This paper will discuss the importance of examining the external environment of any company especially rapidly evolving ones like the cell phone industry. One factor will be discussed from the external environment that most impacts the prepaid cell phone industry. This paper will also outline some strategies to sustain a competitive market profile in the global and domestic markets.
Prepaid Cell Phone External Environment
The external environment of a company is its dynamic factors that affect the working of the company as well as how the company affects other factors. A PEST or PESTEL analysis is one such tool that analyzes the external environment to find key issues in the company (Tutor2u, 2009). An analysis of the prepaid cell phone industry domestically and internationally is outlined below:
- Political: Political factors such as backing from the government or laws to use of cell phones is supported since its good way of communication
- Economical: The downward going economy favors the use of prepaid packages as they are cheaper and customers require cheaper solutions in these tough times
- Social: Keeping cell phones used to be a status symbol but now it’s more of a social norm thus people without cell phones are considered outsiders. This is the biggest change for the users of prepaid cell phones
- Technological: Technology has impacted this industry by bringing out cheaper cell phones models thus bringing with it the opportunity to offer more features and charge less
- Environmental: Cell phones can be recycled, however, they are dangerous if not disposed of properly thus a cause of concern for the people
- Legal: For prepaid cell phones, contractual and legal restrictions are minimal thus becoming a favorable factor for the prepaid service providers
Building a Sustainable a Competitive Market Profile
From a macro-level point of view about the prepaid or pay-as-you-go cell phone providers, the social factor has affected the industry the most and it is expected that the trends will be highly geared towards prepaid packages. In Asian countries the trend is providing carrier services separate from the phone so that there is no reluctance of the consumers to change one service to another. In Europe too, the prepaid package plans are a success and it will only take a few years until the US consumers start favoring the prepaid plans as well. (Fendelman, 2009).
Max’s new venture is a move towards the right direction i.e. future. World over the practice uniqueness of prepaid package plans come from the pricing policy rather than the technological features it provides. The reason for this is that the features are so common and easy to copy that every service provider can adopt them and hence offer them. Other differentiating factors like coverage area, brand name etc. are all left behind due to the flexibility in pricing rates. Verizon, Virgin, AT&T all have flexible calling rate plans as well as special texting rate plans. Various combinations are offered by every company without the restriction of having long-term contracts thus motivating the customer to mix and match their options. (Prepaid Reviews, 2009).
Pricing is the only factor that service providers can play on as create a physiological edge in the customer’s mind. I would recommend Max to bring out multiple packages but each with a different target audience. For example one package should cater to high-calling people, one too late-night callers, others to SMS frenzy people, while some can be bundled with GPRS data packages along with GPS enabled cell phones. This methodology can be usefully segmented across age groups as well and will do well if competitive prices are charged. The only thing to worry about is to keep updating the packages along with new technologies as well as be aware of the competitors’ moves (Fendelman, 2009). Successfully adopting these recommendations will enable the company to sustain a competitive market profile in the global and domestic markets.
References
Fendelman, A. (2009). Prepaid Cell Phones: Analysis of Pay as You Go vs. Monthly Contract Plans. About. Web.
Prepaid Reviews. (2009). Top Ten Reasons to Choose a Prepaid Cell Phone. Web.
Tutor2u (2009). External business environment. Web.