• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

What strategies can Malawi use to overcome problems relating to a change in demand of its main export, tobacco?

Extracts from this document...


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, the main export, 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) ...read more.


This would require diversifying a primary sector agricultural country into secondary sector activities (infant industries). With the funds received Malawi would have an increased influence on global markets. At present Malawi's factors of production are geared towards production of tobacco. Malawi could further expand this agricultural market and develop it so that it becomes more industrialised. It could possibly approach, the foreign companies involved with buying tobacco, and offer to produce the complete product, cigarettes, within the country. Outsourcing is an attractive prospect for multinationals because it allows them to cut costs making their products more profitable. They will be able to save transportation costs if they produce cigarettes in Malawi rather than exporting tobacco. Also Malawi is strategically positioned for excellent access to south East Asia the only growing market for cigarettes. Although wages will be extremely low it will provide thousands of jobs because this industry is labour intensive, allowing many families to feed provide for themselves. Revenues will increase because they have added value to their main export, tobacco. If this is a success, Malawi will become more attractive to other investors, who may also want to exploit low wages and low production costs. ...read more.


cigarette maker with Camel, Magna, More, Salem, Vantage, Winston and other brands. Brown & Williamson is the third largest tobacco company in the U.S. They recently purchased American Brands, producers of the top two selling cigarette brands in the UK, thus increasing their market share in the U.S. by 6.7%. The parent company of B&W is BAT Industries previously known as the British American Tobacco Company. BAT is the second largest private cigarette manufacturer in the world. WITHIN THE 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. Top 10 UK cigarette brands: 2001[1] % share of UK cigarette market Manufacturer Lambert & Butler KS 11.9 Imperial Tobacco Benson & Hedges KS 9.7 Gallaher Mayfair KS 5.2 Gallaher John Player Superkings 5.1 Imperial Tobacco Marlboro Lights KS 4.8 Philip Morris Silk Cut KS 4.4 Gallaher Rothmans Royals KS 4.3 BAT Regal King Size 3.9 Imperial Tobacco Embassy No 1 KS 3.2 Imperial Tobacco Sovereign KS 3. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Labour is a derived demand because the demand for labour is a result of ...

    These are payments to employees exceeding the award wage, which is the standard rate of pay. Non-wage outcomes can take many forms, some of which are provisions of a company house or car, a laptop, and payment of private education fees for children.

  2. Economic Development in Brazil has been hindered by a variety of reasons. Discuss the ...

    and poor people who have no jobs, and therefore no economic activity. This has also led to increased crime in Brazil as people turn in despair to other ways of surviving. Services in the city can provide low pay - low skill pay, however they are of poor level in Brazil and pollution is on the rise.

  1. Toyota Motor Company Limited

    Toyota's consumers are looking for quality goods and a good serve. Bargaining power of suppliers: Suppliers can affect an industry through their ability to raise prices or reduce the quality of purchased goods and services. Toyota's look to their internal means and market share to determine whether they have power over the supplier and exert to gain their competitive edge.

  2. Retailing In India - A Government Policy Perspective

    and that a well articulated strategy for medium term fiscal consolidations would address these concerns. The absence of product patents in the chemicals sector has reduced inflows into the drugs and pharmaceuticals sector. Though the foreign trade and tariff regime for Special Export Zones (SEZs)

  1. Evaluate the impact of Nike's outsourcing strategy and factory location on the host nation

    For example, auditors Andrew Young could be accepting money for Nike to use the report as a pubic relations exercise. Nike is also part of the Athletic Footwear Association guidelines for contractors. However this may have a limited impact on the host nation because the guidelines do not include monitoring

  2. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    Bear 2 09/01 - 10/01 Market * Terrorist attack in the USA, reduced market confidence. 3 05/02 - 09/02 Market * Stock market crashed 6 05/03 - 08/03 Industry * Concerns over military action in the Middle East created economic uncertainties dampening demand for new homes.29 7 11/03 - 08/04

  1. Discuss the policy options the Australian Government can use to achieve external stability

    Therefore, when the government runs continuous large deficits, it tends to increase the size of our net foreign debt and our CAD. Due to this relationship, the main aim of fiscal policy has been to sustain fiscal balance, on average over the course of the economic cycle, which should help

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    Greece, Italy, Spain and Portugal 119,210.7 million $54,446 This information can aid Sony draw up a better strategic plan in targeting the EU countries because as now the cluster has now reduce to five so Sony can just have five production line instead of fifteen.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work