mobile handset companies.

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