Tobacco Industry

Topics: Tobacco industry, Tobacco, Family Smoking Prevention and Tobacco Control Act Pages: 3 (868 words) Published: June 23, 2013
Reynolds American Inc.

The case study on Reynolds American Incorporated (Whipple, Justice, Gainer, Johnson, and Alvidrez 342) illustrates how major players in the industry have used strategic resources to mitigate the threats to their businesses. Reynolds American Incorporated (RAI) is one such leader in the tobacco industry, manufacturing tobacco-related products such as cigarettes, smokeless tobacco, and cigars since 1875. RAI, along with others in the tobacco industry, face many challenges most of which are environmental threats to the industry. The major environmental factors that challenge the RAI are federal regulations and ongoing litigation. Strategic resources then have to be utilized to combat these challenges.

On June 22, 2009, the US government passed the Family Smoking Prevention and Tobacco Control Act (Whipple, Justice, Gainer, Johnson, and Alvidrez 342). The Act increases taxes on the sale of tobacco products. The US Food and Drug Administration are given unprecedented control over the manufacture, sale, marketing, and packaging of tobacco products. The Act also requires that all tobacco manufacturing companies list their ingredients and limit their use of flavor additives. This was a challenge for the manufacturers because menthol and wintergreen, the most commonly used flavors, are very popular with the consumers. Serious limitations and restrictions were also placed on advertisements. The basis for this was the claim that these advertisements encourage underage children to start smoking at a very young age.

Advertising or marketing is an important element in the growth and success of any business. As a result of the forced reduction in advertising and marketing, sales in the tobacco industry decreased significantly and manufacturers still had to pay high taxes for their slow-selling products. Furthermore, private companies also joined the government in the fight against tobacco products and its advertisements, and huge...

Cited: Whipple, Corky, Justice John, Gainer Patricia, Johnson Christopher, and Alvidrez Irene. “Case
23: Reynolds American Inc”. Arizona State University (n.d.): 339-350. Print.
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