Table of Contents
Introduction
The emergence of mobile phone technology has been proved significant since cell phones have massively improved various spheres of human life. For instance, cell phones make communication easier by connecting people who live miles away. In essence, mobile technology plays a significant role in addressing variety of socio-economic developmental changes especially in developing countries, for instance, in digital as well as financial spheres. Consequently, there has been an increase economy in addition to improvement to access to core services like education and healthcare. Mobile communication technology has greatly revolutionized the nature of communication. As a result the necessity to own a mobile communication gadget has put tremendous pressure on manufacturers since they feel the need to innovate in order to create a profit margin.
Economic Data Indicators Affecting Mobile Phone Industry
There are a number of factors that contributed to the significant increase of mobile phone industry around the globe. First, the mobile phone industry, unlike other sectors experiences a fall in commodity price when demand rises (Lee, Lee, Moon, & Park, 2013). For instance, improved and increased supply has reduced the price of mobile phones despite the high demand. Similarly, the price of cell phones significantly reduced due to the increased competition among mobile phone producers which led to the increase in supply of phones from major producers. In other words, the global market for cell phones reached the saturation point thus slowing the rate of demand. Comparatively, the telecommunication companies have contributed to the reduction in price of cell phones because they have a tendency of subsidizing mobile phones in order to involve customers into profitable contracts. In essence, telecommunication companies incur losses in selling phones as long as customers pay telephone calls. With the current trend in mobile phone industry, it is projected that minor changes might occur in the next six months due to the following factors:
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Gross Domestic Product
Similar to other sectors, the mobile industry is sensitive to economic factors, for instance changes in GDP. Generally, GDP rate affects the risk tolerance of investors as well as pricing policies (Abu & Tsuji, 2010). Interest rates and exchange rates determine production costs and commodity price. In particular, in event of high interest rates coupled with low exchange rates, the cost of phone production will be higher and vise versa. The former is a most likely scenario in the next six months hence cost of production is likely rise.
Inflation Rates
In essence, inflation rates automatically influence interest rates thus affecting investments indirectly. For example, high inflation results in higher costs of loans because central banks raise interest rates. Similarly, the costs of raw materials increase, thus producers incur more costs, which leads to the increase in commodity price (Lee, Lee, Moon, & Park, 2013). Mobile phone industry experiences the same situation. With the current global trends, the inflation rate is expected to rise in the next six months, hence the cost of phone production may also increase.
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What the CEO Should Plan
Basing on the above economic data indicators, the cost of mobile phones production might increase in future. Therefore, the CEO ought to implement strategies that will shield the company from incurring more expenses. For instance, the company should manufacture cheap but appealing cell phones which will cost the company less but will be quickly sold to consumers. More so, basic raw materials should be purchased in advance in order to avoid more expenses. Since the mobile industry is under stiff competition, the price of mobile phones will remain low despite the increase in production costs.
Conclusion
Overall, digital transformation witnessed globally gives opportunities to the key players in the cell phone industry to reach success through service innovation. By embracing technological changes, mobile companies will have a chance to compete favorably in the global market. Since mobile phones are still in demand, especially in developing countries, mobile phone producers should use this opportunity and produce phones that are suitable to the present population in order to stimulate more demand for the commodity.
