Tobacco Industry

Only available on StudyMode
  • Download(s) : 98
  • Published : August 19, 2010
Open Document
Text Preview
TOBACCO INDUSTRY

[pic]

PORTER’S DIOMAND MODEL

FIRM, STRATEGY, STRUCTURE, RIVALRY

DEMAND CONDITIONSFACTOR CONDITIONS

SUPPORTIVE INDUSTRIES
DEMAND CONDITIONS:

MARKET TRENDS

The demand for tobacco and its products have seen a steady growth over the years. The reason for this growth largely has been the increase in the population accompanied with easy availability of such products and easing social norms(smoking not considered bad now it is a fashion symbol). More choice is now available to smokers and the various brands in themselves come in different varieties like the Soft Packs etc.

The problem is that this growth has been shared unequally between the duty paid and evaded. Apart from the smuggling of tobacco and its products, even the large multinationals don’t leave any opportunity to evade taxes and duties.

According to an article in daily times(2006) about 0.2 million cigarette packs out of the 1.3 million sold in Lahore are fake or smuggled, causing cancer and heart diseases four times faster and resulting in a Rs 700 million to Rs 1 billion loss to the district government.

A Daily Times survey revealed that wholesale dealers supply fake and smuggled cigarettes to about 20,000 retailers of Lahore, who sell them to ignorant consumers who can either not tell the difference or sent their children or servants to buy cigarettes

According to the available statistics, out of about 71.80 billion cigarettes sold in Pakistan in 2005, 15.40 billion were fake or smuggled. Naveed Aftab, head of Pakistan Tobacco Board’s business department, said smuggled and fake cigarettes were causing a loss of about Rs 6 billion to the federal government, Rs 4 billion by tax evasion and Rs 2 billion by smuggled or unauthorised brands [1]

Seasonal Fluctuations in demand

During the winter season the demand for cigarettes and other tobacco products like Hukka and Sheesha increases. Demographically the northern cooler regions of Pakistan generally have a higher demand for these products. Demand is also affected by promotional campaigns since a new campaign triggers the need to try out the product or take advantage of the scheme.

The month of Ramadan sees a fall in the demand for these products as people only smoke after the fast is over. Even when not fasting people avoid smoking since it is considered undesirable to do so in public during Ramadan.

Local demand trend

The general perception is women do not engage in tobacco consumption. But the fact of the matter is that around 34% men and 12.5% women consume tobacco in some form. Besides the young men in the age category of 15-24 years smoke cigarettes/ beddies largely in the rural areas. But for men age 24-64 the prevalence of smoking cigarettes/ beddies is more common in the urban centers. In the age group 25-64 years, 16% and 7% of persons smoke chillium/huqqa in rural and urban area. Similarly 15% in rural and 8% in urban areas chew tobacco/snuff.

The government of Pakistan identified smoking as among country’s leading causes of morbidity and mortality in its December 1997 health policy. This admission came against the backdrop of a rising incidence of tobacco-related diseases. Despite numerous health and economic costs, the consumption of cigarettes continues to rise in Pakistan, making it a high cigarette consumption country. Twenty-nine percent of men and 3.4% of women smoke cigarettes regularly, concluded the National Health Survey, while the Pakistan Society for Cancer Prevention says 37% of men and 4% of women over 15 years of age are smokers. • Smoking is most common and most likely to be heavy (20 or more cigarettes per day) among men 25-44 years of age in Pakistan. • Approximately 90% of lung cancer cases in men and 79% in women are attributable to cigarette smoking. • Twenty-four percent of illiterate rural young men smoke as compared to 19% of illiterate urban young men....
tracking img