Now Tetley has also been introduced in the market. So Tapal is competing with all of these and also “Khulli Chai” as well. Talking about Lipton and Brooke Bond they are brands of Unilever which is known to be a giant in the FMCG industry. It seemed impossible that any local brand would even survive when competing with them but Tapal proved them wrong through smart advertising and high quality product it has already given Brooke Bond a run for its money and now facing Lipton. The rivalry can be observed when we look at the ad spend of these companies.
All of them advertise heavily to gain a competitive advantage over the other. Threat of new entrants is high. This is evident by the immense growth in the industry nd government policies are also encouraging new Tea houses to emerge on the scene. The taxes on import of tea are reduced thereby decreasing the cost of production. It can be taken as positive sign by a prospect player. Initially it was thought that no company would survive against the giants of Unilever but since Tapal people have started thinking that local brands can do well and new players might decide to come into this market.
In this case tea will always remain an integral part of our culture. Having said that there is a low switching cost associated with the trade off of substitutes. In case of tea substitute is coffee and even cold drinks in some case. It can easily be assumed that the demand for tea is nothing but increasing. Currently majority of the consumers have not developed the taste for coffee so it cannot be seen as a potential threat. Change in patterns can be observed because consumers are shifting from normal tea to green tea but again the same.
broad category ot uct remains The bargaining power of buyers is low because of the high demand. Although due to increased competition prices remain competitive but buyers have little or no argaining power. In case of tea an element of brand loyalty is also associated so a consumer would want to use a same brand which gives in his bargaining power. Also with tea people prefer quality over its price. Bargaining Power of supplier is high because there are few suppliers of tea.
The reason why there are few is because there is a specific taste of tea that consumers like so the manufacturers are forced to choose from few options. In Pakistan tea is imported majorly from Kenya and Srilanka so the supplier is at power to influence he price due to the limited availability of the raw tea. In Pakistan recent plantation of tea farms may favor the local manufacturers and foreign suppliers may find a reduction in their bargaining power. Answer no 3 POLITICAL FACTORS: These factors and government interventions can make or break the industry.
The political factors have played a very benign role for the tea industy. The political arena has a huge influence upon the regulations of the businesses, and spending power of consumers and other businesses. The political environment of Pakistan is relatively unstable in the current situation. The investors are not willing to invest in Pakistan. However, WTO and trade policies encourage the import of raw materials for Tea industry. Tea Import Quota It is an important consideration.
Each year there is a certain quota on tea import in total imports of Pakistan. Each player is given quota to import and manufacture so one can say that it is a very regulated industry. Diplomatic Relations The relations with the tea producing nations and Pakistan play a vital role as large part of imports comes from Kenya, but now Pakistan is also importing tea from India. Unstable Geographic Conditions Pakistan is situated at a very critical and geographically strategic location. Due to the uncertainty new investors are not ready to invest in Pakistan.
Social Factors The social and cultural influences on business vary from country to country. It is very important that such factors are considered. People are socializing more may it be events or casual visits to friends and family. Tea has always been an integral part of Pakistani culture and rituals. It is understood that tea would be present at all events. Changing Trends As work environment is becoming more stressful, people require different forms of efreshment and intakes to increase their energy levels.
This further increase the intake of tea at workplaces, tea is not only Just available to the employees when needed but is also served twice a day in order to keep them going. On the other hand, media expansion, growth of advertising as a separate industry has resulted in greater exposure of all the brands and masses. Hence social factors and changing mindsets have positively affected this industry Tea has always been acceptable in all social classes because of its usage. Green tea has recently gained a lot of popularity due to health reasons and is largely onsumed.
