It’s rare that anything in an MBA textbook makes me laugh out loud, frankly. Porter’s five forces, good ol’ Lancaster and Massingham – all nice chaps, I’m sure, probably a scream down the pub, but their academic stuff isn’t chuckle-a-minute material. But one exhibit, in Robert Grant’s Contemporary Strategy Analysis did the trick, even if the laugh was a pretty cynical, weary one.
“UST Inc. (formerly US Tobacco) has the distinction of earning the highest return on equity of any company in the Fortune 500 listings (over 100 percent over the period 1995-99). UST dominates the US market for “smokeless tobacco” (chewing tobacco and snuff) with a market share of 78%… despite its association with a bygone era of cowboys and rural poverty, chewing tobacco has been a growth market over the past two decades with a surprisingly large number of young customers. UST’s long established brands, its distribution through tens of thousands of small retail outlets and the unwillingness of major tobacco companies to enter this market (due to the poor image and social unacceptability of the product) have supported the company’s unassailable market position. Federal controls on the advertising of smokeless tobacco products introduced in 1986 have buttressed UST’s market position by limiting the opportunities for would-be entrants to market their products”.
(from a Standard and Poor’s stock report)
Chaps, maybe it’s time to rethink this advertising ban stuff…