MGT603 Strategic Management Assignment 1 Solution Fall 2014

For a long time, the tobacco industry was seen as a static and unprofitable one. Between the late 1980s and 2000 most of the tobacco producers were working at national level which were often state owned and frequently unsuccessful. However more than 05 independent Tobacco companies’ went into loss and ultimately collapsed.   In 2006 PTC Tobacco Company paid 50 million to buy tobacco from its local market and ultimately became the Pakistan largest Tobacco Company. During the following year LAKSON Tobacco bought 20 million tobaccos from its local market.
New entrants In the last 5 years Khyber Tobacco got more popularity in the target market and SUNAIR Tobacco had been investing in new production facilities. Substitutes There is much technology involved in the industry and now companies bring new machines. KTC got new technological best filter rod machine as a substitute machine in filter of cigarette.Buyer power Buying power of cigarette is in the age bracket of 18 to 30 years. So now every Tobacco company is reducing its prices.
Competitive rivalry Every company wants to get maximum profit form its target market. For this purpose, they do more advertisement, good packaging and especially reduce their prices. Supplier power Most of the Tobacco companies have their own suppliers.
The Requirement:
According to porter’s five forces model, which forces have more positive impact on Tobacco industry and which have negative impact on it?
{2 marks for each point (2 * 5) = 10}

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