<p align="justify">The Altair group is the United States-based holding company that is the largest producer of tobacco. It was incorporated in 1985 in Virginia as Philip Morris Companies, Inc. The subsidiaries of the company include Philip Morris USA, U.S. Smokeless Tobacco, John Middleton, Nat Sherman, and Philip Morris Capital Corp. It retails the most famous brand of the tobacco market which is Marlboro and it is larger than the accumulated value of the next 8 brands. The company has more than 7,000 employees, and it has made $ 46.9 million in donations (Altria, 2020). The company is investing in research and development to find alternative tobacco-free products. It is an active participant in political activity as they make political donations. The company adheres to all federal and state regulations as there are stringent compliance requirements. Porter&#8217;s five forces model is used to analyze the operational risks it faced and all threats it is exposed too.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The tobacco market has significant competition because international players are fighting for their share. Despite the shrinking size in the global market, its revenue is continuously growing. From 2012 to 2020, revenue grew from $650 billion to $ 829 billion which is a 26% change since 2012 (Statista, 2020). The global tobacco market is highly competitive, and companies spent hefty amounts on improving brand image. Altria is competing with global giants, including British American Tobacco, Phillip Morris International, and Imperial Brands. Altair Group has an annual revenue of $ 19.6 billion in 2019 and is ranked 162 on Fortune (Fortune, 2020).<br />
British American Tobacco led the global market in 2019 in terms of revenue with $ 32.7 billion.</p>
<p align="justify">In comparison, Phillip Morris International and Imperial Brands earned revenue $ 29.5 billion and $ 20.7 billion, respectively (Statista, 2020). The global tobacco market is highly competitive.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes is high when there are better alternatives available. They could be anything that is produced in the same or different industry offering better products. In the case of tobacco, there are many substitutes available. These substitutes would be nicotine patches, nicotine gum, nasal spray, and vape. All these products are available off-the-shelf and are cheaper than cigarettes. They threaten cigarette status and value. There are higher taxes and restrictions on advertisements resulting in rescued demand (Sari, 2013). These products are available readily and are considered safe than cigarettes. Then tobacco companies have to spend a lot of money in terms of political campaigns as donations. They have to keep the public image and branding as a semi-safe product. Considering all the facts, the Tobacco industry faces a high threat of substitutes.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">It is an important parameter to judge the state of completion in the market. If companies mushroom out in the market, they will force the incumbents for the price cut, thus impacting their bottom line. The barrier of entry is moderate in the tobacco industry, but its viability is debatable. Incumbents like Altair have economies of scale, brand recognition, distribution channels, and marketing. It is difficult for a newcomer to compete with incumbents at the National level. Another factor that deters newcomers is a strict regulatory ban on the advertisement, and they can not drive brand presence. The threat at the domestic level is low. Globally there is intense competition among established players as well as consolidated alliances. Companies have to fight tooth and nail for their market share. Due to the viability threat of new entrants remains low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The bargaining power of buyers is high due to the availability of alternatives, market size, and state of competition. In the tobacco industry, the buyers are inclined to use the same brand of cigarettes they have an association with. This is somewhat contributed to the addictive nature of the product. If the customer is satisfied with the brand, he or she is going to stay with it. According to Poranki (2015), customer satisfaction is directly related to brand awareness. Large conglomerates like Altair can leverage their presence and dictate terms on prices. The significant numbers of customers are insensitive to price change. If Altair raises the price of Marlboro, its highly likely customer will not switch despite the price hike.</p>
<h2>Bargaining Power of Supplier</h2>
<p align="justify">Another way to assess competition is by gauging the bargaining power supplier hold. It depends upon various factors, raw material, quality, and quantity, and product differentiation. The major supplies in the tobacco industry are tobacco, and it is the only supply that the industry relies upon. Tobacco is grown by farmers, and tobacco companies buy that from framers. The tobacco companies are the masters, and they control farmers. There are many failed attempts to regulate them and eventually phase-out. The companies go to lengths to protect their image by concealing their true acts. In a paper by Otañez and Glantz (2011), these corporations hide under the guise of corporate social responsibility and hide child labor in developing countries. The suppliers have low bargaining power.</p>
<h2 align="justify">References</h2>
<p align="left">Altria. (2020). About Altria. Available at: https://www.altria.com/about-altria/who-we-are/corporate-profile?src=topnav<br />
Otañez, M., &; Glantz, S. A. (2011). Social responsibility in tobacco production? Tobacco companies&#8217; use of green supply chains to obscure the real costs of tobacco farming. Tobacco control, 20(6), 403-411.<br />
Poranki, K. R. (2015). The Impact of Brand Awareness on Customer Satisfaction: A Case Study of Godfrey Phillips India Limited, India. The International Journal Research Publication’s Research Journal of Social Science &; Management, 5(1).<br />
Sari, N. (2013). On anti-smoking regulations and tobacco consumption. The Journal of Socio-Economics, 43, 60-67.<br />
Statista. (2020). Leading tobacco companies worldwide in 2019, based on net sales. Available at: https://www.statista.com/statistics/259204/leading-10-tobacco-companies-worldwide-based-on-net-sales/<br />
Statista. (2020). Tobacco Products. Available at: https://www.statista.com/outlook/50000000/100/tobacco-products/worldwide#market-arpu</p>