ECIG Strategic Management Analysis: E-Cigarette Industry
This report examines the strategic management of Electronic Cigarettes International Group (ECIG), a publicly traded company selling e-cigarettes, vaporizers, and e-liquids under brands including VIP, FIN, and Vapestick. The analysis covers ECIG's mission, vision, and values; the relationship between strategic statements and functional objectives; and a PESTLE-based macro-environmental scan. It applies Porter's Five Forces to assess industry attractiveness, evaluates internal capabilities and business functions, and uses Bowman's Strategy Clock to assess competitive positioning. Ansoff's Matrix frames the company's strategic growth options. The report concludes that market penetration — particularly through kiosks, blending boutiques, and anti-smoking marketing — offers ECIG its most viable path forward given its heavy debt obligations and favorable regulatory environment in the UK.
- Strategic Purpose: ECIG's mission, vision, and core values
- Strategic Statements and Functional Objectives: Alignment of turnaround strategy with shareholder goals
- External Analysis: PESTLE and Opportunities: Macro-environment, regulatory landscape, threats and opportunities
- Porter's Five Forces Analysis: Industry attractiveness and competitive dynamics
- Internal Analysis: Capabilities and Business Functions: Organizational resources, talent, and financial health
- Basis of Competitive Strategy: Bowman's Strategy Clock and brand positioning
- Strategic Choice, Growth Options, and Recommendations: Ansoff's Matrix options and strategic recommendations
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What makes this paper effective
- Applies multiple well-known strategic frameworks (PESTLE, Porter's Five Forces, Bowman's Strategy Clock, Ansoff's Matrix) in an integrated, sequential sequence that mirrors a real-world strategic audit.
- Grounds each framework in concrete, company-specific evidence — stock performance, brand rankings, marketing campaigns, and regulatory differences between the UK and US — rather than relying on generic descriptions of the tools.
- Balances internal and external analysis, identifying both serious vulnerabilities (debt spiral, stock dilution) and genuine opportunities (UK regulatory support, kiosk expansion, blending boutiques).
Key academic technique demonstrated
The paper exemplifies applied strategic analysis: each analytical tool is introduced briefly and then immediately operationalized using ECIG-specific data. This approach — tool → application → implication — is the standard method in business strategy coursework and consulting reports. The paper also demonstrates how to layer frameworks so that external analysis (PESTLE, Porter) informs internal prioritization (capabilities, competitive positioning) and ultimately drives strategic recommendations (Ansoff's Matrix).
Structure breakdown
The report opens with a company overview and a roadmap of the analysis. It then moves through seven logical sections: strategic purpose; alignment of strategy with objectives; macro-environmental (PESTLE) and competitive (Porter) external analysis; internal capability and functional analysis; competitive positioning via the Strategy Clock; and finally strategic choice and recommendations using Ansoff's Matrix. Each section builds on the previous, culminating in targeted recommendations about market penetration, debt management, and brand development.
Strategic Purpose
Electronic Cigarettes International Group (ECIG) is a publicly traded (OTC: ECIG) company that specializes in producing, distributing, and selling e-cigarettes, vaporizers, e-liquids, and related merchandise to consumers seeking an alternative smoking experience or a method to help them quit smoking traditional cigarettes or tobacco products. ECIG develops and sells a number of brands — including VIP, FIN, and Vapestick — in the UK, U.S., and Europe. The company uses non-traditional retail strategies, such as kiosks in high-foot-traffic areas in England and the U.S., plus internet-based retail outlets. The company is currently situated in a complex position: in the UK, the British government has promoted e-cigarettes as being 95% less harmful than traditional cigarettes (Public Health England, 2015), while in the U.S., the FDA has adopted a much less favorable view of e-cigarettes and vaporizers, essentially deflating the market for them in the States (Berr, 2016).
The strategic purpose of ECIG is based on a near-term view of rescuing itself from costly acquisitions made under the former CEO that have left the company mired in debt. The mission of the company under the new CEO is to establish VIP as an international premium brand, expand into non-traditional channels, strengthen the organizational talent pool, cut costs, and improve working capital (SA Transcripts, 2015). The long-term mission of ECIG is "to deliver profitable growth to enhance shareholder value" (SA Transcripts, 2015). The company's vision is that it offers a premium product in a burgeoning sector and can make a positive impact on the lives of individuals seeking a healthier alternative to smoking (SA Transcripts, 2015). Its values are rooted in an ethical commitment to providing a quality product to the health-conscious consumer; for that reason, the company values honesty, transparency, and efficiency (SA Transcripts, 2015).
Strategic Statements and Functional Objectives
The CEO's plan to turn the company around from the brink of bankruptcy hinges on the company's ability to refinance its debt obligations, which have caused the stock to be diluted and have substantially hurt shareholder value. A reverse stock split in 2015 caused the share price to plunge, and currently the stock appears to be in a death spiral as loans become due quarterly and the company has no choice but to offer warrants to lenders at lower and lower prices. The stock currently trades at 14 cents on the OTC. In 2015, Wells Fargo was to underwrite the company's jump to the NASDAQ, and when that fell through, the stock was hammered downward from north of $200 per share to mere pennies.
The CEO's strategy of boosting shareholder value depends on making use of the non-traditional channels available to the firm in the UK — primarily kiosks — and reducing debt obligations. After one year at the helm, the CEO has not been able to turn the company around in terms of shareholder value; however, he has reduced costs and managed to reduce SKUs year-over-year (SA Transcripts, 2015).
References
Allen, J., Flanigan, S., LeBlanc, M., et al. (2015). Flavoring chemicals in e-cigarettes. Environmental Health Perspectives, 122(12): 23–29.
Berr, J. (2016). Smoke and fire: FDA's e-cig rules spark a battle. CBSNews. Retrieved from http://www.cbsnews.com/news/smoke-and-fire-fdas-e-cig-rules-spark-a-battle/
Cancer Research UK. (2013). The marketing of electronic cigarettes in the UK. UK: ISM.
Chaudhui, S. (2015). Study finds e-cigarettes contain chemical tied to 'popcorn lung'. The Wall Street Journal.
Giovenco, D., Hammond, D., Corey, C., Ambrose, B., & Delnevo, C. (2014). E-cigarette market trends in traditional U.S. retail channels, 2012–2013. Nicotine and Tobacco Research, 16(12): 14–15.
Goodman, A. (2013). E-cigarettes are smoking hot — four ways to invest in them. Forbes. Retrieved from http://www.forbes.com/sites/agoodman/2013/12/05/e-cigarettes-are-smoking-hot-4-ways-to-approach-them/
Gwynn, S. (2015). Great VIP Giveaway to see 10,000 e-cigarettes handed out. The Grocer. Retrieved from http://www.thegrocer.co.uk/buying-and-supplying/marketing/great-vip-giveaway-to-see-10000-e-cigarettes-handed-out/529168.article
Public Health England. (2015). E-cigarettes around 95% less harmful than tobacco estimates landmark review. Gov.uk. Retrieved from https://www.gov.uk/government/news/e-cigarettes-around-95-less-harmful-than-tobacco-estimates-landmark-review
SA Transcripts. (2015). Electronic Cigarettes International's (ECIG) CEO on Q3 2015 results — earnings call transcript. Seeking Alpha. Retrieved from http://seekingalpha.com/article/3669966-electronic-cigarettes-internationals-ecig-ceo-dan-oneill-q3-2015-results-earnings-call
Vapestick ranked the UK's No. 1 e-cigarette brand. (2015). Vapestick. Retrieved from http://www.vapestick.co.uk/e-cigarette-blog/vapestick-ranked-uks-1-ecigarette-brand
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