Pestle analysis of UK mobile industry

The United Kingdom plays a very important role in the European mobile market as it accounts for a total of 12.9% market value (Datamonitor 2008). By the end of 2011 the United Kingdom mobile phone market value is estimated to gain a raise of 29.1% since 2006 valuing around $4.4 billion (Datamonitor 2008). The industry boundary could be around the manufacturing and giving the service to the mobile phone as these two complement with each other. MOBILE PHONE SERVICE PROVIDING MANUFACTURING With the increase in the technology there is always a better phone in the market with newer specifications, and because of the attractiveness of the deals the consumers are going for a better mobile all the time even if they don't use all the integrated applications. On the other hand this market is nearing its maturity which is a superior threat for all the service providers and mobile manufacturers as they need to invest in more and more for research and development. The recent data shows that just in the U.K there are 69.7 million active subscribers for the mobile phones in 2006 which are 9.7 million more than the total U.K population (Mintel 2007). This states the popularity of the mobile phones and the usage. Key Determinants of Success: For any industry to be successful there will be some key determinants of success which helps its growth, and when these determinants come together it could a successful one. And these determinants for the mobile phone manufacturing and service industry could be the Technological, Economical and Social factors. These could be the three main determinants of this industry mainly because all of these complement each other, as the better the technology in a mobile phone the higher the price will be. Even at a high price consumers would tend to buy these phones as for they are getting the latest technology in their hands and thereby they can show off their status. Technology: In this 21st century the technology is booming and all the companies in any kind of industry would like to use the cutting edge technology for their products or services. As the more technology used in any firm would determine its market capture, its consumers, mainly the price of their products or services. In the mobile phone manufacturing the technology is rapidly increasing. It's equally important for the manufacturer to produce high quality for the consumer as in the past mobile phones are only used to talk to the other person, now with the growth in the technology consumers can send and receive text messages, they can check their e-mails, take pictures with integrated camera of up to 8 mega pixels, and most wonderfully consumers can video chat. All of these explain the technological growth and consumers do pay higher prices to enjoy and experience this kind of technology in their palms. The manufacturers on the other hand are not just providing mobile phones which can do only these things; they are also incorporating other things such as touch screen, Bluetooth and infrared connectivity, wireless local area network (WLAN) which the consumers can use for wireless connectivity (internet), watching live TV, mp3 player, and for all these the consumer thinks it is worth paying the price either set by the manufacturer or the service provider. Economy: The U.K mobile phone industry plays a rather very important role in the economy of the country. The U.K mobile market has generated a total revenue of $3.4 billion in 2006 (Datamonitor 2008) As its been forecasted that the U.K economy to grow between 2.4% to 2.6% between 2007 and 2011 (Key note 2007), but over this very small percentage raise over 5 year period, the consumers are going to lose confidence in the economy but at the same time as the mobile phones are a very essential part of their day to day lives it tends to survive. The mobile penetration rate is also so high that few consumers have more than one phone, or more than one contract or connections and thereby increasing their expenditure. At the same time the mobile phone industry contributes to the economy by importing a lot of raw materials to be used in the production or manufacturing and also exporting the end products. It also contributes to the economy by increasing the employment rate, the more outlets or offices it opens by creating a series of distributors and retailers the more the more the employment rate will be. If the mobile industry has to go into recession, it has been estimated in 2004 that the total revenue the government could lose could add up to a total of around à ¯Ã‚ ¿Ã‚ ½9,864 million (O2 2004). And if we take the rate of technology growth from then to now and the price factor into consideration it could have definitely gone higher by now. Social: Social factors have a very large impact on the industry. The demand levels of the products and the sales are continuously affected by the attitudes and beliefs of the consumers. In addition people have mobile phones not just for communication it also adds peace of mind for the people who care, a lot of people have them as to organise their lives either in a social context or a business context there by making most of their time, and a majority of consumers carry for personal safety. People would like to have mobile phones as they carry them any where they want. It also provides more convenient access to other services like banking, working etc. It also improves social networking as we tend to communicate more by talking rather than just sending e-mails. Usefulness of External Environment Analysis: Any firm within the industry can increase its chances of competitiveness by doing an external environmental analysis. The managers need to use the information gained by the external environmental analysis for future planning, strategy formulation by making the environment ready for any positive changes and thereby keeping away from the negative ones and better decision making as the external environment is changing continuously. By doing this kind of analysis there is every opportunity for the firm to get its resources ready for the kind of strategy they want to develop. Managers need to keep examining the external environment as it is very dynamic as market conditions change day to day, technology is growing, and there is a prospect for them to know who their competitors are. Appendix For external environment analysis the tool which any kind of industry or firm to use is PESTEL analysis which we can be elaborated as follows: Political and Legal, Environmental, Ecological, Social and Technology. Political and Legal factors: * Any kind of industry or firm need to sick to some rules and regulations. * Trade restrictions and changes in the tax structure will affect the industry. * OFCOM- Office of Communications is an independent regulatory body for the Communications Industry. It checks that all the firms within the industry adhere to the regulations. * All firms need to stick to the guideline levels of the radiation to which anyone can be exposed, which is set by The International Commission on Non-Ionizing Radiation Protection (ICNIRP). Thereby they need to set up more base stations (which send and receive signals to connect to mobile phones). * From 2003 the Road Safety act does not permit any driver to handle the hands free set to either call, send or receive text, or access internet. If anyone opposes the law there is a fine of up to à ¯Ã‚ ¿Ã‚ ½30. In February 2007, they increased the penalty from à ¯Ã‚ ¿Ã‚ ½30 to à ¯Ã‚ ¿Ã‚ ½60 as they need to be tougher and to make driving safer. This decreases the usage of the mobile phones. * The consumer protection act * European Regulators Group (ERG) is the body appointed to investigate into the prices the service providers are charging for mobile phone usage while abroad. It tends to bring these prices lower in favour to the consumers. Economical factors: * The growth or fall of the economy can impact on the industry, as if the economy falls there won't be any new consumers willing to take contracts. * At the same time the growth of the industry contributes a lot to the economy: o It provides a lot of employment o It generates revenue for the economy thereby contributing to the GDP. o It contributes to the export and import of raw materials and end products respectively. * The other important factors which affect the industry are exchange rates, rise or fall in the inflation, and minimum wages. Environmental factors: * There is no conclusive proof that the usage of mobile phones affects the health of the consumers. * The use of mobile phones in cars can cause accidents. * At the same time there are issues still concerning that even if using mobile phones does not affect the health in a short term, it might in a long term. * There are claims that it affects the brain cells, human DNA, immune system, and might even develop cancer due to the radiations. * National Radiological Protection Board (NRPB) suggested that there is no evidence of the health problems concerning the usage of mobile phones. But it did warn that we need some precautionary measures due to the high usage of the mobile phones in the near future. Social factors: * The society is very much concerned with the mobile usage by under 18s. * It feels that they can be contacted by unknown persons who can be threat to them. * At the same time it's like an advantage as the kids can or can be contacted by their elders. * Career attitudes, social behaviour, and life style of consumers affect the industry. * Society is also concerned about the adult content on the mobile phones and violent games. It's good they have the technology but at the same time it should not lead them in a wrong path. Technological factors: * Technology has rapidly increased in context to mobile phone industry. * At the beginning the phones are only used for conversation now they are being used for send and receive text messages, multi media messages, voice mails, and even video calling. * The raise of 3g connectivity has been a great leap for mobile phone industry, as it's the very new and latest of it. * 3g mobile phones will increase the sales revenue of the firm. * Bluetooth technology is another great achievement in regards to the exchange of the information as it can be done wireless anytime anywhere.