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Microeconomic analysis of mobile phone industry
1. Microeconomic Analysis
of
Mobile Phones Industry
Prepared by:
Dipesh Agrawal
NMIMS-PGDM-03
2. Introduction
• The number of manufacturers are estimated to
be around 100.
• The major players are Samsung ,Nokia , Apple
and others including ZTE ,LG etc.
• India has the world's second-largest mobile
phone user base with over 929.37 million.
• It falls under the category of oligopoly type of
market structure.
• People are more concerned with brand and type
of software rather than looks.
3. Characteristics
• Number of Firms-
A few relatively large firms hold most of the
market share and heavily compete like
samsung and nokia.
• Mutual interdependence-
It occurs when firms consider their rivals
reactions while adjusting prices, outputs, or
product lines.
4. • Product Differentiation-
The products sold by samsung ,nokia are
substitutes. So, it should be easy in
recognizing its brand name, packaging and so
on.
• Advertising-
The players in industry are forced to advertise
their product with a view to capture the
market share. In fact, the players compete on
these lines rather than resorting to price
cutting to attract buyers.
5. • Strategic Behavior-
The number of firms is few, the action of even
one will have some effect on the other firms in
the group. The group may have a dominant
leader, though the other firms may not follow
him in all respects.
• Huge Investments-
The industry involves huge cost in setting up
as it requires capital intensive resources and
skilled people.
7. Price in Mobile Phone industry
• Firms are price setters and has the power to
set prices. For instance, a firm who faces a
downward sloping demand curve can choose
price.
• When one firm has a dominant position in the
market it may experience price leadership.
• The firms with lower market shares may
simply follow the pricing changes prompted
by the dominant firms.
8. Condition for profit
• Firms can retain long run abnormal profits as
high barriers of entry prevent sideline firms
to capture excess profits.
• Firms collaborate to charge the monopoly
price and get monopoly profits.
• Firms compete on price so that price and
profits will be the same as a competitive
industry.
• Firms price and profits will be between the
monopoly and competitive ends of the scale .
