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

Ans: An emerging market basically formed by group accompanies a new idea or a product, and want to incorporate that product in market as one of the essentialpart. discussing about telecom industry it has its won significance to develop its market with some specific characteristics.

Major characteristics of telecom indistry:

a) growth and potentiality: it describe the spread of the users and active participant of larger number of the population in this product/sevice.

b) demand and supply: sufficient demand, as well as the capability to satisfy that demand adequate supply, should be available.

c) future growth: there should be growth or forcasting should be there for the telecom service that presents the growth or the increase in demand for the product/sevices.

d) expectation of profit: profit is another key characteristic for the telecom industry. if a company or a service provider is efficient enough with various strategy then it will be profitable for them to operate in the market or else they have to leave the industry.

e) political stability: here in this case telecom some time public service provider and some time both public and private service provider. so political pressure has a content effect on the growth and activity of the industry in general and company in particular.

f) price ceiling: there should be a regulatory authority to keep eye on the activity of the telecom industry in terms of service provided and the price charged by the company on behalf of public interest. so price ceiling is required and one of the characteristics of emerging telecom industry.

b) pricing policy of margin mobile completely depends on the decision taken by Emirates Integrated Telecom Company (EITC) – the parent company of Du. Now if we will discuss the whole market was divided into two major groups where there are two-player and one player is EITC the parent company of Du and here the new addition is the margin mobile, which is specifically dedicated and targeted to the youth population of the country. so the pricing decision will be completely dependent on the cooperator and the market priced for a similar product. here if we will take the example of a decrease in price it may be a wrong decision as the other competitor may react on it so the pricing may be as similar as the competition but the facility provided by vargin may be advanced and added one. so it will make difference between the adaptation of competitors' market and vargins market.