Tobacco Industry of Pakistan

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Executive summary
Chapter 1: Economy of Pakistan
Chapter 2: Porter’s Diamond Model
Chapter 3: Secondary Research
Chapter 4: Empirical Work

In this report we have tried to cover the tobacco industry of Pakistan as a whole. It begins with an overview of the economy of Pakistan and how different policies and initiatives taken by different governments have shaped the country’s economy today. It highlights both the positives and the negatives of different eras’ covering the GDP growth rates of different periods, the contributions that have been made to it, the employment and the foreign direct investment that these contributions have helped generate. The purpose of this chapter is to make the readers aware of the economy of Pakistan that would enable a better understanding of how the industry we have undertaken operates in such an economic environment. The next chapter that follows covers Porter’s diamond Model and its main constituents which are the factor conditions, the demand conditions, firm strategy, structure and rivalry which is then followed by the fourth dimension of this model, which is the related supporting industries. All of which enable a nation and the industry to which they are applied to become more successful and most importantly competitive, not only on a domestic but also on an international level. The aim of this chapter is to enhance the understanding of the various dimensions of Porter’s diamond model as it has been made the basis of our research and how the various firms in this industry have applied this model in order to increase their competitiveness. The third chapter begins with an introduction of the tobacco industry of Pakistan and how the presence of the tobacco crop gave rise to cigarette manufacturing companies. After this, we have given an overview of the different kinds of tobacco products used globally as well as in Pakistan. Followed by it, is a history of how tobacco cultivation began in Pakistan today and how it joined the league of large tobacco producing nations in the world in such a short span of time, all of which is covered under the section named as the development of tobacco in Pakistan. This report also includes the list of countries to which Pakistan exports its tobacco, which is illustrated with charts so as to enhance understanding of the readers. This chapter also covers the significance of the tobacco industry in Pakistan, as it has played an imperative role in generating employment as well as revenue for the country. The diamond model that had previously been explained in chapter two is now studied with respect to the tobacco industry of Pakistan in which each dimension is studied in great detail and is supported by secondary research. This is done by highlighting the following factors, such as the types of tobacco which are listed and explained in great detail, their cost of production, the size of the area in which they are cultivated and the yield produced, the assistance provided to the farmers so to improve the cultivation of tobacco, the sale and marketing of the tobacco crop, how prices may be determined, all these have been labelled under the factor conditions. Followed by factor conditions are the demand conditions that highlight pre-crop planning, the major importing countries of Pakistani tobacco, the Research and Development that goes into this sector; how tobacco is developed, the extension services and the achievements in this sector. Then come the third dimension of firm structure, size and rivalry; in which we discuss the price wars and promotion wars, mergers and acquisitions that take place as firms compete in this industry. The various problems faced by local entrants and the existing firms as they compete in the market have also been covered. Also, most importantly, the government actions that have influenced the operations of the companies in...
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