Demand Determinants used by Reliance Jio
Discuss about the Price Forecasting Model for Perishable Commodities.
Reliance Jio is a telecommunication company based in India. Reliance Jio is the most used Internet Service provider in the country and has more than 185000000. Jio is causing turbulence in the telecom industry, and this is because of its efficiency and effectiveness. The mobile network has the best offers regarding internet and also calls services (Nair 2017).
Ever since it was launched Jio has managed to gain recognition all over India, and this is due to the demand determinants that the industry uses. Some of the demand determinants that Jio uses are as follows.
First, the telecommunication company uses the price determinant. The company realised that with a change in the prices of their goods and services the demand in the market also changed. The company gives a four-month trial to all its users meaning the client base can use the network first for free before deciding to use it fully (Kumar, Balaji, Krishna and Yadav 2018). This has increased their demand as more people are running the test trial. Also, Jio allows users to make free voice calls to other Jio networks and even to other networks. Reliance Jio also offers the lowest data plans in India which many users have found useful. Therefore in this instance, we see that they have managed to increase their demand through price by being easily affordable.
Second, the mobile network uses the determinant of prices of products that are related to it. Ever since the launch of Jio, the demand for handsets that are VoLTE enabled has increased in India. These handsets include those such as Lenovo, Xiaomi, Samsung and Counterpoint. This is because these handsets allow for the transmission of voice calls as data while using a 4G network which Jio offers. Also, Jio will impact the online market in India, and this is because it provides cheap data and even fast data. Therefore there will be more audio-visual content in the online market. In this instance, we see that a change in income or preferences has resulted in a shift in demand (Kaur 2018).
Lastly, the mobile network uses the determinant of expectation. Ever since its launch, more and more Indians are using the network, and the client base is expecting more from the company. Jio has just launched its new data plan, and the users cannot wait to see what more the company has to offer (Agarwal, 2017). The users are expecting more data plan offers and merging with other mobile network companies to provide better quality services. Therefore the expectation in the client base also has a change in the demand.
Concept of cross-price elasticity of demand in the telecom sector
Explain the concept of cross-price elasticity of demand with respect to clash in telecom sector companies.
Cross-price elasticity is whereby a change in the price of a good affects the demand of another related good. For example, if the price of data plans by Jio is cheap then how has this affected the demand for other mobile networks such as Airtel and Idea (Haq 2017).
Ever since the launch of Jio, the mobile network has managed to score close to 16million subscribers in the country. The network just recently announced its data plans and they were cheap and affordable. This caused other network companies to have to cut down on their tariffs by 80 percent. Airtel was the first to slash of their prepaid tariffs, and other networks followed. In this instance, we see that once the price of the data plans of Jio went down, then the demand for the mobile network went up. This affected other mobile networks in that their demand went down because most of the users preferred the data plan that Jio offered. The other networks hat to cut down on their prices as well so that they could not lose their demand (Chinthala, Madhur and Kumar 2017).
Also, the price of the goods and services that Reliance Jio offers has had an adverse effect on the balance sheets of other mobile network companies. Airtel for example, after cutting down on the data tariffs has had a 4.9 percent decline in their profits in Q2. The company was however lucky because, despite their declines in profit, they had a 24 percent increase in the data revenue. Idea was however not fortunate because they witnessed a decrease of 24 percent in the data revenue. Since Jio made its voice calls free, the other mobile networks are resisting doing this, but they could make calls over the VoLTE networks free (Mahalaxmi and Kumar 2017).
Reliance Jio has also affected the sales of VoLTE enabled handsets in the country. With its fast and cheap data plans, more Indians are buying VoLTE enabled handsets that allow one to transmit voice calls as data over a 4G network. In this instance, we see that the affordable prices for the 4G data that Jio offers have had a positive effect on the demand for handsets that are VoLTE enabled. The demand for such handsets has increased in the country.
Impact of Reliance Jio on the first stage of production
The Amazon Fire TV Stick is a digital media player that is designed to stream digital audio and video to television at high definition. The media player is simply an entertainment device that was developed by Amazon. The media player also allows one to play video games on a mobile app or via a video game controller. The Fire TV Stick is a smaller version of the Fire TV. It does everything that the Fire TV does, but it has different hardware (James 2016).
The Fire TV Stick has a 1GB RAM, 8GB storage, is 25.1g and it uses two processers which are Broadcom BCM28155 dual-core 1.0 GHz Cortex-A9 processor and a Broadcom VideoCore IV GPU. The Fire TV Stick has two remotes where one has a voice search while the other does not (Morrison, Read, Xynos and Sutherland 2017). The voice commands on the Fire TV Stick offer great navigation and also it has a high processor speed due to the new processor. It also has improved Wi-Fi, therefore, making it efficient to use. The Fire Stick TV is consequently an upgrade from the Fire TV, and every new user should purchase it (Weber 2017).
Recall three stages of production. Can we say that Reliance Jio has pushed the incumbents (Airtel, Idea etc.) in the first stages of production? Explain.
Production is the process of manufacturing an item from raw materials. The total product is the output of mixing different resources for example capital and raw materials. The marginal product is the change that occurs in the production when more workers are hired. Lastly, the average product is the number of total products divided by the labour used. The production process has three main stages, and these are as follows
In stage one; there is an increase in the average product. The total product also increases at this stage and remains positive. The marginal product on the other hand at first increases but then with time decreases till it equalises with the average product (Leontief 2016).
In stage two; the production is characterised by decreasing. The total product the total product decreases but positively with each added input which is the raw materials in this case. The marginal product also decreases with each added input as well as the average product (Panda 2017).
In stage three; the diminishing marginal product characterises the production. The marginal product decreases until it becomes negative. The average product at this stage remains positive but decreases as well.
Amazon Fire TV Stick Introduction in the market
From the above, it is correct to say that Reliance Jio has pushed other mobile networks into the first stage of production. Reliance Jio offers free voice calls and cheap data plans which other mobile networks have to compete with. This has caused the network to invest in new inputs such as technology and labour to increase and better their output. In labour, they are hiring more skilled personnel while in technology they are using new high tech to improve their services. The mobile networks are also investing more capital and purchasing better raw materials such as new appliances. All these are in the efforts to counter the strategies of Jio and have better services than them (Jose 2017).
Why have tomato prices risen so much? Explain through the concepts of supply and demand.
The price of tomatoes has risen due to the following reasons
The prices of tomatoes in the previous seasons were low which prompted farmers to sow lesser tomatoes. Therefore the tomatoes in the market are inadequate, and thus their prices are higher because the demand for them is also high (Sinha, Gupta and Sawaria 2015).
The government has demonetised the value of vegetables causing its prices to crash. This caused farmers not to be able to buy seeds and fertilisers for farming their tomatoes. Therefore there was less sowing of tomatoes which affected the supply in the market. The low supply caused a high demand which in turn caused an increase in the tomato prices (Sangeetha and Divya 2014).
There was excessive rainfall in some areas such as Haryana which caused a lot of damage to the tomatoes. With most tomatoes getting spoilt the supply in the market was short. Therefore the prices hiked because the demand was high, but the supply was short (Muhammad Aamir 2017).
Some wholesalers have been hoarding their tomato supplies until the demand was high in the market. They then sold them for high prices because the demand was high and they had the supply despite it being limited (Boving and Patil 2017).
There has also been drought in some planting areas which has destroyed the crop. This has resulted in the lesser cultivation of the tomatoes which has caused an increase in the prices due to the inadequate supply (Chen et al. 2015).
During the last months, farmers have had protests and strikes. The strike was due to the low loans, and the farmers wanted the loans to be increased. The farmers that were on strike also affected the other farmers that were not by destroying their farms, therefore, destroying a large number of tomatoes. Other farmers had to destroy their crops in fear of the angry mob of farmers. The small farmers were especially affected because they were scared and they had to uproot their crops before harvest in fear of the mob (Noonari et al. 2015).
Three Stages of Production
This, therefore, affected the production of the tomatoes. This is because only a few farmers were able to grow their crops till they harvested and this caused the supply in the market to be inadequate. Before the strike, the production was 1000 crates per acre, but it reduced to 200 boxes per acre. Therefore the prices of tomatoes increased.
The prices in tomatoes have also been caused by the shortfall in production. One wholesaler in Vashi said that the prices of tomatoes had hit rock bottom a couple of months ago due to the demonetization and therefore most farmers could not afford the productions costs. Fewer farmers were able to plant the crop causing a shortage in supply in the market. This thus caused the hiked prices since the supply was short.
The Goods and Services Tax has also had a part to play in the hike in tomato prices. The GST taxes on vegetables generally are cheaper. However, the indirect taxes such as the transport services and carrier services are high. This has caused the tomatoes prices to increase because one pays more money to transport the goods from point A to B and therefore they have to recover the money they have lost by increasing the price of tomatoes (Khan 2015).
From the above, we see that the increase in price of tomatoes has been caused by some factors as seen above causing the demand to be high but the supply to be inadequate.
References
Agarwal, N., 2017. Expectation and Perception Level of Reliance Jio Services in Guwahati City.
Boving, T.B. and Patil, K., 2017. Riverbank Filtration Technology at the Nexus of Water?Energy?Food. Water-Energy-Food Nexus: Principles and Practices, 229, p.207.
Chen, K.Z., Joshi, P.K., Cheng, E. and Birthal, P.S., 2015. Innovations in financing of agri-food value chains in China and India: Lessons and policies for inclusive financing. China Agricultural Economic Review, 7(4), pp.616-640.
Chinthala, G., Madhuri, H. and Kumar, K., 2017. Customer Satisfaction Towards Telcommunication Service Provider-A Study on Reliance JIO. International Journal of Engineering and Management Research (IJEMR), 7(2), pp.398-402.
Haq, N., 2017. Impact of Reliance JIO on the Indian Telecom Industry. International Journal of Engineering and Management Research (IJEMR), 7(3), pp.259-263.
James, F., 2016. Fire Stick: The 2016 User Guide And Manual (Fire TV Stick User Guide, Streaming Devices, How To Use Fire Stick, Amazon Echo, Unlimited)-Volume 1.
Jose, C.A., 2017. EFFECT OF INTRODUCTION OF RELIANCE JIO ON THE COMPETITION ENVIRONMENT IN THE TELECOMMUNICATION BUSINESS IN INDIA. Economic and Social Development: Book of Proceedings, p.241.
Kaur, J., 2018. A case study on market leaders and challenges of the Indian telecom industry (mobile phone segment) with special reference to reliance JIO‘s strategies and performance challenging existing firms. Journal of Research: THE BEDE ATHENAEUM, 9(1), pp.44-51.
Khan, F.R., 2015. Rising Prices of Essential Commodities.
Kumar, A., Balaji, M., Krishna, U. and Yadav, M., 2018. Jio-Bharti Airtel Data War and Strategy. In Harnessing Human Capital Analytics for Competitive Advantage (pp. 171-179). IGI Global.
Leontief, W.W., 2016. Essays in Economics: v. 2: Theories, Facts and Policies. Routledge.
Mahalaxmi, K.R. and Kumar, S., 2017. Changing the Indian telecom sector: Reliance Jio.
Morrison, L., Read, H., Xynos, K. and Sutherland, I., 2017, January. Forensic Evaluation of an Amazon Fire TV Stick. In IFIP International Conference on Digital Forensics (pp. 63-79). Springer, Cham.
Muhammad Aamir, S., 2017. Price Forecasting Model for Perishable Commodities: A Case of Tomatoes in Punjab, Pakistan.
Nair, S., 2017. Role of Sentiment Analysis in consumer research: A case study of Reliance Jio. Journal of Contemporary Research in Management, 12(1).
Noonari, S., Irfana, N.M., Raiz, A.B., Muhammad, I.K. and Ali, S., 2015. Price Flexibility and Seasonal Variations of Major Vegetables in Sindh Pakistan. J Food Process Technol, 6(524), p.2.
Panda, M., 2017. Growth and competitiveness of telecom sector in India: an overview. TRANS Asian Journal of Marketing & Management Research (TAJMMR), 6(12), pp.70-76.
Sangeetha, S. and Divya, R., 2014. Hitting Prices and Doubling Burdens: A Fact Sheet of Indian Scenario. The International Journal of Business & Management, 2(4), p.92.
Sinha, D.K., Gupta, S. and Sawaria, P., 2015. Analysis of indices of vegetables and fruits in the context of movement of national price indices. Journal of Income & Wealth (The), 37(2), pp.89-102.
Weber, P., 2017. Fire Stick: Amazon Fire TV Stick Guide to Help You Install Kodi on Your Fire Stick & Immerse you Into the World of Your Media.
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