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Supply and Demand Curve in Tobacco Industry

In: Business and Management

Submitted By daomai162
Words 1990
Pages 8
Economics Report and Demand & Supply curve
Of cigarettes in Australia
Recently, there has been a new trend in the tobacco industry in Australian society due to the increased prices of cigarettes, mainly for the reason that “with more than 3.1 million people still smoking today, tobacco still being the leading cause of death by a wide margin… “ (Scollo & Winstanley, p.xiii, 2008). Therefore, this report will illustrate the market structure of Australia tobacco industry, and then make analysis about the price chances on the demand and supplies for cigarettes. The third and the fourth part of the report are about the impacts of this change and some government policies for the tobacco industry, respectively.
The market structure:
Table 1: Tobacco companies operating in Australia: summary table for 2006-07 | BATA | PMA | ITA | Total revenue ($m) | 1476.7 | 623.3 | 386.5 | Net profit after tax ($m) | 410.7 | 172.6 | 2.7 | Shareholders’ funds ($m) | 632.6 | 403.4 | 25.1 | Total assets ($m) | 2962.1 | 627.5 | 176.7 | Number of employees | >110019 | 691 | 299* | Approximate market share in Australia (%) | 4619 | 34* | 1820 |
* Figure for 2006
** Figure assumed on the basis of market share reported by BATA and ITA, and assuming that a small percentage of the Australian market is accounted for by imported brands.
Source: The BRW 1000, BAT website, BATA website, Imperial Tobacco Group Website.

The tobacco industry in Australia has been considered as a subset of the global industry and its market is defined to be mature, per capital consumption is in the downward trend. (Scollo & Winstanley, p.8, 2008). The Australia tobacco industry can be described as an oligopoly because its market is dominated by three major companies: British American Tobacco Australia – BATA, Philip Morris International (Australia) – PMA and Imperial...

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