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<p align="justify">Imperial Tobacco Group (ITG) is an international tobacco company based in Bristol, England. The company was incorporated in 1901; the company is renamed Imperial Brands. The company is the fourth-largest cigarette company globally and is one of the biggest producers of fine-cut tobacco and high-quality tobacco leaves. Since its inception, the company has expanded its global footprint. It produces 320 billion cigarettes per year and has a presence in almost 160 countries. The imperial band is forward-thinking and has dedicated a significant amount to safer cigarette products&#8217; research and development. The company has committed to making a meaningful contribution towards developing the Next Generation Products (NGP) business. It is expected that by 2025 20% of the nicotine market will consist of NGP (Imperial Brands, 2021). Even though the company&#8217;s primary business is tobacco production, marketing, and sale, it has a diversified portfolio, including Logista, a logistics company, ITG brands, and fontem ventures. The company employs 32,500 people and has 38 factories conducting operations. Porter&#8217;s five forces model is a valuable tool to analyze the opportunities Imperial Tobacco can avail and the threes it is exposed to.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">Tobacco is a specialized industry as mega-corporations run the operations and dominate the market. There is serious competition among them. Tobacco companies operate on a global scale; therefore, they face intense pressure from international firms. The global tobacco market is expected to grow by a Compound Annual Growth Rate of (CAGR) 1.8% from 2021 to 2028. The market is expected to be valued at $1073.79 billion in 2028 (PR news wire, 2021). The global cigarette market is dominated by the “Big Five” cigarette producers. Imperial Tobacco Groups major competitors are British American Tobacco (BAT), Altria Group and Philip Morris International (PM). In 2020, ITG reported $21.2 billion and a profit of $1.9 billion (Forbes, 2021). In the same year, BAT has reported a revenue of $33.1 billion with a profit of $8.2 billion (Forbes, 2021). PM has a considerable presence in the tobacco market and earned $8 billion on $28.7 revenue (Forbes, 2021). Altria group made a profit of 4.5 billion on the corresponding $20.8 billion (Forbes, 2021). Considering the level of competition, the competition level is high in the global tobacco market</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes is high in the presence of better alternatives, the consumers’ acceptance of the alternative product and the product targeting needs of the product. The main alternatives of the main for tobacco-based products are nicotine patches, gums and vapes. All these products are marketed as safe alternatives to cigarettes. However, these products sold as more safe alternatives may be equal or more harmful (Cahn &; Siegel, 2011). These products are gaining momentum in the market since their introduction in the European and US market. The E-cigarettes market will reach $45 billion by 2026 (Global News Wire, 2021). Tobacco companies spend a hefty amount to lobby and safeguard their interests, and despite the competition, cigarettes have a significant market share. Therefore, the threat of substitute is strongly moderate.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">The threat of new entrants remains moderate in the tobacco industry. The threat is perceived to be high when there is supportive legislation and incentives for growth, the potential for growth and access to financing. However, despite lobbying, there are regulations to discourage new entrants, high compliance cost, additional duties and a ban on marketing make it difficult for companies to market their products. It acts as a deterrent for the newcomers because they cannot market them. With over 40 million adult cigarette smokers, a total prohibition on tobacco sales is not practical. However, there is a tradition of limiting minors&#8217; access to tobacco products (Elders, 1997). Moreover, there are higher taxes and restrictions on advertisements resulting in rescued demand (Sari, 2013). Internationally, companies make a global alliance to capture market share and drive sales. As a result, there is intense competition for market share. Therefore, the threat of new entrants remains low to moderate.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">Buyers have higher bargaining power when there are better alternatives available, and they can influence the price due to competition in the market. However, brands have strong brand loyalty, and the users are hard to switch in between brands and, therefore, give brands some power over the consumer. It has been established that customer satisfaction will lead to higher brand loyalty (Poranki, 2015). Consumers usually start smoking as a pleasure activity and then find it impossible to quit; they are used to specific tobacco and brand with time. It effectively takes the price sensitivity out of the picture, as customers are more concerned about the product than the price. Therefore, Consumers’ can exercise moderate bargaining power.</p>
<h2 align="justify">Bargaining Power of Suppliers</h2>
<p align="justify">Suppliers bargaining power depends upon the underlying factors, suppliers’ concentration, the importance for the buyers and the supply chain risk. The essential and vital supply is tobacco, the essential ingredient and the other one is the citrate paper. The quality of tobacco makes the refined product, and if customers are used to it, it becomes vital for customer retention. So, the farmers growing tobacco has a critical say on who to sell. However, large companies such as BAT and PM have multiple sources of supplies, and they are not dependent on a single basis of suppliers. Therefore, by avoiding, over-reliance companies can mitigate supply chain risk (Silbermayr &; Minner, 2016). However, despite that, supplier holds moderate bargaining power in the tobacco industry.</p>
<h2 align="justify">References</h2>
<p align="justify">Cahn, Z., &; Siegel, M. (2011). Electronic cigarettes as a harm reduction strategy for tobacco control: a step forward or a repeat of past mistakes?. Journal of public health policy, 32(1), 16-31.<br />
Elders, M. J. (1997). Preventing tobacco use among young people: a report of the Surgeon General. Diane Publishing.<br />
Forbes. (2021). Altria Group. Available at: https://www.forbes.com/companies/altria-group/?sh=14a802a78769<br />
Forbes. (2021). British American Tobacco. Available at: https://www.forbes.com/companies/british-american-tobacco/?sh=24d84c2442f3<br />
Forbes. (2021). Imperial Brands. Available at: https://www.forbes.com/companies/imperial-brands/?sh=41aaebc91e62<br />
Forbes. (2021). Philip Morris International. Available at: https://www.forbes.com/companies/british-american-tobacco/?sh=24d84c2442f3<br />
Global News Wire. (2021). Global E-Cigarette Market Share Will Reach USD 45 Billion by 2026: Facts &; Factors. Available at: https://www.globenewswire.com/news-release/2021/01/04/2152687/0/en/Global-E-Cigarette-Market-Share-Will-Reach-USD-45-Billion-by-2026-Facts-Factors.html<br />
Imperial Brands. (2021). About us. Who we are. Available at: https://www.imperialbrandsplc.com/about-us/who-we-are.html<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 />
PR news wire. (2021). Tobacco Market Size Worth $1,073.79 Billion By 2028 | CAGR: 1.8%: Grand View Research, Inc. Available at: https://www.prnewswire.com/news-releases/tobacco-market-size-worth-1-073-79-billion-by-2028&#8211;cagr-1-8-grand-view-research-inc-301224304.html<br />
Sari, N. (2013). On anti-smoking regulations and tobacco consumption. The Journal of Socio-Economics, 43, 60-67.<br />
Silbermayr, L., &; Minner, S. (2016). Dual sourcing under disruption risk and cost improvement through learning. European Journal of Operational Research, 250(1), 226-238.</p>
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