The effects of research & development and sales & marketing expenses on a company’s future market share in the mobile industry

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Volume Title

School of Business | Master's thesis

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Date

2012

Department

Department of Accounting
Laskentatoimen laitos

Major/Subject

Accounting
Laskentatoimi

Mcode

Degree programme

Language

en

Pages

97

Series

Abstract

THE EFFECTS OF RESEARCH & DEVELOPMENT AND SALES & MARKETING EXPENSES ON A COMPANY’S FUTURE MARKET SHARE IN THE MOBILE INDUSTRY PURPOSE OF THE STUDY The purpose of this Master’s thesis is to study what are the effects of R&D and S&M expenses on company’s future market share in mobile phones and smartphones. The effects of changes in R&D and S&M expenditures to future market shares are investigated by using comparable and descriptive methods and regression analysis. The changes in R&D and S&M expenses are reflected against changes in companies’ mobile phone and smartphone market shares. DATA Data set consists of four mobile phone companies and their financial statements from 2003 to 2011. In the regression analysis the total number of observations in the sample is 24 for mobile phone market share and 22 for smartphone market share. Market shares used in this study for the mobile phone companies are gathered by utilizing Nielsen and Canalys databases. RESULTS Findings of the study show that changes in R&D and S&M expenditures have significant correlation with changes in future smartphone market shares. As the individual companies were studied, correlation was identified with the changes in R&D and S&M expenses and changes in market shares. Furthermore, reviews of financial statements conclude that firms recognize the importance of these activities when evaluating future performance. However, changes in economic and competitive environment have in some observations had an influence on firms’ market share changes more than the changes in companies’ R&D and S&M costs. Statistically significant correlation was identified with smartphone market shares through regression analysis. The results suggest that for a single percentage change in smartphone market share, it would require 217 percent increase in R&D expenses in previous year. Similarly, it would need 833 percent raise in S&M expenses in previous year to gain single percentage in market share. When compared with mobile phone market share changes, no statistically significant correlation could be found.

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Keywords

accounting, laskentatoimi, mobile technology, mobiilitekniikka, research and development, tutkimus ja kehitys, marketing, markkinointi, market share, markkinaosuus

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https://urn.fi/URN:NBN:fi:aalto-201209303198

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[gradu] Kauppakorkeakoulu / BIZ