size of the market.e.There are high exit barriers in the tobacco industry. This means that the manufacturers of tobacco have a lot to lose if they should decide they want to withdraw from the industry. This makes the competition high because the tobacco manufacturers are more likely to stay in the industry even if the profits are low.f.There is a moderate level of rivalry in the existing tobacco industry competitors. The tobacco manufacturers continually are striving to market a more safe form of tobacco and lower prices, which will keep the competition in this industry alive.Potential Competitors (entry barriers keeping them out)a.Economies of scale, a barrier in the tobacco industry, make it more efficient to have a larger facility to produce higher volumes of cigarettes, chewing tobacco, etc. b.Large start-up costs in the tobacco industry keep the potential competitors out of the market.c.In order to survive in this industry, a tobacco manufacturer should offer a variety of tobacco products. This idea of product differentiation makes it harder for a new firm to gain customers.d.The barrier of high switching costs does not apply to the tobacco industry because the cost to switch from one tobacco grower to another is low. e.Access to distribution channels is not a significant barrier to keep potential competitors out of the tobacco industry. There are many different people to distribute new companies products.f.Restrictions make it harder for smaller rivals or new entrants to persuade consumers to switch tobacco brands. Also, many legal threats faced by tobacco manufacturers make it harder for new firms to start being profitable. g.The idea of favorable location and patents does not apply in the tobacco industry because it does not matter where they manufacturer the product it only matters what customers will buy them. Thus, not creating a barrier for a potential competitor.h.The same industry competitors have been around for someti...
