vietnam national university, HANOI hanoi school of business Ngo Thi Ngoc Anh A STUDY ON TOBACCO INDUSTRY IN VIETNAM AND COMPETITIVE ADVANTAGES OF BRITISH AMERICAN TOBACCO VIETNAM Master of business administration thesis vietnam national university, HANOI hanoi school of business Ngo Thi Ngoc Anh A STUDY ON TOBACCO INDUSTRY IN VIETNAM AND COMPETITIVE ADVANTAGES OF BRITISH AMERICAN TOBACCO VIETNAM Major: Business Administration Code: 60 34 05 Master of business administration thesis Supervisors: 1. Vu Xuan quang 2. Ha nguyen Hanoi 2007 TABLE OF CONTENTS ACKNOWLEDGEMENTS i ABSTRACT iii TÓM TẮT . iv TABLE OF CONTENTS v LIST OF FIGURES . ix LIST OF TABLES x LIST OF ABBREVIATIONS . xi INTRODUCTION .1 THE PROBLEM .1 THE OBJECTIVES AND AIM RESEARCH QUESTIONS SCOPE OF WORK .3 DATA SOURCES AND PROCESSING .4 METHODS/ APPROACHES .4 SIGNIFICANCE .4 LIMITATIONS .5 EXPECTED FINDINGS 10 SHORT INTRODUCTION CHAPTER THEORETICAL FOUNDATION 1.1 EXTERNAL MACRO ENVIRONMENT ANALYSIS .8 1.1.1 Political factors 1.1.2 Economic factors .9 1.1.3 Social factors .10 1.1.4 Technological factors 10 v 1.2 INDUSTRY STRUCTURAL DETERMINANTS 10 1.2.1 Threat of entry .13 1.2.2 Intensity of rivalry among existing competitors .21 1.2.3 Pressure from substitute products .27 1.2.4 Bargaining power of buyers 28 1.2.5 Bargaining power of suppliers 31 1.3 SWOT ANALYSIS .33 1.3.1 Strengths 34 1.3.2 Weaknesses .34 1.3.3 Opportunities .34 1.3.4 Threats .34 1.4 COMPETITIVE ADVANTAGES 35 1.4.1 Resources .36 1.4.2 Capabilities 37 1.5 GENERIC COMPETITIVE STRATEGIES .37 1.5.1 Overall cost leadership 38 1.5.2 Differentiation .40 1.5.3 Focus .42 CHAPTER INDUSTRY STRUCTURAL ANALYSIS OF BRITISH AMERICAN TOBACCO VIETNAM 44 2.1 EXTERNAL MACRO ENVIRONMENT ANALYSIS OF TOBACCO INDUSTRY IN VIETNAM 44 2.1.1 Political factors 44 2.1.2 Economic factors .47 vi 2.1.3 Social factors .48 2.1.4 Technological factors 49 2.2 INDUSTRY STRUCTURAL ANALYSIS OF BRITISH AMERICAN TOBACCO VIETNAM .50 2.2.1 Overview on tobacco industry in Vietnam 50 2.2.2 Rivalry among competitors .57 2.3.3 Bargaining power of buyers 67 2.3.4 Bargaining power of suppliers 70 2.3.5 Substitute products 71 2.3.6 Threat of entry .72 CHAPTER MARKET TRENDS OF TOBACCO MARKET IN VIETNAM AND COMPETITIVE ADVANTAGES OF BRITISH AMERICAN TOBACCO VIETNAM 77 3.1 MARKET TRENDS IN VIETNAM .77 3.1.1 Stricter regulations from the government on tobacco industry .77 3.1.2 People will be more health conscious .79 3.1.3 Increasing social pressure from health organizations and from the society 81 3.2 SWOT ANALYSIS OF BRITISH AMERICAN TOBACCO VIETNAM 83 3.2.1 Strengths 84 3.2.2 Weaknesses .85 3.2.3 Threats .86 3.2.4 Opportunities .87 3.3 COMPETITIVE ADVANTAGES OF BRITISH AMERICAN TOBACCO VIETNAM .88 vii 3.3.1 Resources .88 3.3.2 Capabilities 91 CHAPTER CONCLUSIONS AND RECOMMENDATIONS .93 4.1 CONCLUSIONS .93 4.1.1 External environment of tobacco industry in Vietnam .93 4.1.2 Tobacco industry in Vietnam and structural industry analysis of British American Tobacco .93 4.1.3 Market trends and competitive advantages of British American Tobacco Vietnam 95 4.2 RECOMMENDATIONS .96 4.2.1 Competitive strategy of British American Tobacco 96 4.2.2 Recommendations to Vietnamese government control on tobacco industry in Vietnam 105 CONCLUSIONS .107 REFERENCES 108 APPENDIX .109 GLOBAL TOBACCO MARKET OVERVIEW .109 viii LIST OF FIGURES Figure 1.1 Strategy formulation process .8 Figure 1.2 External macro environment factors affecting companies Figure 1.3 The Five Competitive forces that determine Industry profitability .11 Figure 1.4 Barriers and Profitability .25 Figure 1.5 SWOT Analysis .35 Figure 1.6 Competitive advantages .36 Figure 1.7 Three Generic Strategies .38 Figure 2.1 GDP growth rate bi-annually of Vietnam from 2002 to 2008 (estimation) .47 Figure 2.2 Vietnam tobacco market price segment – 2005 51 Figure 2.3 Vietnam tobacco market by corporations – 2005 53 Figure 2.4 Absolute cigarette volumes in 36 cities of Vietnam by tobacco companies. .56 Figure 2.5 Key contributors in tobacco product quality .61 Figure 2.6 Distribution channels of tobacco companies in Vietnam 67 Figure 2.7 Tobacco manufacturing process 70 Figure 3.1 Graphic health warning .78 Figure 4.1 Snus and snus user .103 Figure A.1 Tobacco global Retail Value Sales % Growth 1999/2004 .110 Figure A.2 Tobacco Retail Volume Sales % Growth by Major Market 1999/2004 .111 Figure A.3 Global Company Shares of Cigarettes by Retail Volume 2003 .112 Figure A.4 Forecast on Cigarettes Retail Volume Sales % Growth by Region 2004/2009 115 ix LIST OF TABLES Table 1.1 External macro environment factors with examples .9 Table 2.1 Brands and Tobacco companies by price segment – 2006 .58 Table 2.2 Blending types of tobacco .62 Table 3.1 SWOT Analysis of British American Tobacco Vietnam 83 Table A.1 Global Company Shares of Cigarettes by Volume 2001-2003 114 x LIST OF ABBREVIATIONS BATV British American Tobacco Vietnam PMI Philip Morris International JTI Japan Tobacco Incorporation SWOT Strengths, Weaknesses, Opportunities, Threats HORECA Hotels – Restaurants – Cafés R&D Research and Development VND Vietnam Dong GDP Gross Domestic Product VFM Value for Money DNP Duty Not Paid xi INTRODUCTION THE PROBLEM Firstly, tobacco industry is a social controversial yet highly profitable industry. The product nature of tobacco is harmful for health. Since this fact is already proven by researches and statistics data of tobacco related diseases, tobacco industry in the world is facing increasing opposition from health and social organizations and governments. However, this industry is getting high profit margin compared to many other industries. In short, this industry is a distinctive industry with high profitability but is facing with increasing social pressure, leading to declined market. Secondly, tobacco market in Vietnam is expanding, but in the future tobacco demand tends to decrease. Tobacco market in Vietnam is currently expanding with high smoking incidence of 55% (Smoking incidence is the ratio of smokers per people at the smoking age from eighteen to sixty five years old. In Vietnam, this ratio is calculated among men only because the number of women smokers is too small to measure) [Euromonitor, tobacco industry, 2005]. According to General Consumer Survey carried out by AC Nielson, this smoking incidence is higher than 60%. The market volume grows at 3% annually for the past five years, according to statistics from Retail Audit in tobacco market. However, rising income and higher health awareness among Vietnamese people, together with government control and pressure from social organizations will change this current increasing trend into a downtrend future.  To work with other tobacco companies in doing these activities  To be willing to communicate about product components, smoking impacts, and explain its good will in providing more health-friendly products to addicted smokers. (3) To deploy and market more health-friendly products from international markets in Vietnam The underlying factor for the harmful effect of cigarette According to research and studies, the mixture containing many chemicals such as formaldehyde, cyanide, carbon monoxide, ammonia, many of which are known carcinogens is the main harmful factor in smoking tobacco. “In addition to nicotine, cigarette smoke is primarily composed of a dozen gases (mainly carbon monoxide) and tar. The tar in a cigarette, which varies from about 15 mg for a regular cigarette to mg in a low-tar cigarette, exposes the user to an increased risk of lung cancer, emphysema, and bronchial disorders”. [http://www.drugabuse.gov/Infofacts/Tobacco.html]. Therefore, a more healthfriendly product is a product with less of these substances. Although conclusions have been drawn, the epidemiology associated with smoking remains to be one of the grey areas, requiring further studies to better understand. Tobacco companies should invest more in Research and Development to further understand the link between smoking and diseases thus could better protect themselves by reducing level of these harmful, toxic factors in their products. To develop a product offer that is a healthier nicotine solution 100 Nicotine is a substance which creates addiction to users. It provides an immediate "kick" through a discharge of epinephrine from the adrenal cortex. This stimulates the central nervous system and endocrine glands, which causes a sudden release of glucose. Stimulation is then followed by depression and fatigue, leading the user to seek more nicotine. Nicotine actually is not concluded to be harmful, but it creates users to be dependent on it. Moreover, addiction to nicotine results in withdrawal symptoms when a person tries to stop smoking. A study found that when permanent smokers stop smoking cigarettes for 24 hours, their anger, hostility, aggression, and loss of social cooperation increased significantly. Persons suffering from withdrawal also suffer from unequal emotional equilibrium following stress. In 1988, the US Surgeon General concluded that cigarettes and other forms of tobacco, such as cigars, pipe tobaccos are addictive and that nicotine is the drug in tobacco that causes addiction. In a nutshell, people smoke to seek nicotine intake but suffer from other tag-along carcinogen and harmful substances. Therefore, one feasible solution for tobacco companies to develop a healthier product is to focus on reducing the harmful substances. Their product is finally a nicotine solution with less harmful effect to nicotine addicted people. Results from health organizations which have provided smokers with nicotine replacement solutions to gradually decrease the amount of cigarettes smoked showed a positive reception rate of smokers. Half of the nicotine solution treatment in the UK results in stopping smoking after weeks of treatment. Therefore, 101 smoking is merely a method to have nicotine intake. When smokers are supplied with sufficient level of nicotine, they not have much demand to smoke. Possible nicotine solutions tobacco companies could think of are all kinds of nicotine containing substance such as:  Nicotine chewing gum,  Chewing tobacco,  Oral tobacco and others. Tobacco companies are currently not keen on developing other innovative nicotine solutions. But once they see the long-term benefit of marketing a more health friendly product, they certainly could come up with win-win solutions thanks to the resources they have and the consumer knowledge they possess. BAT Vietnam could firstly bring the available healthier nicotine solutions in the international market to Vietnam to market them as more health-friendly solutions. This move positions the company as the first company in this potential segment. In addition, the company is perceived to be more social responsible. To work closely with health organizations to communicate about the safer offer One important part in providing more healthy nicotine solutions is how to market these initiatives. Although nicotine chewing gum and snus (a kind of oral tobacco) were invented for some times, they could not become popular due to the lack of communication and the high price. 102 Snus is actually a nicotine pack with aroma that smokers could put into their mouths to enjoy the gradual release of nicotine. Although snus is currently not concluded to be less harmful than smoking cigarettes, it has at least one clear advantage over cigarette because it does not cause passive smoking to non-smokers. From this initiative, tobacco companies could explore more variants of less nicotine level, with less harmful substance. At the moment, snus is gaining popularity in Sweden. Figure 4.1 Snus and snus user In order to effectively deploy these “healthier nicotine solutions”, BAT Vietnam should coordinate with health organizations and related authorities to communicate to smokers. Conclusions In short, being aware of the industry trend, it is recommended that a giant tobacco company like British American Tobacco should choose its further differentiation strategy of pioneering in providing and marketing healthier nicotine solutions to smokers. By doing this, the company will be recognized for its health consciousness and social concern. More importantly, it could be the first to capture the totally new segments in the future- the segment of healthier nicotine solutions. Once established 103 in this segment, other tobacco companies would find more difficulties competing with BAT, especially when the current segments are declining resulting in lower profit to these companies. However, it is easier said than done, easier to plan than to execute. Shifting toward a further differentiation strategies of developing a different offer has its risks. The first risk is the acceptability of smokers. Heavy communication must change smokers‟ perception of smoking, smoking health impact, and then new nicotine solutions should be introduced. The second risk associated with high investment in Research and Development for the new products. Other risks could be the adverse impact of new nicotine solutions on the existing products of the company; the new products may have their own health impacts, which are not less severe than smoking tobacco and so on. However, the above trends of tobacco industry are inevitable. A tobacco company like British American Tobacco should have contingency plan for the change. On one side, in terms of business, it must maintain its products to generate resources for the research and development works. On the other side, it must be persistent in develop healthier nicotine solution and prepare for the coordination with health organizations and some governments, making itself understood as a social corporate responsible. Although the different path it goes has more difficulties and costs, the long-term results for the company are sufficiently rewarding. These results are a firm position as the first tobacco company providing healthier products yet satisfying smokers‟ needs, as the most social responsible corporate and certainly profitable and sustainable business results. 104 4.2.2 Recommendations to Vietnamese government control on tobacco industry in Vietnam Vietnam is the country with highest tobacco volume growth rate in the world, with more than 60% male adults smoke. This situation is alarming to the government. It should take bolder actions toward tobacco control. Better controlling tobacco consumption, the government‟s benefits are: reduced spending on smoking related diseases and improved country image in international arena. Youth smoking prevention As analyzed above, high smoking incidence and low health consciousness among people are results of lacking information, which need government commitment and efforts to change the situation. Youth smoking prevention is the area government should focus first because young people are easier to make not well informed decision to smoke. And once committed to smoke, young people are more difficult to quit than adults. Possible approaches to young people are intensive communication on health implication of smoking at schools since early age; communication through parents, through text books, by teachers; anti-smoking student union. The government should pay special attention to young people at remote areas and of poor families because they have less access to information. Intensive communication on health impacts of smoking Smoking is harmful. But this statement needs to be reinforced by stronger, more frequent and more illustrative communication. When people are frequently and impressively communicated about smoking adverse impacts, they will be more 105 health conscious. Government has full resource and ideas to implement effective communication. An example could be seen in government‟s communication on accident and encouraging people wearing helmets. Together with regulations on wearing helmets, impressive advertising street boards on accidents results when not wearing helmets are bringing significant results on the communication campaign. Public smoking restriction While communication encourages people to volunteer, restriction forces them to do. Both are creating the total impact on smoking control. When smoking is not allowed in public places, smokers will become very uncomfortable with their habits since they could hardly find a place to smoke when they are not at home. Smoking restriction in public places firstly benefits the passive smokers, then secondly encourage smokers to quit. Besides these solutions, government should enhance its current control on tobacco such as stricter tobacco communication, including limited product display, compulsory graphic health warning; apply higher special consumption tax and import tax to raise cigarette price and others. 106 CONCLUSIONS Tobacco industry is a special industry: on one side, it is often under strict government control and social pressure due to its products nature of being harmful for health; on the other side, people still use cigarettes. The tobacco industry in Vietnam could be summarized as highly profitable and highly competitive. In this context, this study expects to deliver a picture on external environment factors and industry structure; from then to analyze the competitive advantages of British American Tobacco Vietnam and recommend the effective competitive strategy to the company. With existing competitive advantages in a differentiation focus strategy, British American Tobacco Vietnam is the leading tobacco company in Vietnam market. In order to maintain this position while enhancing its differentiation strategy, it is recommended to strongly build corporate social responsibilities image and to introduce international product innovations of more health-friendly nature in Vietnam market. This strategy will benefit the company or the whole industry, Vietnamese smokers and the government. Win-win situation helps secure the company competitive advantages in this market. In the context of rising cigarette consumption volume, Vietnam government is also recommended to take bold actions in communicating smoking impacts to people, youth smoking prevention, restricting public smoking and others. 107 REFERENCES 1. Action on Smoking and Health – a US National Antismoking Organization (2006), “Action on Smoking and Health reports 2006”, online copies, United States of America. 2. AC Nielson Vietnam (2006), “General consumer survey report on tobacco” – AC Nielson Vietnam, Vietnam. 3. Consumer Insight Vietnam (2006), “Retail Audit report in Vietnam tobacco industry”, Consumer Insight Vietnam, Vietnam. 4. Euromonitor International (2005, 2006), “The world market for tobacco”, Euromonitor Report, 34-50; 121-132; 153-161. 5. Framework Convention for Tobacco Control (2006) www.fctc.org 6. Porter Michael (1998), "Competitive advantage - Creating and sustaining superior performance", Free Press, United States of America. 7. Porter Michael (1980), "Competitive strategy - Techniques for analyzing industries and competitors", Free Press, United States of America. 8. World Health Organization (2006), www.who.org, various articles and reports on smoking impacts on health, online copies. 108 APPENDIX GLOBAL TOBACCO MARKET OVERVIEW In 2004, global cigarette volumes declined for the first time. This decline has its reason from the volume contraction in Western Europe and North America due to price increases by high tax, combined with increasing health awareness and stricter government regulations on tobacco communication. Although cigarette volumes fell, value grew during the period between 1999 and 2004. In developed markets, value growth was largely driven by tax increase resulting in price increase while in developing markets, increased purchasing power in addition to a rise in consumption, partly from women and young people smoking drive volume growth. 109 Figure A.1 Tobacco global Retail Value Sales % Growth 1999/2004 (Source: Euromonitor International – The world market for Tobacco, March 2006) In the chart 1, it could be seen that although volume growth drops in some regions, value in all regions except Latin America increase dramatically within the period 1999-2004. According to Euromonitor report, tobacco global value has increased around 20% in the period between 1999 and 2004 to reach total revenues of US$430.6 billion in 2004. In terms of volume, China is the largest single market for cigarettes in the world largely because this country has 440 million smokers in 2003 which is increasing. China accounts for around 34% of world volume sales in 2004. The second largest volume contributors to the world tobacco consumption hold 7% each, which are the US and Russia. 110 Figure A.2 Tobacco Retail Volume Sales % Growth by Major Market 1999/2004 (Source: Euromonitor International – The world market for Tobacco, March 2006) In the figure 2, we could see that during the review period of 1999 to 2004, volume growth for cigarettes primarily happened in developing markets. Vietnam took the lead with a growth rate of 47% between 1999 and 2004. This market reached total volumes of 76.1 billion sticks in 2004. Ukraine also see robust growth in cigarette volume between this period with 36%. Egypt, Russia and Turkey also experienced growth during the research time. While developed countries like France, Germany. the US and others experienced declines in volume. 111 Figure A.3 Global Company Shares of Cigarettes by Retail Volume 2003 (Source: Euromonitor International – The world market for Tobacco, March 2006) China National Tobacco Corporation (CNTC) holds the largest global market share for cigarettes at 32% in 2003 thanks to China government protection on the Chinese tobacco market which is the largest market for tobacco in the world. CNTC accounts for around 99% of this huge market. Although it is the leading company in terms of volume, its market coverage is China only. Philip Morris Inc is the second largest global cigarette player, accounting 16% of the world market in 2003. Philip Morris market coverage is dominant in various 112 regions, especially its home base of United States, except Asia-Pacific, which is dominated by CNTC. British American Tobacco Plc follows Philip Morris closely with approximately 11% of the world market for cigarettes in 2003. BAT has strong presence in Latin America and Australasia where it held 50% and 47% market share respectively in 2003. Japan Tobacco Inc ranks the fourth with 7% of global market shares. Japan Tobacco Inc‟s main market is Asia-Pacific. Imperial Tobacco Group Plc‟s main markets is Australia and Eastern Europe. Gallaher Group Plc is strong in Eastern and Western Europe markets with Russia being the largest market in terms of volume in 2003. The majority of the remaining companies including RJ Reynolds Tobacco Holdings Inc and Tekel are strong thanks to their strong localised presence. 113 Table A.1 Global Company Shares of Cigarettes by Volume 2001-2003 % retail volume Company 2001 2002 2003 China National Tobacco Corp (CNTC) 31.4 Philip Morris Cos Inc 15.9 British American Tobacco Plc 10.1 Japan Tobacco Inc 7.4 Imperial Tobacco Group Plc 2.2 Gallaher Group Plc 2.0 KT&G Corp RJ Reynolds Tobacco Holdings Inc 1.7 Altadis SA 1.6 Tekel 1.5 ITC Group 1.1 Eastern Tobacco Co 0.9 Tabakprom 0.8 Vietnam National Tobacco Corp (VINATABA) 0.8 Gudang Garam PT 0.8 Balkanskaya Zvezda ZAO 0.6 Loews Corp 0.6 Thailand Tobacco Monopoly 0.5 General Tobacco Group Ltd 0.5 Skandinavisk Tobakskompagni A/S 0.5 Others 19.0 Total 100.0 Source: Euromonitor International – March 2006 31.7 16.1 10.3 7.3 2.5 2.1 1.6 1.7 1.6 1.4 1.2 1.0 0.9 0.7 0.8 0.6 0.6 0.5 0.5 0.5 16.3 100.0 32.4 16.2 10.5 7.1 2.5 2.2 1.6 1.6 1.5 1.3 1.2 1.0 0.9 0.8 0.7 0.6 0.6 0.6 0.5 0.5 15.4 100.0 Euromonitor international forecast that total tobacco volume is to fall by 0.4% during from 2004 to 2009. Most regions will experience a fall in consumption except for Asia-Pacific, Africa and the Middle East. These markets could still see growth due to rising incomes, low awareness on health implication of tobacco and limited government legislation on the tobacco industry. 114 Figure A.4 Forecast on Cigarettes Retail Volume Sales % Growth by Region 2004/2009 (Source: Euromonitor International – The world market for Tobacco, March 2006) Increased taxes resulting in higher price, combined with anti-smoking campaigns and stricter regulations are factors contributing to the decline in Western Europe, North America, Australia and Latin America markets. North America and Australasia volumes are expected to fall by 16% each from 2004 to 2009. Latin America is anticipated to drop volume by 0.5%. 115 [...]... tobacco industry in Vietnam and recommend the appropriate competitive strategy for British American Tobacco Vietnam 2 THE OBJECTIVES AND AIM This thesis aims at:  Analyzing the external macro environment of tobacco industry in Vietnam  Analyzing the impact of Vietnam tobacco industry structure on British American Tobacco Vietnam (BATV)  Analyzing BATV competitive advantages in Vietnam market  Recommending... advantages of British American Tobacco Vietnam in Vietnam tobacco market?  How to better define BATV competitive strategy in Vietnam tobacco market? 4 SCOPE OF WORK The thesis studies tobacco industry in Vietnam in the past three years, including analyzing external macro environment of the industry at present, industry structural impact on the company, Vietnam tobacco market trends and the competitive... volatility in losing customers (5) Capacity augmented in large increments in an industry could disrupt industry supply and demand balance Economies of scale dictate that firms could reduce their unit cost by adding large capacity; and firms are striving to push their 22 augmented capacity to the market, resulting periods of over supply Rivalry must be more intense to in time of over capacity (6) Competitors... profitability, creating a harder time for the company to gain its market share Bargaining power of suppliers, power of buyers is of no exception They all eat up in the firm profitability Therefore, this five forces analysis provides a broader sense of rivalry than the mere competition among direct competitors All the five competitive forces determine the intensity of industry competition and profitability... secondary data to analyze the tobacco industry in Vietnam based on theoretical foundation Data and information on Vietnam tobacco market could be found in General Consumer Survey in tobacco market and retail audit by AC Nielson in 2005 Besides, other international tobacco sources of information are referred to forecast the trend of tobacco industry in Vietnam These sources are Tobacco reports website; social... foundation of External Macro Environment analysis, Industry Structure analysis and Generic Competitive Strategy to apply in Vietnam tobacco industry and British American Tobacco Vietnam analysis 7 SIGNIFICANCE This study benefits the company (British American Tobacco Vietnam) in reviewing and better understanding the impact of external environment factors and industry 4 structure on the company, its... overview of the thesis, its background, necessity, purpose and contributions Chapter one reviews the theory of external macro environment analysis, Michael E Porter‟s industry structural analysis, company‟s competitive advantages and three generic competitive strategies Chapter two analyzes external macro environment of tobacco industry in Vietnam and Vietnam tobacco industry structure on BATV Chapter... and Vietnam tobacco industry structure on BATV Chapter three analyzes the market trends of tobacco market in Vietnam, SWOT analysis and competitive advantages of British American Tobacco Vietnam The last chapter gives out conclusions of the above findings and recommendations on BAT Vietnam‟s competitive strategy 6 CHAPTER 1 THEORETICAL FOUNDATION To analyze the external macro environment, the PEST... strategy, thus applying into Vietnam tobacco industry and the competitive advantages of British American 2 Tobacco Vietnam From that, the study could recommend on how the company could enhance and build its competitive strategy effectively 3 RESEARCH QUESTIONS The research has the following questions to answer:  How are the factors of the external macro environment in Vietnam tobacco industry and their... This type of product, once produced, is quite costly to store Therefore, firms will be more tempted to reduce price in order to push sales out to the market, rather than keeping the goods and bear storage costs (4) Lack of differentiation or switching cost Choice to buy which product in the industry will depend largely on price and service when this product is perceived as a commodity or near commodity, . vietnam national university, HANOI hanoi school of business Ngo Thi Ngoc Anh A STUDY ON TOBACCO INDUSTRY IN VIETNAM AND COMPETITIVE ADVANTAGES. TOBACCO VIETNAM Master of business administration thesis vietnam national university, HANOI hanoi school of business Ngo Thi Ngoc Anh . industry in Vietnam  Analyzing the impact of Vietnam tobacco industry structure on British American Tobacco Vietnam (BATV)  Analyzing BATV competitive advantages in Vietnam market  Recommending