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Dear Fallows it is Discussion forum So, Discuss about 1st Assignment Here. Assignment File is attached. Last date of submission of Assignment is December, 2 2014.

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For a long time, the tobacco industry was seen as a static and unprofitable one.
Between the late 1980s and 2000 most of the tobacco producers were working at
national level which were often state owned and frequently unsuccessful. However
more than 05 independent Tobacco companies’ went into loss and ultimately
In 2006 PTC Tobacco Company paid 50 million to buy tobacco from its local market and
ultimately became the Pakistan largest Tobacco Company. During the following year
LAKSON Tobacco bought 20 million tobaccos from its local market.  
New entrants
In the last 5 years Khyber Tobacco got more popularity in the target market and
SUNAIR Tobacco had been investing in new production facilities.
There is much technology involved in the industry and now companies bring new
machines. KTC got new technological best filter rod machine as a substitute machine in
filter of cigarette.Buyer power
Buying power of cigarette is in the age bracket of 18 to 30 years. So now every Tobacco
company is reducing its prices.
Competitive rivalry
Every company wants to get maximum profit form its target market. For this purpose,
they do more advertisement, good packaging and especially reduce their prices.
Supplier power
Most of the Tobacco companies have their own suppliers.
The Requirement:
According to porter’s five forces model, which forces have more positive impact on
Tobacco industry and which have negative impact on it?
                                                                                            {2 marks for each point (2 * 5) = 10}

Please Discuss here about this assignment.Thanks

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  • The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. For example, tap water might be considered a substitute for Coke, whereas Pepsi is a competitor's similar product. Increased marketing for drinking tap water might "shrink the pie" for both Coke and Pepsi, whereas increased Pepsi advertising would likely "grow the pie" (increase consumption of all soft drinks), albeit while giving Pepsi a larger slice at Coke's expense. Another example is the substitute of traditional phone with a smart phone.

Buyer power:-

  • The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Firms can take measures to reduce buyer power, such as implementing a loyalty program. The buyer power is high if the buyer has many alternatives. The buyer power is low if they act independently e.g. If a large number of customers will act with each other and ask to make prices low the company will have no other choice because of large number of customers pressure.

Competitive Rivalry:-

  • A starting point to analysing the industry is to look at competitive rivalry. This term describes the intensity of competition between existing players (companies) in an industry If entry to an industry is easy then competitive rivalry will likely to be high.If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high.

Suppliers Power:-

  • The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm when there are few substitutes. If you are making biscuits and there is only one person who sells flour, you have no alternative but to buy it from them. Suppliers may refuse to work with the firm or charge excessively high prices for unique resources.

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Force 1: The Degree of Rivalry
The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition. The most valuable contribution of Porter's “five forces” framework in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine industry attractiveness.

  • This force is located at the centre of the diagram;
  • Is most likely to be high in those industries where there is a threat of substitute products; and existing power of suppliers and buyers in the market.

Force 2: The Threat of Entry 
Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for thecost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position (Porter, 1980b; Sanderson, 1998) The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:

  • Economies of scale: for example, benefits associated with bulk purchasing;
  • Cost of entry: for example, investment into technology;
  • Distribution channels: for example, ease of access for competitors;
  • Cost advantages not related to the size of the company: for example, contacts and expertise;
  • Government legislations: for example, introduction of new laws might weaken company’s competitive position;
  • Differentiation: for example, a certain brand that cannot be copied (The Champagne)

Force 3: The Threat of Substitutes 
The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of substitution is also affected by switching costs – that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a customer switches to a different type of product or service. It also involves:

  • Product-for-product substitution (email for mail, fax); is based on the substitution of need;
  • Generic substitution (Video suppliers compete with travel companies);
  • Substitution that relates to something that people can do without (cigarettesalcohol).

Force 4: Buyer Power 
Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry (refer to the diagram). The most important determinants of buyer power are the size and the concentration of customers. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors. Kippenberger (1998) states that it is often useful to distinguish potential buyer power from the buyer's willingness or incentive to use that power, willingness that derives mainly from the “risk of failure” associated with a product's use.

  • This force is relatively high where there a few, large players in the market, as it is the case with retailers an grocery stores;
  • Present where there is a large number of undifferentiated, small suppliers, such assmall farming businesses supplying large grocery companies;
  • Low cost of switching between suppliers, such as from one fleet supplier of trucks to another.

Force 5: Supplier Power 
Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to industry participants and second on the degree of differentiation in the inputs supplied. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power (Porter, 1998). Bargaining power of suppliers exists in the following situations:

  • Where the switching costs are high (switching from one Internet provider to another);
  • High power of brands (McDonaldsBritish AirwaysTesco);
  • Possibility of forward integration of suppliers (Brewers buying bars);
  • Fragmentation of customers (not in clusters) with a limited bargaining power (Gas/Petrol stations in remote places).

The nature of competition in an industry is strongly affected by the suggested five forces. The stronger the power of buyers and suppliers, and the stronger the threats of entry and substitution, the more intense competition is likely to be within the industry. However, these five factors are not the only ones that determine how firms in an industry will compete – the structure of the industry itself may play an important role. Indeed, the whole five-forces framework is based on an economic theory know as the “Structure-Conduct-Performance” (SCP) model: the structure of an industry determines organizations’ competitive behaviour (conduct), which in turn determines their profitability (performance). In concentrated industries, according to this model, organizations would be expected to compete less fiercely, and make higher profits, than in fragmented ones. However, as Haberberg and Rieple (2001) state, the histories and cultures of the firms in the industry also play a very important role in shaping competitive behaviour, and the predictions of the SCP model need to be modified accordingly.

Kiya yahi solution ha assigment ka

According to porter’s five forces model, which forces have more positive impact onTobacco industry and which have negative impact on it?
plz anyone can provide the guide line for this assignment i am just confuse for this which have asked in this assignment that which forces have more positive impact on Tobacco industry and which have negative impact on it ??? ....plz anyone tell me bout that.
Force 1: The Degree of Rivalry

Force 2: The Threat of Entry
Force 3: The Threat of Substitutes
Force 4: Buyer Power
Force 5: Supplier Power

well jo data agaya hay esay say hi assignment bnani hy,,

  Koi idea is assignment k bare me share kr den 

yeh kiya hai koi to assignment ka solution theik da


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