Mobile communications:

Entry into Africa

GROUP: 6 PEOPLE
Nguyễn Hữu Tấn - 1821003888
Trần Ngọc Diệp - 1821001964
Trang Thị Thùy Anh - 1821003526
Lê Quỳnh Như - 1821003769
Đỗ Thị Lê Dung - 1821003555
Lê Nguyễn Tường Vi - 1821003953

1. Discuss the difference between the use of
cell phones in the African cellular phone
market compared with cell phone use in
developed-country cellular phone markets.
In those developed countries like the United States,
Canada, and Europe, the telecommunication industry
invested in landlines before moving to mobile phone
networks. However, in Africa the mobile phone has
effectively skipped the landline. Because some regions in
Africa don’t have effective fixed landlines for telephone
service
Two main characteristics of mobile users in Africa:
Data in Africa is expensive, they own multiple SIM
cards, switching between them on a day in order to avoid
the high cost.
In developed countries people often use some big
brands like Apple, Samsung… but in Africa the price of the
mobile phone from these brands is high, they need a
mobile phone with a cheap price.
 2. How might the different ownership structures in Africa reflect the potential
economic system in the host countries?

An economic system is a system of production, resource allocation, and distribution of goods

and services within a society of a given geographic area.
It includes the combination of various institutions, agencies, entities, decision-making
processes, and pattens of consumption that comprise the economic structure of a given
community. It have three questions to ask: what to produce, how to produce and who
receive the output of production.
The rest of the Africa continent is less os even least-developed, economically.
The ownership structure is define by the distribution of equity with regard to vote and
capital but also by the identity of the equity owners. Several factors account for the rapid
growth in generally poor consumers and they describes mobile communication like a mobile
phone as “ link with the outside world”.
Economic system is an important factor that the host countries should consider when
choosing ownership structure because is has a direct impact on the business ability.
If the right ownership structure is chosen, the business will develop rapidly and the potential
of competition will be high. Beside the growing economy, many business companies appear
with a variety of ownership structure.
3. Would the model for mobile phone expansion apply to other less-
or least-developed countries? Why or Why not

The mobile model should be expanded to less- or least-developed countries because it

has a lot of benefits:
A cell phone helps the leader of village can link with the outside world
When farmer’s wife went into labor but he was staying far away town, a mobile phone
call rushed him back to take her to hospital
Cell phones help parents find the right antidote to save a young child  when bitten by a
snake
 In addition, there are 5 impacts of mobile phones in the developing world:

Mobile Banking: For many people living in the remote regions of third world countries,
traditional brick and mortar banks are often out of reach

Education: One can increasingly find the cell phone utilized for education in the schools of
many developing countries.

Disaster Relief: Today mobile devices are a unique communication tool for disaster relief in
developing countries.

Governance: In countries and regions with low population densities, mobile technology has
simplified seemingly impossible tasks such as long-distance polling and voter registration. 

Health Care: The impact of cell phones in the developing world has also stretched to the
area of health care. 
 4. How do Porter's five factors explain the high level of industry competitive intensity
in the African mobile phone market?

Threat of new entrants:

African mobile phone is a potential market. However, there are large barriers to entry in terms of
cost and government approval. => The threat of new entrants is low.
Bargaining Power of Customers: 
Many telecommunication companies join in the African mobile phone market so consumers would
have many choices in the market.=> The bargaining power of customers is high
Overall Degree of Competitive Rivalry:
Markets tend to be intensely competitive with three, four, five, or even six local providers.
=> Therefore, the overall degree of competitive rivalry are high in Africa.

Bargaining Power of Suppliers:

The African cellular phone market’s rapid growth exemplifies the potential and it also has radically
changed the African employment landscape. In addition, telecommunications firms are one of the
best-paying companies in the country. Suppliers of the products and services required by the
telecoms industry are a dime a dozen in Africa. It is clear that those companies need the
telecommunications industry more than the telecommunications industry needs them.
=> The bargaining power of suppliers in this industry is low.
Threat of substitutes: 
The direct competition to
mobile phones appears to be
fixed telephone lines. However,
Between 1998 and 2008, Africa
added only 2.4 million landlines.
During this same time, the
number of mobile phone lines
that have been subscribed to
has skyrocketed. 
=> There is clearly very little
competition from fixed telephone
lines so the threat of substitutes to
the mobile market in Africa is low.

5. How might an African
government apply Porter’s
national competitive advantage
diamond to further spur cellular
phone specialization within a
country?
=> Stimulate early demand for advanced products and Focus on specialized factor creation.
Demand conditions:
African represents the fastest growing and most
exciting mobile phone market in the international
marketplace, with more than 50% growth in market
size per year since 2002
More than 28% of African consumers use mobile
phones, which represents a larger market than North
America 
=> Africa offers a potentially rich target market for  mobile
phone providers
In Africa, cell phones can be used to track the price
of crops and to receive reminders to take medicines
so that they can save wasted trips outside of the
village. 
=> The phones typically strip down many Western features
and instead provide call and send messages
 Structure, Firm strategy, Rivalry  :

The market tends to be intensely competitive with

three, four, five or even six local providers.

The local competitors use a variety of ownership

structures (Ownership varies from state-owned
industries to joint ventures to subsidiaries) and
present a strong challenge to outside competitors

=>Encourage companies to raise their performance, Stimulate local rivalry

by limiting direct cooperation and enforcing antitrust regulations
Government:
There are large barriers to entry in terms of cost and governmental approval
=> Outside companies entering the highly competitive market have struggled

Related and supporting industries:

The pricing system” pay-as-you-go models”  allows consumers more flexibility than a traditional monthly plan.
It leads to an increase of usage rates

Multiple SIM memory cards allow consumers to switch to whichever company provides the best rate for the
call being made. Short calls or even flashing - the act of calling and hanging up after  one ring so that the
person will not be billed  for the call which also helps keep costs low

Traditional banks struggling to penetrate many parts of the continents is solved by mobile banking. For
instance, Vodafone used its m-Pesa mobile banking service to expand into  Kenya. More than 50% of the
Kenyan market uses mobile banking for transfers. While the transactions are small, around 1,500 Kenyan
shillings ($20), the lower fees than traditional banks have save poor Kenyans an estimated $4 million per week 
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