The importance of environmentalism has been growing as a response to the increasingly poor impact that industries leave on the global ecosystem. Therefore, the creation of ‘Fairphone,’ a company that seeks to minimise the detrimental impact of mobile connection on the environment is a breath of fresh air in the IT and ICT industry. The company has not reached its maturity stage yet, which means that investing in it may turn out to be a very lucrative venture. However, the idea of investing in Fairphone may contain several risks that need to be considered first.
Exposure is a critical aspect of any company’s activity. Unfortunately, in contrast to similar ventures undertaken by better-known organisations such as Google, Fairphone remains a comparatively unknown brand that requires promotion. Therefore, investing in Fairphone at the current state of its popularity may mean that the money will be lost if the company never reaches the needed level of popularity in the smartphone market. The specified risk is presently the main threat that investors may face when considering Fairphone as a possible investment option.
Another risk associated with investing in Fairphone is related to the low efficacy of the product and its failure to meet the set expectations. While the problem of the lack of recognition can be addressed with the help of an effective rebranding strategy and the development of a creative and memorable brand image, the issue of quality will have a palpable impact on the product’s success in the target market.
According to the reviews and feedback provided by customers, the quality of connection falters quite often, leaving users dissatisfied and disappointed with Fairphone (Trustpilot, 2019). Unlike the previous concern, the risks caused by the issue of quality will be much more difficult to overcome since the organisation does not have enough leeway in choosing the resources for producing the smartphone. In contrast to other devices that are not supposed to be environmentally safe and, therefore, can incorporate any technology available in the market, Fairphone has to limit itself with ecologically safe ones, which are likely to provide worse quality (Akemu, Whiteman and Kennedy, 2016).
As a result, the risk of customers abandoning the brand as a result of its poor quality is quite high (Haucke, 2018). Therefore, investors may lose their financial resources at the stage of the product being introduced to the market and tested by users.
In addition, the management of the problems that Fairphone currently contains is likely to depend on significant investments in the R&D processes. As the recent account of the Fairphone use has shown, the smartphone requires recharging times more frequently than regular smartphones and may randomly request the PIN code (Trustpilot, 2019). Therefore, the lack of reliability in the services that Fairphone provides makes the idea of the investment rather questionable from a financial perspective. While one could spend money to improve the existing model and ensure that the problematic issues mentioned above are managed, there is no guarantee that target audiences will rush to purchase the product.
Given the unreasonable amount of financial resources that investors will have to spend on the improvement of Fairphone’s quality, the change in the supply chain infrastructure, and the promotion campaign, the specified venture does not seem lucrative. Though some aspects of the product, namely, the characteristics linked to its sustainability, are worth the attention, the general impression of its quality leaves much to be desired. Therefore, the risks associated with investing in Fairphone make the venture an unreasonable step to take.
Reference List
Akemu, O., Whiteman, G. and Kennedy, S. (2016) ‘Social enterprise emergence from social movement activism: the Fairphone case,’ Journal of Management Studies, 53(5), pp. 846-877.
Haucke, F.V. (2018) ‘Smartphone-enabled social change: Evidence from the Fairphone case?,’ Journal of Cleaner Production, 197, pp. 1719-1730.
Trustpilot (2019) Fairphone. Web.