Introduction
Marketing is dynamic and has been evolving since 1960s with the beginning of marketing orientation; this was during the initial stage of capitalism business whereby, initially, firms were concerned with only production and manufacturing of goods i.e. the focus was on producing effective products to meet the demands of the consumers.
However, in the 70s companies realized that the needs and wants consumers were the one directing selling of products produced. Therefore, marketers and strategists expanded their knowledge too and came up with plans for there businesses in order to meet such challenges; this witnessed the drafting of marketing guidelines in the form of business strategies, marketing plan and marketing strategies. Marketing plans forms the basis of drawing marketing strategies for firms including BAT Company. Marketing plan mainly entails crafting a business mission and vision that aids in guiding a business to achieve its goals. (British American Tobacco profile, 2008).
Therefore a good mission statement should consist some of the following features; the targeted clients, customer’s needs and wants, customer’s characteristics, the products, particular requirements of customers to be targeted and client’s attitudes among other factors. Also the marketing plan should clearly spell out the firm’s objectives, i.e. in what is referred to as SMART criterion; SMART stands for specific, measurable, attainable, realistic and time bound objectives. This paper will therefore focus on BAT Company and how it has responded to the various challenges brought about by the changing business world.
Description of the Organization
British American Tobacco (BAT) Company is the second largest listed producer of tobacco products in the world and it is categorized to be in the tobacco industry. BAT Company is said to be among the top market leaders in the tobacco industry. BAT Company is also reported to be employing over fifty five thousand employees and its annual revenue is estimated to be ₤9,762 million from each subsidiary. The company’s workforce is diverse and multicultural in nature. The objectives of the company include increase of its products that is its brands, building worth of its dealing, enhance efficiency in production, and to implant the main beliefs of corporate social responsibility in all the branches of the company. The vision of the company is to be the leader of the worldwide tobacco industry. The company has Board of Directors who has played the role of ensuring that the company is directed to a success. Further the management of the company is considered to be effective and efficient in carrying out their expected duties. (British American Tobacco profile, 2008).
The subsidiaries of the company in the different countries have the autonomy to make their decisions so long as it is in line with the company’s overall main objectives. This has enabled decision making processes to involve all the shareholders of the company in the respective subsidiaries. The company’s management is aware of the risks caused by the tobacco products that they produce and it has formulated an effective operating responsibility that guides the consumers of the products. The company’s interest lies mainly in tobacco leaf planting and the company work hand in hand with farmers globally. The company does this by giving the farmers agronomy support that wraps all dimensions of crop production and environmental best practice as set by international standards. This aspect enabled the company to buy over four fifty thousand tones of tobacco leaves from two hundred thousand farmers around the globe.
Competitive Strategies of BAT Company
John Tomlinson in globalization and culture notes that, globalization lies at the heart of modern culture and cultural practices lies at the heart of globalization. He further argues that the current business globalization has led firms that operate and invest in a global scale to transform patterns of trade and shape the interactions between them for example through mergers. Business environment analysis is very crucial to businesses and marketing managers have the duty to formulate good policies that help the organizations to withstand competition. With particular regard to BAT Company environmental analysis, it is evident that the company has had some competitive strategies that have enabled the company to perform well in the tobacco industry. (British American Tobacco profile, 2008).
The company has adopted competitive generic strategies that have enhanced the company’s competitive advantage over its rivals like the Marlboro Company. These competitive strategies have enabled the company to create and sustain a justifiable position in the tobacco industry. BAT Company has formulated competitive strategies that have enabled the company to compete across the entire market of tobacco industry which is evident in the way it has diversified to various countries.
Because of such strategy, BAT Company has a strong brand name which helps the organization to have a competitive advantage over the other tobacco producing companies like the Marlboro Company which is the BAT main competitor. According to latest research, the company has investments nearly all over the world, which has led to the success of the company. Customers of tobacco products purchase mostly those products like cigarettes associated with BAT Company. The company is said to be an overall low cost producer in the industry and it has competed well by gaining a large market share by lowering the prices of tobacco product.
The company is also accredited with the best marketing network that have made the company to do well globally. BAT Company has opened many subsidiaries in many countries for example; it has one hundred and eighty markets all over the world which sells it brands. Research shows that this tobacco company is quite global in nature. It operates branches in Africa, Australia, Asia, Australia, Latin America and the Middle East among other countries. The company has the best distribution channels in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. The other competitive strategy associated with BAT Company is it has utilized its ability to identify the market segments and hence the competitive position of the company is considered to be high than that of its competitors and has in the process developed workable marketing strategies BAT is the second largest tobacco company in the world and it has got many assets that help it to serve a wide range of customers. (British American Tobacco profile, 2008).
This company has got core operating units that have helped it to have a very firm structure. Because of this well build financial base, the company has embarked on product differentiation process where the products of the company have been viewed to be unique and that is the main reason why there has been constant increase in sales. The growth strategies of the company include market penetration whereby the company has sold existing cigarette products in existing markets. The company has also embarked on market development whereby the company has formulated strategies of expanding to new markets with existing products for example in Africa. It has also formulated new cigarettes products for new markets in those places.
BAT Competencies and Capabilities (the environment it operates in)
In order to assess BAT Company competencies and capabilities the company’s effectiveness in terms of production and ability to sustain any competition from its rivals is considered. BAT Company in regard to competencies and capabilities have embarked on a number of activities which has contributed to the success of the company not only in the company’s main centre in London but also globally including; recruiting competent, motivated and qualified employees in order to achieve good results, good communication system in the company, BAT Company has developed unambiguous policies, decisions and regulations, a conducive environment for working, good management, have built a system with ability to adapt to any changes, have an efficient board of directors and have build a viable and strong culture and mission among others.
Strength can be defined as a particular skill or distinctive competence that a company can do relatively better than other companies especially its competitors and which the organizations have and contributes to the achievements of the stated goals or objectives. BAT Company has a strong brand name which helps the organization to have a competitive advantage over the other tobacco producing companies like the Marlboro Company which is the BAT main competitor. According to latest research, the company has investments nearly all over the world, which has led to the success of the company. Customers of tobacco products purchase mostly those products like cigarettes associated with BAT Company.
Research shows that this tobacco company is quite global in nature. It operates branches in Africa, Australia, Asia, Australia, Latin America and the Middle East among other countries. The company has the best distribution channels in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. The other strength associated with BAT Company is it has the ability to identify the market segments and hence the competitive position of the company and has in the process developed workable marketing strategies BAT is the second largest tobacco company in the world and it has got many assets that help it to serve a wide range of customers. This company has got core operating units that have helped it to have a very firm structure. (British American Tobacco profile, 2008).
An opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favourable or advantageous to the business in relation to a particular objective or set of goals to be attained. It is an attractive venture for a company’s operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth.
There are many opportunities that exist for BAT Company in relation to emerging markets all over the world. There are great emerging markets in Africa, Asia, and Australia among other countries. There is great investment demand in these places that BAT Company can maximize on it. There is significant increase in the consumption of tobacco products which creates a great opportunity for BAT Company to expand their investments. BAT Company has an excellent developed financial base as compared to their rivals implying that they don’t have financial problems in opening branches in potential markets outside the UK. (Cullen and Parboteeah, 2005).
The technological innovation, for example, that of e-commerce has been utilized and has resulted to expansion of the market share of the company thus increasing their profits and enhancing growth. Since BAT Company is the second largest producer of tobacco products, its competitive advantage allows the company to penetrate to more new markets than its rivals. If the company can fully utilize this it will have the upper hand in terms of competition and explore new markets and profit margins will shoot up thus gaining more power to compete globally. (British American Tobacco profile, 2008).
A threat can be referred to as an environmental development or event which will present problems or challenges likely to hinder the achievement of organizational objectives, for example, competition, high interest rates, government legislations, declining real income among others. BAT Company is now facing stiff competition from its main rivals like the Marlboro Company, thus there has been a drop in the market share thus a reduction of their profits. The marketing strategies of BAT need to be reviewed in order to cope with the increasing competition. For it to continue succeeding globally the marketing managers have to incorporate recent technological developments like doing business online.
There are times when government regulations may hinder the operation of the organization. This can also be termed as a threat. Under this BAT Company over the last few years in some countries have been experiencing challenging times whereby these countries have passed laws that do not favour using tobacco products. A good example is in Africa particularly Kenya whereby recently advertising of cigarettes to the public through media were banned. Also the country has banned smoking in public places, a habit which was common among the citizens of that country. Such development have threaten the success of the BAT Company in that sales of tobacco products have reduced significantly in the countries affected thus leading to reduction of overall profits. (British American Tobacco profile, 2008).
A weakness can be defined as any aspect of the company which may hinder the company from attaining its objectives or goals. Usually, it covers the firm’s assets, resources, and capabilities. Latest research indicates that BAT company is faced with few weaknesses which if not taken care of it may hinder the company’s success. The company’s rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly. Also the human resources, that is, the workers and the management have been performing poorly of late in their respective responsibilities.
Laxity on the side of the marketing managers has been pointed out and reports suggest that they have not come up with suitable marketing strategies to cope with the ever increasing competition in the industry. The organization culture of doing things and reputation has been questioned by many people globally. There has been an argument that the products that the company is producing are harmful to human health, a development which has reduced their market share. The systems of production, controls, and work methods have been under scrutiny in the past few years. There have been fears that the work methods used are not convenient in the company if they need to cope with change and the ever increasing competition. (Cullen and Parboteeah, 2005).
BAT and Corporate Social Responsibility
Recent survey indicates that in the contemporary world of business where perfect economies prevail, any business organization including BAT Company is anticipated to behave in the best way possible in order to attain its corporate goals. The main objective of the set marketing objectives in BAT Company is to augment competitive advantage of the firm over its rivals like the Marlboro Company. Research further reveals that BAT Company has attained its competitive advantage in the tobacco industry over its rivals because it produces cigarettes that meet the needs of its customers. Also further surveys indicates that BAT Company has utilized excellent marketing practices that are considered ethically good and that is the main reason why it has achieved a large market share in the tobacco industry because the external public have trust on the company and positive perception of the tobacco products that the company offers; this implies that the company’s clients are always happy of the products since they are aware on all the features of the products (Barnett, Bass, Brown and Hebert, 1998).
It is evident that BAT Company over the recent past have been subjected to what is termed as social or administration pressures particularly government pressure on its tobacco products; for instance, the ban on smoking in public places and the strict rules on advertising in the media. Governments play a key role in ensuring that good marketing practices are followed for instance in some situations firms that don’t follow required ethical norms may end up being blacklisted thus making customers not to use the firm’s products. For instance the frequent calls for observing social responsibility context have contributed immensely to BAT Company to follow good ethical marketing practices that are meant to protect consumer rights. (British American Tobacco profile, 2008).
Business ethics as defined is the norms or standards of behavior that guide moral choices about the conduct of the personnel in a business organization and the relationship with its publics. The goal of business ethics is to ensure the safety of the employees, management, and the external publics from suffering the consequences from the business activities of the particular organization (Murphy, 1998). Business ethics along with social responsibility defines what the organization ought to do in the management of the business. The social responsibility of BAT Company towards the society merits considerations in all the faces of strategic management, whereby the organization must exercise strategic planning through environmental and organizational appraisal in order to provide answers to what the company might do and what it can do with regards to production of tobacco products.
The span of business ethics is extensive and can be measured from different perspectives. In this case the BAT Company’s management should ensure that several ethical considerations must be balanced for the business to be successful in its operations and relations with its employees and the surroundings of its business (Berman, and Evans, 1998).
It is not ethically good for business firms to engage in deceptive behavior for instance; by BAT Company producing cigarettes that make the clients to believe that they will be satisfied but in the real sense they will not be satisfied. Such marketing activities are considered misleading since the clients will not reap the benefits that they were earlier meant to get when they first heard of the product. In business context deception by business firms may be through distortion of information regarding the product, exclusion of certain features as well as practices of marketing that are regarded to be deceptive or confusing among other deceptive actions. However, it can be deduced that BAT Company is not engaging in deceptive conducts since it gives out clear information of cigarettes to customers for instance; in BAT Company’s advertisement they usually indicates that excessive smoking is harmful to your health which is true as per say.
In other instances firms engage in offering products to customers at misleading prices; this scenario is considered unethical in the business industry since the customer has a right to know the real value of the product and buy its at its genuine price. By firms pricing their products in such a manner that consumers will suppose that they are actually purchasing the products at a cheaper value than it is meant while just that is a gimmick of attracting customers is considered unethical. However, up to now there is no clear indication that BAT Company is offering its tobacco products in a misleading manner (Kotler and Armstrong, 1999).
Further, businesses should not engage themselves in advertising practices that makes the customers think otherwise of the products i.e. features or needs that the customers cannot derive from the products when they purchase the products as advertised. Further BAT Company to a larger extent markets products i.e. cigarettes that are considered harmful to the consumers’ and therefore to some extent breaks the rule of good ethical marketing values that guides good marketing practices in a competitive market place (American Marketing Association, 1998).
Another ethical issue Company is the social reaction of the organization that is the manager should create a positive work place that will have its employees engage and encouraged to attain high performances. He may do this by setting the right expectations from each department of the company. He should encourage the workers into productive work by rewarding the best performance through increment of the payment by recognition of the workforce applied by the employee. For BAT Company to maximize the individual performance the managers responsible should have job security concerns for his employees, under which when an employee is confident of his or her job security at the workplace, his performance is far much better than a case where he or she is not sure of being retained in the next year.
Another ethical concern in marketing activities is adverts to young children or adverts that may not be good for children to listen or view them when it is being aired in different media channels. Although children in the modern world forms close to sixty percent of the target markets in terms of products that are being marketed, it is prudent for BAT Company marketers to consider ethical considerations before reaching to the targeted market. It should not be noted that children are not mature like adults and therefore it is more likely that they will react to different adverts advocated by BAT Company in very unique ways considering their psychological conditions. For instance, children are more vulnerable to adverts of cigarettes than adults since they may want to practice what is being aired in order to enjoy the particular cigarette product being promoted (Murphy, 1998).
Business ethics is crucial to BAT Company and therefore the management should give much attention in ensuring that the business is conducted in a fair and an objective manner. This means the needs of the community should be met while the BAT Company’s goals are achieved without much difficulty. It is evident that the world economic order is ever changing and BAT Company ought to change tactics by strictly following ethical ideals that is recommended in the tobacco industry instead of only concentrating with merely the tobacco products that it offers to the market. (Anthony, 1998).
It should be noted that in this competitive business world, BAT Company should conduct itself in a good manner which in the long run will lead to its clients being happy with their products thus reaching out to a larger market share. In essence, if BAT Company wishes to succeed in its undertakings it ought to provide tobacco products that are of good quality, generally acceptable to the members of the public as well as meeting the set standards set by the local bureau of standards body.
Recommended Strategies to the Company
Generally the board of directors should define the company’s mission statement which will involve clarifying and analyzing this mission statement to meet the present challenges of the organization. This will offer guidelines to management of the company when considering how business should develop and in what direction, for example how it will increase its current market share to greater levels. The strategies adopted by the company should clearly direct efforts towards accomplishing the organizations basic mission or objective. As reported earlier that the BAT Company vision is to become a leader in tobacco industry the company’s board of directors has to embark on a five year plan that includes the following:
The company needs to improve on in its response to globalization. For instance BAT has responded to globalization by opening up some branches around the globe but this have not been enough as it still faces competition from other tobacco products producers. BAT Company should explore more new markets and try to be the dominant market leader in order cope with change and competition in the industry. This company requires restructuring of the entire company structure such that it is able to withstand the pace of growth in the industry.
Organization structures of BAT Company should be clearly outlined such that the employees will know what they are expected from them in the course of their duties. This will lead to reduction of conflicts between management and the workers because there will be no vague policies. The BAT Company structures should be in such a way that it fits the modern world and should be adaptable by the employees. Groups’ dynamics should also be encouraged in order to enhance cooperation among the workforce. Workers should be left to join groups of their choice to avoid conflicts that may arise. (Berman and Evans, 1998).
In order to improve the organization effectiveness BAT Company, the management concerned should always avoid poor managerial leadership through doing away with authoritarian style of leading and instead encourage democracy to prevail in decision making that is, an all inclusive decision making structure. Also motivation of employees should be encouraged and offering of fringe benefits, house, medical, hardship allowances and other social services for example swimming pools, televisions sets will make the employees feel respected and recognized in the work place.
Research also indicates that group decision making need to be emphasized because it yields good returns as compared to that of individual decision making. A good communication channel should be identified by BAT Company in order to boost organizational effectiveness. Any barriers to effective communication that may be encountered e.g. selective perception, language barrier among others should be dealt with in order to pave way for efficient passing of messages in the workplace. The company should immediately implement the strategies that will counter competition as a result of globalization from other firms and thus the company should continue to explore new markets around the globe. (Maund, 2001).
Conclusion
Research indicates that there are many things a company does but it should always concentrates on what it can produce best. The internal analysis facilitates the formulation of strategic plan which requires a clear understanding of the internal strengths acquired over time and any weakness that adversely impact on performance. Distinctive competencies are things that give a firm an advantage over similar businesses. Research also indicates that no matter how attractive an opportunity may be the business must have the competencies to capitalize on it. An opportunity without the competence to capture it is no really an opportunity to the business.
Due to invention of highly developed technology the current world has more and more become an integrated community and as a consequence global business is the present form of trade in this 21st century.
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