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UK Micro Environment Factors for a Tobacco Company - Essay Example

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With the operations of the company expanding, it has been decided that a more formal and planned approach to the business across borders must be taken. UK being the hub of all the operations of the company, is supposed to be the center for all investigation, research and analysis of the new approach…
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UK Micro Environment Factors for a Tobacco Company
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These variables affect the business and its operations to the core and a proper understanding of these is a necessary step to expand the product in a particular market. According to porter, there are 5 forces that act on a business in the Micro Environment. These five variables along with others variables proposed by different authors can be broken down as. [5]
Cigarette is an additive product and that is a favorable point for the company as far its sales are concerned. Buyers are hooked to the brand of cigarette usually from the start so there is little bargaining that the customers can do. The buyers are also brand conscious and they don not change their brands rapidly and specially in UK. Even if the prices of the cigarette increases, the customers will continue to buy it because of its addictive nature.
Retailers get a nominal amount on retailing the cigarette however they are in much demand so they keep it. Also the retailers usually get branded settings and are paid extra to keep shelf space for a brand. As substitutes for the products exist, retailers have a bit of power over the companies
There are high barriers to entry. ...
People trying to leave this habit usually revert to nicotine gum, counseling, or behavior modification. In extreme cases acupuncture needles are stuck in the bodies or the nicotine-averse images implanted in their minds however these are not that successful.
Competitive Rivalry
Among the four top brands of cigarettes in UK, Imperial Tobacco Group is the market leader. However, this has created intense rivalry amongst all the competitors. This is not a good sign for the company since this much competition can make it harder for the rest to come to the standard of these leading companies.
The stakeholders such as the government, the media and the society play a major role in the business. Since smoking is considered a social evil, the society usually shuns the smokers. Laws, and deals such as the 'tobacco resolution' are the results of the anti-smoking society. The increase in taxes makes it harder for the company to sell their products. The UK tobacco sector is one of the most heavily taxed in the world, and UK cigarette prices are the highest in the EU, with taxes accounting for around 84.5 percent of the retail cost of a typical packet of cigarettes. [3] [4]
Conclusion - Changes to the Company's Strategy and its Impact
Micro environmental factors play as much a vital role in a business as other macro does. Maybe these are even more important since these factors are hard to investigate as they work on a hidden level. From the information gathered, it has been found out that a few dramatic changes to the company's strategy must be brought. First the company must be perceived as a "green company". Since awareness of the harms of cigarette smoking is increasing, the company must promote itself as a ...Download file to see next pagesRead More
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