The Tremendous Growth in the Telecom Industry - Report Example

Opportunity Analysis Cell phones have in the recent past changed the way people communicate. Today, cell phones are nolonger a status symbol but are rather a necessity being used by millions of people worldwide. Global-Cell Inc. intends to take advantage of this huge market by specifically capitalizing on wireless communication; a rapidly growing sector of the telecommunications industry. Global-Cell Inc. intends to offer its clients cell phone accessories as well as GSM (Global System for Mobile Communications) cellular phones. GSM technology is from Europe and is currently being widely adopted in the U.S. Market and Industry Analysis The tremendous growth in the telecom industry has provided a huge market for our products. By virtue of being one of the fastest growing industries, the telecom industry is responsible for much of the high gains found in the capital markets. It is expected that in two years’ time, 65% of children of 10-15 years will possess cell phones showing the fast proliferation of cell phones. Global-Cell Inc. will initially target five customer segments: i. General public; ii. Children aged 10-17 years old; iii. Professionals; iv. Students and; v. Organizations, companies as well as other institutions. Below is a table illustrating the number of potential customers that Global-Cell Inc. anticipates to get in its first five years. A growth rate for each customer segment is approximated and used to estimate the number of customers for each subsequent year. Year 1 Year 2 Year 3 Year 4 Year 5 Targeted Customers Growth General public 2% 240,000 244,800 249,696 254,690 259,784 Children aged 10-17 years old 3% 100,000 103,000 106,090 109,273 112,551 Professionals 2% 50,000 51,000 52,020 53,060 54,122 Students 2% 40,000 40,800 41,616 42,448 43,297 Organizations and companies 4% 50,000 52,000 54,080 56,243 58,493 Other 1% 20,000 20,200 20,402 20,606 20,812 Total 2.3% 500,000 511,800 523,904 536,320 549,059 A successful business has to attract and retain its customers. This ensures the constant and steady increase in revenues. Most customers like speedy and quality service; this will be of primary concern to Global-Cell Inc. since customer delays put off customers and reduces the chances of the company retaining its customers, eventually leading to a loss in its market share. Although customers might not be too excited when they receive prompt quality service, they are however vocal and very dissatisfied when this is not afforded to them. This will be highly upheld by the company in order to satisfy our customers. The majority of customers also want reliable and consistent services that are easy to use. There is a fragmented market for cell phones and their accessories which is crowded and competitive. Global-Cell Inc. intends to penetrate the market using innovations of new devices and gadgets from our Research and Development department. These new innovations will become successful through an aggressive marketing campaign. Industry Analysis Three companies currently dominate the U.S. market: T-Mobile Wireless, a subsidiary of Deutsche Telekom, is the largest wireless company in the U.S. i. The company has had increasing revenues exceeding $13.6 billion annually over the last decade. ii. The company offers wireless phone services which includes high-speed wireless services to more than 8 million subscribers. iii. T-Mobile Wireless has the largest digital wireless network that is exclusively based on GSM (Global System for Mobile Communications) technology. This mode of technology is the most widely used in the world, constituting 70% of the total digital wireless market. Cingular Wireless is a leader in data communications and mobile voice. i. It has the second largest market share in the U.S. wireless market and is a joint venture between SBC and BellSouth; with SBC holding 60% of the company and BellSouth owning 40%. ii. The revenues of the company have been more than $14.7 billion annually for the past decade. iii. Cingular Wireless has a customer base of more than 22 million data and voice subscribers in the U.S.A. Nextel Communications provides wireless communications services in the U.S on an all-digital wireless network. i. The company’s revenues have been more than $8.7 billion annually over the past decade. ii. The company has more than 10.6 million subscribers to their cell phone services. iii. Global-Cell Inc. intends to gain a portion of the market share held by these three companies. Utility and Pricing The technological merit for these phones is that the phones can be used all over the world since the system is globally used. The company’s products include: i. GSM cellular phones and smart phones ii. Cell phone accessories: modems, adapters, batteries, cables, ear phones, chargers and cases/covers. iii. Fixed wireless phones Global-Cell Inc. wants to venture into business in order to become a recognized and distinguished leader in the cell phone wireless communications industry. For this goal to come to fruition, the company will have to identify emerging trends in a rapidly evolving industry and integrate them into the company’s business operations and offer high quality products. Global-Cell Inc. will offer its customers unrivalled convenience and support. The principle of the company is to provide the best quality products and services that is value for money for its customers. The company’s products will be priced slightly lower than the market rates since the company is a startup aiming to penetrate the competitive market but will offer more for value. The products and services offered by the company are geared to creating brand identity and the intention is to form customer brand loyalty. Capabilities and Resources Global-Cell will recruit an efficient management structure that will spearhead the strategic policies that are required for the company to achieve its goals. To do this, the company will outsource recruitment services which will enable the business to get the best leaders it possible can. For the business to be successful it must be able to attract the best talent available in the field of telecommunications. This will ascertain that the company’s products and services are of the highest quality due to the efficiency and competency brought about by talented staff. Quality customer service is an integral aspect of any business and Global-Cell Inc. will ensure that its customers receive the best services they can get. It is important to note that good customer relationship is bvased on the quality of customer service that the customers get. Therefore, customers will only come back again if the service they previously received was good. Customers must feel valued, appreciated and the business must make sure that it connects with the customers. Product innovation is essential for the company to differentiate its products and services from its competitors. To create a brand identity that is unique to other products in the market, Global-Cell will have an efficient Research and Development department that will be responsible for innovation and developing products that will ensure that the company has a competitive advantage over its rivals. Value Chain Profits Projections of Global-Cell Inc. for the First Three Years 1st Year 2nd Year 3rd Year Sales $355,000 $505,000 $700,000 Cost of Sales ($110,000) ($152,350) ($200,850) Gross Profit $245,000 $352,650 $499,150 Expenses Marketing ($5,400) ($11,000) ($24,500) Salaries/Wages ($122,900) ($134,650) ($146,000) Depreciation $0 $0 $0 Insurance ($13,000) ($13,000) ($13,000) Rent ($23,000) ($23,000) ($23,000) Other expenses $0 $0 $0 Profit before tax $80,700 $171,000 $292,650 Tax (30%) ($24,210) ($51,300) ($87,795) Profit after tax $56,490 $119,700 $204,855 The equity that is initially invested into the business is assumed to be enough to cover any monthly cash flow shortages that might result. The company will have to establish a good relationship with a bank or other financial institution which would be an alternative source of short term funds. For example, an overdraft from a bank would offer the company a fall back option that would cushion any cash flow shortages. These projections are conservative indicate the worst case scenario therefore the sales could increase at a higher rate than is assumed. However, the more the sales, the more the finances needed to acquire more inventories hence more costs are consequently incurred. The economy has relatively been on an upward trend in the recent past as it tries to exorcise the ghosts of the global economic crisis. Therefore, this would be the right time to start a business as the economic is trekking up and consumer spending is on the rise. Global-Cell Inc. must implement efficient procurement practices. This can only be done by researching on the right product for the right price. By so doing, the business can meet the margins it has set and maintain its inventory at an adequate level. Works Cited G.A. Cole. Management Theory and Practice, 5th Edition. DP Publications Heinz Weihrich and Harold Koontz. Management, 10th Edition. McGraw-Hill International Editions James A.F. Stoner, Edward Freeman and Daniel R. Gilbert, Jr. Management , 6th Edition. Prentice-Hall, Inc. Read More