Information About the Company
Imperial Tobacco is a multinational company whose head office is in the UK, Bristol. When considering the market share, Imperial Tobacco is the fourth-largest cigarette-producing company in the world. This company produces up to 320 billion cigarettes annually which are distributed in more than 160 countries. The greatest competitors to this company include British American Tobacco, Japan Tobacco, and Philip morris international. To remain a strong player in the market, there are many strategies that this company has had to adopt. Being a multinational company, the management has to ensure that the market is protected not only at local levels but also at international levels. To do this effectively, they have adopted Porter’s competitive forces model which includes factors such as traditional competitors, new market entrants, substitute products and services, customers, and suppliers.
Anti-Competitor Strategy
The traditional competitors, in this case, include the companies in the same industry which have been in existence for as long as Imperial Tobacco has been. A good example of this is British American Tobacco which has been a competitor since time immemorial. It was once a subsidiary of Imperial Tobacco before it separated and took the position of a competitor. The management, therefore, needs to understand the strengths of such companies so that they can plan counter actions, hence ensuring that they are always ahead of them. The other factor is that of new market entrants. This is an important factor in the sense that new entrants in the market mostly start with low prices to attract customers. This means that the management at Imperial Tobacco needs to develop products that can compete with the new products for them to maintain their position in the market.
The third factor in the competitive model as explained in the article Strategy: Porter’s Five Forces Model – analyzing industry structure (2009) is substitute products and services (para. 4). These are products and services that can be used in place of the original products. Imperial Tobacco should ensure that they have products for all people in society. The paper-rolled cigarettes are manufactured for the low and middle-income groups while the refined cigars are for the high-income earners, hence having a substitute product for all users. The fourth factor is about the customers, which includes people from all over the world (para. 6).
Considering the wide customer base, they are expected to set up operations all over the world hence reducing the problem of logistics. In this way, the products can reach both local and international customers with ease creating a sense of reliability. The result of this is an increase in the market share. Finally are the suppliers who play a big role in the success of any company. Suppliers range from the providers of raw materials to the providers of equipment used in production. These determine the level of production hence the availability of the product to the people. Where the suppliers fail to deliver for example the raw tobacco on time, this will delay the entire production chain and create a notion of unreliability among the customers.
Conclusion
From this discussion, it is clear that the factors presented in Porter’s competitive model are important for the success of this company. The customers are the most important people in any chain but their needs cannot be met if the other actors do not play their role. They, therefore, need to ensure that they adhere to the entire model owing to the interconnectivity of the factors. If for example, they fail to produce substitute products, they will not reach a certain client base and will have created an avenue for their competitors to take over that section of the market. In the same way, if they fail to consider the threat posed by new entrants into the market, they may end up losing some of their customers to the new products which are usually more enticing especially where they come with lower prices.
Reference
Strategy: Porter’s Five Forces Model – analyzing industry structure (2009). Web.