External environment including macro-environment and industry analyses

Posted: November 26th, 2013

IPhone 4

Analysis – External environment including macro-environment and industry analyses

According to the department of Foreign Affairs and Trade of Australia (2008), it has a democratic and stable political environment. “Its government and regulatory institutions are reliable, transparent, impartial and internationally competitive—providing investors with a safe and secure business framework.” The Australian government supports foreign investment, and in 2007, it was ranked first in Global Corporate Governance (Government of Australia, 2008)

The government of Australia further says that its economic strength continues to be stable. In 1997-2007, there was economic growth of 3.5 percent, which was well above other developed countries. They say that their economy is service based, with the service-based industries accounting for 70% of gross value. This is ideal for a smart phone service company. The environment of Australia is very conducive and less pollution of air and water. It has great recreational facilities, cost of living and its stable political and social life are very appealing (Government of Australia, 2008). Australian Automobile Association (2008) says that cars are minimizing pollution. The social environment of Australia has a population of approximately 21 million people (Government of Australia, 2008). Australia is a multilingual country with people speaking another language different from English. It is also culturally diverse, and there is a highly skilled workforce in the country (Government of Australia, 2008).

According to the government of Australia, the country has a sophisticated information and communication s technology. “A powerful combination of world-class information and communications technology (ICT) infrastructure and high-level technological adaptability across all Australian industry sectors provides an excellent environment for investment.” (Government of Australia, 2008), and is ranked as the fourth country in using the internet. Australia was said to perform well in communication technology in 2008 as said by Economist Intelligence Unit data, regarding its e-readiness and had a score of 8.83 out of 10, which is ideal for smart phone industry (Government of Australia, 2008).

Key Success Factors (KSF)

In the smart phone industry, technology, marketing, skill and capability, and distributions are key success areas that a firm would consider in the market. According to AppsCore (n.d.) in Australia, companies use smart phone to be at contact with the customers. The companies are aware that smart phone can help keep contacts with the busy customers who are more technology oriented. The smart phones are used by these companies to market their services since they have the applications necessary for online marketing and sales. This shows that smart phones with good applications will be preferred. According to Arghire (2009), in Australia, according to a research firm, data-centric handsets overtook voice-centric devices. This shows that technological devices are more preferred (Paul Budde Communication, 2011)

Marketing, on the hand is the use of several ways of meeting the needs of a customer, which include advertising, sales, public relations, customer services and satisfaction McNamara (n.d.). According to Joy (2011), a superior marketing strategy is seen as a key factor that led to success of Android as a world leader in smart phone industry. She says that Google’s tools of marketing and advertising, which aimed at expanding the users of Android, were successful. Neil (2009) states, “Advertising has also started playing a more important role, apart from the information…”

The skills and capabilities of a smart phone are essential in this industry. According to Henty (2008), the increasing development of communication technology is reciprocated by the growing demand for it. The growth demand for data information, hardware, software and networks dictates that innovations and accessibility to these services is important to the users who use them in varied ways Henty (2008). The Smartphone industry can only meet this by innovations that have these capabilities. According to Cronin (2011), the smart phone has a capability of making things easier. He says that they are used to do tasks such as paying bills. According to Trylor (2009), a smart phone is considered mobile business partner that allows you do be in touch with clients, and should contain important capabilities for business such as email and security. The ability of a smart phone to meet these capabilities is key factors in this industry. Customers consider this consideration before buying one (Mobile Phone Lover, 2011).

            Distribution of these items is very necessary to reach the customers. Joy (2011) says that, “…all major U.S. mobile operators have launched their own mobile networks Android powered Smartphone. This provides convenient conditions for users to choose Android phones.” These operators distribute the smart phones to their customers, unlike Apple, who distribute their smart phones on their own. This gives android a market advantage since its devices are marketed by several mobile operator firms. Digital news of Hunt360, (n. d.), supports this idea.

Driving Forces (DF) identified from Macro-environment analysis

Driving forces that mould the industry are several and firms in this industry have to consider them critically. One of them is the advancing demand for internet (The Anniston, n.d). Recently, according to Henty (2008), internet and communication technology is growing rapidly, since its uses are diversified. She says that it is hard for people to do research without it. Since the smart phones contain good internet services, their demand is increasing. The Anniston also says that a mew generation that is connected and accessing money and employment demands is another driving force in the industry. Many youths, who are the great users of internet, are accessing money. This increases the demand for smart phones. Increasing globalization and competition, and a fast-paced work culture due to internet and need to be available is another driving force for this industry. The low prices of manufacturing and distribution of the smart phones, making them available and affordable drives the industry. The Anniston also says that the increased cellular coverage across the globe is a driving factor, since it increases the demand for cellular phone devices.

Porter’s Forces

Threat of Rivalry

Rivalry in the smart phone industry is high due to the five major competitors being strong (The Anniston)

This is a threat.

Threat of supplier power

The suppliers of smart phone processors are said to be few making them strong.(The Anniston)

This is a threat to the Smartphone industry.

Threat of substitution

It is very weak since smart phones exist as substitute for laptops and other cellular devices. It tends to incorporate all (The Anniston)

This is a good opportunity for Smartphone industry.

Threat of buyer power

It is moderate since customers do not have much choice and can only switch between brands (The Anniston)

This makes it an opportunity for profit in the industry.


Threat of new entrants

New entrant’s threat is moderate. New entrants can only use single element of value chain, which is easier.

There is opportunity for continued growth profit since new entrants are moderate.

From the porter’s model, the Smartphone industry is only affected by two factors, which are strong influence on it. The forces are less fierce and this makes the industry attractive for profit (The Anniston). This analysis is used to analyze markets using the five factors (Hill, C. and Jones, G. 2009).



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Australian Automobile Association. (2008). Technology and the Environment. Retrieved from http://www.aaa.asn.au/issues/technology.htm

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Joy, L. (2011). Top Ten Factors Cause Android Success into the World’s Largest Smart Phone Platform. Retrieved from http://www.sooperarticles.com/news-society-articles/technology-news-articles/top-ten-factors-cause-android-success-into-worlds-largest-smart-phone-platform-368446.html

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Papadopoulos, S. (2009). Key Success Factors in Internet Advertising. Saarbrücken, Germany: Lambert Academic Publishing.

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