GSM Chapter One
GSM Chapter One
By
SAMUEL, Ndaingiya
(IMT/16U/2176)
July 2023
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Since the mid-1990s, the penetration of mobile phones has been explosive. Whereas in 1997
only 215 million people were using mobile communication devices worldwide, by 2001 this had
grown to a massive 961 million, further growing to 1.16 billion by 2003. Today, Western Europe
exhibits the highest penetration of mobile phones (79%), followed by North America (48%) and Asia
(12%) (Kearney 2013). While the first text message ever was sent in 1992, the first commercial text
message first appeared in Europe in 1997 and in the United States around 2001. Over the last 20
years, texting has become increasingly popular in every primary age group. In this context the short
message service (SMS) has exceeded all initial expectations and become a great market success. In
2018, the total number of SMS messages sent globally totaled 1.78 trillion and rose to 7.6 trillion by
202022 (Hepburn, 2013).
This recent development in mobile communication technology, along with the rapid
proliferation and inherent characteristics of mobile devices, has made the mobile phones to emerge
as a new, potential tool for business activities (Mei & Yun 2018). In view of this development, Small
and Medium Enterprises (SMEs) are becoming increasingly interested in using the mobile
technology as a medium for their business operations (Chogi, 2017). The description of Small and
Medium Enterprises (SMEs) vary from country to country. However, most of the time the choice
whether or not a company is an SME is based on the number of employees, value of assets or value
of sales. In Japan for example, the new Small and Medium Enterprise Basic Law set the definition of
SMEs based on number of employees, capital size and industry. For the USA, it is 500 employees
and for European Union countries, it is 250 employees (Hallberg, 2011).
In Nigeria SMEs are described as any non-farm enterprise, formal or informal, with less than 50
employees, including sole proprietorships, part-time businesses, and home-based businesses (GoK,
2012). Though significantly less growth-oriented and productive (on average) than larger firms,
SMEs share a basic similarity with all enterprises; each combines investments in capital with some
labor (their own, their families’ or their employees) in the hopes of yielding a product or service
whose market value exceeds the cost of those inputs (Biswas & Roy, 2017). Evidence suggests that
some small and medium enterprises have begun using mobile technology to grow their businesses.
A mobile phone is a handheld pocket sized computing device with a small screen for output and
a mini keyboard or touch screen as an input device (Sarker & Wells, 2013). First generation mobile
phones allowed people to talk and listen to each other anywhere and anytime without the wire. The
third an fourth generation (3G/4G) phones allow people to see each other anywhere and anytime in
addition to exchange of speech (audio) (Rafael, 2003). Mobile phones are easily available to
everyone with key services being mobile calls, mobile instant messaging, M-pesa remittances,
Mobile bills payments; Mobile internet browsing and lately banking services (Arunga & Kahora,
2017).
GSM have become strategic weapons for enhancing business performance among SMEs. Indeed
Mobile phones offer them the opportunity to grow through the simplified business information
exchange, making it easier access customers, goods, services and other business opportunities. The
phenomenal success of mobile phones is attributed to its key features, such as ease of use, low cost,
message forwarding ability, and unobtrusive nature (Rao & Soumya, 2017). Pangani (2014)
mentions mobility, availability (anytime, anyplace), and personalization as important benefits of
mobile services. Mobile phones have changed ways and means by which business information is
received and transferred leading to more efficiency and performance (Chogi, 2017).
SMEs performance can be measured in two basic ways: relating to results (outputs or outcomes
such as competitiveness or financial performance) and focusing on the determinants of the results
(inputs such as quality, flexibility, resource utilization, and innovation). This suggests that
performance measurement can cab be based on financial and operational Performance (non-
financial) (Abraham, 2017). However performance as a proxy for competitiveness builds on the
universal notion that sustainable success of an enterprise is a function of its ability to deliver (in
absolute terms or relative to its competitors) more real value for its customers, without using more
factor inputs (also, in absolute terms or relative to its competitors). Generally, from the performance
perspective, the competitive effect of mobile phone derives from the effects that the mobile phones
have upon the performance of the factor inputs. In this regard, mobile phones can improve efficiency
and increase performance by different ways including, improving efficiency in business operation,
reducing transaction costs, and improvement in communication with customers (Devaraj & Kohli,
2013).
GSM increase efficiency of business processes such as ordering; transaction, delivery, inventory
control and accounting are streamlined and connected regardless of location (Elder & Rashid, 2019).
GSM enhance information and knowledge management within SMEs by facilitating immediate
connectivity to customers, suppliers and staff thereby improving small and medium enterprises
efficiency. At the same time allowing firms to store, share and use the acquired knowledge and
know-how within the firm. For instance customer databases with a history of client specific
correspondence help managers and employees to respond more effectively to customers (Esselaar et
al., 2017). The use of mobile phones: reduce transaction costs and among SMEs while increasing the
speed and reliability of transactions Example: real-time interaction reduces the time it takes to
negotiate, purchase and deliver orders (Frempong, 2019).
GSM improves access to business information within firms, thus enabling more effective and
more rapid decision-making by employees and managers (OECD, 2003). It also allows the SMEs to
communicate with its suppliers and customers without having to pay a visit to the individual
customer or small and medium enterprises. It also makes communications within the firm faster and
helps to make management of the firms’ resources more efficient (Shanker et al., 2013). The
effective use of GSM can help SMEs gain market share by facilitating the creation and delivery of
products and services to their customers and widening the geographic scope and access of potential
markets at the cost of less productive enterprises, which raise overall performance of SMEs. In
addition, the use of mobile may help enterprises innovate, for instance by helping them to expand
their product range, customise the services offered, or respond better to client demand (Jagun, Heeks
& Whalley, 2018).
1.2 Problem Statement of the Problem
SMEs still face the challenge of effective performance, largely attributed to many factors such
as: the lack of access to credit, inadequate information to make informed decision, the lack of
expertise, digital illiteracy, high cost of access to information technology infrastructure and high
taxation. However mobile technology is perceived as critical in harnessing business opportunities
and achieving high performance and growth. Thus, there is significant potential for mobile use to
increase SMs performance as GSM allow entrepreneurs to communicate at a distance and exchange
information instantaneously; to serve existing customers more effectively; check market prices and
to bypass middlemen in the marketplace but SMEs level of mobile technology usage remains low.
Without using mobile technology today, to obtain competitive advantages, produce high added value
products and processes and develop competitive strategies within a business, SME performance and
growth will continue being constrained.
A number of previous studies have focused on mobile use among business enterprise. For
instance Jensen’s (2017) in his research on the fishermen of Kerala, worked with five-year time
series data at three fish markets in coastal India and found that the adoption of mobile phones by
fishermen and wholesalers was associated with a dramatic reduction in price dispersion, the complete
elimination of waste, and near perfect adherence to the law of one price. Jagun, Heeks, and
Whalley’s (2018) examined the mobile’s role in mediating supply chains in the Nigerian market for
traditional hand-woven ceremonial cloth and found out that mobile calls at a distance reduce the time
of trades and replace costly journeys and that the use of mobile phones by traders better position
them to effectively coordinate with a wider range of downstream customers and to maintain a more
dynamic and responsive set of relationships with weavers. In Nigeria, there is a general notion in
which GSM can be applied in business; however limited effort has be taken to exactly determine the
effects of mobile phone services in enhancing enterprise performance and growth especially in the
SMEs sector. Hence this study sought to fill this gap by examining the Impact of GSM on service
delivery of registered Small and Medium Enterprise (SMEs) performance in Jimeta metropolis
1.3 Purpose Aim and Objectives of the Study
The general objectivemain aim of this study is to examine the Impact of GSM on service delivery of
registered Small and Medium Enterprise (SMEs) performance in Jimeta metropolis. Specific
Objectives are,. Tto:
i. Examine the effects of GSM on operation cost on Small and Medium Enterprises in Jimeta
Metropolis.
ii. Determine the effects of GSM communication on business efficiency of Small and Medium
Enterprises in Jimeta Metropolis.
iii. Establish the effects of GSM on marketing and sales of Small and Medium Enterprises in
Jimeta Metropolis
1.4 Research Questions
To guide the achievement of the stated specific objectives the following research questions are
formulated to guide the study.
i. What are the effects of GSM on operation cost on Small and Medium Enterprises in Jimeta
Metropolis?
ii. What are the effects of GSM communication on business efficiency of Small and Medium
Enterprises in Jimeta Metropolis?
iii. What are the effects of GSM on marketing and sales of Small and Medium Enterprises in
Jimeta Metropolis?