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Reynolds And Sherrillard Merger Case Study

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R.J Reynolds and Lorillard Merger
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Abstract The Tobacco and Cigarette industry is made up of a small set of companies that grow, sell and distribute tobacco and other related products worldwide. Barriers of entry are high because of the government restrictions on advertising and marketing and consequently, a small number of corporations serve this market hence creating an oligopoly.

Industry description Reynolds America Inc. is an American company that deals with tobacco. It is also the second-largest tobacco company in U.S. its CEO is Susan Cameroon. The company was founded in 2003 and its headquarters are located at Winston-Salem.the Company holdings include; R.J Reynolds Tobacco Company, Santa Fe Natural Tobacco Company, Niconovum and American Snuff Company (Reid, 2014). In terms of its stock price, the company trading name at the NYSE is RAI and its trading stock price is $42.12.on the other hand, Lorillard Tobacco Company is an American tobacco company marketing cigarettes under certain brand names. …show more content…

In addition to that, it can work on eliminating the emerging and current head-to-head competition between Reynolds and Lorillard especially on sales of menthol cigarette. The merger also means that the two will exercise unilaterally market power and increase the likelihood of an interaction that is coordinated between the remaining participants in the cigarette market (Reid, 2014).
The competitive environment in this industry benefits the society in that; it has managed to create job opportunities to the members of the society where more employees with experience are needed to add ideas to the company so as to give it a more competitive edge (Pampel, 2009). Besides that, it has also made the companies want to engage more in corporate social responsibilities so as to gain the attention of the consumers and create public

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