The Cuban
The Cuban Cigar Industry
BU481 – S Submitted To: Lynn Gazzola Group Members: Adam Davidson - 070846030 Brandon Mattalo - 070399260 Elizabeth Phillips - 070463720 Sam Roston - 070812060 Muhammad Shahjahan - 20321861
J u n e 8 t h 2 0 1 1
B U 4 8 1 - S
To: Mr. John Hernandez, Re: Strategic Analysis of the Cuban Cigar Industry With the potential for significant political reform and absolution of the U.S trade embargo, it is critical to determine the probability and effects of these changes on the Cuban cigar industry. After reviewing these scenarios and two possible entrance strategies; creation of a joint venture and investment in an existing firm; it was determined that entering the Cuban cigar industry is not favorable at this time. After analyzing industry forces it is clear that entrance into Cuba is unlikely (see Appendix A). The industry exhibits high barriers to entry due to government restrictions. Foreign land ownership is not permitted, which makes entrance into the industry as a supplier impossible. Moreover, even if ownership laws are relaxed, government control over production is driving low supplier power, making it an unenviable position within the value chain. The other sections of the value chain, export distribution
BU481 – S Submitted To: Lynn Gazzola Group Members: Adam Davidson - 070846030 Brandon Mattalo - 070399260 Elizabeth Phillips - 070463720 Sam Roston - 070812060 Muhammad Shahjahan - 20321861
J u n e 8 t h 2 0 1 1
B U 4 8 1 - S
To: Mr. John Hernandez, Re: Strategic Analysis of the Cuban Cigar Industry With the potential for significant political reform and absolution of the U.S trade embargo, it is critical to determine the probability and effects of these changes on the Cuban cigar industry. After reviewing these scenarios and two possible entrance strategies; creation of a joint venture and investment in an existing firm; it was determined that entering the Cuban cigar industry is not favorable at this time. After analyzing industry forces it is clear that entrance into Cuba is unlikely (see Appendix A). The industry exhibits high barriers to entry due to government restrictions. Foreign land ownership is not permitted, which makes entrance into the industry as a supplier impossible. Moreover, even if ownership laws are relaxed, government control over production is driving low supplier power, making it an unenviable position within the value chain. The other sections of the value chain, export distribution