Cell phone industry analysis

10. Capital Requirements:

The cell phone companies require large capital to enter and remain in the market successfully. Companies require capital to create products that attracts consumers and for total assets and revenues to enlist other products and services that are featured with cell phones. Cell phone companies work with manufacturers to create new technological and innovative cell phones in the market today to attract consumers. A valuable capital in the cell phone industry is the consumers because revenue and profits depends on them who buy the companies’ cell phones.

New products are introduced continually, technology evolves on a daily basis, and customers are eager to become part of the future of a wireless society. This makes the market very competitive and large companies that have big economies of scale provide a highly automated service to a large number of customers, and have the financial resources required in building and maintaining a large network of communications devices. Smaller companies can also compete, but only in small markets or by provide specialty services.

Total capital requirement to start a business in selling cell phones requires a capital investment between $50,000 to $90,000, and liquid capital requirement of$40,000 to $50,000. In addition, companies spend millions of dollars on developing brand name recognition, and promoting and marketing their products. Companies also want to spread their companies out through franchises, because more offices mean more visibility in drawing consumers in to buying their products and services.