Subject: Smartphone market portion in Australia
3.1 Research Methodology……………………..….… … pg.4
3.2 Summary of Results of the Research……… … …pg.5,6
3.3 Market Structure of the Industry……………………pg.7
3.4 Analysis of Competition Within the Industry….pg.7,8,9
7.0 Reference list………………………………………..pg.14
The subject our group has chosen is the market of smartphones in Australia. The five smartphone trade names this study will analyze are Apple, Android, Windows Phone and Blackberry. A study was held and information was gathered online.
However, due to certain restrictions, we were unable to carry on an extended study, as an illustration, our study respondents are of the same group- which are pupils and the targeted group is limited to merely a few pupils. The industry we examined fell under the oligopoly market construction class. We so proceeded to analyze the competition within the smartphone industry such as non-price competition and the kinked demand curve. Then, we concluded that the smartphone industry was inefficient in apportioning its resources.
The purpose of the study is to find and understand the market construction of the smartphone market portion in Australia.
As portion of the primary research, a study was conducted on a category of block 2 economic pupils which consisted 23 pupils.
Two inquiries were asked in the study:
1 ) What smartphone are you presently utilizing?
2 ) Are you satisfied with your current smartphone? If so why?
The information from the study was recorded and tabulated.
As an add-on to the primary research, beginnings and stuffs gathered from secondary research was used excessively.
Data was obtained from Australian engineering and concern web site CRN and several on-line intelligence articles.
Summary of Results of the Research
Below is the informations recorded from inquiry 1 of the study conducted as a portion of primary research. It shows the figure of different types of smartphone trade names that the pupils are presently utilizing.
From the informations above, it is concluded that among 23 pupils, a bulk of approximately 87 % of pupils use Apple branded smartphone, while merely a little figure, less than 10 % of pupils use a Android branded smartphone and eventually merely a mere fraction of pupils use a smartphone of another trade name. It is besides noted from the inquiry on the satisfaction of their current smartphone, a user remark that Apple’s runing system is ‘beautiful, simple and clean’ . Another added that Android smartphones are ‘smarter and map more’ .
Harmonizing to CRN Australia ( 2014 ) , the market portion for smartphones running Google ‘s Android package stood at 57.2 per cent while that of Apple accounted to 35.2 per cent while the Windows Phone hits 5.2 per cent of the market and in conclusion Blackberry saw its portion of the Australian smartphone market shrivel to 0.8 per cent. The four chief smartphone trade names add up to 98.2 per cent of the entire smartphone market in Australia.
From the informations above, it is seen that the top four manufacturers dominate the Australian smartphone market portion and merely a small 1.8 per cent of the market belongs to other little smartphone trade names.
Market Structure of the Industry
The smartphone industry in Australia consists of four chief Sellerss notably, Android, Apple, Windows Phone, and Blackberry. From the informations above provided by CRN Australia, it is clear that the concentration ratio indicates small competition between the houses and they each control rather a big part of the smartphone market portion in Australia so they are big plenty to act upon market monetary values and end product. Furthermore, the houses tend to mime and foretell each other by take downing their monetary values or advertise when a new smartphone theoretical account is released. Additionally, the houses require high capital investing and engineering to vie with each other. Last, the smartphones sold in this specific industry have single alone features. These features fit those of an oligopoly market construction. Harmonizing to Layton ( 2012, pg.217 ) , a oligopoly market is defined as ‘a market construction in which a few big houses dominate the market’ . Features of an oligopoly market are a few figure of Sellerss, common mutuality between houses, hard market entry and differentiated merchandises ( Layton 2012 ) .
Analysis of Competition within the Industry
Research from CRN Australia shows that there are four chief rivals in the Australian smartphone market competition, Android, Apple, Windows phone and HTC. These four rivals take dominate 98.2 per cent of the entire smartphone market portion in Australia and merely the other smaller trade names controls 1.8 per cent of the smartphone industry ( 2014 ) . Strategy of an oligopoly houses include utilizing non-price competition to derive more market portions over its challengers. An illustration of non-price competition is merchandise distinction, the pupil study done above allowed us to understand the difference between the merchandises that these houses produce and how they matter to the consumers. For illustration, Apple’s smartphones have an unique operating system and Siri, which is an intelligent personal helper characteristic while Android is renowned for their user interface and customizability. Another illustration of non-price competition in an oligopoly market is the high barriers to entry. Examples of high barriers that houses encounter are strong consumer trueness to bing trade names and legal barriers particularly patents which is common among the digital industries. In an oligopoly market, there is the presence of common mutuality between houses. Firms have to be cognizant of their rivals determinations and respond consequently to keep their market control ( Layton 2012 ) . In the event that we assume houses are seeking to keep high net incomes, when an oligopolistic house increases its merchandise monetary value, challengers will non follow the action and increase their monetary values, nevertheless when they decrease the monetary value of their merchandise, challengers will follow and diminish their merchandise monetary value excessively in order to avoid losing market portions ( Layton 2012 ) . As a consequence of this, houses maintain at a stable and stiff monetary value point since they have small additions from altering monetary values. This monetary value point is besides known as a gluey monetary value. Thus, houses in an oligopoly market are faced with a kinked demand curve.
The graph below shows the construct of a kinked demand curve nowadays in an oligopoly market
The graph shows the construct of a kinked demand curve that the smartphone manufacturers face. The demand curve for smartphone manufacturers in this market contains two parts. For monetary values above the gluey monetary value, the demand is more monetary value elastic. If any house increases their merchandise monetary value and other houses do non, such house will lose important market portions and see a autumn in measure demanded. However monetary values below the gluey monetary value, are less monetary value inelastic. If any house chooses to diminish its smartphone monetary value, other houses will follow. Because of this, any manufacturer who decides to take down its monetary values does non derive market portion and might originate a monetary value war which is frequently non favorable for all Sellerss.
However, the kinked demand curve in an oligopoly market does non take into history of conniving behaviour between houses. There is no clear grounds that the smartphone houses in this research are in secret collaborating and commanding market monetary values. This method is besides known as collusion and is illegal under the Australian Competition and Consumer Act 2010. Fair competition between houses in the oligopoly market is critical to forestall monetary value repair and increase prosperity and public assistance of Australian consumers ( Australian Competition and Consumer Commission n.d. ) .
Resource Allocation In the Industry
From the grounds above, it is concluded that the smartphone industry falls under the oligopoly market construction. Due to the features of oligopolies, the smartphone industry tends to be inefficient because perfect competition does non be between houses. It is besides known that oligopoly industries do non expeditiously allocate resources. Oligopolies have significant market control over the supply and monetary value of their merchandises. Since they are merely little sums of Sellerss ruling the market, it is more hard for a new house to come in the industry ( Layton 2012 ) . Additionally, new houses have to vie in an already competitory and strong market presence of bing houses that control 98.2 % of the smartphone market portion. In the presence of high barriers and non-price competition, merchandises monetary values of oligopoly industries are higher, therefore misallocation of resources occur. Harmonizing to economic theory, when oligopolies are compared to absolutely competitory market constructions, oligopolies are more fruitfully inefficient because they produce at a point where monetary value exceeds the minimal mean entire cost ( P & gt ; ATC ) . Furthermore, oligopolies produce at a point where monetary value is above fringy cost ( P & gt ; MC ) , so they are non allocatively efficient unlike perfect competition where production is at where monetary value is equal to fringy costs ( P=MC ) . What this means is that oligopoly houses do non bring forth with the least costs nor harmonizing to the sum of merchandise society requires.
The graph below shows how the smartphone industry comparison to a absolutely competitory market construction
In decision, this study is analyses the few smartphone houses market construction and information. Which is Android, Apple, Windows Phone, and Blackberry. Based on the research information, the smartphone of humanoid is more popular for users, the secondly is apple and the remainder of market portions is attributed to windows phone and blackberry. In add-on, harmonizing to the economic theory, this few smartphone manufacturer fit the oligopoly market construction. Because these houses need to project the rival diminishing the monetary value or plan a new smartphone. Furthermore, few houses use engineering to vie each other and few companies busying the most market portions. Therefore, the smartphone industries should be classified into the oligopoly market construction.
Individual Reflection Reports:
Student Name: Hao Cong LI
First, the leader administer me to happen some information about our subject, because the mention is really of import to happen some utile information. In add-on, we still need set the professional words by experter. Second, we need do a study to look into the smartphone user ratio and analysis the information. Besides, we need unite the research information and study ratio to happen which trade name of smartphone is more popular. Third, we use information to turn out the smartphone industries is include in oligopoly market construction. In this study, it is clearly to understand what is oligopoly market construction. In my position, oligopoly is about few companies occupy the most of market portion and command the monetary value of the merchandise. In add-on, other smartphone manufacturer is hard to come in the market. Based on the subject is smartphone industries, Is make a suggest for phone market should do more study for public. Because the companies need to cognize the degree of monetary value and phone manner. I’m really basking the research and communicate with squad member, although there some small problem with our authorship, but we make a communicating to each other. We correct the error and retrieve the new words. If have group assignment following clip, i will pay more attending and strive for more difficult work. Finally, I learned an of import thing is do me understand what is a squad. Thankss.
Student Name: Ting Sie Yuan
Student ID: 25747983
In the study I was in charge of redacting the stuff and information, this included doing certain relevant economic theories are applied and used decently, be aftering a spot of research, arranging the study and doing it publishable. I besides took action in making parts of the analysis of competition and resource allotment in the Australian smartphone industry. I have learned more than a few things throughout composing the study. First, it has deepened my apprehension of market constructions specifically oligopolies and how every merchandise industry nowadays in the existent universe can be applied to economic market constructions. Besides, I learnt and eventually understood the efficiency of the oligopoly market construction and why oligopoly houses choose to be inefficient. Overall, I enjoyed working on this assignment likewise to how I enjoyed the old 1s even though this clip it was a group assignment. Although ab initio there were troubles pass oning and make up one’s minding upon a determination between the group, the job was easy solved and the end achieved one time we started pass oning. If I could make a similar undertaking as such otherwise in the hereafter, I would pass more clip outlining out the research of the study.
Maher, W. 2014,Windows Phone up, Apple down in Aussie smartphone gross revenues portion, CRN Australia, February 6, viewed 29 April 2014, from hypertext transfer protocol: //www.crn.com.au/News/371631, windows-phone-up-apple-down-in-aussie-smartphone-sales-share.aspx
Layton, A, Robinson, T & A ; Tucker, I 2012,Economicss For Today,4th edn, Cengage Learning, Sydney, New South Whales
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