Read the extract, examine the table of data and answer the questions that follow:

Read the extract, examine the table of data and answer the questions that follow:

fig 1 Source IDC

International DatCorporation

Samsung Leads the Mobile Phone Shipments

1. Samsung accounted for one in four of all mobile phones shipped worldwide last year, as its shipments rose nearly 20% to 396.5 million, a report says. Apple's phone shipments grew by 46% to a record 135.8 million mobile phones worldwide in 2012. But Nokia's global phone shipments fell by 20% from 417.1 million units in 2011 to 335.6 million. Overall, total shipments grew by 2% annually to reach 1.6 billion units in 2012, according to Strategy Analytics.

2. Neil Shah, senior analyst at the research firm, said: "Ongoing macroeconomic challenges in mature markets like North America and Western Europe, tighter operator upgrade policies, and shifting consumer tastes " were among the reasons for the modest global growth figure. He added: "Fuelled by good demand for its popular Galaxy models, Samsung was the star performer, shipping a record 396.5 million mobile phones worldwide and capturing 25% market share to solidify its first-place lead. "However, Samsung's total volumes for the year fell just short of the 400-million threshold.

3. Meanwhile Strategy Analytics said global smartphone shipments grew by 43% annually

to a record 700 million units in last year. Global smartphone shipments for the full year reached a record 700.1 million units in 2012, from 490.5 million units in 2011, but there were signs that shipments of smartphones began to mature in developed regions such as North America and Western Europe.

4. Once again Samsung had the biggest market share, at 30% worldwide and extending its lead over Apple and Nokia.

5. The research comes as Samsung reported a 76% jump in profits for the last three months of 2012, helped by sales of its Galaxy smartphones.

6. Net income rose to a record 7.04 tn won ($6.6bn; £4.2bn), up from 4.01 tn won in the same period a year earlier, beating analysts' expectations. The Korean firm said its mobile profits more than doubled over the same period.

7. Last year, Samsung became the world's biggest smartphone maker, overtaking Apple, its main rival in the sector. This week Apple also reported quarterly results, showing flat profits, unchanged from a year earlier at $13.1bn, and record quarterly revenue of $55bn. But it was not enough to overcome disappointment over sales of the company's new iPhone 5, as analysts said the firm was in danger of becoming a victim of its own success.

8. The firm said late on Wednesday it had sold more iPhones (47.8 million) and iPads (22.9 million) in the final three months of last year than in any previous quarter, but investors had expected more.

'Emerging markets'

9. "If you look at Apple, their position of strength in the smartphone market has generally been in Europe and North America, " said Mark Newman, head telecoms analyst at research firm ‘Informa’.

10. "A lot of their continued growth will be in emerging markets, in BRIC countries such as Brazil, India and China. There has certainly been this feeling that Samsung is catching up up, and overtaking Apple in terms of sales."

11. Meanwhile Nokia, the struggling Finnish mobile phone maker which once dominated the global mobile market, said on Thursday that it had swung back into profit in the last three months of 2012.

12. Pre-tax profit for the quarter was 375m euros (£316m), against a 974m-euro loss last year. Nokia said it sold 15.9 million smartphones in the quarter, down from 19.6 million a year earlier.

13. "We have seen Nokia hit rock bottom but there are now some gentle signs of a recovery," said Mr Newman.

14. He said in that the smartphone marketplace Apple and Samsung currently occupied the top tier, with "many players vying for position in the mid-range marketplace," including Nokia, and others such as LG, Motorola, HTC. and Sony.

15. "This is an extremely competitive place, and it is difficult to see any of these brands capturing the mid-market, which is so fragmented," added Mr Newman.

Bryan Glick, Computer Weekly: "Samsung have products which can match Apple... but they've also got lower-end phones"

16. He said at the bottom end of the smartphone market there was "pent-up demand" for a phone retailing at about 100 euros, and Chinese firms Huawei and ZTE were "making most of the running here".

Part 1: 6 mark questions: (18 marks)

uestion 1

1.a Define the term market share (2 marks)

The percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. The student may give an example from the case study.

A definition + an example from the case study = 2 marks.

1 b Using the data in figs 1 compare the mobile phone market in 2012 and 2011. (4 marks)

Award 1 mark for any one of the points below

Two company’s market shares have substantially grown:

Samsung’s market share has really grown from 11.3% to 29.1%

Apple’s market share has also grown from 18.3% to 24.2%

Others have risen from 24.5% to 39.1%.

On the other hand Nokia, Research, and HTC have all fallen,

Nokia has fallen from 23.8% to 11.9%

Research from 13.6% to 6.7%

HTC from 8.9% to 4.8%

Only award two marks if no comparison is made.

Question 2

Using supply and demand analysis, explain the impact of changes in demand to the price levels of Nokia phones between 2011 and 2012 (6 marks)

Award 4 marks for a fully labeled graph. Award 4 marks for a full description,

2 marks for explanation of the graph.

2 marks for reference to the case study quoting actual figures.

Question 3

3 a If the price of iPhone 5 Mobile phones fell by 5% and this lead to an increase in sales of 8%, what is the PED of iPhone 5 Mobile phones? Is it elastic or inelastic? (2 marks)

PED = 5/8 = 0.625 therefore inelastic

3b Why is a knowledge of a product’s PED important to a company making pricing decisions? (4 marks)

· It is important when making pricing decisions as it could lead to a loss of revenue.

· A company with inelastic demand, will increase revenue if increasing prices, however, it will lose revenue if the prices are reduced.

· On the other hand a company with elastic demand will lose revenue if increasing prices, but will increase revenue if lowering prices.

Award 1 mark for each point made, plus up to 2 marks for an explanation.

Award two marks for a graph if backed up by explanation.

Question 4

Using the passage and the comments by Bryan Glick, of Computer Weekly…. What can be attributed to the success of Samsung in the mobile phone market? (6 marks)

Sales of it smartphones sold a record 395.6 million (para 2) Gave it first place in that market.

Samsung capturing the BRIC market.

Samsung have top end products, but have also got lower end phones, therefore they are gaining brand loyalty across the market.

2 marks for two features,

+ 2 marks for development, plus reference to the case study.

Part Two 12 mark questions (24 marks)

Question 5

To what extent is the oligopoly in the mobile phone market getting stronger? (12 marks)

Level 4 8-12 marks	A discussion of how the oligopoly in the mobile phone market is developing. A balanced answer that looks at the case a strengthening mobile phone market. Use concentration ratios. 2011 Samsung, Apple, Nokia, Research and HTC control. 75.9% of market 5:76 2012 Samsung, Apple, Nokia, Research and HTC control. 73% of the market 5:73 So to that extent the market has become more competitive particularly with ‘others’ increasing their market share from 24.5% in 2011 to 27% in 2012. This shows the market getting more competitive. Samsung and Apple have however, increased their power, which is making that part of the Oligopoly stronger…. Therefore more likely to behave as in Game Theory…. Looking all the time to what the other company is doing, and basing its actions upon that. 2011 Concentration ratio = 2:29.6 2012 Concentration ratio = 2:53.3 A reasoned conclusion based on previous analysis is given.
Level 3 (5 – 7 marks)	An analysis of how the oligopoly in the mobile phone market is developing. The answer must have relevant analytical underpinning of the concept of oligopoly, applied to this market. Concentration ratios may be used. Market becoming a duopoly? With other makes becoming less significant. How much will this impact upon the company’s behavior. Relatively straightforward ideas are expressed with clarity and fluency. Arguments are generally relevant, though may stray from the point of the question. There are some errors of spelling, punctuation and grammar but these are unlikely to be intrusive or to obscure meaning.
Level 2 (3-4 marks)	An application of knowledge of how the oligopoly in the mobile phone market is developing. Answers at the top of this level are likely to be largely framed around a series of examples of features of an oligopoly and maybe other types of markets. Simple examples are given. Some simple ideas have been expressed in an appropriate context. There may be some errors of spelling, punctuation and grammar which may be noticeable and intrusive.
Level 1 (1-2 marks)	Knowledge and understanding of oligopolies in the mobile phone market The answer shows basic knowledge of oligopolies and the mobile phone market 2 marks it is essential to refer to both. Some simple ideas have been expressed in an appropriate context. There may be some errors of spelling, punctuation and grammar which may be noticeable and intrusive.

Question 6

To what extent does the consumer benefit from a more competitive market? (12 marks)

Level 4 8-12 marks

A discussion of whether the consumer benefits from a more competitive market? A balanced answer that looks at the case for a competitive market More choice Prices tend to be lower Firms have to be more efficient On the other hand, Economies of scale are less Money wasted in advertising and branding A larger company with monopoly profits, will have more money for R&D A reasoned conclusion based on previous analysis is given.

Level 3 (5 – 7 marks)	An analysis of whether the consumer benefits from a more competitive market? The answer must have relevant analytical underpinning of how diversification may be beneficial to the consumer. Maybe with examples from own knowledge, or application to the case study. Relatively straightforward ideas are expressed with clarity and fluency. Arguments are generally relevant, though may stray from the point of the question. There are some errors of spelling, punctuation and grammar but these are unlikely to be intrusive or to obscure meaning.
Level 2 (3-4 marks)	An application of whether the consumer benefits from a more competitive market? Answers at the top of this level are likely to be largely framed around a series of examples of features of a competitive market and why this is good. Some simple ideas have been expressed in an appropriate context. There may be some errors of spelling, punctuation and grammar which may be noticeable and intrusive.
Level 1 (1-2 marks)	Knowledge and understanding of whether diversification is important to Kazakhstan. The answer shows basic knowledge of the term ‘competitive market’ and for 2 marks it is essential to refer to both. Some simple ideas have been expressed in an appropriate context. There may be some errors of spelling, punctuation and grammar which may be noticeable and intrusive.

Grade	Grade Description
Grade A80% and above	Demonstrates a strong and reasoned analysis of the application of concepts, principles and theories and clear interpretation of economic information. Has a competent, developed evaluation of alternative perspectives supported by relevant analysis and justified, reasoned conclusions.
Grade C60% and above	Demonstrates an application of knowledge and understanding of problems and issues arising from both familiar and unfamiliar situations. Has an awareness of alternative perspectives of analysis of economic problems and issues.
Grade E 40% and above	Demonstrates a basic knowledge of the links between economic concepts with limited viable explanation in relation to economic information. Has a limited awareness of alternative perspectives with simplistic communication of economic ideas and arguments.

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