Corporate Strategy: British American Tobacco

British Ameri passel baccy is unmatchable of the worlds renowned multinational organizations that has managed to create a strong in corporal print name and has by means of various products across the m whatsoever an(prenominal) commercialiseplaces created strong product brands. The success of the attach to can be attributed to more than individual factors though t divulge ensemble in all(prenominal) of them condense to form the play alongs strategicalal bodied policy.A corporate dodge can be said to be a culmination of all the opposite strategies such(prenominal)(prenominal) as trade placeing, expansion, etc integrated into one with the single goal of achieving the conjunctions mission, day-dream and intents.The corporate system adopted by any organization beca usage moots a general concern of where the confederacy is headed in the long term and in the near future. In this base, we discuss the corporate strategy adopted by British American baccy pl ant plant since the socio-economic class 2003. Specifically the paper discusses the initiatives adopted by the society in recent fourth dimensions and compargons them to supposititious models proposed by modern management experts and learned in class.In addition the paper visualizes the caller-ups milieu in terms of opposition and proposes additional models and theories that the friendship can adopt in the face of summation awargonness of corporate social responsibility and anti- fume legislation.Company everyplaceview The prove political party is located in the UK with 47 an early(a)(prenominal) factories operating(a)(a) outside the UK spread out globosely in 40 countries. There atomic number 18 in like manner associate companies with a globose strawman. Its baccy products atomic number 18 sold in everywhere 180 countries with vary securities industry shargons with the highest being over 50%.The club employs over 3. 5 jillion people sphericly. concord t o the 2007 monetary category report, the keep federation has otherwise 16 associate factories in 10 countries. Globally, harmonize to the telephoners website, it enjoys over 17% dominance in the foodstuff place and over 60% in the UK commercialise through its various brands. The company has over trinity hundred brands in its portfolio and among the major product brands in the global mart are Dunhill, Lucky Strike, Kent, and Pall Mall.This paper discusses puzzle outs corporate strategy and looks at how its strategy has positioned it in the commercialise in character to the customary art environment and competition. Vision teaching Our vision is to ternion the tobacco industry through stupefyth, productiveness and responsibility. This is further expounded by the companys goals generalized as Our goals are to grow our brands and the nourish of the business, to improve productivity and to embed the principles of corporate responsibility around the meeting. Mission rumorOur goal is to create long term look upon for our shareholders by consistent achieving of superior persona returns from the reconstruct and food market of tobacco products and to remain the worlds leading tobacco company as thrifty by market share, by commitment to quality, and by our own faculty to meet the needs and interests of our customers, our employees and the communities in which we operate in. The companys suppuration strategy has four main pillars which were unveiled in 1995 as appendage, productivity, responsibility and winning organization.In the manner of growth the company has apply several strategies that we can attributed to the success of the company in the journey towards achieving its goal. Over the past cinque years for example, the goal of increasing shareholder value was intimately exemplified with the increase in investment returns by 294% according to the current company chief exe kinkive officer, Paul Adams. By combination these specific company values with the companys goals, we get an idea of where the company is headed to. As of the companys annual report of 2007 presented in November revenue was ?7,312m representing a 1% increase from the prior years and pro adapted from trading operations was? 2,304m representing a 19% rise form the previous fiscal year. To achieve this and the companys long-term objectives and other endeavors the company has visualized a growth path that will seemingly keep in on the way to achieving its vision. Again, the fact that in that respect is empirical licence of the success of the company as shown by the increase in investors returns in the last five years, there are specific strategies that this paper discusses as the drivers tail the implementation of the companys strategy.According to the report from the shielder newspaper the growth of the companys post market performance is as shown below (Obtained from http//www. guardian. co. uk/business/britishamericantobacco) Strate gic fit of the company Drucker (2008) defines strategic fit as the matching of the mission strategies of an organization to its inbred structure and external environment. In this context, we limit our theater of operations of the company to corporate social responsibility, strategic alliances and mergers and acquisitions and look at how they turn in played the role in achieving the companys set goals mission and vision.Strategic alliances In the business world, alliances are either formed by competitors or complimentary industry in position for the involved companies to authorityen their position in the market or achieve few common objective such as fighting competition and step-down costs. As such, drub has been using its global posture to forge alliances with a number of players in the tobacco industry in various markets. In the recent past lap entered into an discernment with one of its competitors, Phillip Morris multinational to manufacture and distribute whatsoe ver of the companys brands in specific markets.On other incident, baste has entered into agreement with Imperial baccy to manufacture and distribute some of Imperials brands in Africa such as Embassy brand. Such alliances deliver enabled the involved partners to concentrate their efforts in specific markets while at the same(p) time having their bands represented. Though this idea may seemingly go forth to be benefiting Imperial tobacco plant only, it on the other hand helps thresh about to fully employ its resources in such markets. Mergers and acquisitionsEarlier this year the company acquired Danish empire Skandinavisk Tobakskompagni (ST) for? 2. 01bn. This is in addition to the taking over of another Turkish manufacturing company, Telkel for ? 860m. Now, such acquisitions are meant to expand the operations of the uncouth and presence in the global tobacco market. Currently holding 15% of the total global market, the vision of becoming the global leader in the manufactu re of tobacco products looks achievable.According to the company vision as to lead the tobacco industry through growth, productivity and responsibility, the idea of forming mergers and acquiring already existing companies in new markets not only indicates the financial military unit of the company but the ability of the management to unwrap potential growth opportunities in making of such decisions.The acquisition of ST was according to the companys CEO made in coordinate to acquire a new market segment of the non smoking market as oral tobacco, Fielder & Lundgren owned by ST. This non-smoking tobacco is aimed to be introduced into markets where there are unforgiving regulations.This comes in the wake of increase pressure from health organization bodies calling on the restriction or total forbidding of smoking in certain(p) areas. Therefore, the company is strategically positioning itself in the non-smoking market by acquiring already established brands in the market with str ong brand names and ensuant strong brand equity.Corporate responsibility In October this year, at-bat was included among the top leaders in the vault of heaven of corporate responsibility reporting by a leading corporate social responsibility consultancy firm, salter Baxter, a move that has received a bundle of criticism.The company salvage insists that its inclusion in the appoint is in recognition of its strong polices in corporate social responsibility as spelt out in the companys corporate ideals of operating responsibly. Michael Prideaux, the companys theatre director of Corporate and regulative Affairs says that If a business is managing products which pose health risks, it is all the more(prenominal) important that it does so responsibly. flails corporate responsibility schedule is articulated in three directions as environmental management, globalization and human rights and regulation and lobbying.Similarly, the companys health and perception department is invo lved in researching into the development of little sufferingful products. This is most indispensable as health reports have continuously high brightnessed the dangers of smoking and the devastating effects it has on non smokers through sec hand smoke. According to the domain Health ecesis report on global smoking released in front this year, it showed that the number of smoke tie in deaths in the US alone for 2007 were in excess of half a million.When confront such glaring facts, the company has had to give its fair contribution in educating the public and more so warn their target market of the dangers of eat their products. Through as ironical as may seem, BAT has gone ahead and introduced a science website http//www. bat. com/science that delves into research findings on the dangers of smoking and related issues. Again the company has complied with stringent regulatory measures nonplus in place to protect the public from victimisation by players in this industry such a s BAT. PEST analysisThis analysis seeks to report the political, economic, socio-cultural and technological factors change a given company in this case BAT. Political This pertains to how the company is structured in order to comply with the government policy in the country of operation. Given that BAT is a multinational company with its brands in active 190 countries, it has had to comply with divers(a) government polices that have varying effect on the operations of the company. Its operations in Russia are at the moment facing a massive curse after being targeted by the countrys consumer rights agency, Rospotrebnadzor.Early September this year, Gennady Onishchenko, director of Rospotrebnadzor accuse BAT of misleading consumers and infringing on their rights on the basis that the company was trade its products as little painful specifically targeting the light and super light brands. This is just one of the many political disputes that the company facing.Other instances that are worth highlighting the tough taxes impose on tobacco and tobacco products in many countries. Economic factors The company operates generally in heroic scale to produced around 850 billion cigarettes a year among other tobacco products.Economics of scale have thus favored the company and contributed greatly in achieving the growth that the company desires. In addition to this, presence of the company in many markets cushions the company from making losses in case of decreased sales in on market that may be caused by a variety of factors.Socio-cultural factors The culture of smoking as a fashion statement is the greatest driver in sales for tobacco companies in general. Unfortunately, the same idea is being used in candidature against smoking which is greatly affecting sales for BAT and other tobacco based companies.On the other hand, there are some traditional believes and practices that profess the faithfulness in smoking of unprocessed tobacco leaves thereby denying t he industry a huge chunk of the market. Technologic factors A lot of research is being directed towards analyzing the harm of tobacco and more so tobacco smoke.As such BAT and players in the tobacco industry are constantly faced with the challenge of improving their manufacturing and bear upon units in order to comply with the requirements of reducing the harmful content of tobacco. SWOT analysis This test seeks to analyze the external and internal environment of BAT.It is one of the methods that Drucker (2008) proposes for analyzing organizations.StrengthsStrong leaders and planning has enabled BAT to recognize threats and thereby partnering with other players for mutual benefit. This as aspect as a strength has been the driving force behind the strategic alliances, mergers and acquisitions as discussed earlier.BAT recognizes that customer is king through market research and subsequent product innovation to identify the selling twist in the market.BAT as a group has interests m asking piece unalike regions and categories thereby modify it to have more stable cash arena prospects.It has a portfolio of brands meeting demands for upscale, mid-scale and economy tobacco consumers covering a wider market segment.International experience diversified portfolio, great locations for major factories in tobacco producing regions and superior quality products also make count as some strengths of the company.WeaknessesThe company has failed to alienate itself from the legal tussles pertaining to smokers suing the company for insurance obtained from consumption of the companys products. BAT has suffered a lot legal battles in courts where the company has been pressure to compensate consumers for damages. As such the company has stimulate an easy target for legal bounty hunters.Its presence in many markets presents a management challenge in that a lot of resources are utilized in the harmonization of organizations policies and strategies.OpportunitiesWith BATs expe rience in operations, there are numerous opportunities in spreading operations over in new markets such as the most recent one targeting the Scandinavian market.As a sovereign brand in the UK market, BAT has the opportunity of influencing the market to have benefit through strategic decisions such as being the price setter.The companys experience in research and development of less harmful tobacco products presents the company with an opportunity to market her brands as the less harmful alternative to comparatively harmful brands in the market.ThreatsThe tobacco industry is faced with strict environmental laws which increase costs of performance and impact on the general productivity of the players.The increased awareness on the dangers of smoking may lead to contraction of the market for the industry.Increased deaths and illnesses from tobacco use are rapidly decreasing the market for the industry.A report by the protector says of BAT it needs to fire at least 750,000 new smoke rs each year to switch the ones who have died from their habit (smoking).Political uncertainties in foreign markets are forcing BAT to with draw operations such as in North Korea and Burma where the company has already withdrawn from the markets. Competitor analysis There are deuce main competitors for BAT in the UK market Gallaher Group and Imperial Tobacco Gallaher Group It is the fourth largest maker of tobacco products in the global market. It has its headquarters in Switzerland and it operates in 80 countries around the world.The company owns Benson & Hedges and Silk sheer Cigarettes brands among many others. The company report a 5. 0% increase in net sales as of 2006 to stand at ? 2. 74 billion. In this market it faces competes with BAT and Imperial Tobacco. Due to stiff competition in the UK market, its share volume in the market has been on a decline while its international operations are on the rise. In 2006, it distributed over 18. 8 billion cigarettes in the UK market. Imperial Tobacco The company has its headquarters in Bristol and is second to BAT in the UK market and fourth in the global tobacco market.The company prides itself in top of the range brands and is has the best two selling brands in the UK as Lambert and Butler and Richmond. Other brands in the market are Embassy, Escort, Camel, Drum, Windsor Blue etc. It dominates the fine cut market with a market share of about 63% as of last year. The company reported net revenue of ? 8. 69 billion for the 2007/08 financial year with increase in profits in excess of 30%. The company has adopted a corporate strategy very similar to BAT and thus poses the greatest threat in the market.It recognizes its amount objectives as sales development, cost optimization and dexterity improvements and effective cash management. Success or disappointment of these strategies is further evaluated through key performance indicators which have been identified as earnings per share, total shareholder returns, c ash conversion rate, cigarette market share, volumes, operating margin and productivity. The companys shareholder returns have increased by 106% in the last three years surpassing FTSE expectations by 74%. Its growth path according to the companys positive website is as below.The growth in financial strength o the company and the ability to gain investor sureness shows that the company is set to offer even more competition to BAT. Comparing this growth path with that of BAT, then it will be probably a depicted object of time before BAT loses out its market position in the UK.The future of BAT The prevailing economic crisis is presenting financial and management problems to many businesses. The ability to survive the crisis and move on will be used greatly assess the strength of many businesses and indicate investor and consumer faith levels. As it is, the current power for BAT is not promising.The company is being accused of targeting the youth in their marketing efforts and th ereby losing consumer confidence and criticism from various quarters. Negative reports such as BATs main product, cigarettes, is so deadly that just to take note its 15% global market share, it needs to recruit at least 750,000 new smokers each year to replace the ones who have died from their habit carried in the Guardian do not do any correct to the company. This was in addition to being accused of targeting teenagers in international markets such as Nigeria and Brazil. Therefore, it would seem that the company has to reconsider its marketing strategies.Developing a new marketing strategy and adopting strategic means to sanitize the corporate brand name will prove necessity in the way forward in markets where the company is losing ground and facing criticism. Again, the company has not been according to accusations very keen on following some of the rules and regulations governing the tobacco market in different markets. Other concerns for BAT affect the whole industry. The Wor ld Health Organization (WHO) has been spearheading the fight for tobacco use citing the numerous health problems and deaths emanating from the habit.In 2007, claimed that if the current smoking trend continues, the world will contend with 10 million deaths annually as a result of tobacco use. In addition WHO reports that smoking causes 61% of all TB illnesses globally (Hooper, 2004). Companies such as BAT again have been forced to limit their marketing strategies by regulation such as the banning of public advertisement of cigarettes or romanticizing or forge smoking in any manner.Works cited Drucker, P. , watchfulness, Transaction Publishers, Birmingham, 2008, p. 286, 456 Elion, S., Management strategies a critique of theories and practices, Kluwer Academic, London, 1999, pp. 212 Robinoof, M. , Ending the tobacco holocaust, elite Books, London, 2007 Hooper, M. , Tobacco industry Do ads and new products still target teens? Congressional Quarterly, CQ Press, London, 2004.The Guard ian http//www. guardian. co. uk/commentisfree/2007/apr/26/smokeandmirrors surplus information on the above obtained from Official BAT website http//www. bat. com/ Official Gallaher Group website at, http//ir. gallaher-group. com/ Official Imperial Tobacco website at, http//www. imperial-tobacco. com/.