Appendix

Appendix 1: Pestel Analysis for RAI

Political - Pressure for Government to be socially responsible. - Importance of tobacco industry to third world producers. - Incremental excise taxes at both federal and state level. Economic - Slow US economy recovering from 2008 recession. - High prices of cigarette products are negatively affecting demand. - Projected decline of demand of 2.3% annually from 2012 to $27.9 billion in 2017. Social - Societal obstacles around the acceptance of smoking. - Demographic trends around the decrease in smoking. - Decline in popularity as a recreational activity. - Medical costs associated with poor health. - Improving US disposable incomes will support tobacco product growth. Environment - Government bodies measuring the levels of constituents (e.g. Tar, nicotine, and carbon monoxide). - Concerns about littering due to cigarette butts. Legal - Severely tightened regulation. - US Department of Agriculture imposes production quotas and price levels for tobacco leaf. - Labelling and advertising are regulated by the Federal Cigarette Labelling and Advertising Act. - Curb access to cigarettes and smokeless tobacco products to children under 18. - Involvement in a number of litigations. Sources: Whipple et. al. 2011; Datamonitor 2011; Freedonia Group, Inc. 2013; Marketline 2013. Technological - Microsoft and Google both have policies banning tobacco promotion. - New advances in nicotine delivery technology. - Development of innovative tobacco products such as menthol capsule embedded in filter.