SWM - Mark Moore

RelationshipsThe relationships of the paper and tobacco industry are very important. Most of themain competitors in this industry have been around and operating on average for around 80years. (Schweitzer Mauduit 10-K, Alliance One 10-K, Universal 10-K) The deep relationshipswith their suppliers and customers can be very strong barriers to entry. “With the average ageof a smoker being 13,” (Illinois Dept. of Public Health) and the life expectancy of the worldincreasing everyday with new medical technology, the relationships between companies andtheir customers is imperative. Cigarette customers are both male and female from the ages of13 to 44 worldwide. (Illinois Dept. of Public Health) Additionally the ability to maintainsuppliers in multiple other countries where the cost of goods sold is considerably less is veryimportant. As indicated earlier, many of the firms have outsourced throughout the world.Maintaining the relationships with the suppliers and employees is very important, as well asmaintaining proper relationships with their respective governments.Legal BarriersThe legal barriers affecting the consumer paper and tobacco industry grow every day.The industry is under extreme pressure from national governments worldwide as well as, stateand local governments who are attempting to lower the consumption of these products.Additionally, political turmoil around the world has also been affecting the industry. The desireof the firms to outsource and achieve reduce labor prices have lead them to countries that arenot always politically stable and is frowned upon by many domestic politicians. Taxes ontobacco products have increased greatly throughout the years, and the price of cigarette packshas almost doubled in the past ten years. Additionally, several health insurance companies nowmandate that smokers inform them of their tobacco history and consumption, which could leadthe companies to choose not to cover the tobacco users. The type of advertising has also comeunder plenty of scrutiny, and advertising like “Joe the Camel” that is supposed to appeal tochildren has come under strict supervision by the government. Other countries are alsofollowing in the footsteps of the United States and cracking down on the amount ofconsumption due to the great health risks that come along with it. Right now “one in threeadults today or 1.1 billion people smoke” (Economics of Tobacco Control) and for severalcountries implanting national healthcare companies can become very expensive.33