PESTEL
Pestle analysis
| Political | · (T)The government of United Kingdom have pressurised the Tobocco company such as, Imperial Brands (IMB) to abide to world trade organisation regulation while exporting product to other countries that acts as challenge in smooth operation (Hiscock et. al. 2020).
· (O)- Over the years, company has been benefited from the lower taxation policies that are being made in the western hemisphere. Also, government in delivering countries are reducing corporate tax to attract foreign direct investment. |
| Economic | · (T)- Inflation due to covid-19: there are many of the countries and UK which has face situation of inflation that led in decreasing disposable income of people, thereby reduction in people to make purchase of tobacco.
· (T)-Continuous fluctuation in the exchange rates results in impacting negatively on the future short- and long-term investment (Hawkins and McCambridge, 2018). |
| Socio-cultural | · (O) – Currently, there are around 6.9 million adult that are engaged in smoking and in-taking the tobacco, so the demand of the products is continuously rising with its addiction to more and more people. This has results in increasing sales volume and profitability of enterprise. |
| Technological | · (O) With influence of covid-19, the company has tried to integrated new technologies in its process that has contributed in improving its function and delivering the services in optimum manner. |
| Ecological | · (T) Imperial Brands is engaged in offering tobacco which is not at all good for the health and wellbeing of people in-taking, as it has serious chances of causing cancer and many other diseases. |
| Legal | · (T) In 2020, Imperial Brands (IMB) has been lawsuit by Helms-Burton legislation for alleged use of property confiscated by the Cuban state. This has results in ordering stay of lawsuit from the US government that has adversely impacted on its business operation. |
Organisation’s resources
Resources
| Resource | Explanation |
| Highly skilled workforce (Strength) | In 2021, there were around 30200 employees that are dedicatedly working in the Imperial Brands to offer range of services to the customers which has helped in gaining competitive advantages. |
| Factories (Strength) | The company is having round 51 factories that are responsible for manufacturing around 320 billion of cigarettes round the year. |
| Its positioning (Strength) | Imperial Brands has maintained competitive positioning as in the London stock exchange, it has gotten 28th position with primary listing (Moodie et. al. 2021). |
| Market capitalisation (Strength) | On 4 June, 2019, the company have got a market capitalisation of £18.5 billion that helps in effective promotion of its products to the end customers. |
| Brand, (Strength) | The Imperial Brands have maintained its different brand name to influence number of customers within the enterprise, such as, Drum, Gauloises Blondes, Golden Virginia Davidoff, West and Montecristo. |
Financial resources
| Ratio | 2021 | 2020 | Interpretation |
| ROCE (%)
|
13.54%
|
17.21% | The capital invested ratio has been decreased from 2020 to 2021 that means less amount of return. |
| Current ratio (times) | 0.80088
|
0.759345 | The firm does not have sufficient fund to meet its short-term liabilities as they are less than 1. |
| Gearing (%)
|
62.29% | 67.51%
|
Company is having high gearing ratio means using loan to pay debts. |
| Interest Cover (times) | 1.562609
|
3.213483
|
The company interest ratio has increased means that inability to meet the interest expenses. |
Financial position
Organisations distinctive activities/competences
Value Chain
| Infrastructure | Imperial Brands is having well established infrastructure where the products are being manufactured and delivered to customers. | ||||
| Human
Resource Management |
There are highly talented and qualified employees working for the Imperial Brands | ||||
| Technology
Development (R&D) |
|
Company heavy invest in research and development to find new techniques of doing specific task. | |||
| Procurement | |||||
| Support activities
Primary activities
|
Inbound logistics
The material utilised in production of tobacco are inbound.
|
Operations
Employees are provided guidelines related to the way Tobacco needs to be made (Hilton et. al. 2022). |
Outbound logistics
It is outbound to be offered to the end customers from warehouses. |
Marketing and sales
Finally, marketing is being done through advertisement and other techniques. |
Service
Imperial Brands offer tremendous services to all people across UK. |
VRIO
Competence / activity (All Strengths) |
Valuable | Rare | Inimitable | Supported by the Organisation | Implications (distinctive or Core competence) |
| Global presence | Yes | No | Yes | Yes | Temporary competitive advantages |
| Human resource | Yes | No | Yes | Yes | Temporary competitive advantages |
| Brand image | Yes | Yes | No | Yes | Competitive advantages |
| Its product | Yes | Yes | No | Yes | Competitive advantages |
| Organisation structure | Yes | No | Yes | Yes | Temporary competitive advantages |
Select one of the competences listed in table 6
| Competence | Global presence, Human resource, Brand image, product and structure |
| Valuable | Imperial Brands is globally present, have highly qualified team members, strong brand image, and qualitative products with organised structure. |
| Rare | Brand image and Its product are rare as no such tobaccos are being made by other enterprise (Evans-Reeves et. al. 2022). |
| Inimitable | So, both image of the company and its product are difficult to be imitable as have been differentiated. |
TOWS
| TOWS | Strengths
Leadership Brand image Product portfolio Market capitalisation 1. |
Weaknesses
1. Ineffective to review the operation 2. Criticism from people as dealing in harmful goods |
| Opportunities
1. Globalisation 2. Increase consumption of Tobacco |
S-O
Leadership Brand image Product portfolio Market capitalisation Use of all these strength will contribute in effectively entering into global market for meeting the expectancy of customers (Partos et. al. 2018).
|
W-O
If company will review its products or operation then have option to increase its demand of Tobacco with its consumption. |
| Threats
1. Covid-19 2. Competition 3. Government regulation 4. |
S-T
Leadership will help in finding innovative ideas to stay ahead in competition and overcome covid-19 situation. Brand image will ensure abiding to the legal law for overcoming threat of government regulation.
|
W-T
Ineffective review will lead in legal laws and critics from people (Nuyts et. al. 2020). |
Select one recommendation
From the above it can be suggested that the enterprise needs to make changes in its product portfolio by adding some healthy products as people have become more concerned about their health after covid-19. The company should also lay focus on making use of new technology to aware about the negative outcome of Tobacco.
References
Evans-Reeves, K., Lauber, K., and Hiscock, R. (2022). The ‘filter fraud’persists: the tobacco industry is still using filters to suggest lower health risks while destroying the environment. Tobacco Control, 31(e1), e80-e82.
Hawkins, B and McCambridge, J. (2018). Can internal tobacco industry documents be useful for studying the UK alcohol industry?. BMC Public Health, 18(1), 1-9.
Hilton, S., Smith, M. J., Buckton, C. H and Patterson, C. (2022). Experts’ views on how to design a tobacco control fund in the UK. BMJ open, 12(11), e066224.
Hiscock, R., Silver, K., Zatoński, M and Gilmore, A. B. (2020). Tobacco industry tactics to circumvent and undermine the menthol cigarette ban in the UK. Tobacco Control, 29(e1), e138-e142.
Moodie, C., Angus, K., and Stead, M. (2021). Consumer response to standardized tobacco packaging in the United Kingdom: a synthesis of evidence from two systematic reviews. Risk Management and Healthcare Policy, 14, 1465.
Nuyts, P. A., Kuipers, M. A., Willemsen, M. C and Kunst, A. E. (2020). An increase in the tobacco age-of-sale to 21: for debate in Europe. Nicotine and Tobacco Research, 22(7), 1247-1249.
Partos, T. R., Gilmore, A. B., Hitchman, S. C., Hiscock, R., Branston, J. R and McNeill, A. (2018). Availability and use of cheap tobacco in the United Kingdom 2002–2014: findings from the International Tobacco Control Project. Nicotine and Tobacco Research, 20(6), 714-724.
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