Essay:

Essay details:

  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

Text preview of this essay:

This page is a preview - download the full version of this essay above.

British American Tobacco (BAT) is one of the world's most recognize international businesses, with its brands sold in around 200 countries. BAT takes its commercial and its impact, in the health and wellbeing of the society, very seriously. Though it's aware of the controversies surrounding the tobacco industries, so it's imperative they act responsibly, from the crop planting right through to the consumers. The company began with merger of British Tobacco Company and American Tobacco Company. Though the business environment is changing continuously it has become onus on the BAT to adapt to this changes and the best way is for it to operate within the frame work of the each countries it does business with.

Table of Content

• Executive Summary page 1

• Introduction page 1

• Definition page 2

• Findings and Analysis page 2-7

o Climate change and carbon-reduction page 4-5

o International and global politics page 5-6

o Government regulation of markets page 6-7

• Conclusion page 7

• Reference page 7-8

Introduction

The British American Tobacco Company or BAT, was founded in 1902 joint as a venture between Britain's Imperial Tobacco Company and the American Tobacco Company; and as the name suggest, operates both from the United States and United Kingdoms, and has branches around the world including Nigeria and has been operating in Nigeria for nearly a century. The company employs people with all sort of qualification and has been it's the sole producer of various brands of cigarette in the country. It has a large cache of employees from production to distribution.

It has 44 factories in 41 countries, and has a worldwide workforce of more than 50,000 people, with many more staff who are employed indirectly through the company's supply chain. The company has been operating in Nigeria for nearly a century and it's one of the leaders in tobacco in Nigeria and the West African sub region. Though lots of criticisms has been meted out against the company it is imperative to look this criticism and weigh if its justified.

Definition

This work looks into the role tobacco company BAT plays in its global environment with emphasis on Nigeria and United Kingdom and what role it plays in each countries as regard to the laws of the land. It also look into its CSR roles; and the way it is seen by some anti-tobacco groups.

Finding and analysis

To be able to understand the role BAT plays in any country, especially in Nigeria and United Kingdom, we have to look at the company through SWOT, STEEPLE and Porters Five Forces analytical tools then be able to understand what roles it tend to play in countries it operates from. Within the basis of this analysis, the threats and opportunities, faced by BAT in United Kingdom and Nigeria, are well-defined, and help to picture the peripheral features, which usually cannot be well-ordered and have probability to upset intents.

With current awareness in health matters as regard to smoking, BAT has accepted, albeit reluctantly in some quarters, its social responsibilities in regard to health issues smoking causes thus by issuing  health warning in some of its brand packaging, thus helping to the government to spread the risk involved associated with smoking. The introduction of smoking ban in some public places has added to reduction in smoking in public has little impact on the sales or profit margin of the company. In Nigeria, the distribution of tobacco is led by roadside kiosks and street vendors, this method is popular because the easy access it give customers, such avenue of sale could be found on almost all the street in the country. The sale of single cigarettes in such way also contributes to their ongoing success. Nonetheless, more formal vendors, such as supermarkets, hotels, restaurants and bars are helping to prop up sales. The latter is seeing the best increase, as many Nigerian smokers prefer to smoke in bars. Though there is a restriction for smoking there is no restriction on whom to sale cigarette to. (Euromonitor.com, 2015)

Owing to progress in technology cigarette manufacturing is fully mechanized process, from treating of tobacco leaf to cutting cigarette paper wrap and filters. Packing is also computerized, cigarettes are filled into respective brand packs, wrap in protective film and placed in cartons. Factory machines at each location are contemporary and those cannot be redeployed are destroyed. BAT itself participate in technological progress by carrying their own researches either into their department or looking to other institutions for innovating new and fresh ideas and production. It believe in testing and adapting new available technology for their production. BAT has also developed and promoted new cultivation methods that to replenish soil by using organic substance for better fertility structure as well as having environmental benefit. But BAT have to find a way to deal with current surge in E-Cigarette.

Economically, Nigeria is a growing economy unlike the United Kingdom with an enlighten workforce, and according to a World Bank report, Nigeria has seen an economic improvement since 2014 and has a good prospects for continual growth and macroeconomic stability are good in light of increased revenues to the country, stable foreign reserves and an augmented fiscal reserve fund. Though poverty is much higher in the rural areas than in urban areas of the country. With large concentration of population in urban areas, there are likely to be no shortage of patrons for the BAT products. (World Bank, 2014)

The environment plays an important role for the tobacco industries in the sense that a large portion of forest has to be cut down to make way for tobacco plants, the industry farmers also use large quantity of chemicals to protect the plant as it is prone to diseases. In other to make tobacco leaf good for processing it has to be dried and this method requires that other plant, especially trees be cut down and used as fire wood. This chemical and tree cutting all lead to deforestation which in turn has an impact on global warming. The tobacco industry is noted for the large amount waste products associated with it. In 1995, the global tobacco industry produced an estimated 2.3 billion kilograms of manufacturing waste and 209 million kilograms of chemical waste. This does not take into account the vast quantity of mess generated by cigarette butts, which are not bio-degradable. (Who.int, 1995)

Politically, British American tobacco are aware of current restriction place on its products worldwide as a result of health awareness. It has to deal with ban on advertising it products on all sort of medium in most countries, Nigeria inclusive, and as well as banning of smoking in some place to avoid second hand smoking  This couple with the fact that most countries are now shifting to banning smoking in public place as a result of strong anti-smoking campaign groups. BAT tend to flaunt this regulations in third countries like Nigeria where implementation are restricted due to certain awareness issues. But this same rules or regulations are being adhere to by all tobacco companies.

In March of 2011 a legislation was enacted by the Nigerian Senate which regulates the manufacturing, sales and distribution to advertising of any tobacco products in accordance with WHO Framework Convention on Tobacco Control (FCTC), thus making smoking in areas designated as non-smoking illegal. There mass awareness campaign about the danger of smoking as well as the establishment of commission, National Tobacco Control Committee, that will guide government on the issue of tobacco regulation in the country were all introduced. This has to be a hindrance for BAT operations in Nigeria but it has to work within the frame work of legislation of the country it operates from. But tobacco companies like BAT have found loopholes in the enactment of these laws. (Agaku, Akinyele and Oluwafemi, 2012)

On ethics, the tobacco industry cannot be treated like other industries due to negative impact its products have on health and wellbeing of the people. The problem of creating trends with smoking through advertising gives wrong impression about its side effect on users. The vulnerable are usually targeted by marketing people in the industry, this vulnerable people include and teens and lower income and less educated consumers. Tobacco, though is considered as a harmful product for adults for of its potential to cause physical (e.g., cause cancer), economical (e.g., monetary cost of consumption), or psychological harm (e.g., feeling of addition to the product). Marketing practices for tobacco products receive considerable attention from both public policy makers and consumers because of the health, safety, and social problems associated with the consumption of that product. Issues that are of specific concern to public are long-term health problems, addiction, and consumption by under-aged consumers. Given the amount and scale of the issues linked to the consumption of tobacco, it is only reasonable to anticipate that there will be significant attentiveness in appraising how tobacco produce are promoted, “specifically whether the manufacturers and distributors of these products uphold ethical standards in their marketing efforts”. (Sundaram and Mitra, 2007)

In recent years the fortunes of BAT is taking a knock round the world thereby making it weaker by the day as its operating profits shrinks but it should be noted that the company still generate enough income to still influence or lobby against anti-tobacco legislations. The irony is that as lobbying strength of tobacco companies weaken that of anti-tobacco lobbyist group's increases, .us helping to make more people aware of the risks associated with smoking.

Gone are the days when tobacco companies were untouchable and was a colossus in the lobbying scenes. When the tobacco display ban, in shops, was introduced in 2011, there were lots of outcry by different shop owners under their parental umbrella association, National Federation of Retail Newsagents (NFRN) which lobbied against bill though not as successful as intended an action BAT categorically denied when it release a statement stating that "To accuse us of underhand tactics and the funding of an independent retailer organisation (the NFRN), via a PR agency that we use solely for work related to the European wide problem of tobacco smuggling, is untrue". (Anonymous, 2011)

Climate change and carbon-reduction

Since 2001 British American Tobacco company has been in partnership with some NGOs how gest to deal with environmental changes in regard to its operations around the world, this collaboration is aimed to delved into the challenges surrounding the preservation and controlling the biodiversity within farming sites and the ecosystems within which tobacco plants depends on, according to the report; “the accomplishment of BAT now and in the imminent future rest on biodiversity, this will  afford the business means like clean water, healthy soils and timber to which its depends on for growth. Tobacco industry has a duty to reduce its harmful impact on the ecosystem, as all species of plants and animals and communities will be depending on these resources also.

In 2011 BAT began a worldwide research of it operations as it effects climate. The research raised awareness of the risks the industry posed to the environment on its “main operational sites and tobacco growing locations, along with a small number of strategic material suppliers' sites. This involved looking at national risks, like energy security and the vulnerability of transport and infrastructure, as well as more local risks like water scarcity and flooding. In the tobacco growing areas, we also looked at risks to do with urbanisation rates, child labour and food security”, but their report did not go far enough as it only dealt with the risks natural to the tobacco industry rather the society at large: “research has raised awareness of climate change risks in the business and is helping us prioritise our efforts to protect the Group against these risks. We have also used the results to pilot a climate change risk index, which we now plan to develop for each of our strategic leaf growing locations. Based on this, short- and long-term action plans will be put in place”, the report says. Hence focusing on how best to improve the yield of tobacco crop. (BAT, 2016)

Though it must be noted that BAT have held dialogue with its various stakeholders on the issue of environmental changes, it's imperative that t bear in mind that the lot could be achieved through this avenue. According to one of BAT facilitators, Paul Burke, Senior Partner, at Acona Partners, the fact that BAT has undertaken such step has to be applauded… in his word: “Climate change is often named as the greatest challenge facing the planet. Many sustainability reports, annual reports and so on from the corporate world pay lip service to this. They claim that the business in question is responding to the risks, but often there seems to be a disconnection between the rhetoric and the reality. Many businesses just aren't doing enough.  So I applaud British American Tobacco for its decision to use this series of dialogues to really examine how climate change will impact on its business. After all, it's only by fully understanding future risks that a company can protect its long-term business interests”. (BAT, 2011) [169]

Many watchdogs around the world has slammed the report for not going far enough on protecting the climate against harmful effect of tobacco farming nor taking responsibility for the dameges the industry contributes to the environment and accuses the company of hiding its short comings under Corporate Social Responsibility (CSR).

In a report commissioned and published by Christian Aid, Friends of the Earth and Action on Smoking and Health (ASH), and titled "BAT in its Own Words", the report shows that behind the façade of CSR, as it accuses BAT of trying very hard to undermine any anti-smoking legislations all across the world:

• That BAT executives fought to block the Framework Convention on Tobacco Control by trying to use its support for the fight against AIDS in Africa to gain political influence and downgrade tobacco as a health issues.

• That BAT officials tried very hard to discredit research WHO conducted by using counter scientific evidence from research which tobacco industries supported in order to “undermine WHO research into nicotine addiction and health impact of secondhand smoke.

• That BAT tried to use codes of conduct, self-regulatory bodies, public reporting and coordinated public donations as tactic to prevent paying high rate taxes, banning tobacco advertising and introduction of smoking restriction in public designated places.

According to Director of ASH, Deborah Arnott, tobacco companies like BAT tend to hide the actual harms the industry causes with elaborate glossy reports and boast of unreal Corporate Social Responsibility. It has been noted by various organizations and groups that the tobacco causes more environmental harm than good. But this report shows the cynicism and deceit behind the public face. It should be read by decision-makers, campaigners and health professionals in every country where BAT seeks sales. Companies like BAT offer the ultimate devil's bargain. When they enter developing countries in search of new markets, they come with a smile a handshake and an open cheque book. But they leave behind nothing but a trail of addiction, misery and death." (Friends of the Earth, 2005)

International and global politics

Ever since the health risk associated with tobacco was discovered, various pressure groups has emerged to get this companies to some responsibility for what their product causes to users. To some level this is beginning to yield some results as various governments around the world begins to enact laws reducing the glamour associated with smoking. In so doing tobacco companies like BAT are mounting fightback to discredit any accusations or scientific findings against the industries.

World Health Organisation (WHO) has always led the cause for tobacco ban which led to the international agreement which is popularly referred to as Framework Convention on Tobacco Control (FCTC) this has formed the basis for member countries to formulate legislations against consumption and production of tobacco products around the world.

The core demand reduction provisions in the WHO FCTC are contained in articles 6-14:

• Price and tax measures to reduce the demand for tobacco, and

• Non-price measures to reduce the demand for tobacco, namely:

Protection from exposure to tobacco smoke;

Regulation of the contents of tobacco products;

• Regulation of tobacco product disclosures;

• Packaging and labelling of tobacco products;

• Education, communication, training and public awareness;

• Tobacco advertising, promotion and sponsorship; and,

• Demand reduction measures concerning tobacco dependence and cessation.

The core supply reduction provisions in the WHO FCTC are contained in articles 15-17:

• Illicit trade in tobacco products;

• Sales to and by minors; and,

• Provision of support for economically viable alternative activities.

The above section of the FCTC article of understanding has actually helped to deglamourize and help to reduce to influence of tobacco companies and embolden anti-tobacco groups to mount pressure on governments around the world to implement various legislations to help reduce the consumption of tobacco. (Who.int, 2003)

Government regulation of markets

With the introduction of FCTC, various governments around the world has adopted a unified guidelines aimed at reducing the glamour associated with tobacco consumption, sales and advertisement, but it must be noted that some country have laxity in implementing or enforcing this laws hence allowing the tobacco companies to impugn the law they have agreed to work with especially in poorer countries. This attitude has led to calls from anti-tobacco campaigners for more stringent control of the industry.

In 2008, the BBC carried out investigation into the activities of BAT in sub-Sahara Africa and found that the company is, to an extent above the law as it flaunts the law against tobacco advertising especially in Nigeria and Malawi. The programme shows clear evidence of BAT flouting existing bans on advertising. In this countries, where cigarette advertising is banned, BAT has painted shops with attractive and colourful pictures of some of their leading brands. It noted how BAT's own guidelines to stop selling to children in various countries was clearly ignored by the company itself in Nigeria. The way the company encourages the sales of its product in Nigeria is quite different from the United Kingdom or United State, there is absolute no regard to the law on advertising against or sponsoring events like concerts; these events are heavily branded with BAT logos products, this the critics have said, encourage underage smoking. (News.bbc.co.uk, 2008)

Another area the government can control tobacco industry and deglamorize its products is increase taxation on tobacco products. This is important for the reason that it both raises revenues for governments, “which helps fund tobacco control and social/health programs to address associated problems”, and it helps to discourage people, particularly the young, from taking up habit. This method have been known to work in Britain. With high cost of buying cigarette some smokers have chosen to reduce consumption or quit smoking entirely while some patrons have chosen to E-cigarette or nicotine patch. In 2003 the global tobacco epidemic report by the WHO, it was noted that higher taxes are especially effective in reducing tobacco use among lower-income groups and preventing youth from starting to smoke. An increase in the retail price of cigarettes by 10% will reduce consumption in high-income countries by about 4% and in low- and middle-income countries by up to 8%; smoking prevalence is usually decreased by about half those rates. (Shah, 2014)

In the in United Kingdom, as a result of various laws and regulation there are currently no cigarette making outlets in the country as the last factory, in Bristol, was closed in 2010. These closures in the UK has resulted in opening of tobacco factories in other country especially in developing economies where the laws governing tobacco are much more lax.

Conclusion

In 1902 British American Tobacco (BAT) was formed as a joint venture between Britain's Imperial Tobacco Company and the American Tobacco Company.  But a decade later, in 1912, the first connection was made between smoking and lung cancer by a Doctor Isaac Adler. And since then there has been campaigns for stringent rules be imposed on the tobacco industries and over the years the campaign has grown in leap and bound to what is has become today to a near total ban of smoking in public place with some other laws taking the glamour of the smoking habit. It must be noted that the industry has always tried to fight back with its own researches to disprove any scientific findings. Note that in Britain and Nigeria the laws are operated and implemented differently and thus the two environments are manipulated differently by BAT; while it tend to abide by the laws in Britain but flaunts similar laws in Nigeria due to laxity in law enforcement.

...(download the rest of the essay above)

About this essay:

This essay was submitted to us by a student in order to help you with your studies.

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, . Available from:< https://www.essaysauce.com/essays/marketing/2016-4-30-1462041279.php > [Accessed 18.10.19].