Chapter 1

Chapter 1. Country Profile

1.1 Geography and Climate.
Mongolia has located Eastern/Central Asia, it borders Russia to the north and the People’s Republic of China to the south, east, and west. The total land area is 1,553,560, the 18th largest country in the world.
Mongolia is also known as the “Land of the Eternal Blue Sky” or “Country of Blue Sky” because it has over more than 250 sunny days in a year. The symbol on the flag means letter “A” which was one of the alphabets they used in a long time ago, and color represents fire and sky. Mongolia is divided in 21 aimag/provinces, which its self-divided in 329 sums/district.
Ulaanbaatar has the lowest average temperature of any national capital in the world. It has an extreme continental climate with long, cold winters and short summers, during which most of its annual precipitation falls. Average temperatures over most of the country are below freezing from November through March and are about freezing in April and October. Winter nights can drop to around ?40 °C in most years, and in summer extremes reach as high as 38 °C.
1.2 History
In 209 BC a great leader called Modun united the people of Mongolia. This early state was called Hunnu. The Hunnu were a powerful empire and they were often at war with China. The Mongols has little inclination to ally with other nomadic people of northern Asian and until the end of 12th century, they were little more than a loose confederation of rival clans.
Then in 1162, the boy named Temuujin was born, in 20-year-old started emerged and managed to unite most of Mongol tribes. In 1189 he was given the honorary name of “Chinggis Khan”, meaning “universal king”. Under Chinggis Khan and his successors, the Mongols conquered a vast empire. They conquered China and Russia and advanced into Europe as far as Poland and Hungary. They also conquered Persia. However, the Mongol Empire soon fragmented after Chinggis Khan’s death, the empire was subdivided into four khanates (a political entity ruled by a khan) One of the khanates, Kublai Khan, established Yuan Dynasty, consisting of the Mongol homeland and China, and ruled from 1271 till 1368.
The Mongol court returned to its native land, however, centuries of internal conflict, expansion, and contraction brought them to fall into Manchu Qing dynasty. They conquered Mongolia in 1636, and for the next two hundred years Mongolia was ruled by the Qing Dynasty until 1911 but had to struggle until 1921 to firmly establish de-facto independence from the Republic of China, and until 1945 to gain international recognition.
Mongolia subsequently came under strong Russian and Soviet influence, in 1924, the Mongolian People’s Republic was declared, and Mongolian politics began to follow the same patterns as the Soviet politics of the time. After the breakdown of communist regimes in Eastern Europe in late 1989, Mongolia saw its own Democratic Revolution in early 1990, which led to a multi-party system, a new constitution in 1992, and the transition to a market economy.
1.3 Government Structure
Mongolia is a parliamentary republic. The Parliament is elected by the people and in turn, elects the government. The President is elected directly. Mongolia’s constitution guarantees freedom of expression, religion, and others rights. Mongolia has a number of political parties, the largest two parties known as the Mongolian People’s Party and the Democratic Party. Mongolian politics can be turbulent, with frequent changes in cabinet members and coalition partners.
The Great State Assembly (Great State Khural), which is a unicameral parliament of 76 members, which are elected for terms of four years. It elects the Prime Minister upon nomination by the President and confirms the Cabinet members upon nomination by the Prime Minister in consultation with the President. Although Mongolia’s President has a largely symbolic role, the president can block the Parliament’s decisions through veto powers, which requires a two-thirds majority of parliament to override. Mongolia’s constitution provides three requirements for taking office as president; the candidate must be a native-born Mongolian, be at least 45 years of age, and have resided in Mongolia for five years prior to taking office. The President is also required to formally resign his or her party membership.
On July 7, the new President was elected Khaltmaa Battulga, who was a former artist and first Judo Olympic Champion in Mongolia. During the election Battulga made ambitious pledges to reduce unemployment, free citizens of debt, and balance Mongolia’s trade dependence on China, he could solve pressing social issues. He will confront political reality, a semi-presidential constitution will significantly constrain what he is legally permitted to do with and without parliament’s cooperation.
Mongolia has not yet achieved the translation of its Constitution’s main principles into a clear, long-term vision for the nation, nor has it a cohesive set of medium and short-term policies assisting the development of one. Its institutions are generally characterized as inefficient, exhibiting weak institutional memory and a lack of coordinating ability. Participation in policy building, decision making, and leadership are characterized by a strong dominance of informal channels and networks. In fact, most decisions at different levels are heavily influenced by informal channels. So-called ‘Home Councils’ are examples of organized groups founded on broader kinship ties, exercising strong influence across political parties and groups using informal channels and networks, it same as to many members of parliament and business owners. It is common for inappropriate payments to be made to election candidates in every level of government, with leadership positions requiring additional payments.
The financial resources, networks and informal networks that are required to succeed in leadership positions and are weakening Mongolian governance systems, are also impacting upon women’s ability to stand for parliament.
In October 2014, the Mayor of Ulaanbaatar, in a public statement, noted that networks of informal channels improperly penetrating formal layers of power to the extent that non-transparent decision making has become an accepted norm, affecting authorities’ ability to act in the interests of the public and undermining the principles of democracy.
The overwhelming majority of media is owned by the private sector and politicians who have a direct influence on agenda setting and practice censorship over their own editors and journalists. External agents, such as Russia and China, are alleged to have undue influence over economic policy issues, including transport infrastructure and mining. Access to unbiased information is undermined, affecting democratic processes in Mongolia. Since Mongolia’s independence, the prevailing view has been that the majority of citizens not only accept but respect, the legitimacy of the nation-state. Also it same time gives the freedom to access all international websites and hardly any blocks, limitation to information.
1.4 People
The current population of Mongolia is 3,113,904 as for May 2nd, 2018 and ranked 137th in the list of countries by population.
The Government and the constitution both provide for freedom of religion, so more than 55% follows the Tibetan Buddhism and rest Shamanist, Christian and Muslim.
The official language of Mongolia is Khalkha Mongolian and is spoken by around 95% of the population. A variety of different dialects are spoken across the country, which mostly in the countryside. Today, Mongolian is written using the Cyrillic alphabet which same as Russian except Mongolians have two more letters “?, ?”, second Mongolian script which oldest one among of other alphabet existed in Mongolian history and the traditional alphabet is being reintroduced through schools.
The most frequently spoken foreign language in Mongolia is Russian, followed by English, though English has been gradually replacing Russian as the second language. Primary and secondary education last to 11-years. But from 2008-2009 school years, new first graders are using the 12-year system. As such, full transition to the 12-year system will not happen until the 2019-2020 school year, when the current first graders graduate.
1.5 Economic
Since 1992, Mongolia has transformed from a closed society ruled by a single party Communist system into an open society and a dynamic multiparty democracy. This transition has been accompanied by the gradual introduction of free-market reforms and relatively well maintained political stability. While improving overall relations with the U.S., Japan, and South Korea, Mongolia has also maintained strong ties with Russia and China. President Tsakhiagiin Elbeg-Dorj, whose Democratic Party coalition controls parliament, is serving his second term.
Mongolia is developing a country since 2013 has started experience high rate of economic growth. To this the development “Oyun Tolgoi” finding copper and gold being a big influence.
The last 20 years, Mongolia has transformed from an agricultural based economy to a resource-dependent economy. Like other resource-dependent countries, Mongolia has a highly volatile two-speed economy, those exposed to the mining sector experiencing increased real incomes, and those outside the sector experiencing a fall in real incomes. The challenge for Mongolia will be how it manages its resource dependency in a way that stabilizes the economy and transfers wealth in an equitable way.
The growth has allowed a large expansion in both recurrent and capital expenditure and continues to support the growth in nominal GDP. Mongolia became reliant on high rates of investment, and especially FDI-fueled economic growth, and would like a return to previously high rates. Two factors: 1) a dispute between Oyun Tolgoi and the Mongolian Government needs to be resolved, 2) there will need to be a sustained improvement in commodity prices.
Trade is important to Mongolia’s economy; the value of exports and imports taken together equals 87 percent of GDP. The average applied tariff rate is 5.0 percent. The judicial and regulatory systems impede foreign investment, and state-owned enterprises distort the economy. The limited availability of long-term loans and costly collateral requirements make access to credit a challenge for small and medium-sized firms.
1.6 Mining in Mongolia
Mongolia has rich mineral resources and exploitation of these has been increasing in the transition period to the market economy.
By definition of the Law on Minerals, mineral resources naturally occurring on and under the earth’s surface in Mongolia are the property of the State. Therefore, the State, as the owner, has the right to grant exploration and mining rights.
The State also has the right to own a certain percentage in a mineral deposit of strategic importance a deposit which may have a potential impact on national security, national or regional economic or social development or that is producing or has the potential to produce more than 5% of the total annual gross domestic product. If the deposit qualifies as a mineral deposit of strategic importance, then the State may acquire a certain percentage as follows. The State may participate up to 50% jointly with a private legal person in the exploitation of a mineral deposit of strategic importance where the State can prove that it has conducted State funded exploration and that the State funded exploration was used to determine the proven reserves. However, the legislation does not prescribe what form this equity interest might take and it is unclear what the drafters mean by “participate”. The percentage of the State share shall be determined by an agreement on exploitation of the deposit considering the amount of investment made by the State. The State may own up to 34%of the shares of an investment to be made by a license holder in a mineral deposit of strategic importance where proven reserves were determined through funding sources other than the State budget. The percentage of the State share shall be determined by an agreement on exploitation of the deposit considering the amount of investment made by the State.
The Mongolian government has identified a number of the largest deposits that have strategic importance for the country and where a development of the mining industry should be focused. Currently, there are fifteen deposits that have been classified as “Strategic Deposits”. These are currently held either by the State Property Committee, through established state-owned enterprises, or in some cases by the private sector. There is an addition of thirty-nine deposits under consideration for classification as “Strategic Deposits.”

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Chapter 2. Hofstede 5 Dimensions

This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.
China by the chart is 80, it’s a society that believes that inequalities amongst people are acceptable. The subordinate-superior relationship tends to be polarized and there is no defense against power abuse by superiors. Individuals are influenced by formal authority and sanctions and are in general optimistic about people’s capacity for leadership and initiative. People should not have aspirations beyond their rank.
In another hand, Mongolia is 18 which has a very low power distance score, meaning that equality across gender class and social roles are preferred a phenomenon which is rare for Asian cultures. Part of this may be traced back to Genghis Khan who was known for challenging social norms to promote his generals and successors based on competence and not a birthright. In ministry, a low power distance may mean that congregation power distance is more willing to voice their through and opinions and relate to ministry leaders on equal terms. This suggests that power-sharing is important and status differences are not desirable in Mongolian culture. Thus, guidance and direction might not be expected and Mongolians are less receptive to it.

The main issue affected by this dimension is the degree of interdependence that society supports among its members. This is due to whether the will of the people is defined in terms of “we” or “I”. Individualism is the about that a person’s life belongs to themselves and that they have the right to live and to act in they own opinion, to store and use the product of their efforts and pursue the values if they choose. Collectivism is the about that a person’s life does not belong to only themselves, but to the society or group of which they are a part, that they have no rights and that they must sacrifice his values and goals for the “greater good” of the group.
With 20 points, China is a multicultural and multicultural culture, which is a matter of people’s interests. Affordable services and incentives for family members, such as families, are provided at a discount. The commitment of employees, but not necessarily the organization of the organization. When relations with colleagues work with groups, they are sexually offensive or even hostile. Personal relationships dominate the work and the company.
For Mongolia 71 score for individualism is again relatively high for Asian nations, indicating that an emphasis is placed on individual rights and responsibilities, including the freedom and independence of religious belief. This suggests that it is important to be independent and self-reliant, which shows that they usually prefer to overcome their problems/crisis without taking or relying on others. Same time it because of the independent and self-reliant they look cold and selfish.
A high score in this dimension indicates that the society will be determined by competition, achievements, and successes, and success is determined by the winner or the best in the field – the value system that starts in the school and continues throughout the life of the organization. A low score or femininity in size means that the dominant values in society take care of others and about the quality of life. Women’s society is one where the quality of life is a sign of success and stands out from the crowd is not delicious. The main problem here is that it motivates people, wanting to be better (masculine) or to love what you are doing (feminine).
Looking at 66 scores, China is more a Masculine society which success oriented and driven. The need to ensure success can be shown by the fact that many Chinese will sacrifice family and leisure priorities to work. Service people will provide services until very late at night which one of a simple example like on the street people cook food or hairdressers like spare time is not so important. Another example is that Chinese students study constantly and almost always in a library which shows how much they care very much about their exam scores and ranking as this is the main criteria to achieve success or not.
But for Mongolia score 103 which is extremely high. This suggests that Mongolian culture emphasizes the importance of competition, aggressiveness, assertiveness, achievement, and material goods This again may be rooted in the warring of the Mongols, but instead of producing competition or disunity among churches and believers, ambitions and heroic spirit is a fitting asset in charring out the great commission. Also, it easily is related to individualism score.
Measurement Uncertainty Avoidance is related to how society is concerned that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings anxiety, and different cultures have learned to deal with this anxiety in different ways. The degree to which members of a culture feel threatened by ambiguous or unknown situations and created beliefs and institutions that try to avoid it are reflected in the assessment.
At 30 China has a low score on Uncertainty Avoidance. The truth may be relative though in the immediate social circles there is a concern for Truth with a capital T and rules, not necessarily laws abound. None the less, adherence to laws and rules may be flexible to suit the actual situation and pragmatism is a fact of life. The Chinese are comfortable with ambiguity; the Chinese language is full of ambiguous meanings that can be difficult for Western people to follow. Chinese are adaptable and entrepreneurial. At the time of writing the majority around 70% to 80% of Chinese businesses tend to be small to medium-sized and family owned.
But for Mongolia, 92 score on uncertainty avoidance is high, which indicates a preference for known, established methodologies, rather than new ideas, progress, and change. This is not surprising given the century-old traditions of nomadic life. Considering Russia’s even higher score which 95, years of a Soviet rule may be also had an influence. Missionaries should be aware of this and not be discouraged if possible changes cannot be made quickly. This suggests that change is perceived as undesirable, while policies and rules that facilitate stability are considered valuable.
This dimension describes how each society should maintain some links with its past, dealing with the challenges of the present and the future, and societies – priorities for these two existential goals in different ways. Normative societies. who value a low value in this dimension, for example, prefer to adhere to respected traditions and norms when viewing social changes with suspicion. On the other hand, those who are praised have a more pragmatic approach: they encourage thrift and effort in modern education as a way of preparing for the future.
In this dimension, China has 87, which means that this is a very pragmatic culture. In societies with a pragmatic orientation, people believe that the truth depends largely on the situation, context and time. They demonstrate the ability to easily adapt traditions to changed conditions, a strong propensity for saving and investing, thrift and perseverance in achieving results. In Mongolia, 41 scores mean a short-term oriented culture, which means that immediate concern often occurs here and now. Planning for the distant future, as a rule, is not so important, unlike its neighbors, Russia and China, where highly valued especially long-term financial planning and provision to family members. This suggests that their people look at life and participation in transactions from a short-term perspective.
Chapter 3. Business practices

During doing the business with different, one of most important thing to know is ethics of opposite country. Because of not paying attention to this failing the project or job happens frequently.

Both Chinese and Mongolians are similar concerning first introduction:
• They prefer working with friends and family
• It is better if you are introduced by a third party who knows both of you
• Building a strong and long term relationship is more important than terms of a contract
• Connections is really important and you should know beforehand whom is connected to whom

In China:
• A handshake is expected but wait for you Chinese counterpart to initiate it
• Greet people by saying their titles followed by their name
• Chinese will enter a meeting room by order of importance. The first to enter is the first one you should greet
In Mongolia:
• A firm handshake while keeping eye contact is expected
• Greet people by saying their titles followed by their name
• Address people by “Noyen” which means “sir” or “the respected” and “Hatagtai” which means madam
• The first person you should greet is the higher in the hierarchy of the oldest one

Same rules apply for both countries:
• Punctuality is important
• The first meeting has to be a formal one
• Men should wear a suit and tie; women should wear a pantsuit or mid-length skirt with a suit jacket or formal blouse
• Small talk is highly encouraged before getting into the meeting
• The meeting should be well-prepared in advance
• You shouldn’t say “no” or confront your business counterparts
• For Mongolians, the person who initiated the meeting must be the mediator
Business partners from both countries will expect to exchange business cards.
In China:
• Present and receive business card with both hands
• it should have an English and a Chinese side (this side should be on top)
• It is better if your business card as gold letters (gold means prosperity and riches)
• Don’t put it away and study a business card upon receiving one.
In Mongolia:
• Present your business card with both hands or the right hand
• Receive business cards in the same manner

In China:
• Strongly discouraged
• Gifts are considered bribery by the Chinese
• If you still want to give a gift, it should be done in private and not in front of everyone
• The receiver will not open the gifts in front of you but after
In Mongolia:
• Gifts are appreciated by Mongolians
• They should not be expensive as it would be
• seen as bribery
• The small gift should be something from where you are from (ex: a Yankee cap if you are from the New York)
• It should be wrapped
• The receiver will open the gift in front of you as a show of goodwill and appreciation

In China:
• Chinese like to have business meals
• Seat at the table are designated by order of importance you should wait for your counterparts to be seated before sitting yourself
• Too much food will be ordered, you are not expected to eat everything
• You might drink a lot during those business meals
In Mongolia:
• Mongolians are very generous people, they will likely host meals for you
• It is rude not to accept their invitations
• You should reciprocate when you can invite them
Chapter 4. Investment

The Mongolian legal system is based on the Roman-German (continental) legal system. The principal legal act is the Constitution (1992). In many cases, laws are worded widely or vaguely leaving latitude for alternative interpretations.
State bodies can issue regulations, some of which are considered as regulatory legal acts. Sometimes regulations contradict (are not in compliance with) laws. Authorities applying regulations are generally reluctant in applying more general provisions stipulated by laws and are more comfortable in applying more detailed/specific regulations.
The Arbitration Law of 2003 regulates arbitration disputes. In the drafting of contracts in Mongolia, in most cases parties are free to select international arbitration as the method for the resolution of disputes of certain types of international trade, contractual and non-contractual civil disputes. Mongolia is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which mandates that arbitration awards made within the Territory of Mongolia are enforceable in Mongolia and other countries that are parties to the New York Convention.
The Arbitration Bureau operated by the Mongolian National Chamber of Commerce and Industry, is sometimes regarded by Mongolian business people and government agencies that deal with foreign investors as politically not independent and unfamiliar with commercial practices, prompting a preference for international arbitration. However, support for binding international arbitration has not penetrated local Mongolian agencies responsible for executing judgments.

In general, Mongolian law does not discriminate against foreign investors. Foreigners may invest with as little as USD 100,000 cash or the equivalent value of capital material (office stock, structures, autos, etc.).

Mongolia passed the Law On Strategic Entities Foreign Investment (SEFIL) in May 2012. The intention of the law was to regulate foreign investment in entities of strategic importance (mining, finance and banking, media and communications sectors). The law specified that if a foreign investment in those entities exceeded a threshold of 49%, such investment would need the Parliament’s approval.
However, in less than a year, i.e. in March 2013, the Parliament approved amendment to the law whereby investment by foreign private companies in “strategic entities” would no longer need the Parliament’s approval.
The possible reason behind this amendment could be the recent drop in the volume of foreign investment in Mongolia. According to the Bank of Mongolia, the foreign direct investment (FDI) in Mongolia decreased by 58% as of February 2013 as compared to the same period in the previous year.
As of December 2014, FDI steadily decreased by 76% as compared to the same period in the year 2013.18
Further, the SEFIL was cancelled following the issuance of the new investment law.

In October 2013, the Mongolian parliament passed the Investment Law and the Law On Implementation of the Investment Law (effective from 1 November 2013). The purpose of the Investment Law is to protect the legitimate rights and interests of the investors in the territory of Mongolia, establish the common legal guarantee for investment, support investment, stabilize tax environment, determine the powers of the state organizations, and rights and obligations of the investor and regulate other relations concerning investments.
The Law applies to both domestic and foreign investors that had made investment in Mongolia. Investment incentives provided by Law are divided into tax and non-tax incentives. Tax incentives include exemptions from tax, tax credits, possibility to use accelerated depreciation for tax purposes, tax loss carry-forward and deduction of employee training costs from taxable income. Non-tax incentives include favorable conditions such as longer period to possess land, incentives for conducting operations in free trade zones and technology and science parks, increase of quota of foreign employees, simplified visa arrangements etc.
The Law also introduced “Stabilization Certificate” to make more stable tax environment in Mongolia. By obtaining a stabilization certificate, investors can stabilize applicable rates of the following taxes:
• Corporate income tax;
• Customs duties; ?
• Value-added tax;
• Mineral royalty tax. ?
The holder of a stabilization certificate will stabilize tax rates for period from five to eighteen years depending on amount of investment, industry of investment and geographic location of investment in Mongolia (Please see Appendix B for details). Under valid period of this stabilization certificate, investors will also have the right to apply effective tax rates provided in general legislation if such rates are more beneficial for investors. The criteria of issuing a stabilization certificate are:
• The total investment amount specified in the business plan and feasibility study reaches thresholds specified in the law; ?
• Environmental impact assessment should be carried out; ?
• The investment should create new permanent jobs; and ?
• The investment should introduce innovative technology. ?
Investors who made investment in tobacco and alcohol related activities cannot benefit from tax stabilization. If certain conditions are met, the stabilization certificate period may be extended by 1.5 times for some projects. The conditions are: ?
• Produce products that substitute for imported products or export -oriented which are important for the long-term social and economic development of Mongolia; that will require investment of more than MNT 500 billion; ?
• Have development period of more than 3 years; and ?
• Produce value-added, processed products for export. ?
In addition to above, the law provides for incentives with respect to customs duty (exemption) and value added tax (zero rate) on imported equipment and machinery during construction period of specific projects, as below: ?
• Construction of factory for processing construction materials, petroleum, agricultural products and products intended for export;?
• Nano, bio and innovation technology plant construction;
• Construction of power plants and railroads.
The Law on Implementation of the Investment Law specified that investors, who previously invested in Mongolia and meet the conditions to obtain the tax stabilization certificates, can also apply for the tax stabilization certificate. The certificate can be obtained based on the investment amount made on projects for the previous 5 years from the date of enforcement of the Law on Investment and this investment amount should be confirmed by the audited financial statements.
For those investors who already have in place investment agreements with the Government of Mongolia in accordance with the old Foreign Investment Law and Law on Minerals, the effective investment agreements will stay in force.

Chapter 5. Tourism Industry

Tourism demand in Mongolia is increasing year by year, as tourism is important for the Mongolian economy. In addition, the depreciation of the tugrug is cheaper and more attractive for tourism products. The richness of the country is one of the major growth factors in the tourism market. According to recent reports by the World Tourism Travel Council (WTTC), the tourism sector contributed almost 4% of GDP. The direct contribution of the plant directly or indirectly is equal to 9% of GDP of Mongolia.
In 2011, the sector invested $ 400 million. According to the National Tourism Authority of Mongolia, this year half a million tourists arrived. However, the government plans to increase up to 1 million by 2020. Historically, the tourism sector constituted 30% of GDP. In other emerging economies, there are many countries where the economy is more dependent on tourism. In addition, the tourism sector will have a significant impact on the labor market. Therefore, the importance of tourism in Mongolia should not be overlooked.
Successful participation and involvement of government, non-governmental organizations and the private sector for the purpose of developing Mongolia as a global tourism hub. Over the years, tourism has shown steady growth over 15 to 25 years, and hospitality and service quality is improving.

5.1 Tourism sector
The unique culture of Mongolia, the ancient hospitality of Mongolia, the beauty of nature, rich animals and vegetables are attracted by tourists. Since the transition to the Mongolian market in 1990, tourism has become an important part of the country’s development. It has become an important factor in integrating Mongolia into following the global trends of globalization. Mongolia’s tourism sector is steadily growing over the past 15 years, currently over 534 private companies are operating in the sector, of which 60 are foreign. The number of tourists arriving in Mongolia is increasing year by year. About 12,000 people are involved in tourism.
Most tourists come from Japan, France, England, South Korea, Germany and the United States. Mongolia is a favorite tourist destination because of its vast steppe, hills, deserts, unique culture and history. There are a number of opportunities to invest in the tourism sector within the government’s privatization program, including hotels, camps, and management that meet international standards.

5.2 The policy of the Ministry
The Government of Mongolia considers tourism as a priority sector as a great opportunity to contribute to socio-economic development. Thus, the government has taken steps to invest in the tourism sector and to increase private sector participation. Currently, there are approximately 700 tour operators, 350 hotels, 375 tourist camps and 65-star hotels. Investments need to be created for the tourism industry. The government is working to partially finance mining revenues from the part of the International Airport financed by the country, which will play a key role in the development of tourism and the improvement of domestic links.
Hopefully, Mongolia will receive 1 million visitors per year by 2020. The number of people arriving in Mongolia is increasing, with the number of tourists increased by 11% and revenue by 30% over the last three years. However, experts believe that the Government of Mongolia will need more action and investment to increase the tourism industry by 2020 to achieve 1 million annual foreign tourists. As a result of the strengthening of the Mongolian economy, tourism is expected to flourish, with the result that tourism will create a favorable investment climate.
There is a need to take major measures to increase the number of international visitors to Mongolia. These measures should focus on improving the current situation. In order to understand the current situation as compared to other nations, the Tourism Travel Competitiveness Index is a benchmark and can offer future solutions. According to the following index, Mongolia’s tourism infrastructure is ranked 116th. Infrastructure is a bad infrastructure that makes it difficult to attract foreign tourists in Mongolia. So increasing the number of 4-5 star hotels in UB helps improve your scores. The following figure shows that the number of 4-5 star rooms is expected to grow to 1,300 in 2010 from 1400 to 2020.
In addition, spending on business travelers is 60 percent higher than leisure travelers, and the number of entrepreneurs will increase significantly. And they spend four times more than their vacationers. At the same time, business travelers do not have leisure time during summer. So they will help to increase the use of this sector.

5.3 Disadvantages of the sector
There are several disadvantages in the country that are developing more rapidly in this sector. These include:
Due to heavy and long winter seasons, the tourist season is concentrated in June, July and August. Although the small breeding season (from early June to June to June, from mid-September to mid-October), it is unlikely that tour operators should be open during the main season. The high cost of cold weather is limiting the way to attract tourists by extending seasonal times and price promotions.
Limited access to international aviation is a barrier to tourism development. The main grievance of travel service providers in Mongolia is the limited number of flights (high-cost air transportation without national air transport policy). Weather deviations (particularly in the spring and autumn), seasonally scheduled changes are related to international access. Some of these issues will be resolved after the completion of the international airport. Because the frequency of the flight increases 3-4 times. In addition, increase the number of business customers.
There are no symbols and tags, and this may be another way of using the existing earthwork and enhancing its security. Multiple machines will leave their existing roads, which will have a negative impact on the environment. It sometimes takes into account the condition of the road and it does not know the consequences of such behavior among local drivers and tour operators. Improve local transportation security, better use of GPS equipment, improve mobile communications, and improve search and rescue services. The survival potential of domestic service providers is especially advantageous for growth, especially in emerging market markets.
Quality of service is ambiguous. On the one hand, there is no public policy or sector-oriented guidance that will support quality standards or contribute to the preservation of the standards of tourism facilities. On the other hand, there is little understanding of what kind of quality and service culture are. In some cases, it may explain seasonal and rapid turnover of workers in this sector, relatively young and inexperienced laborers (mostly young people of students or colleges) and temporary characteristics of employment in this field. Tourism is a step forward for young people interested in international language and international education. The competitiveness of human resources with mining companies is worsening in comparison to the average salary of $ 150 tourisms.
Education and education of the tourism sector do not meet standards. All professional service providers do not rely on their own curricula and rely on the knowledge gained by formal schools. In order to improve the situation, the ministry’s leadership will help improve industry standards.

5.4 Possible solutions for the problems
The greatest obstacles for the sector are related to the productivity of the sector. To increase productivity, this sector will increase spending on this sector. This sector includes 1. Increase the availability of bandwidth. 2 Increase the business traveler 3. Improve the level of service
At the same time, the government should do the following: 1. Create industry directives. Travel budgets spend more money on tourist infrastructures, such as historical monuments and museums. In any case, the government pays more attention to the tourism class in Mongolia and seeks to increase productivity for each cluster.
IFC is an example of investing in the sector
Since 1956, IFC has invested 2.6 billion dollars. The USA. 260 projects in 89 countries (including syndicates); More than half of this investment falls on the countries of the International Development Association (IDA) from the world’s poorest countries.
The hotel plays an important role in the development and development of tourism and business infrastructure. In addition, the hotel creates jobs, raises tax revenues, increases foreign currency earnings and opens up opportunities for small businesses. Being able to promote local, regional and national economic growth and contribute to poverty reduction, IFC actively participates in hotels and tourism. Their commitment is to protect the environment, preserve cultural heritage, preserve cultural heritage, preserve cultural heritage and increase the interests of historical significance.

5.5 IFC’s investment in Mongolia
Shangri-La Ulaanbaatar
• Business: Shangri-La Hotel is a luxury hotel and resort in all corners of the world.
• Variety of markets: this is the first hotel and shopping center in Mongolia, which promotes the development of business and tourist infrastructures in Mongolia.
• IFC financing: a loan of $ 50 million.
• Impact of development: the project aims to improve hotel services and create direct and indirect jobs to meet the needs of a five-star hotel in Ulaanbaatar. It will also support SME support, including the construction and operation phase, as well as labor and materials from local sources of materials and services, including the procurement of goods and services. In addition, the Shangri-La hotel in Ulaanbaatar offers a positive signal to foreign investors planning to invest in Mongolia.
The project hopes to increase productivity:
1. Professional level high
2. International degree
3. Quality of construction.

5.6 Advantages of Mongolia
Mongolia has many advantages over many other countries, so the tourism sector has vast potential. Mongolia has the advantage of unique history, culture, nature, and even weather as you know it.
However, these advantages should be to investigate and inspire foreigners in foreign countries, especially in Southeast Asia. One good example is Hokkaido’s brand of success in Hong Kong, Singapore, and Southeast Asia. It is also important to learn how to attract these travelers by learning more about Hokkaido.
In addition, some deficiencies can be considered as an advantage. For example, poor infrastructure is one of the biggest challenges in the industry. Quality road networks and other supporting infrastructure impede the acceleration of tourism, but limited infrastructure is not considered a deficiency.

5.7 The tourism law
The Mongolian Tourism Law was approved for the first time since May 5, 2000, when Mongolia was transferred to a market economy. To regulate the relations between the state, citizen, and business entities in the tourism business. The law defines punishments and penalties for the violation of this law by tourism, responsibility, state obligations, tourism organizations, human structures and tourism-related tourism sectors related to the state administrative and governing body of the tourism sector and infrastructure development. This creates a favorable legal environment for further development of the tourism industry. The favorable tax deductions and deductions in the tourism sector also apply to the tourism sector that creates favorable investment conditions. More information can be obtained through the Ministry of Railways, Transport, and Tourism and the Tourism Council of Mongolia.

SUMMARY: The first chapter of the book talks about on how communication being an important instrument to figure out how a message will reach the other party. We have to think about even the smallest message, it will be delivered whether you like it or not. The most essential part in communicating is focusing on the possible candidate than the product itself. With this, the selection process is much easier and uncomplicated. In advertising and marketing, it is important to convey your message clearly and on-point.
CONCEPT: The first chapter of the book talks about positioning.

COMPANY: Happy Skin
STRENGHTHS AND WEAKNESSES: Happy skin’s strengths are positioning their brand as skin care and makeup in one and they use local endorsers to strengthen the company’s name as a local brand. For the weakness, they are not engaging with different promotional platforms to advertise their product which made them not known to some people.

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SUMMARY: The second chapter of the book shows some interesting facts that can be seen that support their argument about an over-communicated world:
– America consumes 57% of the world’s advertising.

– 30,000 books are published in America annually.

– 98% of all American homes have at least one television set.

– The average American family watches television more than 51 hours a week.

– 5,000 new products are introduced into the American market each year.

This shows how using different advertising platforms are important in communicating with consumers to have an effective and convincing message.

CONCEPT: The second chapter of the book talks about communicating using different advertising platforms and how people respond to it.

COMPANY: Ginebra San Miguel
STRENGHTHS AND WEAKNESSES: Ginebra San Miguel is first ever Philippine gin and the largest selling in the world, they use strong marketing communication programs to persuade people to try their products.

They are losing their international assets.

SUMMARY: The third chapter of the book talks about how being first into a person’s mind is beneficial for a firm. Having this advantage over competitors will put you in a good position to compete with other products. For example, Coca Cola was the first when it comes to cola; they have this advantage of being number one when it comes to this industry. It is hard for other competitors to keep up and try to beat the top brand.

CONCEPT: The third chapter of the book talks about positioning strategies
STRENGHTHS AND WEAKNESSES: Alaska milk is a truly Filipino product and was first manufactured in the Philippines.
High dependency on imported raw materials.

SUMMARY: The fourth chapter of the book talks about over-communicated world and how people tend to rank brands like using a series of ladders. It is determined by the brand’s equity to consumers and how they positioned their brands. Companies are competing towards each other to get the top spot, but in the end big companies win and the other party lose. The book stated an example for car rental industry, Hertz might be the top of the ladder to some people while Avis is the second and National at the third spot.

CONCEPT: The fourth chapter of the book talks about product category
COMPANY: Datu Puti
STRENGHTHS AND WEAKNESSES: Datu Puti offers a wide range of varieties that makes people buy their products.

They are not engaging with different marketing communication programs that would thrill the consumers.

SUMMARY: The fifth chapter of the book states the importance of knowing when to stop trying and when to quit. A company has to face the truth and accept they cannot go anywhere when they are losing the competition. In the book, they used IBM as an example of how to compete against a big company in an industry where competition is really tough. Firms can take this as an advantage where they take the position they already have in the minds of customers, this is the best strategy in this kind of situation.

CONCEPT: The fifth chapter of the book talks about positioning
STRENGHTHS AND WEAKNESSES: Lucky Me advertises their products well, they already established their brand to the market.
They only have few variants of their products.

SUMMARY: The sixth chapter talks about being the number one company with the highest market share in an industry. It is much easier for a firm to stay at the top of the competition when it comes to maintaining your position rather than climbing your way to the top. Being the leading company does not guarantee a permanent position and being complacent towards a competitive field will not work. You will just end up losing the game and lose the things you worked hard for. Firms should understand that the power of the product is the essential part of the firm not the firm towards the product.

CONCEPT: The sixth chapter of the book talks about market leader
COMPANY: Globe Telecom
STRENGHTHS AND WEAKNESSES: Globe Telecom is a market leader in the Philippines when it comes to telecommunications.

Globe has weak wireless signals that harm their brand.

SUMMARY: The philosophy “bigger and better” must be avoided. In the book, they called it “Cherchez le creneau”, which means to look for the hole. You must fill that hole to not fall into the trap that you tried to fill to be perceived as better than others. Under market positioning, they are classified as the leader, challenger, follower and nicher.

CONCEPT: The seventh chapter of the book talks about perception
COMPANY: PenshoppeSTRENGHTHS AND WEAKNESSES: Penshoppe is able to expand from designed shirts to clothing lines and even personal care products.

They use international models to have a perception to Filipinos because they tend to think that when a brand is endorsed by international artists, the products are good quality.

SUMMARY: The eight chapter of the book talks about on how you can reposition your brand, basically on how you can replace an idea in the first place into the minds of the consumers, to enter a new idea or replace it. Thus, indeed you must give out a factual and convincing argument to them in order for them to be convince. Moreover, the chapter talks about the repositioning of Aspirin, Lenox, American Vodkas, and Pringle’s. From the book Aspirin move out from the minds of its customers because of the advertisements of Tylenol which directly attack Aspirin, that in order to do a great repositioning strategy you have to say something about your competitor’s product that may cause for the consumers to change their perception about it. It was also talk about that it is ethical and legal on using repositioning. The answer was yes, they are legal but however there is a problem that in the comparative advertising where you differentiate you brand among your competitors, it is not against the law and nor should it be, but it makes as a practice it seems to be in a mockery way.
STATEMENT OF THE CONCEPT: The chapter eight of the book mainly talk about the repositioning strategy of your brand.

COMPANY: The company that uses this strategy is SCPG Asia Pacific in repositioning their product.

STRENGTHS AND WEAKNESSES: The company SCPG Asia Pacific use the repositioning strategy onto there product, which there primary product is the Perla Laundry Soap, first of Perla is a soap mainly use for your laundry, thus there strength on having this laundry soap due to that it is a coconut-oil based they used this advantage to reposition there product that this soap can also be used for the face and to the body because it is again coconut-oil based. From that consumers heard of this and due to curiosity, they have used it and from that the company SCPG Asia Pacific have increases their sales. However, due to the increase threats of competitors in the market which is rather bigger than them it lowers their market share because they only produce Perla Soap as they don’t innovate through past years and their competitors keeps on producing different variants of their soap.

SUMMARY: The chapter nine of the book talks about the power of a name that can increase your products awareness from the prospects. It is said that naming is what hooks a brand to differentiate you from your competitor, thus this is the most important decision that you have to take along the way if you want to start. Which is in today’s generation the name you should pick must be appealing because your product won’t work if it has say-nothing name in the market, not like before name of a brand is not really that important. Thus, a good name of a brand is the best insurance that you can have for a long-term growth and success. However, due to timing your brand can work if its name doesn’t have any meaningful background especially if it is you are the first in the business people will easily remember you. Moreover, a negative name can rather be positive sometimes.

STATEMENT OF THE CONCEPT: The concept of the chapter mainly talks about branding or naming your brand to be to introduce it to the market.

COMPANY: A company which I can say that have a applied this thing when naming their brand is the Silver Swan Manufacturing Company, Inc. because its name was derived from its original owner Sy Bun Suan. If we will apprehend the name itself, we would be confused because what is this product all about when we are not familiar with the brand, we won’t know that it is a condiment product. Moreover, the company actually named their product in a timing because there is the first branded soy sauce in the condiment industry that why people where easy to be aware of the product.
STRENGTHS AND WEAKNESSES: With regards of the strengths of Silver Swan Manufacturing Company, Inc. on how it succeeded in the branding of its name, their strength was there brand name was easily associated that it is a Filipino brand, also they are the number one brand of soy sauce in the Philippines, they also made themselves as high in awareness of the consumers when they make purchase of their products in the market. The branding had made them successful through out the years and even up to this day Silver Swan is the fourth most brought in the Philippines as based on Kantar Worldpanel survey. Moreover, the weaknesses of Silver Swan
SUMMARY: The chapter ten of the book tackles about the shortening, using initials, syllables, or short handing a brand name. When there is a choice of word that you want to put up or even a set of initials, it must be in phonetic length which can employ a speech of sounds. But usually companies today gone through a lot of things when they go to this phase that in order for them to stay out of trouble, they make sure of looking the name right but without considering it’s sounds it produces in the words it creates. Moreover, this chapter also talk about on how shortcuts of words doesn’t lead straight to success because first a company must be successfully well known first before it will shorten its branding. Also, the chapter talks about the mind works by the ears or through it. As this thing is the most useful concept idea. Thus, through by it we tend to hear advertisement program of other brands when they play with sounds that make us remember them, thus in the book it was seen that using visual program sometimes can create distractions.
STATEMENT OF THE CONCEPT: From this what I can derived from the chapter is the concept Rebranding, because as you only use initials on your brand name people especially on a specific place you are targeting, they can easily be aware that it is you brand and you rebrand your name because you feel that it can be much more attract customers.

COMPANY: The company which have done this strategy is the company Globe Telecom from their product TM, which people now associate them as the “Republika ng TM”, they renamed there brand in 2005 from mainly called Touch Mobile, which only few people only know because TM on the other hand is much easier to understand and the awareness of the people by this carrier is high. The company which have done this strategy is the company TM, which people now associate them as Re
STRENGTHS AND WEAKNESSES: The strength of the company of Globe Telecom using to rebrand their product TM has been successful as today it is one of the leading cellular service. As TM before is launched to be called Touch Mobile and have gone through a lot of rebranding since then as it is through that shortening doesn’t lead to straight success. Globe Telecom launched TM to serve as a value pricing for the people who are on the middle-income market, their strength is that TM offers a much more affordable promos where consumers kept on coming back. However, the weaknesses of the company as TM rebrand there for a few times is that what if they are still going to rebrand it in the future and people might not be used on calling it in its new way.

SUMMARY: The chapter eleven of the book tackles about the
COMPANY: The company Universal Foods Corporation on their ketchup products.

SUMMARY: The chapter twelve of the book tackles about on how line extension is significant is, when taking an established product name and using it to come up with a new one. Than when introducing a new extension, you must consider on how your customers will see it because as they perceive you as a high quality, therefore you produce a new product line which is in a good quality or even better. Rather the rationale changes when introducing a new line extension of a product which in the same category where you are adding it. Moreover, if you have a generic brand name, you cannot risk ignoring it, thus you must promote where its strategy is at. Which can conclude that the strength of a generic brand name in the market is that it is close with the identification with the other product itself. However, when the line ex-tensioning is not working you can revert and use reverse line extension which is about broadening the base of your product offering where you can easily notice a product with the same packaging a label thus it changes it application process when using the product.

STATEMENT OF THE CONCEPT: The concept about this chapter is about line-extension of products that you are going to put in in your category
COMPANY: The company that uses this line-extension is the Del Monte Philippines who is a a company in the Philippines which is in the packaged food industry and extends is product extension in producing a new product line in the market.

STRENGTHS AND WEAKNESSES: Del Monte is known for producing the pineapple drink which became their strength because this is their famous product that is nutritious and fresh and throughout the years, they kept on adding a new line-extension of the product which lead them to add a pineapple juice which is a heart smart to target different segment. The weaknesses however of the Del Monte brand is that they have not identified the problems and challenges of the new entrants in the segment, also the inventory of their product depends on the life cycle of there primary raw material which is the pineapples.

SUMMARY: The chapter thirteen of the book tackles about the short-term and long-term with regards to their advantages and disadvantages of a line extension. It is an advantage that the reason for line extension is with its short-term goals. However, there is a misinterpretation that might happen when your first announcement or statement about your product is wrong, people could be confused and be distracted. The chapter also talk about the long-term disadvantages that might happen in the run. It is an easy come and easy go for these products line-extension names are however forgettable as they have no independent positioning in the minds of the consumers, they are only a connecting branch of its own main branch. To continue on to act one is a big success, or a big breakthrough when you find a gap you want to fill in or it can result brilliantly.
STATEMENT OF THE CONCEPT: The concept in this chapter is still about the line extension or we can now say the product concept or innovation.
COMPANY: The company that uses this strategy is that the Davenben Enterprises Corp. which is known for their product Memory plus a natural memory enhancer.
STRENGTHS AND WEAKNESSES: The company Davenben Enterprise Corp. strength was is that there are primary known in the Philippines as produces a medicine for memory enhancer for kids which is the Memory Plus, however through the years they added and introduce their Memory Plus Gold which now facilitates learning, improves ones learned behavior and delays and also added some new benefits that you van received when take. But there was a weakness on their product on the first product they had which is did not succeed because their Memory Plus Gold product was much more known due to the target market. In their first product they targeted children which parents are the one who will purchase and their perception on it is that what if it is going to had a side effect on their kids especially on a young age. In addition, kids’ memory are still good because they are still young.
SUMMARY: The chapter fourteen of the book tackles about the approach Monsanto. First of we can indeed position anything it can be a person, product, place, and even a politician. Moreover, with regards to name there can be a problem if you want to position your company to what it should it be really is, thus there is risk in it. There should be a stand for something, that if you stand to be serving or producing quality your company has the tendency to successful and having a successful company means to having a better people that comes with it other than small companies. Next to it is with diversification of your company but in order to succeed on this your prospects must rather have a view on not only what you offer but what you do in the industry. In addition, a company can gain more profitability when diversifying. Moreover, the Mosanto approach where if you want o start on a good place you must first have a clear and concise of what your company is really is alongside with your mission and vision, and also by acting through it. These chapter tackles about the product leadership, business leadership, and industry leadership.
STATEMENT OF THE CONCEPT: The concept in this chapter is about the diversification of your brand from its competitors.

COMPANY: The company that uses this kind of strategy is the Suyen Corporation on their brand Bench/.

STRENGTHS AND WEAKNESSES: The brand bench have been successful through the years as they continue to diversify their product offering and offers a wide variety of product in the market. They are known for apparel industry, cosmetic or beauty product, to salons, and even a restaurant their newest flagship store. From these Bench have succeeded in the market and continues to penetrate the Philippine market in our country. However, their weakness was that as they continue to enter international operations they must increase there quality of product because they are now competing with the international brands in the market.

1.0 Overview

Next chapter provide the background of the survey, the exposure of the problem, the research objectives, the research questions and the importance of the study. This will provide a better understanding on the smartphone in general, local and global view. It will also provide how competitive this sector is and how it influences people’s daily lives, particularly university students, which is our goal of this research.

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In the field of research, we have done our research on the invention of smart phones in general and how it has affected society in general. We also investigate purchasing behavior in general. The declaration of the problem is related to the objectives of the survey and to the research questions. This study can be used as a reference for smart phone developers, as target university students as our respondents and are the future main users of smartphones.


Smartphone was born in 1992, invented by IBM, which was nicknamed “Simon”. The features I had were calendar, address book, calculator, e-mail service and a touch screen. At that time it was very expensive, $ 899 USD, but not many can afford it. In 1996, Nokia launched a series of smartphones that were combined between a cell phone and a PDA. The real smartphone that first has an all-in-one device is Ericsson, R380. As shown in the figure, the phone can be opened and closed, inside a touch screen, using the Symbian operating system. Nokia has also started with the first camera phone and the Wi-Fi phone, which is called 9500.

In 2002 alone, the smartphone revolution began when Blackberry entered the industry, providing its users with email services as well as Palm Treo and QWERTY keyboards. In addition to the Blackberry, there is also the Ericsson P800 model. These phones incorporate new features such as MP3, camera and wireless technology, which lead to the popularity of exchange email. More information came in 2005, Sony Ericsson launched the N series for entrepreneurs due to their computer skills. In 2007, Steve Job, Apple’s former CEO, launched the iPhone, which changes the idea of ??smartphones in people’s minds. Android, which is an open source operating system released by Google, Intel, HTC and a group of other developers in 2008. It is a solid operating system against iOS as it has become one of the largest users operating worldwide. world in 2012.

There are many brands in the industry of smart phones such as Nokia, Samsung, Apple, Sony Ericsson (now known as Sony), HTC, etc. It has the support of different operating systems.

Spokespersons: John Koetsier (2013)

According to John Koetsier (2013) at (VB), Android has managed to capture about 70% of the global smartphone market share, while Apple has reached only 20% and the rest are others. In the articles, smartphone sales increased 38% in the final quarter of 2012, reaching 217 million units worldwide, surpassing 700 million, based on a new report from Strategy Analytics. Of that number, 68.3% of smartphones use Android as an operating system. IOS has only about 19.4% as an operating system. Neil Mawston, who is chief executive officer of Wireless Device Strategies (WDS), is a representative for the development of policy, insights and stories for media operators, has seen vendors, computer makers, investment banks, PC service providers , software vendors and media companies around the world. It is a recognized authority in the global trends of mobile telephony. (Anon) issued a statement, “Android is clearly the undisputed leader in the smart phone industry at the moment.” (Koetsier, 2013). For other competitors, it’s a matter of being able to grow more and see Android and IOS as competitors as a learning role.

The best operating systems for smartphones, expected market share and CAGR, 2012-2016

Smartphone OS
2012 Market Share
2016 Market Share
BlackBerry OS
Window Phone

Spokespersons Dan Grazino( 2012)

Based on the article by Dan Grazino (2012), in 2012, in the best smartphone operating system, market share forecast and compound annual growth (CAGR), 2012-2016, Android is expected to grow in CAGR 2012 – 2016 of 16.3%, while IOS, grew by 18.8%. The only competitor that these two operating systems should not ignore is Windows Phone, which is expected to grow by 71.3%, taking control of the smart phone industry, since Windows has left a mark in the Internet industry. smart phones Research conducted with the International Navigation Company (IDC) states that “the smartphone market around the world is based on a constantly evolving mobile operating system environment”. This indicates, although Android is the leader in the smartphone industry, but there is also the expectation that it will be the biggest goal in the industry to gain market share. (DanGrazino, 2012)

The smartphone help to get Anytime, anywhere and almost everything in your hand” seems to be a very common problem for today’s smartphone users. According to Aldridge (2004) in smartphones.

The mobile market has become a highly competitive market, although it is a relatively new industry (Haverila, 2011). Although this sector is young, it has a major impact on our daily lives as it has been integrated into our work and lives. According to Harris Interactive (2009), students spend 12 hours a day on media and devices. This has opened up greater profit and market opportunities for the industry.

With regard to purchasing power is the decision-making process and the actions of the people involved in the purchase and use of products (Brown, 2008). It is also a complex amalgam of needs and desires and is influenced by factors such as the social role of the consumer (parents, spouse, worker, etc.), the social and cultural environment and norms, as well as aspirations and inhibitions (Business Dictionary).

The purchase of smartphones has increased in recent years due to the smartphone revolution in 2002. The trend of today’s smartphone market has led consumers to buy smartphones. Manufacturers are slowly reducing the production of mobile phones in the market, so the number of smartphone purchases has increased. If the consumer wants to buy a new phone, the last cell phone on the market is the smartphone, the phone is considered an outdated product. The market trend has therefore influenced the buying behavior of smartphones.

According to Francesco (2012), there are 50 million people who own a mobile phone in the Italian market, of this number, 40 percent have a smartphone. In addition, increase the visit of the website generated by the smartphone, users spend 79-80 minutes per day in the use of applications. From the research of Ad Mobile Metrics report 2010 (cited in Francesco, 2012), there is a 22 percent in 2009 compared to a 40 percent in May 2010. Sellers have turned the smartphone into a laptop that is not only for voice and text messages. but it is more and more like calculation devices. this meant that the consumer preferred the smartphone more than the phone. Adding new and more features to smartphones is one of the reasons that influence consumer buying behavior. Functions and functions provided by the smartphone that could not be found on the traditional mobile phone. For example, wireless technology and the touch screen work. The frequency of consumers uses the Internet, the email and the GPS function provided on the smartphone, the wireless network that provides everywhere will increase the purchasing behavior for the smartphone.

With regard to Smartphone purchasing power in Malaysia, consumer buying power is determined by the community trend, smartphone consumption software and the cost of the plan. According to the article, the trend of the smartphone in the community is the main factor to influence the consumer in his purchasing behavior. Consumers look to the trend of the community and make the decision to buy a smartphone. Looking for the tendency in the community to make the purchase decision, he set up the buying power. In addition to this, needs are another important factor in determining consumer buying power. According to their personal needs, consumers decide to buy the smartphone. This means that when consumers buy a smartphone, they will watch if they buy it as a need or a desire. As for the behavior of a male buying a smartphone in Malaysia, it has a higher percentage in emphasizing the hardware and software of the smartphone compared to the female. Males pay more attention to the hardware and software provided when they buy a smartphone (Mohd Azam Osman, Abdullah Zawawi Talib, Zainal Abidin Sanusi, Tan, S. Y., Abdullah Sani Alwi).


As mentioned, there are many brands and operating systems available for smartphone users. There are many factors that can influence the power of purchases on smartphones, especially on the generation X. A new report by e-marketer notes that, at the time of the graduate class 2016, almost 90% of university students in the United States will possess a smartphone (Fredricksen, 2012). This indicates that there is a large market for the development of developers and providers of smartphones as more and more university students have smartphones in their hands, being part of their daily use.

The invention of the smartphone has pressed the phone, especially for university students, as a tendency to have a smartphone as a mobile phone. With the current reimbursement that the government is providing to university students aged 21 or older, they are eligible for RM 200 reimbursement for the purchase of smartphones, with the terms and conditions. This will increase the use of smartphones among university students. College students are defined as students at a university or university who have not received a diploma, especially a diploma, according to Normally, university students are 19 or 20 years old, from 3 to 5 years old in higher or higher education, based on However, there are cases in which the student is older, due to financial problems or other reasons.

Addiction to smartphones among university students, using the convenience to stay in touch with friends and family, to keep up with social needs and what they use as a guide for buying a smartphone. This could refer to many aspects of college life and the way they see the smartphone as part of their lives.
We intend to use the results and methods of other surveys that we try to determine the main factor that most influences students in the purchase power of smartphones.

We try to discover the participants of public and private universities to see how they respond to our research project.

1.2.1 Cultural Gap:

The developing wholesale ethnicity is described by the widespread consumption of mobile machineries, great connectivity, ubiquitous computing and contactless technologies, which allow consumers to experiment with purchases differently. In fact, innovative mobile technologies provide new tools (applications) that can separate the time of purchase from the moment of actual consumption, allowing consumers to make purchases via mobile phone and collect them at home or in a store (a boutique selection or collection), in addition to the traditional service in the store (buy it at the store and collect / consume in the store). The purpose of this document is to understand to what extent mobile technologies have an impact on consumer, with an emphasis on the factors that motivate consumers to adopt the consumer experience of mobile purchases. To achieve this goal, we used a qualitative approach that involves 29 consumers in the Italian market, where mobile purchases are still at an early stage. The results shed light on the extent to which consumers are moving from electronic channels to mobile channels and take into account the effect of these technological innovations in cognitive retail environments, where studies are limited. The implications for researchers and professionals are then discussed, with particular emphasis on retailers who need to develop new skills in mobile services and integrate and synthesize physical retail environments with mobile opportunities and capabilities.

1.3 Research objectives
There is not much research about college students and private universities, especially our own university, Sungai Long Campus, about their smartphone buying power, although there are many smartphone researchers. The aim of this study is therefore to find out which factors influence the purchasing power of students in the smartphone. Quantitative methods are used in this study to examine the relationship between independent variables and the dependent variable. Independent variables include friends and family, social influence, product features, and brand. Regarding the dependent variable is the buying power of the smartphone. Our result shows how strongly the independent variable affects the dependent variable. Discussion and suggestion were given in response to the results.
1.3.1 General Objective
Identify the factors that influence the purchasing power of smartphones among university students.

1.3.2 Specific Objectives
a) Determine if there is a significant connection between friends and family and the purchasing power of the smartphone.

b) Determine if there is a significant connection between social influence and purchase power of smartphones.

c) determine whether there is a significant connection between product features and purchasing power of smartphone.

d) determine whether there is a significant connection between branding and purchasing power of smartphone.

1.4 Research Questions
What are the effects that influence purchasing power of smartphone among Malaysian people?

1.5 Hypotheses of the Study
H1: there are a significant connection between friends and family and the purchasing power of the smartphone.

H2: There are a significant connection between social influence and smartphone buying purchasing power .

H3: there are a significant connection between the characteristics of the product and the purchasing power of the smartphone.

H4: there are a significant connection between the brand and the purchasing power of the smartphone.

1.6 Significance of the Study
This study could be used as a reference for developers of smartphones for companies, since this study would show which variable focus more on the purchasing power of smartphones among university students. There are more factors that have an effect, but this study focuses on the target group of the young adult market.

1.7 Chapter Layout
There are five chapters in this study.

The first chapter is Search Summary, which presents the topic in general, provides an overview of the study context, and explains the research problem. It consists of introduction, research background, problem statement, research objectives, research questions, study hypothesis, importance of the study, arrangement and conclusion of the chapter. The second chapter is the review of the literature, which consists of reviewing the introduction of the main themes of the previous chapter and the general scheme in the second chapter, followed by the literature review that addresses the dependent variable and the independent variables. Next, we review the relevant theoretical models, the proposed theoretical or conceptual framework, and, finally, the development and conclusion of hypotheses. The third chapter is the methodology that consists of how the research is designed, how to collect data, what type of sampling project is used, what type of method and techniques are used in this study and how the collected data is used. The fourth chapter is the analysis of the data, presents the results scheme and the analysis of the result that are relevant to the research questions and hypotheses. Chapter five, which is the last, provides the conclusion of the data collected and the analyzes in chapter four, which relate to the main theme of the study, discussing the main results, indicating the limitation of the study and the future recommendation for future research. .

1.8 Conclusion
In conclusion, this chapter provides an overview of what our study is. We wanted to know how the buying behavior of university students is influenced by several factors. This study adopted the theory of other researchers as a basis for the study and how we consider the future of the smartphone in today’s younger generation.

2.0 Introduction
This next chapter will discuss the details of the literature review on the factors that influence purchasing behavior in relation to the smartphone. These factors include friends and family, social influence, product characteristics and brand. The primary goal of our research is to determine the vital factors that will influence smartphone purchase behavior. It will continue with the revision of the relevant theoretical model, a proposed conceptual framework and the development of hypotheses. This chapter will end with the conclusion that summarizes the main session.

2.1 Literature Review
2.1.1 Friends and Family

The family group is perhaps the most influential influence on the purchasing power of the consumer due to the closeness and interactions between family members (June and Stacy, 2004). The investigation of June et al. (2004) declared that the family is a field rich in consumer purchasing power. The family has a separate influence on parents and siblings. In this case, the survey was conducted by 469 respondents, including students and families. From the result, it was discovered that parents have a stronger influence than their siblings. Compared to siblings, parents often play an important role in the purchasing power of consumers that affects an individual in terms of brand preference and loyalty, search for information, confidence in the media and price sensitivity. Based on the research, parents convey values, attitudes and buy habits for your children when you select a product. Therefore, children learn this power through observation because their parents’ guide them directly in buying a product.

According to Tiana (2011), the study aimed at who and what influenced young people in choosing a cell phone. The result indicated that friends were the highest average (2.15) compared to the family that had influenced young people in their cell phone decision. As for the family, the average score was 2.10, which helped young people buy cell phones. So, friends and relatives have had an average rating that influences the decision of young people to buy a cell phone. When the consumer takes into consideration the purchase of a mobile phone, he asks for advice from friends and relatives and then hears the recommendation for the purchase of the mobile phone.

According to Chow, Chen, Yeow and Wong (2012), the research was done by the students at Multimedia University, Melaka about the factors affective the request of Smartphone among youth adult. The study was conducted by 300 students who aged between 17 to 25 years. The investigators found that peer are the initial influencer affecting youth adult judgement, followed by media and Parents People tend to ask for opinions and advice from their friends based on their smartphone brand and tend to buy the same brand of smartphone that their friends use. For example, people who use the smartphone with the goal of keeping contracts with their friends and colleagues. This shows that people influence their friends when they think of buying a smartphone

2.1.2 Social Influence
Social influence is the group of influences that influence an individual’s beliefs, feelings, and behaviour (Mason, Conrey, and Smith, as quoted in Ting, Lim, Tanusina, Low, and Ker, 2011). An individual can follow social influence through daily observation and the perception of others in the purchase of a smartphone (Suki and Suki, as cited in Ting et al., 2011).

A study by Chi, Yeh and Tsai (2011) indicates the influence of the advertising promoter on the consumer’s purchase intent. There are 420 respondents who responded to this survey and only 408 questionnaires are used to analyze the data. In general, commercial advertisers often use celebrities to promote a product or service. The result of the study indicated that celebrities can link the value of the product with the client by transferring their feelings to a particular product. This is because advocates can make a strong recommendation and influence consumer choice. Therefore, it may increase the consumer’s purchase intention.

A study by Tiana (2011) indicated in this case that advertising was the highest average collection with 2.34 (49%) that will influence young people when choosing a mobile phone. Meanwhile, the second highest average was technology, which is 185 when they think about buying a new phone, while the average rating of 1.95 has been for other technology purchases. Furthermore, the influences of traditional media will also affect consumers when they make decisions about buying smartphones. Including online dairy box (1.21), radio (1.26), newspapers (1.26), YouTube (1.29) and magazines (1.31) were the lowest averages to influence young people to make a decision about the cell phone. Therefore, it was found that the power of propaganda exerts greater influence on the change of feelings, attitudes, thoughts and consumption behaviors of a person.

Yang, He, and Lee (2007) are studying a study on the social reference group on mobile phone buying power among mobile phone users in the US and China. The reference group refers to groups whose opinions are evaluated to influence the buying power of a person such as a celebrity. Compared to users in the United States, Chinese users rely on word-of-mouth communication because they are the strong forces in purchasing decisions. While users in the United States are more focused on their personal needs and do not care about the opinions of others. Then, the result shows that the social reference group has a stronger influence on Chinese users than users in the US.

Yang, He, and Lee (2007) are studying a study on the social reference group on mobile phone buying power among mobile phone users in the US and China. The reference group refers to groups whose opinions are evaluated to influence the buying power of a person such as a celebrity. Compared to users in the United States, Chinese users rely on word-of-mouth communication because they are the strong forces in purchasing decisions. While users in the United States are more focused on their personal needs and do not care about the opinions of others. Then, the result shows that the social reference group has a stronger influence on Chinese users than users in the US.

According to Bansal and Voyer (2000), word of mouth has a strong impact on the market. The consumer always relies on informal sources when making a purchase decision and not on formal sources such as advertising. Investigate WOM information before making a purchase decision to avoid problems of low comparability and quality of service. With WOM information, consumers can better understand a service before consuming it to avoid risk. Therefore, they will likely include and rely on WOM positive opinions on the most important ones in a product. This shows that consumers are easily influenced by the words of others when they make a decision when buying a product.

2.1.3 Product features

The study by Kotler, Philip, Armstrong and Gary (cited in Chow et al., 2012) suggests that a feature is an attribute of a product that satisfies the needs and desires of consumers and satisfies them through product ownership. . , use and use of a product.

According to Chow et al., The study studied the factors that affect the demand for smartphones among young adults. The feature of the product is one of the factors that affect the demand of the smartphone. For the survey, they guided the interviewees who were between 17 and 25 years old. Studies by Puth, G., Mostert, P. and Ewing, M. (quoted in Chow et al., 2012) mentioned that consumers nowadays use “product characteristics to compare a product offered by a different competitive brand and uses (as cited in Chow et al., 2012) suggests that the smartphone uses the operating system, which is the most important feature to evaluate the product.Among the similar brand products, the feature that is most noticeable, is more likely to be chosen. There are many systems, such as Windows Mobile, iPhone OS, Symbian OS, Google Android or Linux. For the traditional mobile phone, it does not have this system, which has increased the value of smartphone This feature allows consumers to switch their traditional mobile phones to smartphones.

According to Chernev (2005), his research has argued that the non-complementary characteristic has a greater influence than the complementary characteristics in the choice to buy a product. The example of your search used the addition of the function, for example, differences in functions and comparison with non-complementary functions such as more colours in the product. Based on the results of the three experimental studies, it was concluded that complementary resources are less likely to acquire a product than non-complementary characteristics. This research has shown that the influence of the characteristics consumer behavior when it comes to a product. Therefore, smartphone features such as colors and features offer more options than the traditional phone.

According to Oulasvirta, Wahlstrom, Ericsson (2010), his researches claimed that previous sources had less connection, presentation and broader capture, a built-in web browser, complete programming, installation of applications, file management system, several gigabytes of storage, location and motion sensors and high resolution screens. These next-generation mobile phones that called smartphone are growing rapidly in the market due to resources. The reason why the unique smartphone is the functionality, since it can be used as a traditional telephone and also as a PC. It provides calls and is able to access the Internet, making smartphone users easier for their work and their lives. For example, the smartphone provided the functions that mobile phones do not have and that attracts consumers to choose a smartphone instead of a traditional cell phone.

2.1.4 Branding
The concept of “brand” there are many definitions, according to Bogan, Stephanie (2007), according to the study, the brand is a perception of its value in the market. Creating a brand is more than images and words, it is creating a clear and convincing message that defines the work you do and the value you provide.

In 2011, Yang, Wang, Son, Chen and Hung conducted a survey of the mobile phone industry survey in Taiwan. This survey was conducted on 500 respondents. The result found that there are two factors related to the recognition of the brand, which are professional maintenance services and brand image. Both professional maintenance services and brand image will influence consumers’ brand recognition. The professional maintenance service that is the industry has trained the professional staff to have a greater professionalism, an excellent service attitude and a good technology of maintenance and ability that the consumers of mobile phones would feel more at ease and the degree of recognition of the brand would have improved positively. In addition, the study found that a successful brand image can enhance the aggregate values ??of the product, allow consumers to develop a positive attitude and trust in the brand of the product, and thus enhance brand recognition. Therefore, create a brand recognition in consumers “the mind is important, the recognition of the consumer brand allows the product brand to become the consumer’s first choice when wanting to buy the product, which in this case is a smart phone.

A study on Srivastava (2007), which determined brand loyalty among 150 members between the ages of 18 and 24, affirmed that brand loyalty is the main factor for the consumer to buy the product. From the point of view of consumers, a brand provides a visible representation of the difference between the products. The loyalty to the consumer brand has been strongly supported by the quality and reputation of the brand’s product, particularly for the mobile phone. Interviewed more strongly. He accepted the “quality” and “reputation” of the brand as a basis for his purchases of mobile phones. These statements have significantly lower levels of agreement (p


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