Market Research: RFI-Engineering

Management Summary

RFI-Engineering is a company specialized in M2M (machine to machine) routers. M2M is a revolutionary technology. That allows effective supervision and maintenance of physical products by networking. The market is very broad and allows many possibilities. At this point the market is expecting a substantial increase in adoption of this technology. There are four segments within the M2M markets smart metering, element Monitoring, managed services and sensor networks. Each segment can be divided in different industries. RFI-Engineering is operational on the managed services and mainly the out of band management within the sector. RFI-Engineering is dependent on one (big) client (Verizon Wireless) and has to spread its risk on a short term basis. The problem which needs to be answered is: which product market combination offers the most possibility to complete this goal in the western European market (England/Germany).

The research includes an internal analysis (Mckinsey7s model) an external analysis, including client analysis, competitor analysis, market description and distribution analysis etc. There are big challenges to overcome for the company, sales are not going well, there is no focus and the revenue is low.

The major M2M market is in North America but Europe is growing very quickly. A M2M research company Berg Insight claimed an expectation of 14.2 Million M2M applications at the end of 2008. The adoption of M2M connections has been growing rapidly in the EU. Berg Insight claimed that the number of active SIM-cards in use for wireless M2M applications was 12.3 million at the end of Q2 2008. In The UK there are currently an estimated 2.1 million connected machine-to-machine devices, rising to 2.6 million by 2010 and 3.1 million by 2011. The number of M2M SIM cards in use in Germany is forecast to grow to over 5 million by 2013, currently there are 2.3 million.

The most upcoming markets are energy and the automotive industry. These markets however are highly dominated by big companies and the energy sector has already made partnerships for M2M implementation. A market that RFI-Engineering would be able to penetrate is the industrial sector. To accomplish that, needs to change its casing for it to be able to withstand harsh conditions. RFI-Engineering would also need to have a platform like the competitors, for the clients to access the M2M products more easily. This benefits the clients but also the company, because they can integrate a subscription model to access the platform, this results into stable revenue instead of profit from a once-off product.

If these factors are changed including, recruiting new employees to stimulate sales. RFI-Engineering will be able to make profit from the growth in the M2M market. The company might be able to adjust its business model in the future to accommodate the upcoming internet of things but the first priority is setting up a stable business model.

Introduction

Telemetry

Telemetry is derived from the Greek words Tele which stands for remote and metron which stands for mature. Telemetry is a technique which allows machine to communicate with each other and send instructions from one machine to another. The machines can also be called Wireless data transfer mechanisms, mostly people know them to communicate through infrared or radio but many modern devices use GSM networks and SMS to receive and transmit data.

Definition and History of M2M

Machine-to-machine (M2M) communication is an upcoming technology that allows effective supervision and maintenance of physical products by networking. It helps companies in many ways: decrease costs, increase revenue and makes it possible to provide a superior customer service. This is essential nowadays. The main idea of M2M is a direct communication link between connection hardware and the object that needs monitoring: the information about its status of performance is directly sent to a computer system without the need for human interference. This makes automation of processes possible. The technology that it uses originates in manufacturing industry, where physical assets networking have been done for decades.

The goal of M2M is exactly as automation systems or remote-monitoring solutions: it evolves getting information from sensors in a device and transmitting it to an IT network. However the above mentioned applications don't present the flexibility with which the networking is accomplished. M2M is using existing public networks and access methods like wireless that reduce the cost of connecting a large number of assets or machines. This can broaden the company’s pool of connected devices. Automation of business processes also provide a series of benefits: cutting down on costs related to maintenance and device downtime; increase incomes by designing new ways to servicing products in the field and improves customer service by proactive monitoring equipment, possibility for reaction before the equipment fails and only when required.

M2M is a fairly new technology. That also means that new ways of networking are being discovered and in the process the early adopters are developing a competitive advantage and improving their business models. M2M is a technology and service deriving from its close relative telemetry and SCADA (Supervisory, Control and Data Acquisition) systems. Telemetry can be simply defined as: the automatic transmission and measurement of data from remote sources by wire, radio or other means. The M2M market is a market that differs greatly from the telemetry systems in the past. From a technology and business standpoint, telemetry is very fragmented and hardly as cost effective as M2M, which consists of many generic components that are common to a number of solutions. The telemetry systems used private wireless networks, analog cellular, or satellite for their wireless delivery needs. They also used “old” telephone service and other wired transmission media. The wireless networks formerly used were either expensive or did not provide the coverage needed for wide area usage. Additionally, the hardware equipment required was normally custom-made or sold in quantities too small to yield favorable, mass-market pricing. Finally, the back-end services required to interpret and display the machine status were largely built on platforms that did not use the Internet to communicate. Telemetry solutions were in general, slowly rolled- out, they were custom solutions that were too costly for mass distribution. Looking at the current M2M market, the opportunity that M2M now has is comparatively larger. M2M in its present form has the intrinsic ability as a generic application to replicate itself in other markets and industrial segments, creating mass-market distribution and revenue appeal. With the introduction of a pervasive Internet, wireless modems suitable for GSM and CDMA, what we can call cellular networks, M2M can now make a broad market entry with less resistance than the former telemetry solutions.

There are three different types of Machine to Machine communications:

Machine – To – Machine:

Machine – To – Machine:

Machine – To – Machine:

The Product

Following a small description of the G-Router, RFI-Engineering’s core product.

G-Router

smart data router

The G-router (GSM/GRPS smart data router) and C-router (CDMA smart data router) are both designed as an intelligent wireless data transmitter, which can be effectively deployed in sensor networks, smart metering and monitoring applications. Data can be transmitted in "Push" or "Pull" mode, stored and aggregated along preset criteria. The wireless technology will bring immediate benefits such as online connections plus cost efficient, high-speed data transmission. smart data router (G-router and C-router) Intelligent monitoring can be used e.g. in "Managed Services": to monitor modems, installed on corporate customer premises, providing a redundant link for maintenance and support purposes.

An example of a standard G-router implementation

An example of a standard G-router implementation

The company’s flagship product, G-router, is a programmable GSM/GPRS machine to machine terminal. The G-router is a robust unit with integrated GPRS and Quad band GSM functionality based on the Linux operating system. It allows your products to immediately benefit from the advantages of GPRS technology, such as online connections plus cost efficient, high-speed data transmission. With the additional single port remote power switch external high power equipment can be remotely controlled.

Problem assumption

RFI-Engineering is currently dependant on one big client (Verizon). The company wants to spread its risk on short term. RFI has found four market segments for its product in the Telemetric market. To which their product with or without its accessories can be a perfect solution to future clients. De assignment that has to be done is a market research for one of the products of RFI-Engineering in the Machine to Machine. This market will be looked at through several analysis including a client analysis, industrial branch analysis, competitor analysis and distribution analysis. The research needs to result into an advice for one of the four market segments. Criteria are: accessibility, relative size and the demand for product. This will be discussed further within the report.

The research must generate an increase in the market share in England and Germany on a short term basis (6-12months). It has to generate a product which leads to spreading the risk of RFI by attracting more prospects. The company will be able to use the research in a following research.

RFI-Engineering is willing to invest money in a well established plan. This will be presented after 5 months to the client and if approved implemented.

strong>Problem assumption

RFI-Engineering is dependent on one (big) client and has to spread its risk on a short term basis. The problem which needs to be answered is: which product market combination offers the most possibility to complete this goal in the western European market (England/Germany).

The segments are:

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Hypothesis

In this chapter will be several Hypothesis stated, when solved they may lead to solution of RFI’s problem. These hypotheses will be proven right or wrong by using facts to strengthen or to break them down. By strengthen them or breaking them down an answer will appear and will be used to give an advice for the product.

Multiple hypothesises

  1. If the bad sales results are related to the sales people then recruiting sales people will result in a boost to our sales
  2. If the bad results are because the market is too broad, RFI may need to focus in a certain area
  3. If the competition is too big, RFI may have to change their product and be distinctive towards our competitors
  4. If we are depending too much RFI may have to invest into other market segments to gain new prospects
  5. If the bad sales results are related to the lack of marketing, RFI may have to invest in a marketing campaign

Problems

Internal analysis

For the internal analysis I have used the 7s model made by Mckinsey.

McKinsey 7S framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two former consultants who worked for McKinsey, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful. The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you:

The 7s analysis is done by looking at several aspects within the company. They are interdependent and categorized in "Hard" and "Soft" Elements.

Hard Elements

Soft Elements

Strategy

Structure

Systems

Shared Values

Skills

Style

Staff

"Hard" elements are easier to define or identify and management can directly influence them: These are product statements; organization charts and reporting lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.

After analyzing and describing the current situation the focus will be on looking at what would be the ideal situation for the company. After that there will be a conclusion drawn considering these factors:

Some factors take on more special importance in this phase.

All these factors must be working together to have a functioning 7s model

Strategy:

What is our product?

RFI wants to provide their clients with a specialised M2M router which works on the 3G/CDMA network. Our specialty is that we have only one type of router which is our core product and we have the best knowledge considering this solution.

How do we intend to achieve our objectives?

RFI wants to show their clients that they specialize in their core product and that they are price/quality wise the best on the market.

How does RFI deal with competitive pressure?

RFI tries to look for applications which could use their router but do not know of its existence.RFI also listens to the client's problem and see if they can customize product for the client.RFI allows the client to test the application first like a demo, if it's not what the client was looking for the client is allowed to send products back.

How are changes in customer demands dealt with?

We are constantly improving our product, and we offer our product to be customized to the wishes of the client.

How is product adjusted for environmental issues?

Our product improves environmental friendliness due to the wireless management. It reduces pollution due to the ability of looking at the attached appliance from a distance

Set up a product using the hedgehog model from the good to great

RFI's specialty is their knowledge of our product and that they focus only on one type of data router. RFI wants to provide the client with the best solution to their M2M problem.

Structure:

How is the company/team divided?

Everyone in the team is focused on his own type of profession and consults with each other if necessary there is not a lot of team work.

What is the hierarchy?

There is no defined hierarchy, it's a small company and everything still is basic and is top down authoritarian.

How do the various departments coordinate activities?

The company is too small to have various departments

How do the team members organize and align themselves?

They work individually

Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing?

Decision making is fully centralized due to the small size of the company.

Where are the lines of communication? Explicit and implicit?

Mostly implicit, everything is done face to face in the office if something needs to be discussed.

Systems:

What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage.

There is not a working system in place in the company.

What internal rules and processes does the team use to keep on track?

There are no noticeable rules or processes within the company

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Shared Values:

What are the core values?

You are allowed to speak your mind. If you don't agree on something you can say it out loud but of course with argumentation and with respect to the person you don't agree with.

What is the corporate/team culture?

The team culture is friendly and open, and predominantly male working environment.

How strong are the values?

They are not written down in stone but they are present.

What are the fundamental values that the company/team was built on?

Style:

How participative is the management/leadership style?

Working at RFI is very individual. If you want help you can ask, people are very open.

How effective is that leadership?

Not very effective it lacks a true team spirit feeling of contribution.

Do employees/team members tend to be competitive or cooperative?

Due to the friendly nature within the company plus everyone focused on their own specialty there is more a cooperative nature then competitive.

Are there real teams functioning within the organization or are they just nominal groups?

No, there is not an actual team working together. Each employee fulfils their job requirements on their own. Most of the time it's more a debate within the company if a client wants something the commercial people immediately say: Yes we can. Whilst the technical people say it is too much work.

Staff:

What positions or specializations are represented within the team?

Within the team there is a good amount of people working on R&D who have an excellent knowledge

What positions need to be filled?

Sales positions, there are not enough people with sales knowledge/experience.

Are there gaps in required competencies?

Everyone in the company is focused on the technical aspects and not well enough on the commercial aspect of the business.

Skills:

What are the strongest skills represented within the company/team?

There is a lot of technical knowledge within the team, the employees have a lot of technical experience also due to their age. The youngest people are the trainees after that is a big age gap.

Are there any skills gaps?

Yes between the trainees and the fulltime employees there is a huge skill gap. Overall between the fulltime employees there isn't. Though the skills of the employees are not up to date as they should be this is because of an age gap, the fulltime employees are all around 40+ The trainees have another way of working then the full time employees because they have a more modern way of thinking.

What is the company/team known for doing well?

The company is not well known within the business. But they are good in technical research they were able to make a product to the wishes of the first client Verizon.

Do the current employees/team members have the ability to do the job?

Each employee of RFI Engineering is specialized in their job. Though there are not enough people focusing on sales, currently just one.

How are skills monitored and assessed?

RFI is a small company and the employees all are monitored and assessed through a job evaluation.

External Analysis

Client analysis

Who are the current and potential clients?

Currently RFI has one big client who is responsible for an estimated 95% of RFI engineering's sales. Potential clients within the same sector as the no1 client are Vodafone AT&T, China Mobile, KPN etc. However there are more segments in which product can be used and there are many more potential clients in those segments.

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What are those segments?

There are different segments of industry in which the device has a potential use. Energy, transport, security, digital signage, banking, retail, business continuity and rapid deployment. Every business dealing with the M2M market categorizes them differently for instance some industries are named as a whole instead of separate segments.

Energy

Due to Increased usage demands, costs, and green initiatives are pushing electricity, water, gas, and oil utilities to update transmission and distribution infrastructures. Energy companies require solutions with end-to-end connectivity that is secure, maintainable, and open to enhancement. Wireless connectivity is a critical component of infrastructures that enable new solutions for:

M2M plays a big role in the future of Energy, Sensors are connected to M2M routers to let them control and communicate the processes and devices. This provides an increase environment, costs and efficiency. Western European countries are taking the lead in these solutions and a lot of company's already integrated M2M routers within their environments.

An example of a network in the energy segment

Example of a network in the energy segment

Transport

Fleet owners and transportation infrastructure managers demand wireless solutions that are open, secure and scalable to enable cost-effective communications, location and tracking of assets, and deployment of new services for new business needs. Wireless connectivity improves efficiency for:

The transport section is going through a big renewal phase considering the technology which is involved in the process. The big transport companies have a GPS feature installed on most vehicles and ships. Upcoming technologies are sensors within the vehicles that can measure the temperature, light, humidity etc in the container but also are able to check if the cargo doors have been opened which is useful to prevent theft. With these sensor linked to a cellular router it is possible for the transport companies to check up on the status of their vehicle from a distance. This is essential for vehicles transporting dangerous chemicals or expensive products.

Example of a sensor network on a truck

Example of a sensor network on a truck

Industrial and Infrastructure

Organizations are deploying wireless solutions to address more efficient management of manufacturing facilities and commercial building. Cellular broadband allows fast, cost-effective deployment to locations where fixed line costs are too high, and reliably connects sensors and monitoring devices for:

The industrial sector is a very big segment within the M2M market due to the enormous benefit M2M integration it would have on the manufacturing process. Most industrial plants are on 24/7 and need the highest amount of uptime possible. Placing sensors on the machines will increase uptime, due to the fact that the sensor is able to diagnose the machine's status and other updates. The router is able to send a warning when the machine needs to be replaced or when it needs maintenance. Currently in most factories the need to be looked at manually and when a machine stops functioning properly it's replaced or repaired. This increases the downtime of production line drastically. With the M2M router solution the mechanic can be there on time, plus he knows what is wrong with the machine due to the advanced diagnosis report. This is just one from the many examples how the M2M router will improve production process.

Industrial solution example

Industrial solution example

Security

Nowadays with the increased concern over security threats, the need to lower public security costs, and demand for more effective premise access controls are driving the market for security solutions. When traditional fixed line solutions are inconvenient because equipment is installed on remote locations, expensive to provision, or vulnerable to compromise, wireless communications provide rapid and flexible deployment for:

Examples of security solutions

Examples of security solutions

Sales and Payment

The demand for wirelessly enabled electronic point-of-sale terminals, ATMs, kiosks/vending machines and digital signs has grown as retailers compete to place devices in as many locations as possible, including sites which may be difficult to provision with fixed wire communications. Wireless broadband allows rapid deployment, flexible placement and portability for:

An interesting technology is for the vending machines. The inventory needs to be checked in the vending machine and new products have to be ordered. By placing a sensor + router the sensor can detect when the machine needs refilling and it can also send statistics to the user of the vending machine. It can also send information about what products need to be ordered and how many there need to be ordered. This information can be sent directly to the supplier. With this technology the client only needs to refill the machine, the rest has become an automated process.

Example of an ATM, vending machine and POS system.

Example of an ATM, vending machine and POS system.

Healthcare

One of the most interesting aspects in the M2M market is Healthcare. New technologies for health information transfer enables patients and caregivers to connect with ease, ultimately improving the quality and efficiency of care. Wireless cellular technology ensures a highly reliable connection that enable new services in the following areas:

There are many patients which need monitoring, people who have a pacemaker, who are in bad condition, patients in need of medication. The doctors are now able to use devices which send updates of the patient automatically. When their heart fails to function, when they need to take medication or just to read out information about the patient's condition.

Example of Healthcare solutions

Example of Healthcare solutions

A pictorial overview of M2M applications in different sectors.

A pictorial overview of M2M applications in different sectors.

What do the current clients and future potential clients use the products for?

Our product is mainly used for "out of band management". Out of band management allows a system administrator to monitor and manage servers and other network equipment by remote control regardless of whether the machine is powered on.

Where do the current and future potential clients buy our products?

To this point we sell product directly to the customer. There are a few distributors that also offer our products but there isn't much revenue gained from these channels

When do the current and future potential clients buy our products?

The decision making process is a long one because it is a big investment. They first want to see how much it will reduce their costs and increase their efficiency. The implementation also requires training of the staff. The companies that buy our products wish to test it first. After a successful integration of product

Where do the current potential clients buy product now?

The potential clients who are aware of this technology buy their products at the multinational competitors.

Why do the current and future potential clients buy our products?

The client sees a problem within their network/processes and is looking for a more cost effective solution to diagnose and operate the machine. Also if this machine is remotely located the cellular router offers a great solution to be operated remotely.

Why don't they buy our products?

Most potential clients are unaware this solution exists and does not realize what it could do for their business. The industry is still quite new it's still in the growing phase. The early adaptors have integrated this in their systems. Other companies now begin to realise that they need to follow up on these solutions but they see it as a big investment and are not sure if it is worth the trouble integrating this.

What is the future of product?

The future of product will be described in the topic market trends.

What differentiates RFI-Engineering's cellular router to the competitor's equal product?

RFI-Engineering's router is cheaper, customizable to the clients wishes and constantly being improved with accessories.

Are the current client's satisfied with product?

Verizon tested RFI-Engineering's G-router thoroughly and they were very satisfied. The router was able to do the functions they wished for and at a reasonable price.

Swot-Analysis

SWOT Analysis

Client cases

In this chapter there will be a few explanations of client cases to get an idea what a client could be coping with and how a cellular router meets the need of the client.

Sierra Wireless case: Digital Payment Technologies

Digital Payment Technologies (DPT) is a leader in the design, manufacture and distribution of parking management technologies for the North American parking industry. The company's highly advanced multi-space parking pay stations are supported by the Web-based Enterprise Management System (EMS), a best-in-class management software program designed specifically for the parking industry.

Challenges

Enlisted in 2003 by University of California at Santa Barbara (UCSB), DPT developed pay stations that connected to the Internet, DPT originally developed their parking payment solution using Wi-Fi for connectivity. Unfortunately, DPT experienced "all kinds of problems with the Wi-Fi connectivity."

The need for reliable connectivity, secure data transmission and low power consumption prompted DPT to begin investigating a 3G cellular solution.

Solution

After careful testing, DPT selected the AirLink Raven XT as a reliable 3G cellular connection gateway. The Raven XT gateway's sleek, compact form factor enables integration within existing infrastructure and enclosures, and its low power needs allow DPT the flexibility solar or battery power.

One of the most critical aspects of DPT's pay station solutions is the ability to securely collect and verify credit card payments in real-time. DPT is the only pay station manufacturer with both a Payment Card Industry Data Security Standard (PCI-DSS) organization-level certification and Payment Application Data Security Standard (PA-DSS) product-level certification required for credit card transactions.

Of DPT's total pay station deployments, about 90 percent of pay stations shipped are setup with real-time credit card transaction capabilities, and about half of those are wireless. The Raven XT intelligent communications gateway allows for real-time credit card validation, saving operators from lost revenue resulting from overdrawn accounts or stolen card usage.

The Sierra Wireless AirLink Raven-E solution has resulted in significant benefits to Ecast and their operators:

Digi Connect client case

Background

South Holland Internal Drainage Board (SHIDB) is one of the UK's key flood Management organizations. South Holland, named so because it is in an area of low-lying land akin to Holland, is one of the UK's principle agricultural zones; however, due to its flat landscape the district is at constant risk of flooding, making SHIDB's work vitally important to the local community and its 60,000 residents.

SHIDB is responsible for the drainage of the 38,441 hectares of valuable fertile land sandwiched between the rivers Welland and Nene. In particular, they maintain sixteen pumping stations and seven tidally controlled gravity sluices connected to a network of 704 kilometres of drainage channel.

SHIDB engaged Cougar Automation, a systems integrator specialising primarily in the water treatment business, to install a monitoring system that would control 16 unmanned remote pumping stations of varying sizes in the South Holland district of Lincolnshire, from their central office at Holbeach. Cougar turned to Digi International, whose mobile routing technology is now playing a major role in assisting SHIDB in water-level management.

Ease of deployment

Ease of Deployment

Phase One of the deployment, completed in November 2008, saw the Digi TransPort DR routers being used for both fixed line and mobile communications. While BT broadband connections have been deployed where possible, mobile networks are being used in the form of dual Vodafone and T-Mobile SIM cards in some remote locations for failover. Industrial wireless access points at select sites ensure that engineers can access the pumping stations during bad weather. Each pumping station has automatic controls telemetry for central monitoring and an alarm system to detect fixed-line failure.

Transmitting data every 10-15 seconds, Digi TransPort routers not only enable SHIDB to monitor the district's water levels and status of each site's equipment in real-time, but also permit the engineers to remotely switch pumps on and off, and adjust target water levels and pump sequences. SHIDB can easily scan and assess a site from the central office before making the decision whether or not to dispatch a team to deal with any issues.

Cougar Automation configured SHIDB's telemetry system to allow the Digi TransPort routers to establish a secure Virtual Private Network (VPN) tunnel back to the master router from each remote location. Some sites are also equipped with an IP camera that feeds images back to the office via the Digi TransPort device. This function gives SHIDB real-time visual images of water levels, acting as a valuable intruder detection system and safety monitoring device when engineers need to remotely control pumps on an automatic basis. "CCTV gives SHIDB much needed visibility as well as control over South Holland's drainage network, permitting engineers to monitor each site closely without impacting on manpower," said Stuart Gaunt, principal project engineer at Cougar Automation.

Looking to the Future

Phase Two of the Digi deployment will include specialized features to allow SHIDB to archive water levels and pump run hours, as well as any action taken by the engineers, for hydrological modelling purposes. Such functionality will allow SHIDB and other internal drainage boards to compare and contrast rainfall in the district with the amount of water discharged from the catchment area, among other details.

The Results

Digi TransPort's cellular technology, coupled with Cougar Automation's advanced telecommunications systems, allow SHIDB to guarantee an even more efficient management of water levels, ensuring that continuous and effective actions are being taken to reduce risk of flooding. "The South Holland district is a key area for the UK economy, and the local community over 60,000 residents depends on us to prevent permanent flooding and water logging" explains Karl Vines, SHIDB district engineer. "Thanks to Digi TransPort routers, we are now able to prioritize and deal with potential issues before they arise, as well as allocate man power accordingly. In this way, our engineers will always be in the right place at the right time.

RFI-Engineering Client case

Background

Verizon Wireless, is a wireless phone provider that owns and operates the largest mobile telecommunications network in the United States, based on a total of 93.2 million U.S. subscribers, only 0.4 million ahead of the second largest provider, AT&T Mobility, in Q3 2010.Headquartered in Basking Ridge, New Jersey, the company is a joint venture of U.S. telecommunications firm Verizon Communications and British multinational mobile network operator Vodafone, with 55 and 45 percent ownership respectively. Verizon Wireless had the second largest revenue of all United States wireless companies reporting $49.332 billion in 2008.

Verizon Wireless is investing in the machine to machine market because they see a business opportunity. Other telecom providers also see the same opportunity and are investing a lot of money in the future of the machine to machine market.

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The cellular machine to machine products have an integrated phone module which needs a sim-card to operate. To communicate the machines are connected through a GSM/3G network Verizon wants their clients to use their sim-card to increase their profit in the cellular market. To make sure current and potential clients that want to integrate M2M solutions in their company make use of the Verizon network the company wants to give a total solution by providing a router themselves. Verizon approached RFI-Engineering because they want a custom made router which meets their demands.

RFI-Engineering agreed and developed a custom made router for Verizon. Verizon now has product integrated in their own network to access servers remotely over the world. This increases the uptime of the servers drastically. Verizon is able to monitor, diagnose and reboot the server from a central location. Increasing efficiency and reducing costs.

The M2M Market

RFI-Engineering is operating in the M2M industrial branch. However this industry is of a great scale. M2M can mean different things. To mobile Phone operators they look at automated data transmission via SMS/GPRS. They also segment M2M different then the industry(See image below). But for manufacturers of Bluetooth or radio chips M2M is the automatic meter reading, the wireless transmission of data. RFI-Engineering looks at M2M in both ways. It manufactures a product that involves data transmission through SMS/GRPS and is also able to read the data on the machine/device it is connected to. This makes product usable for a wide range of markets. In 2003 analysts in the market research company Forrester deemed the M2M market to be the biggest growth market of the next five to twenty years. They looked at the following, SMS messages are send to many people around the World figures from 2009 show that it lies above 100 billion text messages a month over the World. M2M concept are ideal for forming solutions in a vertical markets. However, foresters experience shown that these kinds of markets develop less rapidly than horizontal markets in terms of mass products. The 2003 research was a bit too optimistic but due to demands and the advance of technology the rapid development research expected around 2003 is happening now.

There has been a lot of research on the M2M market and they all came out with very optimistic results such as:

The expectations are high and the market is booming. But most of the M2M market research is focused on wireless cellular solutions. But why wireless cellular?

RFI-Engineering's products are all based on a wireless cellular solution. A cellular has advantages and disadvantages of course which are highlighted down below:

Wireless Cellular Solution dedicated cellular link:

Advantages: excellent coverage (ethernet/WiFi/etc only provides local coverage), mobility (cellular networks provide today ubiquitous coverage & global connectivity) roaming, generally secure. Users already familiar with and proven infrastructure

Disadvantages: expensive rollout, not cheap to maintain, not power efficient, delays

Why focus on a wireless cellular solution?

Wireless cellular solution has the great advantage of all: mobility. Most of the solutions and future solutions will take place in a remote location. Sensors are mostly placed in remotely locations and it cost a lot of money to wire the whole infrastructure needed for the particular solution. When we look at smart cities as mentioned before M2M will turn to be a great infrastructure of communicating machines and ideally they should be wireless. As described before mobile phone operators are also involved in the market. This is because the mobile phone connections and data transferring from human to human are reaching its limit. Mobile phone operators see new opportunities in the M2M market and they try to get the market moving by creating partnerships with M2M companies (see picture on the next page) and by making special data plans for M2M devices. In the table below you can see the growth in M2M cellular connections in 2009 there were 75 million and in 2014 it is expected to reach 225 million.

More reasons for operators to invest in M2M:

An overview of the partnerships between mobile phone operators and M2M companies:

An M2M device does not use as much data as a human. Therefore it is critical for mobile operators to motivate M2M companies in to going cellular by reducing prices for M2M usage. An M2M cellular application is already cheaper in use than a wired phone line but to keep the market growing its essential to make it attractive to choose going cellular.

This is an overview of cellular's past and current involvements and future potential in M2M, taken from a research centre which does M2M research.

Cellular's past and current involvements in M2M: So far, indirect (albeit pivotal) role in M2M applications. Just a transport support, a pipe for data from the sensor to the application serverM2M applications run on proprietary platforms

Cellular's future potential in M2M: M2M is attracting Mobile Network Operators (MNOs) to become active players.

Technical solutions, standardization, business models, services, etc, Value of network is generally non-linearly related to number of objects. The cctc research centre also pointed out a list of challenges which the mobile phone operators need to overcome to make the network.

So far, mobile operators are experts in communicating humans M2M is a new market and a mentality shift is required in many transversal areas:

Current cellular systems are designed for human-to-human (H2H):

Accommodation of M2M requires paradigm shift:

This all need to be taken care of without jeopardizing current cellular services. The M2M equipment manufacturers also have some technological challenges to overcome. The main technical challenges are (note that MTC stands for machine type-communications)

RFI-Engineering is not on the general market but the company specializes in manufacturing the router needed for a cellular M2M connection. This market dominated by two multinationals Sierra Wireless and Digi International. There are a lot of other companies who do the same but these companies do not specialize in M2M routers, and are regionalised to operating in their own country. Most of the potential clients first look at products of the two big players because they have the biggest product portfolio and they work through distributors and regional offices over the world.

The product differentiation is really high due to the different applications within the telemetry market. The small companies choose to focus on a certain area within the telemetry market and Sierra Wireless and Digi International choose to have a wide range of products with small adaptations to the core product for clients to choose the specialized version they need for their solutions.

Realising the potential of M2M can provide organisations with new business models, additional opportunities for revenue generation and improved customer satisfaction. Across all market sectors, M2M solutions can be implemented to not only increase flexibility but also reduce maintenance and installation costs. As seen in the client cases.

The UK M2M market and The German M2M market

RFI-Engineering's competitors do business on a global scale and they have a regional office in the countries where M2M is booming, these countries include the United Kingdom and Germany. The major M2M market is in North America but Europe is growing very quickly. A M2M research company Berg Insight claimed an expectation of 14.2 Million M2M applications at the end of 2008. That would mean that the total of mobile network connections used by machines would equal that of mobile connections used by humans in a medium sized European country. Berg Insight estimates that until 2013 the number of wireless connections will grow with an annual rate of 32.9 percent, ending up to reach 58.6 million M2M mobile connections. Currently it is said that the Energy sector makes up for most of those connections, followed by the transport sector. But at the end of 2013 Berg Insight claims that the automotive sector would've gained more ground and ending up using 61 percent of the M2M total connections in Europe. Energy meters will remain second largest followed by security and POS-terminals. The growing acceptance of M2M solutions will also increase a substantial growth of remote monitoring applications for different types of products and assets from all manufacturing industries. With the financial crisis still leaving traces it is important to consider that the M2M market is affected by fluctuations in all products such as: motor vehicles, energy meters, security alarms, POS-terminals and other machinery and equipment.

The adoption of M2M connections has been growing rapidly in the EU. Berg Insight claimed that the number of active SIM-cards in use for wireless M2M applications was 12.3 million at the end of Q2 2008. This equals 2,2 percent of the SIM cards used by humans in the EU. Sweden and Finland are considered the early adopters in the European M2M market. The M2M connections stood out for M2M connections accounting for 13.4 percent and 7.7 percent of all mobile connections. Other countries that stood out were Denmark with 3.8 percent and Spain with 2.7 percent. All the other European countries were in the range from 1-2 percentages. In absolute terms, Italy constitutes for the largest geographical market with 1.9 million connections, followed by Germany and the UK with 1.9 and 1.7 connections. (see the table on the next page for an overview of the growth expectations in the European M2M market)

In the UK wireless logic which is one of the biggest M2M SIM aggregator in the region, reports that there is a 75 percent year-on-year growth within the number of connected SIM-Cards, that the company manages within the UK market. They report that they increased their sales force by 25 percent. They say the country is adopting the M2M greatly. The average amount of growth rate of the global M2M market is expected to reach 31 percent by 2012. However in Europe there is a staggering increase in growth. This is because the non-traditional M2M sectors such as healthcare and agriculture are interested in the technology. This is a good indication how the market is evolving.

"There has been a lack of understanding within the market around the cost and service structure of M2M to wider business, with many believing that it's impossible to negotiate a tailored data tariff or benefit from a robust Service Level Agreement which protects their investment. All this is now possible and, we believe, will become a necessary industry standard" Philip Cole, Sales Director, Wireless Logic. This shows that the customer is getting wiser and will adopt a M2M solutions easier.

According to Wireless Logic there are currently an estimated 2.1 million connected machine-to-machine devices in the UK, rising to 2.6 million by 2010 and 3.1 million by 2011. The potential for the growth of this market, as companies start to understand the strategic importance of this technology, is boundless. It's no longer difficult or complicated to integrate data connectivity into every enterprise mobility scenario and, as a result, use the intelligence-gathering capabilities which results in making significant savings and an increase in effectiveness.

The number of M2M SIM cards in use in Germany is forecast to grow to over 5 million by 2013, currently there are 2.3 million, according to a new study called 'The M2M Industry Map of Germany' from mobile network operator E-Plus. The study defines the current market applications of M2M communications - in the automotive, tracking & tracing, remote maintenance & control, metering, POS/payment, consumer electronics, healthcare and security sectors. The Tracking & Tracing sector is forecast to experience average annual growth of 30 percent over the next three years. The fastest growing M2M segment in Germany, with an average annual growth of 47 percent, will be the consumer electronics segment (shown in the table on next page).

Looking at the country, Germany's economics are hugely influenced by the car companies. Once the automotive industry in Germany takes interest in the M2M solutions, it will trigger a substantial growth. Germany also has a big Energy and industrial industry. That is why it is good to target Germany and The United Kingdom. These countries are still in a growing phase and the M2M integration is going in an exceptional quick rate.

A prediction on the future M2M market: Christoph Leifer, Phoenix Contact, and Holger Bühl, Vodafone Deutschland said: "We are absolutely certain that 100 percent of the PLCs(programmable logic controller), DCS(digital service calling) systems and PC-based control systems will, in the future, be integrated in telecontrol, remote maintenance and diagnostic concepts. A high percentage of these applications will be networked via telecommunication networks".

Process structure

The product goes to several processes before it ends up with the client. In this part there will be a description of each process.

The cellular routers are build from several parts, A CPU board an embedded module, antenna and the case for the router. These are the primary parts. Software and firmware is usually developed by the company itself and done by the assembly within the company or outsourced. Afterwards product goes to the distributor or it will be distributed directly.

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The process structure would look like this:

The M2M products are in the growth phase, early adopters have implemented the routers with success and other companies are following. Still because it's a big investment to implement product for the client's needs. The decision making process to purchase is generally a slow progress.

The threat of the entry of new competitors

This threat is relatively low due to the fact it takes a lot of investment to invest and the right staff to research and develop a product in the M2M market. The process of this and quite complicated and even the big manufacturers make alliances for Research and Development.

The bargaining power of customers (buyers)

Customers have a reasonable buying power, but the prices are pretty much the same, they can really bargain when fully integrating M2M in their business and for example buy a 1000 routers. This makes the cost price lower as well for the manufacturer.

The threat of substitute products or services

Substitutes are a big threat due to the fact that it is fairly easy to manufacture a replica in China for a much lower price.

The bargaining power of suppliers

The market is not dependant on suppliers. Suppliers that do sell M2M products look for well established names within the Industry.

The intensity of competitive rivalry

In the M2M industry the rivalry is reasonably high.

Competitor analysis

The competitors RFI-Engineering is dealing with are large companies within the market. In the competitor analysis there will be looked at two of biggest names on the market: Sierra Wireless and Digi International. These two companies have a broader range of products but unlike all the big telecom operators they focus on selling routers and the services involved.

The telecom operators focus more on the embedded SIM-cards that are used within product and the operating costs. The operators don't manufacture the routers themselves but rather partner up with a producer. This is the reason Verizon came to RFI-Engineering. Verizon asked RFI-Engineering if the company could be a router to their demands for them to use personally in their servers and supply them to their customers.

Competitor profiling

Profile of Sierra Wireless

Corporate Profile

Sierra Wireless is expanding the wireless world with a comprehensive offering of hardware, software, and connected services for mobile lifestyles and machine-to-machine communications. Our customers count on us to help them succeed with innovative, reliable, high-performing solutions and early access to new wireless technologies.

Founded in 1993, Sierra Wireless has a track record of leading the way with new wireless technologies and solutions. Sierra Wireless focuses on wireless devices and applications, offering a comprehensive portfolio of products and services that reduce complexity for their customers. With sales, engineering, and research and development teams located in offices around the world, Sierra also offers a network of experts in mobile broadband and M2M integration to support their customers worldwide.

Sierra Wireless technology enables solutions for a broad range of target markets, including applications for:

Number of Employees (Q2 2010): 905 / 2009 Sales (mil.)$526.4

Digi International

Digi International is located in Minnetonka, Minnesota, and has 20 locations worldwide. The company was founded in 1985 and currently employs more than 500 people. Digi is a recognized brand worldwide and has a reputation for innovative, good quality products and strong technical support.

Digi is the leader in device networking for business developing products and technology to connect and securely manage local or remote devices over the network, internet or cellular connections. The solutions Digi offers include: cellular gateways, Wi-Fi device servers, video and sensor products, usb connectivity, zero-clients, serial servers, serial cards, embedded solutions, single board computers and Zigbee and RF radio modules.

Digi strives to deliver leading edge technology to meet the demands of today's mission-critical networking environments. Recently introduced technologies are:

High speed cellular gateways, embedded core modules with wireless and wired networking, all-in-one console server with console management IPMI and free KVM, rugged device server for harsh environments and Zero-client solution.

The company's mission is to solve the customers networking challenges so they can focus on running their business more efficiently and cost effectively.

The segments Digi connect operates in are:

RFI-Engineering

Sierra Wireless

Digi Connect

Market Share

A very small percentage within the market.

Speculating: The largest percentage within the market

A reasonable market percentage

Major Customers

Verizon Wireless

Philips, CBS Outdoors, Metropoline and many more.

Hafslund Norway, Globe Electronics, Verizon Wireless.

What do their customers think of them

Satisfied with product.

Many success stories on the website, so presumably satisfied customers.

Many success stories on the website, so presumably satisfied customers.

Pricing Policy

Mark up on +- 50%

N/A

N/A

Financial Strength

Very weak compared to the competitors

Very High, 526 Million sales in 2009 as seen in the financial report

High, 182 Million Sales in 2010 as seen in the financial report

Product / Service Range

Cellular Routers and accessories

Very broad product range. Everything necessary for M2M solutions.

Very broad product range. Everything necessary for M2M solutions.

Product / Service Quality

Good quality

Good quality, able to withstand harsh conditions.

Good quality

Customer Loyalty

Not very high

Due to broad product range, customers tend to buy more products.

Due to broad product range, customers tend to buy more products.

Brand Recognition

Almost None

Well known

Well known

Length of Time in Business

Founded in 2007

Founded in 1993

Founded in 1985

Alliances

None

9 Alliances in technology and 22 partners

30 Partners

Premises / Location

The Netherlands

Worldwide

Worldwide

Research & Development

R&D department to improve product and develop new accessories

R&D department plus Alliances to develop new technologies together.

R&D department

Plant and Technology

Workshop

Factory

Factory

Manufacturer, Wholesale, Service, Retail

Manufacturer and wholesaler

Manufacturer, Service and wholesaler

Manufacturer, Service and wholesaler

Advertising

Press releases

Online marketing

Business fairs

Press releases

Online marketing

Seminars

Business fairs

Press releases

Online marketing

Seminars

Customer Service

Personal customer service

International and regional customer care. The client also has an agent which he can keep in touch with.

International and regional customer care. The client also has an agent which he can keep in touch with.

Positioning

Functional

Functional

Functional

Number of Employees

7

905

500+

Distribution Methods

Post

Partner

Partner

Patents

product licences

product licences

product licences

Sales Tactics

Cold calling

Few retailers

Cold calling

Well known retailers

Cold calling

Well known retailers

Growth

Currently unstable

Trying to expand business

Steady growth

Steady growth

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As seen in the comparison chart Sierra Wireless and Digi international are well established competitors within the market. These are very big competitors and something to be wary about. RFI-Engineering would need to specialise themselves to distinguish themselves. A way to do this would be to target a specific market and compete with price and personal assistance.

What RFI-Engineering lacks is a software platform for the customers to access their products. Product wise it is the only missing factor. Product comparison chart between RFI-Engineering's G-Router, Sierra Wireless Airlink Raven X and Digi connect Wan 3G. The routers do not differentiate a lot RFI-Engineering's price is remarkably low compared to the others. However they don't have a portal except for a firmware updater.

Distribution analysis

Currently RFI-Engineering is not running a particular distribution model. The company tries to sell directly to the business involved. The competitors are also widely profiled on the internet through retailers. Most of the competitor routers are found on specialised electronics websites who have client connections in all different types of industry. They look for retailers who have a focus on electronics and have enough knowledge to advice clients who want an M2M solution.

Looking at the competitor's websites they do prefer to sell products themselves in the most profitable regions such as: the United States, Japan, Canada, U.K, Australia, Germany, Switzerland, Italy and the Netherlands. The countries above are advised to contact the local office of the competitor. Other countries are referred to the website and dealers. This is noticeable on both the Sierra Wireless and Digi Connect website. This shows that product needs to be sold with personal contact with the client to make sure the clients receives the right solution.

M2M Germany specializes in all sorts of M2M solutions. They sell the most M2M related products and accessories.

Market Trends

The internet of things

This is an ongoing development of technology. More objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks.

Following a small description of the Internet of things Council to get a better understanding of the term

"The Internet of Things; imagine a world where everything can be both analogue and digitally approached - reformulates our relationship with objects things- as well as the objects themselves. Any object that carries an RFID(Radio frequency Identification) tag relates not only to you, but also through being read by a RFID reader nearby, to other objects, relations or values in a database. In this world, you are no longer alone, anywhere.

It holds dangers, but it also holds promises. And maybe it can be the positive solution, the logical step in the history of outsourcing memory to objects, devices and the environment, for the challenges we all face today of an ever growing individualization that might tempt citizens into breaking with existing solidarities ( among race, gender, ethnicity, age…) that are currently harnessed through the nation state.

What if through The Internet of Things we can create a layer of data, open to all, through which individuals can decide for themselves what they are willing to pay for, to get direct feedback from their voluntary donations, to coordinate community spending that has a direct bearing to their needs, to negotiate with other people in other parts of the world how to use their money?"

It still might sound a bit vague, very simplistically put it would be a world where machines talk to each other. When M2M first was introduced it was created to control automated processes. This has evolved to the point where everything can become fully automated. As described before how M2M can automate certain processes, the prediction is that in the future other processes will be automated as well. Mckinsey has done research on the topic and has come up with six distinct types of emerging applications which fall in two broad categories: first, Information and Analysis and, second, automation and control.

Information and analysis

As the M2M solutions link data from products, company assets or the operating environment. It will gather better information and analysis, which will enhance the decision making process significantly. Many organizations are deploying these applications for experimental usage.

1. Tracking behavior. When products are embedded with sensors, companies are able to track movements and request statistics and monitor the interactions. Business models can be made and optimized to make use of this data. For example insurance companies are now experimenting to install sensors in customer's cars to analyze their driving behaviour. This will allow companies to base the price customers pay on the way they drive and how far the car travels. This can be good news for youngsters who pay ridiculous amounts on car insurance.

In retailing, sensors are able that note shoppers' profile data (stored in their membership cards) can help close purchases by providing additional information or offering discounts at the point of sale. Market leaders such as Tesco are at the forefront of these uses and are about to experiment with M2M.

In the business-to-business marketplace, one well-known application of the Internet of Things involves using sensors to track RFID (radio-frequency identification) tags placed on products moving through supply chains, thus improving inventory management while reducing working capital and logistics costs. The range of possible uses for tracking is expanding rapidly. In the aviation industry, sensor technologies are creating new business models. Manufacturers of jet engines retain ownership of their products while charging airlines for the amount of thrust used. Airplane manufacturers are building airframes with networked sensors that send continuous data on product wear and tear to their computers, allowing for proactive maintenance and reducing unplanned downtime.

2. Enhanced situational awareness. Data from large numbers of sensors, deployed in infrastructure (such as roads and buildings) or to report on environmental conditions (including soil moisture, ocean currents, or weather), can give decision makers a better overview of real-time events, particularly when the sensors are used with advanced display or visualization technologies.

Security personnel can use sensor networks that combine video, audio, and vibration detectors to spot unauthorized individuals who enter restricted areas. Some security systems already make use of these advanced features, but there are many more applications in the make as sensors become smaller and more powerful. Also the software is being optimized to read and analyze the data the sensors are sending out. Logistic managers for Airlines and trucking lines are already making use of M2M by analyzing the weather conditions, traffic patterns and vehicle locations. With this data the managers increase their ability to make changes and routing adjustments that will reduce congestion and increase efficiency.

3. Sensor-driven decision analytics. The Internet of Things is able to support longer-range, more complex planning and decision making. sIn retail, there are a few companies experimenting with ways to gather and process data from thousands of shoppers as they go through stores. Sensor readings and videos note how long they walk around and stop at individual displays and record what they ultimately buy. Simulations based on this data will help to increase revenues by optimizing retail layouts and buying stock.

Automation and control. Using data for automation and control would mean that the collected data and analysis needs to be converted to use in the internet of things. Using the data to create automated processes can raise productivity and create systems that automatically solve complex solutions without any human interference. Early adopters are investing in basic applications that provide an almost immediate pay-off. Automated systems will be adopted by more organizations as the technology will improve. In the future large automated systems will be integrated which can replace humans altogether.

1. Process Optimization

2. Opitimized recourse consumption

3. Complex autonomous systems

A lot of manufacturers are looking for ways to increase their productivity by using M2M they can create complex systems to automate production process. If a problem occurs the M2M devices can detect and solve the problem without any human interference.

Mckinsey gives a good overview of where the market is going to and how it expands. In the future Mckinsey expects a big increase of use in technology with the use of wireless applications. Not only companies will make use of machine to machine technology but also end users. It will increase more data gathering on customers and efficiency in use for consumers in their environment.

What comes next?

The Internet of Things has great promise according to Mckinsey. However business, policy, and technical challenges must be faced before these systems are widely integrated. Early adopters will need to prove that their new sensor-driven business models create superior value. Industry groups and government regulators should study rules on data privacy and data security, particularly for uses that touch on sensitive consumer information. Especially this is a danger for M2M. Privacy issues keep coming up with new technology. M2M has a lot of advantages but also comes with a few disadvantages. Some data could be influenced or used for other use than intended. Legal liability frameworks for the bad decisions of automated systems will have to be established by governments, companies, and risk analysts together with insurers.

On the M2M product manufacturers side, products such as sensors and routers must fall to levels that will motivate widespread usage. Networking technologies and supporting standards must evolve to a point where data can float freely between sensors, computers and routers. Software to gather and analyze data and advanced display techniques must improve to the point where they can visualize big volumes of data, so that they can be analyzed by human decision makers or to guide automated systems more efficiently.

Companies must allow big changes in production process and information patterns. It will change the structure within the company and the decision making process, as well as the way operations are managed and processes conceived.

Early adopters can begin to reposition themselves by using the new possibilities of the M2M market. They can use them for new technologies where traditional approaches have not brought sufficient returns. Energy consumption and process optimization are good early targets. Companies can experiment themselves in what way the Internet of things can be of use to them. They could seek partnerships with innovative technology suppliers creating M2M capabilities for the target industry and show other companies how it affected them.

Cultural aspects

The focus of this thesis lies on the United Kingdom and Germany. A product will be defined for RFI-Engineering how to access these markets but before that it must be taken into account that there will be a gap in cultural differences when doing business. In this chapter the different cultures will be described and the differences highlighted in what business etiquettes to get a better understanding and to adapt the product to the specific country if necessary.

United Kingdom

Location: Western Europe, islands including the northern one-sixth of the island of Ireland between the North Atlantic Ocean and the North Sea, northwest of France

Capital: London

Population: 62 million estimated 2010

Ethnic Make-up: White (of which English 83.6%, Scottish 8.6%, Welsh 4.9%, Northern Irish 2.9%) 92.1%, black 2%, Indian 1.8%, Pakistani 1.3%, mixed 1.2%, other 1.6% (2001 census)

Religions: Christian (Anglican, Roman Catholic, Presbyterian, Methodist) 71.6%, Muslim 2.7%, Hindu 1%, other 1.6%, unspecified or none 23.1% (2001 census)

Government: Constitutional monarchy

Language: The official language in the United Kingdom is not stated in the constitution. English is the main language and is being spoken by more than 70% of the UK population and is considered the country's official language. There are other native languages which include Welsh, Irish, Ulster Scots, Cornish and Gaelic.

British Society, People and Culture

The United Kingdom is compromised of four different countries: England, Scotland, Wales and Northern Ireland. It is important to be aware of this situation, because of these geographical distinctions there is a strong sense of identity and nationalism.

The terms 'English' and 'British' do not mean the same thing. 'British' defines someone who is from the mainland England, Scotland, Wales or Northern Ireland. 'English' refers to people from the mainland England. People from Scotland are named 'Scots', from Wales ‘Welsh' and from Northern Ireland ‘Irish'.

PDI- Power distance index: Power distance reflects the equality of people within the culture in the British culture.

IDV- Individualism: In the British there is a high individualistic attitude, everybody is expected to look after themselves and their immediate family. In the United Kingdom individualism is extremely high

MAS- Masculinity: The British culture is highly masculine this shows a gap between the women and men's values.

UAI- Uncertainty avoidance index: The English live by a lot of rules, but the uncertainty avoidance is quite low. Due to their stiff upper lip they tend to ignore the problem at first and fix it afterwards.

LTO- Long term orientation: The British culture is short term based. It's a culture based on hierarchy and traditions.

The Class System

Nowadays people from varied backgrounds are having more access to higher education, wealth distribution is changing and more upward/downward mobility is occurring, the British class system is still very much intact although in a more subconscious way.

Class is no longer simply about wealth or where one lives. The British are able to define someone's class through a number of things such as demeanour, accent, manners and comportment. The class system defines three different types of classes: Lower, Middle and Higher class. Lower classes are considered people from poor area's doing hard labour. Middle are educated people who have a good income. High class is defined by title, you are born higher class. You can grow from lower to middleclass but you cannot grow be higher class.

A Multicultural Society

The United Kingdom used to be a very homogenous society, but since World War II, Britain has become increasingly diverse it has attracted large immigrant populations, particularly from their former colonies such as India, Pakistan and the West Indies and nowadays because of the EU many Eastern Europeans looking for work. The mixture of ethnic groups and cultures make it difficult to define real "Britishness". It is quite difficult decide who is a Briton and who isn't because many immigrants are well integrated into the British society.

The stiff upper lip culture

The British are known for their stiff upper lip. This attitude used in adversity or embarrassment is still used. Bear in mind that this is a stereotype and that the British culture has evolved a lot and some things are more acceptable then they were before.

As a nation, the Brits tend not to use superlatives and may not appear lively when they speak. This is because Brits don't like to show strong emotions in public. They are generally not very open in conversations and they are not used to touching people or being touched unless they know the person well. Kissing is mostly often reserved for family members in the privacy of home. British prefer to maintain a few feet of distance between themselves and the person to whom they are speaking stepping into that space will make them take a step back. If you have insulted someone, their facial expression may not change and your insult will even be ignored and you will still be treated politely.

The British are very reserved and private people they do not discuss personal things very openly. Privacy is extremely important. The British will not necessarily give you a tour of their home and, in fact, may keep most doors closed. They expect others to respect their privacy. This extends to not asking any personal questions. Close friends do not ask pointedly personal questions, particularly pertaining to one's financial situation or relationships.

There is a proper way to act in most situations and the British are famous for handling to protocol. The British are a bit more contained in their body language and hand gestures while speaking. They are generally more distant and reserved than North and South Americans and Southern Europeans, and may not initially appear to be as open or friendly. Friendships take longer to build; however, once established they tend to be deep and may last over time and distance.

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British Etiquette and Customs

Meeting and Greeting

The handshake is the common form of greeting.

The British might seem a little stiff and formal at first.

Avoid prolonged eye contact as it makes people feel uncomfortable.

There is still some protocol to follow when introducing people in a business or more formal social situation. This is often a class distinction, with the 'upper class' holding on to the long-standing traditions:

Gift Giving Etiquette

The British exchange gifts between family members and close friends for birthdays and Christmas. The gift need not be expensive, but it should usually demonstrate an attempt to find something that related to the recipient's interests.If invited to someone's home, it is normal to take along a box of good chocolates, a good bottle of wine or flowers. Gifts are opened when received.

Business Etiquette and Protocol

Greeting: A firm handshake is the norm; there are no issues over gender in the UK. People shake upon meeting and leaving. Maintain eye contact during the greeting but avoid anything prolonged. Most people use the courtesy titles or Mr, Mrs or Miss and their surname. Wait until invited before moving to a first-name basis. People under the age of 35 may make this move more rapidly than older British. Business cards are exchanged at the initial introduction without formal ritual. The business card may be put away with only a cursory glance so don't be offended if not much attention is paid to it.

The British Communication Style

The British have an interesting mix of communication styles encompassing both understatement and direct communication. Many older businesspeople or those from the 'upper class' rely heavily upon formal use of established protocol. Most British are masters of understatement and do not use effusive language. If anything, they have a marked tendency to use ‘qualifiers' such as 'perhaps', ‘possibly' or 'it could be'.

When communicating with people they see as equal to themselves in rank or class, the British are direct, but modest. If communicating with someone they know well, their style may be more informal, although they will still be reserved.

Written communication follows strict rules of protocol. How a letter is closed varies depending upon how well the writer knows the recipient. Written communication is always addressed using the person's title and their surname. First names are not generally used in written communication, unless you know the person well.

E-mail is now much more widespread, however the communication style remains more formal, at least initially, than in many other countries. Most British will not use slang or abbreviations and will think negatively if your communication appears overly familiar.

Building Relationships

The British can be quite formal and sometimes prefer to work with people and companies they know or who are known to their associates. The younger generation however is very different; they do not need long-standing personal relationships before they do business with people and do not require an intermediary to make business introductions. Nevertheless, networking and relationship building is often the key to long-term business success.

Most British look for long-term relationships with people they do business with and will be cautious if you appear to be going after a quick deal.

Business Meetings

If you plan to use an agenda, be sure to forward it to your British colleagues in sufficient time for them to review it and recommend any changes.

Punctuality is important in business situations. In most cases, the people you are meeting will be on time. Especially Scottish people are extremely punctual. Call if you will be even 5 minutes later than agreed. Having said that, punctuality is often a matter of personal style and emergencies do arise. If you are kept waiting a few minutes, do not make an issue of it. Likewise, if you know that you will be late it is a good idea to telephone and offer your apologies.

How meetings are conducted is often determined by the composition of people attending: If everyone is at the same level, there is generally a free flow of ideas and opinions, if there is a senior ranking person in the room, that person will do most of the speaking.

In general, meetings are rather formal:

Germany

Location: Central Europe

Capital: Berlin

Population: 82 million estimated 2010

Ethnic Make-up: German 91.5%, Turkish 2.4%, other 6.1% (made up largely of Greek, Italian, Polish, Russian, Serbo-Croatian, Spanish)

Religions: Protestant 34%, Roman Catholic 34%, Muslim 3.7%, unaffiliated or other 28.3%

Government: federal republic

Languages in Germany The official language of Germany is German, with over 95% of the population speaking German as their first language. Minority languages include Sorbian, spoken by 0.09% in the east of Germany; North and West Frisian, spoken around the Rhine estuary by around 10,000 people, or 0.01%, who also speak German. Danish is spoken by 0.06%, mainly in the area along the Danish border. Romani, an indigenous language is spoken by around 0.08%. Immigrant languages include Turkish, which is spoken by around 1.8%, and Kurdish, by 0.3%.

German Society & Culture

A Planning Culture

Germans culture is famous for planning. This is a culture that favours forward thinking and knowing what they will be doing at a specific time on a specific date. Careful planning, in one's business and personal life, provides a sense of security. Rules and regulations allow people to know what is expected and plan their life accordingly. Once the proper way to perform a task is discovered, there is no need to think of doing it any other way. Work and personal lives are strictly seperated. There is a proper time for every activity. When the business day ends, you are expected to leave the office. If you must remain after normal closing, it indicates that you did not plan your day properly.

Hofstede categorizes the Germans as a high masculine and individualistic culture.

PDI- Power distance index: Power distance reflects the equality of people within the culture in the German culture.

IDV- Individualism: In the German culture there is a high individualistic attitude, everybody is expected to look after themselves and their immediate family.

MAS- Masculinity: The German culture is highly masculine this shows a gap between the women and men's values.

UAI- Uncertainty avoidance index: As stated before, Germany is a planning culture they tend to have a lot of rules and plan everything forward in case of sudden occurrences.

LTO- Long term orientation: The Germans show a short term orientation which is a culture based on tradition and fulfilling social obligations.

German Etiquette & Customs

Meeting Etiquette

Greetings are formal. A quick, firm handshake is the traditional greeting.

Titles are very important and denote respect. Use a person's title and their surname until invited to use their first name. You should say Herr or Frau and the person's title and their surname.

In general, wait for your host or hostess to introduce you to a group. When entering a room, shake hands with everyone individually, including children.

Gift Giving Etiquette

If you are invited to a German's house, bring a gift such as chocolates or flowers.Yellow roses or tea roses are always well received. Do not give red roses as they symbolize romantic intentions. Do not give carnations as they symbolize mourning. Do not give lilies or chrysanthemums as they are used at funerals. If you bring wine, it should be imported, French or Italian. Giving German wines is viewed as meaning you do not think the host will serve a good quality wine. Gifts are usually opened when received.

Relationships & Communications

Germans do not need a personal relationship in order to do business. They will be interested in your academic credentials and the amount of time your company has been in business.

Germans display great deference to people in authority, so it is imperative that they understand your level relative to their own. Germans do not have an open-door policy. People often work with their office door closed. Knock and wait to be invited in before entering. German communication is mainly formal unless you are told otherwise.

Following the established protocol is critical to building and maintaining business relationships. As a group, Germans are suspicious of hyperbole, promises that sound too good to be true, or displays of emotion. Germans will be direct to the point of bluntness. Expect a great deal of written communication, both to back up decisions and to maintain a record of decisions and discussions. You will be reminded of these discussions and decisions in a later stage.

Business Meeting Etiquette

Although English may be spoken, it is a good idea to hire an interpreter so as to avoid any misunderstandings. At the end of a meeting, some Germans signal their approval by rapping their knuckles on the tabletop. Germans do not clap their hands as a sign of approval. So do not mistake this as rude behaviour.

There is a strict protocol to follow when entering a room:

Business Negotiation

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Dress Etiquette

Business dress is understated, formal and conservative. Men should wear dark coloured, conservative business suits. Women should wear either business suits or conservative dresses. Do not wear ostentatious jewellery or accessories.

Strategy

The M2M market is growing rapidly and the technology within is evolving. RFI-Engineering needs to diverge itself within the M2M market. The company faces big competitors and needs to create an advantage over its competitors.

Looking at the multiple hypothesis that were made:

It shows in the research that all of the hypothesis I saw in the beginning were rightly stated. Looking at the research a conclusion can be drawn that RFI-Engineering:

In what way should RFI-Engineering change their company?

My suggestions are to specialize in the industrial segment and continue doing business in the out of band management.

The product is currently focused on out of band management and for it to be usable in the industrial segment it needs to have a different type of casing, for it to withstand harsh conditions. The reason the industrial sector is chosen, is because this would be the most reasonable sector. The energy sector will create partnerships with mobile phone operators and big M2M manufacturers, the car companies will do the same. But the Industrial sector is not dominated only by large manufacturers. Looking at the German and the U.K. market, the German market has a lot of opportunities in the Industrial sector and in the U.K. there are many services. Both countries are very progressive in terms of integrating technology that's why these countries are good to focus on. They weren't the early adopters according to Berg Insight, but there is a substantial upcoming growth in the adoption of the M2M technology. RFI-Engineering needs to keep in mind that the German and U.K. market have different cultures thus different ways of doing business. Therefore they should be aware that those clients cannot be approached in the same way. A good way to enter the German and U.K. market is by contacting the distributors that were mentioned in the distribution analysis.

An additional service feature what RFI-Engineering does not have is a platform on which multiple units can be monitored visually. Sierra Wireless and Digi International both have their own platforms and provides a steady income due to the subscription costs charged per month for usage of this platform. The platform makes the interaction with their M2M products friendly and easily accessible. Due to the subscription cost a different business model can be made for RFI-Engineering including stable monthly revenue instead of being dependant on once-off products.

If these factors are followed their will be a reasonable increase in revenue on a short term basis. In the long-term basis RFI-Engineering needs to be aware of their competitors and being distinctive by specialization, turning in to a company to which clients can turn to for their solution, expecting to receive a specialized M2M integration plan for their company.