Porter's Five Forces Indian Cigarette Industry
TABLE OF CONTENTS
Indian Cigarette Industry 2
Porter’s five force analysis 3
External environment analysis 6
Industry trends 7
Conclusion 8
Appendix 9
Sources 10
INDIAN CIGARETTE INDUSTRY
In India, where farmers cultivate wide variety of crops, tobacco is cultivated as a cash crop of national importance. Out of the total cultivated area it is restricted to 0.3 %, but it still plays a prominent role in the development of nation’s economy. Among the various tobacco products cigarettes account for the major revenue, by contributing 70% of the tax1 from tobacco while other tobacco products contribute only 30%.
The cigarette industry in India is one of the oldest industries. It is labor intensive and provides livelihood
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There are also very few alternatives to the products provided by this industry resulting in ultimately higher switching costs. Differentiation within the industry has led to a wider variety of products while pulling in new customers. By providing high quality products to the public, the companies within the industry can control their own price. The customer has many options in this type of industry but little bargaining power due to the nature of the product. For consumers, there are not many substitutes to an addictive habit that will not be addictive themselves. In conclusion, the overall bargaining power of customers is ultimately …show more content…
Technology spend is also being incurred in the supply chain aspects of the companies to help them manage inventory, manage distributions and lower stock out situations in the market. Though the solutions are costly but it has shown to give profitable results to companies. R&D investments are also being done to come out with newer products with reduced deliveries in line with future regulations.
TAKEAWAY
We find from the above analysis that the external environment factors in totality do not play a supporting role to the Indian cigarette industry by creating hindrances to the growth of the industry. The major negative impact is because of the taxation regime and the regulations being imposed by the government.
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