China Mobile Business Administration Paper 2010

Bus Mobile 2010

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TABLE OF CONTENT
Executive Summary ..................................................................................................... 2 1. Introduction .........................................................................................................3-4 2. Company Summary ............................................................................................ 4-5 2.1 Company Background ................................................................................... 4-5 2.2 Management Team ......................................................................................... 5 3. Environmental Analysis ................................................................................. 6-8 3.1 Technology ...................................................................................................... 6 3.2 Sociocultural ..................................................................................................6-7 3.3 Political ..........................................................................................................7-8 4. Market Situation Analysis .............................................................................. 9-11 4.1 Advantage and Disadvantage of taking Bus and MTR .................................... 9 4.2 Potential Demand ........................................................................................ 9-11 4.3 Insufficiency of Foreign GPS system ............................................................ 11 5. 6. 7. Targeted Customers...................................................................................... 11-12 Competitive Advantage of Bus Mobile ............................................................ 13 Marketing Strategies .................................................................................... 13-18 7.1 Product ......................................................................................................13-17 7.1.1 Positioning Check of Buses with Web3.0 ......................................14-15 7.1.2 Automatic Reminder ........................................................................... 16 7.1.3 Checking Numbers of Passengers ....................................................... 16 7.1.4 Services for the People with Disabilities ....................................... 16-17 7.2 Place and Promotion ................................................................................. 17-18 7.3 Price ............................................................................................................... 18 8. 9. Implementation Schedule ............................................................................. 18-19 Financial Considerations .............................................................................. 19-20

10. Conclusion .......................................................................................................... 20 Appendices ............................................................................................................. 21-24

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Executive Summary Our company is preparing to launch a new bus tracking system, named Bus Mobile in Hong Kong. With the consideration of the rapid increasing bus service demand, Bus Mobile has competitive advantages of its lower cost, via Mobile 2.0 and the latest coming application of Web 3.0, with a comprehensive bus tracking system and care for disabilities. Targeted Customers Our company aims to cooperate with bus companies such as KMB, First Bus and Citybus so as to enhance their bus services to general public and disabilities. Marketing Strategies The Bus Mobile with the use of Mobile 2.0 and Web 3.0 application can be operated four functions. The covered routes of the system will be increased from

peak routes to most of the bus routes. Financial Considerations The Bus Mobile system includes the mobile accounts and sensors at the entrances and exits on each of buses in order to fit our needs. It is introduced at

$905,648 innovation fees for writing application program and other related fee.

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1. Introduction Do you agree that you have wasted a lot of time for waiting buses? From 2002

to 2009, the average daily patronage of franchised buses has been decreased from 4,327,300 to 3,818,000 (See Appendix 1). Passengers prefer taking MTR rather than buses because of long waiting time for buses and lesser scheduled buses than MTR. In fact, buses have better seating environment and much more coverage of destinations and point-to-point transportation. To solve this problem, some foreign

countries have installed GPS systems, such as Where is My Bus1 and Next Bus2 in the U.S.A., to inform passengers about the positions of the buses so that they can accommodate time to take buses. However, considering the problem of expensive

GPS system installation fees and the deficient of existing route number searching system in Hong Kong buses, we come up with another affordable and effective software application for bus tracking system, named Bus Mobile. In addition, the existing operation systems of buses are not enough for demanding customers. There were fixed amount of passengers complained about For example, in 2007, 86% were related to

KMB every year3 (See Appendix 2).

the quality of services, which were included frequency of routes and capacity of buses. Most Hong Kong people want to have more comfortable seats and shortest waiting
1

Where's My Bus? Next Bus for Circulator -http://greatergreaterwashington.org/post/2735/wheres-my-bus-nextbus-for-circulator/ 2 Next Bus About Us -- http://www.nextbus.com/corporate/about/index.htm 3 More about KMB P.14 -- http://www.kmb.hk/chi/pdf/kmb_2009.pdf

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time for buses.

The Bus Mobile system can provide related information to them.

With the application of Mobile 2.0, a convergence of mobile devices and web services is suggested to change the tendency of transferring and exchanging information from one-way flow to two-way flow. People can use Bus Mobile for

the following four functions: (1) Positioning Check of Buses with Web 3.0; (2) Automatic Reminder; (3) Checking Numbers of Passengers; (4) Services for the People with Disabilities. With sufficient considerations, the proposed business development in Hong Kong can increase the corporations future benefits as the following:
Delivering Bus Mobile especially with high effort of assisting bus companies to improve services and enhance customer satisfaction Providing convenience to all bus passengers, including the disables Building "Bus Mobile" application, designing and installation

Vision

Mission
Business

2. Company Summary 2.1 Company Background Our company, Professional I.T. Consulting Limited, is built up by a group of I.T. professionals who are dedicated to provide full range of quality and value-added I.T. consulting services to clients from personal to enterprise-wide clients since 2008. In

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addition, the company has a strong social responsibility and aims at improving Hong Kong peoples living standard and environment.

2.2 Management Team

I.T. Director

Construction Management Manager

Deputy General Manager

3 Project Staff

3 Technical Staff

HR Administration Department

Acct . & Finance Department

Sales & Marketing Department

2 HR Clerks

3 Acct. Clerks

3 Marketing Assistants

The company is led by an experienced I.T. director in managing and monitoring the department of construction management and general business functions. There are two divisions: construction division, for preparing and supervising construction projects, and general business division, for dealing with administration and other affairs, which includes Human Resource and Administration Department, Account and Finance Department, and Sales and Marketing Department.

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3.

Environmental Analysis

Technological Sociocultural Political

3.1 Technological

Web2.0, Mobile 2.0 and Web 3.0

Hustle Pace I.T. adaptation of Hongkongers Focus on Innovation and Technology Promoting the Integration of People with Disabilities into Society

New technology development of Web 2.0, Mobile 2.0 and Web 3.0: Digital technology and interactive information become more sophisticated as Web 2.0, Mobile 2.0 and Web 3.0 allow users to interact and collaborate with each other in a virtual community and can memorize the habits of browsers. It is proposed to

develop more facilities and apply technological innovations to improve public transport service. Bus companies can then raise their competitiveness through

installing Bus Mobile which is applied to Mobile 2.0 and Web 3.0.

3.2 Sociocultural Hustle pace: It is commonplace that Hong Kong people have a very fast pace of life. They walk, eat and speak fast. They follow the principles: Time is Money Convenience is highly valued by Hong

and Efficiency is the Key to Success.

Kong people and it is a good idea to offer them a convenient bus tracing system.

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I.T. adaptation of Hongkongers: Products related to I.T. are very popular in Hong Kong. For example, according to a statistics (2009), both PCs and Internet connections were becoming more and more common among households. number of households with their PCs
4

The

at home connected to Internet also increased

by 121% from 770,200 in 2000 to 1,699,400 in 2009, representing an annual rate of increase of 9.2% on average.5 (See Appendix 3) Also, mobile phone penetration rate in 2010 (August) was 185.3%.6 Hence, Internet and mobile phone are so popular among Hong Kong people and it is easy for them to accept new I.T. system which combine mobile and Internet- Bus Mobile.

3.3 Political Innovation and technology support: Capabilities in innovation and technology are essential elements to enhance an economys competitiveness while research and development (R&D) is one of the key forces for technological advancement. The

Chief Executive of the Hong Kong Special Administrative Region, Donald Tsang said that Hong Kong would focus on six industries in the coming year included Innovation and Technology. According to a research, total R&D expenditure in 2006 amounted

4 5

excluding palm tops and Personal Digital Assistants Usage of Personal Computers and Internet Services by Hong Kong Residents, 2000 to 2009 -http://www.censtatd.gov.hk/products_and_services/products/publications/statistical_report/feature_artic les/science/index_tc_cd_B71002FB_dt_latest.jsp 6 2008 Digital 21 Strategy -- http://www.info.gov.hk/digital21/chi/statistics/stat.html

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to HK$11.9 billion, 58% and 9% higher than that recorded in 2002 and 2005 respectively and 63% of them were the fund of the government. 7 Thus, the government support to develop new technology system and it is a good opportunity to develop Bus Mobile. Promoting the integration of disabilities into society: Our government concerns about the disabilities and has spent lots of efforts on promoting the integration of disabilities into society since there were 361,300 disabilities 8 (excluding persons with intellectual disability) in 2008. The overall prevalence rate

of people with disabilities (expressed as a percentage of the total population of Hong Kong) was 5.2% 8 which is quite a large population. of the difficulties that disabilities may face. Transportation problem is one

There are about 2,000 buses in Hong Then, it is a must to

Kong but only 400 of them having super-low floor facility9.

install Bus Mobile in order to lessen the disabilities waiting time.

Statistics on Research and Development of Hong Kong, 2002 to2006 -http://www.censtatd.gov.hk/products_and_services/products/publications/statistical_report/feature_artic les/science/index_cd_B70805FA_dt_latest.jsp 8 Social Data Collected via the General Household Survey : Special Topics Report - Report No.48 http://www.censtatd.gov.hk/products_and_services/products/publications/statistical_report/social_data/i ndex_cd_B1130148_dt_latest.jsp 9 -http:// ks.mysch.net/~ks-tech/f5gc/bus.doc

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4.

Market Situation Analysis

4.1 Advantage and Disadvantage of taking Bus and MTR According to the KMB Report in 2002, KMB got the reward (first-runner up) in the public ranking of HK public transport, organized by Democratic Alliance for Betterment of Hong Kong 10 . It means that general public likes to take buses.

However, when comparing with MTR, several disadvantages are found as below.

BUS

MTR

Advantages Extensive network with point-to-point services 24-hour services (overnight buses services) Better seating environment

Disadvantages Long waiting time for buses Schedule of bus routes are difficult to remember

Advantages Accurate and on time service MTR mobile iPhone App More facilities for passengers with disabilities

Disadvantages Extremely crowded in rush hours Less extensive network Worse seating environment

4.2 Potential Demand Needs of general public: Most Hong Kong people want to have more comfortable seats and shortest waiting time for buses. According to the KMB

Report 201011, in different districts, the passengers commented that the schedules of

10

KMB Corporate Profile-http://www.kmb.hk/chi/pdf/corp_pro.pdf 11 KMB Passenger Liaison Group Report 2010-http://www.kmb.hk/chi/pdf/plg.pdf

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bus routes were difficult to predict. check the schedule of buses easily.

After Bus Mobile launched, passengers can

Cross Harbor Tunnel has a stable and increasing vehicular flow in recent years. From 2008 to 2009, the average daily vehicular flow increased from 121,245 to 121,42212. The growth rate was 0.15%. As the vehicular flow is increasing in the For example,

Cross Harbor Tunnel, Bus Mobile will first launch for these bus routes.

there are 6013 routes on cross-harbor services of KMB and our company assumes that Bus Mobile will be launch on the selected 200 buses. Further, it is obvious to

predict that there will be increasing passengers to use Bus Mobile in the future and a target group of 330,000 people may download Bus Mobile in the first two years who are the current users of the MTR mobile iPhone Application. Needs of Disabilities: As mentioned before, there are about 361,300 disabilities (excluding people with intellectual disability) and 49% of them can engage in daily life/ work. They like taking buses rather than MTR if they go out14. (See Appendix

4) However, only 50% of buses have introduced wheelchair ramps; they cannot take bus freely. They need to wait for long times until the buses with wheelchair ramps

12

Tunnel, Lantau Link and Vehicular Ferry Service Statistics-http://www.td.gov.hk/filemanager/en/content_4415/table31s.pdf

13

Transport in Hong Kong( Kowloon Motor Bus)--

http://www.td.gov.hk/en/transport_in_hong_kong/public_transport/buses/kowloon_motor_bus/index.ht ml
14

-- http://www.ftulegco.org.hk/news.php?id=117

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come. Furthermore, there are only four routes of Rehabus in Hong Kong. This means that every disability can only use it 0.2 times a month 15 . Due to the

inadequacy of Rehabus service, inconvenience of MTR, there is a potential need for disabilities to take buses. It is obvious to predict that there will be nearly 30% of

disabilities (around 108,390) may use Bus Mobile and take buses.

4.3 Insufficiency of Foreign GPS system In order to solve the long waiting time for buses and the unstable frequency of scheduled buses, some foreign bus companies have installed GPS systems to inform passengers about the positions of the buses so that they can accommodate time to take buses. However, because of the expensive installation fees of GPS system, which is around HK$68,152,800-85,191,000 (See Appendix 5), and insufficiency of Foreign GPS system16, Bus Mobile will adopt the cellular system, thus operating with a lower cost and infinitude usage of checking bus positions every day. only costs for about HK$ 905,648 for 200 buses installation. Hence, Bus Mobile

5.

Targeted Customers Our company aims to help bus companies such as KMB, First Bus and Citybus

15 16

-- http://www.leekoklong.org.hk/c3_17.htm GPS system for bus-http://www.alibaba.com/product-gs/335217549/GPS_system_for_bus.html

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to target customers who take buses every day, like businessmen and students.

They

can get on more convenient and comfort transportation, as well as the instant information on the routes. buses to wait. Towards the bus companies, they may know the passengers flow in different routes, thus reallocating resources and rearranging bus schedules. At last, they can increase its image through concerning about the disabilities at a less expensive cost. To China Mobile, Bus Mobile will help the company to earn the revenue of providing services to bus companies. Because of this system, more people may use In addition, the disabilities can check the suitable types of

the China mobile network, thereby enhancing its market growth and market share.

China Mobile

General Pubilc

Bus Mobile

Bus Companies

Disabilities

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6.

Competitive Advantage of Bus Mobile

China Mobile Earn money from bus companies Increase market share Fulfill social Fesponsibility

Bus Companies (such as KMB) Low cost of installing Bus Mobile Infinite usage of supplied ability of Bus Mobile Increase the numbers of passengers Fulfill social responsibility Improve public image

General public Gain convenient and comfort bus services Get instant information Shorten the waiting tme for buses Assure sufficient seats

Disabilities Shorten the waiting time for buses Assure sufficient special seats for disabilities

7.

Marketing Strategies

7.1 Product Positioning Check of Buses with Web 3.0 Automatic Reminder Checking Numbers of Passengers Services for the People with Disabilities
Using the concept of cellular system Know the destinations and the statuses of the buses Memorize the tracks of the browsers Alert to those who easily fall asleep or blind persons on the bus Know the frequency of passengers

Check whether the buses have special seats

The Bus Mobile service is rendered by the cooperation between our company, China Mobile and bus companies. The Bus Mobile is made use of Mobile 2.0 and the coming-launched Web 3.0 application. beneficial to general public and disabilities. It is proposed that the system can be

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7.1.1

Positioning Check of Buses with Web3.0

One of the Bus Mobile purposes is to provide convenience and instant information to passengers, who want to know the destinations and statuses of the buses that maybe on the ways or at the stops. The tracking system is suggested to

use the existing mobile phone system which calls cellular system as shown below:

Step 1 Step 2 Step 3

Mobile phone will be connected to the nearest base transceiver station when mobile user wants to contact with the other. Mobile switching center (MSC) will transfer the calling to the gateway mobile switching center (GMSC). The other can receive the call.

Using the cellular system, passengers can know the destinations and the statuses of the related buses as the following diagram:

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Step 1 Step 2 Step 3

A mobile phone for bus-use will be installed on each bus and passengers enter routes data which transmits to the server of the system. The server will collect the information of the bus such as the time of bus arrivals and its destination on the way. Passengers can know the routes data from the server of the system from the bus companies website through their use of mobile phone internet service.

Applying the concept of Web 3.0 into Bus Mobile, the system can memorize the habit of the browsers17. For instance, Mary takes 74X from Tai Po to Kung Tong The server can memorize her

every day and uses Bus Mobile to check bus position.

tracks and thus China Mobile informs Mary about the arrival time of 74X and which station she needs to take off. every day. As a result, Mary does not need to enter her route data

17

< Web 3.0 > 2010-11-12-http://www.singtao.com/yesterday/loc/1112ao13.html

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7.1.2

Automatic Reminder

Passengers can enter different destinations which they would like to take off. Then, the alarm system will remind them.

The destinations which passengers would like to take off

Automatic Alarm
Before one stop of passenger's destinations

Alert to those who easily fall asleep or blind persons on the bus

Enter Data Get off

7.1.3

Checking Numbers of Passengers

According to the assurance of having enough seating on the buses, this idea is operated as below:

Sensors of checking the numbers of passengers will be installed over the entrance and exit of each bus

Bus Mobile
The information will be issue on the Bus Mobile App

Mobile users have a better understanding of the seating statuses

Installation

Seating

7.1.4

Services for the People with Disabilities As mentioned the operation of Bus Mobile before, the application is also

beneficial to the disabilities and visually impaired passengers.

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Bus Mobile

Visually impaired passengers

Disabilities

Bus Mobile Enter which stop they would like to take off Automatic alarm will alert to them before one stop of their destinations

Check whether the buses have special seats or not before getting on the buses

7.2 Place and Promotion Place: Bus passengers may download the Bus Mobile software application on bus companies or China Mobile websites which are with detailed demonstration of the whole system installation process and user-friendly technical support. Promotion: There are 2 stages. (1). Start-up stage: Our staff will contact It is suggested Bus Mobile firstly

China Mobile and bus companies, e.g. KMB.

implement in peak bus routes. (2). On-going stage: Advertisements will be launched on the websites of China Mobile, bus companies and our company. In addition,

Wong Kam Po18 and Chong Chan Yau19 will be invited to be opinion leaders for promoting the system to general public and the disables respectively. conference will be held at Hong Kong Cultural Centre. A press

Posters for introducing Bus

Mobile will be posted on KMB buses and organizations of the disables such as
18 19

Wong Kam Po is a famous Hong Kong and world champion racing cyclist. Chong Chan Yau is one of the winners in Ten Outstanding Young Persons Selection 1991. He concerns the welfares of blinds besides his formal duties.

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Jockey Club Rehabilitation Engineering Centre.

Step 1: Contact China Mobile for the idea of "Bus Mobile" Step 2: Visit bus companies and we first target at KMB Step 3: Implement Bus Mobile in peak routes

On-going stage
Advertisements on the websites Invite opinion leaders "Bus Mobile" press conference Posters on KMB buses and organizations of the disables

Start-up stage

7.3 Price In order to attract more people to use the Bus Mobile application, it is free of charge for general public and the disables to use Bus Mobile application. Details of financial considerations of the Bus Mobile will be discussed in the below financial consideration part.

8.

Implementation Schedule In the first 6 months (Setup Period), China Mobile will provide specialized

technology advice to develop Bus Mobile.

China Mobile will cooperate with KMB Our company will also

first, which is the biggest bus company in Hong Kong.

require the advice from KMB for making the whole system and ensuring its operation. The system will be officially launched on some selected routes for testing during the

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second 6 months (Phase 1). disabilities.

Promotion will be done for general public and

Having the extensive network in Hong Kong, KMB can help to promote In the next year (Phase 2), performance can be

this new system to general public. reviewed.

Online survey will be conducted by users, so that Bus Mobile can be Simultaneously, the Marketing Department of our company

improved in the future.

would get feedbacks from China Mobile and bus companies who have joined the system scheme for evaluating the performance of the system in attempt to improve and have better splendid bus tracking system. After the Phase 2, Bus Mobile will be

launched for all the routes and other bus companies (if not violating the cooperation with KMB). Further, a contingency plan may adopt. For example, our system may

operate with other transports, like school bus, for parents to checking the statuses.

Months 1-6
Set up -China Mobile provides technological advice to develop Bus Mobile -Require the advice from KMB

Months 7-12
Phase1 -System launches on some Phase2 selected routes -Performance review with -Promotion with general online survey on general public public and disabilities -Get feedbacks from China Mobile and bus companies -Launch for all the bus routes and bus companies

Months 13 after

9. Financial Considerations The system includes the mobile accounts and sensors at the entrances and exits on each of buses. The bus company has to pay sensor fees about HK$419.04 (U.S.$

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(24+30)/2*7.76*2)20 for each bus. They may install the sensors on the peak route buses firstly for pre-testing stage. The bus company and China Mobile need to pay the innovation fees HK$452,824 respectively. The innovation fees include the fees of writing

application program, fees of designing website for application and the demonstration program in promotion. (See Appendix 6) Besides, the bus company needs to pay the maintenance fees HK$3500 per year. Indeed, it is worthwhile because they can retain their existing passengers, and even attract more passengers. It is proposed that the press conference and opinion leader

fees will be cost about $252,750 for China Mobile and bus company respectively. (See Appendix 7 & Appendix 8)

10. Conclusion The Bus Mobile is a software application with the use of Mobile 2.0/ Web 3.0 and is a user-friendly system. In order to gain higher and stronger public image and

market share, the Bus Mobile should be implemented at once.

20

High frequency sensor products, buy high frequency sensor products from alibaba.com-http://www.alibaba.com/product-gs/264604899/high_frequency_sensor.html U.S. $ (24+30)/2 stands for the average price of each sensor , U.S. $1=H.K. $ 7.76, times 2 stands for two sensors for each bus

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Appendices Appendix 1: Percentage Share of Public Transport Patronage by Selected Mode, 1999 to 2009

Appendix 2: Average number of complaints handled by KMB for the year (per million passenger trips)

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Appendix 3: The number of households with their PCs (excluding palm tops and Personal Digital Assistants) at home connected to Internet

Appendix 4: Transports Uses of Disabilities: Bus Treatments Go to Works Daily activities 37.4% 49.1% 30.6% MTR 15.4% 28.1% 16.9% On foot 12.2% 17.1% 49%

Appendix 5: Comparison of between Bus Mobile and GPS System Bus Mobile Price per each bus Supply Ability Total Price
21

GPS System HK $ 340,764-425,95521

( Exchange rate of US$1 = HK $7.78)

HK $2,264.12 Infinite usage HK $ 905,648

Limited usage HK $ 68,152,800-85,191,00022

60*7.78*365*2=$340,764 75*7.78*365*2=$425,955 http://www.alibaba.com/product-gs/335217549/GPS_system_for_bus.html 22 340,764*200= $68,152,800 425,955*200=$85,191,000

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Appendix 6: Projected Financial Income Statement for Bus Mobile Financial Plan of Bus Mobile Application HK $ Revenues: Innovation fees: Implementation and Maintenance fees {($6900+3702+3500)*24months}23 Fees of writing Application ($4500*3*16 weeks)24 Fees of designing website for Application23 Promotion fees: Demonstration fees ($240,000*1.1) Advertising ($72,000*1.1) Total revenues Expenditures: Staff wages: Technical staff ($10,000*24months) Project staff ($6,000*3 months) Human Resource Dept. staff ($6,000*24months) Acct. & Finance Dept. staff ($6,000*24months) Sales & Marketing Dept. staff ($6,000*12months) Virtual business center {($67+193 per month)*24months}25 Other expenses(e.g. Administration fees, stationary) Revenues exceeds expenditure 264,000 79,200 HK $

338,448 216,000 8,000

343,200 905,648

240,000 18,000 144,000 144,000 72,000 618,000 6240 4000 277,408 905,648

http://www.alibaba.com/product-gs/335217549/GPS_system_for_bus.html 23 One More Limited-http://www.onemore.com.hk/ 24 iPhone <<The iPhone.me>>-http://theiphone.me/zh-tw/2010/05/costs-involved-with-iphone-application-development/ iPhone -http://sns.spforum.net/space.php?uid=242168&do=blog&id=16329 25 Synergy Virtual Office-http://www.synergybc.com.hk/virtual_tc.htm

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Appendix 7: Expenditures of Bus Company, KMB, in implementing Bus Mobile System Bus Company, KMBs Expenditures Innovation fees to I.T. Consulting Limited Payment of Bus Mobile maintenance fees to China Mobile Promotion fees for Bus Mobile (Press conference & inviting opinion leader) HK $ 452,824 3500 per year23 252,75026 {(300,000+700,000)/2+5500}/2

Appendix 8: Revenues & Expenditures of China Mobile in implementing Bus Mobile System China Mobile Revenues: - Receipts of maintenance fees from KMB Expenditures: Innovation fees to I.T. Consulting Limited Promotion fees of Bus Mobile (Press conference & inviting opinion leader) HK $ 3500 per year23

452,824 252,75026 {(300,000+700,000)/2+5500}/2

26

-http://paper.wenweipo.com/2008/06/28/SP0806280011.htm <>-http://www.lcsd.gov.hk/CE/CulturalService/HKCC/b5/hiring/hiring_sca_bas.html#2