Malawi and Tobacco Essay -- Trade Tobacco Malawi Essays

Malawi and Tobacco What strategies can Malawi use to overcome problems relating to a change in demand of its main export, tobacco. QUESTION- what strategies can Malawi use to overcome problems relating to a change in demand of its main export, tobacco? Malawi, a LEDC, located in Southern Africa, has a population of 10 million. Tobacco is its main export and this provides the majority of the countries export revenues. It has become dependant on exporting tobacco to firms based in MEDC's such as the United States. Demand for cigarettes has recently decreased because of health and ethical reasons. Cigarettes, has reached the end on its product lifecycle. However South East Asia remains a growing market, because of the effects of globalisation and dumping. The decrease in demand is a major problem for Malawi, a country that is not market orientated or market aware. Decline in demand for cigarettes will obviously have a direct effect on demand for tobacco because they are complimentary products. With decreased demand for its crops of tobacco, Malawi will find itself in a very dangerous situation that will not only threaten its economic position but the very lives of its population. Another concern that Malawi must take into account is the state of the tobacco industry. At present the market could be described as an oligopoly (see appendix) where suppliers compete on price. The outcome of this is that the firms involved have a high market share and therefore have much power to control supply and demand. They have the power to control prices of tobacco and they can exploit countries like Malawi. The national economy is dictated by exports of tobacco. The decreased revenue, due to loss of demand, will an... ...E UK (BRANDS): Two firms, Gallaher and Imperial Tobacco, who between them, control around 80% of the market, dominate the cigarette and tobacco market in the United Kingdom. One other major firm, British American Tobacco (BAT), manufactures cigarettes in the UK but sells almost all of them abroad. In 1999 BAT merged with Rothmans International thereby increasing its share of the world tobacco market to 15.4%, just behind the world leader Philip Morris which controls 17% of the global market. BIBLIOGRAPHY http://www.ash.org.uk http://www.tobacco.org http://www.mcspotlight.org http://www.cdc.gov http://www.sas.upenn.edu/African_Studies/Country_Specific/Malawi.html http://allafrica.com www.google.co.uk www.bbc.co.uk www.altavista.com www.theguardian.co.uk Nuffield Business and economics- Students Book