PESTLE ANALYSIS OF TOBBACO INDUSTRY IN UK

Pestle analysis of tobacco industry in UK

Pestle analysis of tobacco industry in UK

Introduction

PESTLE analysis is the technique that determines the effect of the political, economic, social, technological, legal and environmental of and industry and then evaluates the effect of these factors on the other units operating in their corresponding. The objective of this study is to analyze the political, economic, social, technological, legal and environmental factors of the UK and then evaluate their effect on the tobacco industry of United Kingdom so that knowing these factors an effective strategy can be formulated that can give better guidance and ability to cope in a critical situation.

Discussion

Political and legal analysis

W.H.O's framework on tobacco control came into existence in the year 2005. The goal of the agreement is to reduce the prevalence of tobacco use and exposure to tobacco smoke by regulating advertising, labeling, product testing, and the submission of ingredient information (Feldman, Bayer, 2004, 28). The treaty also includes price and tax measures to reduce demand and calls for the tightening of legislation to combat the illicit trade in tobacco products and the sale of tobacco to minors. The treaty has been ratified by 159 countries and the European Union including United Kingdom, making it the most widely embraced treaty in UN history. The treaty's goal of reducing tobacco use is an obvious threat to the tobacco industry.

The provisions outlined in the treaty fall short of the specific tobacco regulations already in place in many of the contracting nations meaning little real change in the regulatory environment but the national-level legislation that has stemmed from the treaty's ratification, particularly in developing countries, and the general direction of global-level regulation of tobacco pose long-term threats (Feldman, Bayer, 2004, 28). Beyond industry specific regulation, industry players are subject to, and increasingly affected by antitrust regulation. Under Articles 81 and 82 of the European Community Treaty, antitrust regulation in the EU is the responsibility of both the European Commission and member state governments. As the tobacco industry in Europe consolidates, government antitrust concerns create great barriers and threaten to limit the actions of companies looking to expand through acquisitions (Bacchetti, 2002, 20).

There are several indications and regulations implied to the tobacco industry of UK. In UK companies need to include the health warning on the packaging of the product, the arrangement and charges of excise duty applied on tobacco products which sets the minimum excise duty at 57% of retail price, the advertising and sponsorship of tobacco products which prohibits advertising in print media, information society services and radio broadcasts and prohibits sponsorship of radio programs and international events, the sale of tobacco products is banned to below the age of 18 years (Bacchetti, 2002, 20). There have been several other directives by the government to create the smoke free areas in UK by banning the smoking in certain areas. All these issues are a great threat to the companies which are engaged in the production of tobacco ...