Question

Asian-based telecom operator recently announced that it was launching Virgin Mobile as a new telecom brand within the country. It would operate in conjunction with Etisalat and Du. Assuming the trend continues, and the government opens the market for private and foreign players. You are required to – a. Apply your understanding and concepts from microeconomics, to investigate and summarize the major characteristics of the emerging market form in the telecom industry. b. Describe and analyze the pricing policies that you would expect to find in this industry.

Answer 1

Characteristics of emerging markets:

1. MARKET VOLATILITY

Market volatility stems from political instability ,external price movements, and/ or supply demand shocks due to natural calamities .It exposes investors to the risk of fluctuations in exchange rates, as well as market performance.

​​​2. GROWTH AND INVESTMENT POTENTIAL

Emerging markets are often attractive to foreign investors due to the high return on investment they can provide.In the transition from being an agricultural-based economy to a developed economy, countries often require a large influx of capital from foreign sources fue to a shortage of domestic capital.

Using their competitive advantage, such countries focus on exposing low-cost goods to richer nations, which boosts GDP growth ,stock prices,and returns for investors.

3. HIGH RATES OF ECONOMIC GROWTH

Governments of emerging markets tend to implement policies that fabor industrialization and rapid economic growth. Such policies lead to lower unemployment, higher diposable, income per capita, higher investments ,and better infrastructure.On the otherhand, developed countries ,such as the USA, Germany, and Japan, experience low rates of economic growth due to early industrialization.

4. INCOME PER CAPITA

Emerging markets usually achieve a low middle income per capita relative to other countries, due to their dependence on agricultural activities.As the economy persues industrialization and manufacturing activities ,income per capita increases with GDP .Lower average incomes also function as incentives for higher economic growth.

Pricing policies in Telecom Industries:

1. Optimise pricing strategies on meet targets.
2. End price wars to achieve market development.
3. Implement segment -tailored value extraction.
4. Offer the best bundle.
5. Fine-tune price models for sustainable development.
6. Think of pricing capabilities as investing in future success.
7. Implement smart hardware pricing.
8. Learn from other industries.