CAS3701 Assignment 12 Due 3 October 2024

QUESTION 1

1. INTRODUCTION
Rhino Cellular Ltd (“RhinoCell”) is a South African based manufacturer and retailer of low-cost
smart phones. RhinoCell was founded in 2011 in response to the uptake of smart phones in the
South African market. The company quickly saw a market opportunity for a low-cost smart phone
that provides a basic version of features when compared to other high-end smart phones
manufactured in South Africa and other African markets. RhinoCell has a 31 August financial
year-end. The board of RhinoCell expects to authorise the annual financial statements of
RhinoCell for issue on 14 December 2023.
The key to RhinoCell’s competitive advantage is its locally based supply chain. RhinoCell
manufactures its products at the Maluti-A-Phofung Special Economic Zone (“SEZ”) in Harrismith,
Free State Province. The Maluti-A-Phofung SEZ is a key logistic link by road and rail to South
Africa’s economic and industrial heartland, with key links to Gauteng, the Port of Durban, and the
Bloemfontein-Cape Town route. RhinoCell sources its main materials from South Africa and other
African countries and employs workers from the Harrismith community. This strategy allows
RhinoCell to procure materials at competitive prices and pay lower wages to its employees, as
the cost of living in Harrismith is lower when compared to urban centres such as Johannesburg,
Durban, and Cape Town.
2. MARKETING AND SALES STRATEGY
The smart phone industry is dominated by a few international companies that manufacture their
products mainly in South-East Asia and the Americas. The strong expansion program by these
companies, coupled with the rollout of 5G internet, has allowed global consumers to make
increased use of the internet in their daily lives. RhinoCell has identified Sub-Saharan Africa as
an underdeveloped market for smart phones and believes that low priced smart phones are the
industry future, considering the affordability constraints that plague consumers in the region.
According to the Global Systems for Mobile Communications Association (GSMA), 49% of
consumers in the Sub-Saharan African region have access to 4G mobile technology, whilst only
17% of consumers have access to 3G mobile technology. The lack of penetration in the SubSaharan African region
provides
RhinoCell with a
strong
opportunity to
capture a
sizeable
portion
of the market.
RhinoCell’s Africa expansion strategy includes a newly developed smart phone, named
“EnduroPro94”, which has a 48-hour long battery life and will be capable of utilising 5G mobile
technology. The longer battery life is in response to the electricity challenges that affect most of
Sub-Saharan Africa. EnduroPro94 will be targeted at the lower end of the market. RhinoCell