Strategy in practice Assignment Sample
Introduction
British American tobacco also known as the BAT is one of leading the tobacco companies around the world who specialized in different types of cigarettes and the nicotine products as well. The company was established in 1902 and has a knowledge base and infrastructure that spans over one hundred and ten years.
External analysis
PESTLE analysis
| Political | Economic | Social | Technological | Environmental | Legal |
| 1.There have been political pressures to the closure and restricting of the tobacco companies.
2.British American tobacco had a number of conflicts with the British government over the years 3.However, in the recent years – the major contributions of the company in terms of sustainable development and election funding have strengthened the political ties for the company.
4.The company has known to have what is called as the engagement through campaigning programs that helps the relationship building with the politicians, the parties and also with the policy makers that is important to note and understand as well (Ozcebe et al., 2018). 5.The company has developed strong regulation teams and policies within the framework of the company that has helped their compliance with the federal bodies and the standards and more improvement in this domain can be seen as an opportunity. 6.Thus regulations and the campaigns plus the funding parctices actually helped the company in the recent time to develop the business as it is needed and the political relationship, as it is required – that is important to understand. |
1.It has a strong market hold and share being a leader and the global sales of the company chosen here is also increasing – given a range of demand and stress factors affecting the societies around the world.
2.The company is also a leader in terms of the net sales produced for the last some years showing that the reputation of the company playing a major role in bringing in the economic revenues that is vital to note. 3.As reported, the company British Tobacco company is known to follow and invest in what is known as the circular economy whether the waste management is given a primary focus, and this is also adding to the sustainability and regulatory practices of the British American Tobacco. |
1.The company has been using the child labor to grow and manufacture the tobaccos that is the major social challenge for the company
2.However, the corporate social responsibility practices and the activities are taken up by British American Tobacco in order to solve and sort the problems pertaining to social capital and the management that is important to point out here.
3.Since the allegations, both the protests as well as the commitment to protection and empowerment of the rights of humans from all background has been made by the British American Tobacco (Cao, Liang & Zhou, 2021).
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1.The company is using the strong practices in technology leadership and automation in order to drive the international business properly and in today’s right business context.
2.The company is collaborating with international business machines (IBM) and the best practices in automation as well as in terms of enterprise management is helping the process of development very much and critically. 3.In fact, the company is also using the technology to reduce the effects of the tobacco and the emission of the smokes. 4.There is the research and development team in the company that focusses on decreasing the harmful effects of using or intaking tobacco and there are using different set of the technologies to bring in the right awareness in the customers and to reduce overall harmful effects of the tobacco on the human body. |
1.The company is strongly committed to protect the resources of the environment and to save the resources that is at a critical point for the use of the future generations to come.
2.The company is known for the commitment it made in the recent years to become a climate leader and already by the media companies, it is already considered as one.
3.The company has the strong practices in terms of the green technology and management, technology integration that is helping the cause of what is called the environmental sustainability that is important to note and understand as well. |
1. the company has the issues of allegations faced by it, for the child labor used that is a business ethics and legal breach clearly.
2. Next the company was found to have the complex breaches pertaining to the Tobacco control regulation law and this is another critical risks point for the company that is British American Tobacco. 3. the company failed to disclose the materials and the ingredients used in the tobacco manufacturing and this was a mandatory thing to do that created the major gaps and legal complications. |
There it can be said from the PESTLE analysis, the areas such as the political, economic, social and technology can be seen as the opportunities where the company has made progress while the other areas like the legal and the social areas – the company is having certain amount of the complex threats that needs to be managed well too.
Porters five fore analysis
| Threat of new entrants – low. This is because the tobacco industry requires a large sector of production and the human resource management that is important to note and understand as well. That is why, the investments needed to develop such a business and maintain such infrastructure is expensive for many and that is why the threat is quite low with respect to this market force that is important to understand. The government regulations on tobacco business and the capital requirements are the major issues for the new entrants. |
| Supplier bargaining power – low. This particular market force is considered to be low because of a number of reasons. The manufacturing farms of the tobacco cannot be well managed without the investment from large sector industries like the tobacco dealing corporations like the British American Tobacco. That is why, the suppliers can be shifted from one to another and cost, on the average, is low as well. |
| Buyer bargaining power – High. this is because there is an oligopoly in the market created by the business competition by various tobacco multinationals in the global market scenario that is very much important to note. The buyers have the choice to buy whatever they need and the need for experimentation and cost control – they are continuously changing brands of the tobacco that is important to note. |
| Substitutes – moderate. There are many companies producing the health-conscious cigarettes and the nicotine products and that is why, the consumers always have the fair share of their chance to switch brands and their level of loyalty is what that matters for a certain organization like British American tobacco. |
| Competitive rivalry – High. the companies like the Philip Morris international, Benson and Hedges, Glaxo smith and others have given a tough competition to the world class brand of the British American Tobacco ciguateras that is important to note and understand as well. The innovation from these companies at a very fast rate and the low costs for switching the brands are increasing the level or the degree of rivalry present in the global tobacco market. |
| Internal factors | ||||
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External factors |
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| Opportunities | Technology oriented market growth, innovation and responding to market needs. Technology and regulatory policies can be used to develop good relationships with the external stakeholder that will help the global business of the British American tobacco company as a multinational corporation. | |||
| Threats | The major complex issues of legal breach in terms of information disclosure became a problem and with the right sustainability and corporate communication practices – these areas or rather gaps can be closed by British American tobacco. | |||
Internal analysis
Resources:
Resources are the essential factors to develop the business in the global market. There are five types of resources, which include tangible. Intangible, human resources, high brand equity, and signature check design (Olteanu, 2020).
Intangible resources (Strength):
The company British American Tobacco had an income of 33.09 billion in terms of the United States dollars for the year of 2020, 17,637 million in Great Britain pounds for the year of 2019 that is important to note, and it was about 16,085 million in Great Britain pounds for the year of 2018 that is critical to note and understand as well. As for the Return on capital employed also known as the ROCE is as high as 3,173.00 GBX that shows the high market performance of the company in the recent years. In terms of what is the Gearing and Interest Cover as well as the current ratio – it has been reported that in the year of 2019, it has 7.1 and for the year of 2020, it was found to be 7.0 that is important to understand (bat.com, 2021). Thus, in terms of the business performance and the company growth in terms of the global tobacco business – the company has maintained a steady phase that is to be critically noted in this case as well. According to the intangible resources the financial factor is the strength to British American Tobacco company. This has been seen as a strength and an opportunity by the research, to further improve financial performance for the British American Tobacco.
Human resources (Strength):
Human resource is the essential factor to develop the business in the global market and makes the competition. So, the human resource of company provide training to employee for the better production and improve the knowledge regarding the production process. According to the report, the company employed approximately 89,182 persons worldwide in 2020. According to the Adenekan (2019), it is the marked levels of the operational excellence run by the company and the marked levels of what is called the quality management done by the company with the adopted practices of lean management and waste control is adding to the market perception of the British American Tobacco company. These are relatively new practices adopted by the company and that is why, there is an improvement of the work or the employee work performance by almost 18.5 percentage that is a great number, adding to sales performance of the company such as these. According to this study, the reliance of the company in the covid 19 pandemic should a marked increase due to the adoption of great business practices in terms of stress management and employment management through technology oriented right and ethical information flow that helped the overall financial development and performance of the company which is a clear strength. The human resource of the company provides training regarding the sales and marketing of the product. The human resource is the strength of the company to make a position in the competitive market.
According to the Bauch, B. (2021), it is important to understand that the environmental and sustainable practices undertaken by the company is critical for the development of the safer practices and great returns in terms of investment returns. It is recommended by the study that more economic, social governance activities and the corporate social activities should be taken up by the British American Tobacco that is important to note and understand.
Psychological resources (Strength):
According to the Munthali & Xuelian (2020), there is a need for the development of the corporate social responsibility actions by British American Tobacco organization as they are more politically and socially disruptive and so are all of the tobacco companies around the world. While the value chains that the company uses and adds to has been appreciated by the researchers here, the fact that tobacco use cause the health problems of different types form cardiovascular to the respiratory has been strongly criticized by them as these companies are using strong political and the socially corruptive measures to sell their products on a very high amount that is ethical wrong. And this is the sense of wrong that is impacting the financial performance of British American Tobacco in a serious way and is important to understand. British American Tobacco ha an impact on public for the use of tobacco as it has the significant function on the health issue. Most of the young generation use tobacco that helps to develop the business in the competitive market.
Managerial resources (Weakness):
According to Nafis (2021), there is a need for the development of the business practices in terms of the corporate communications and the informational management and public disclosure for British American Tobacco. In the Asian countries where they have operations and the offices running, according to this research, British American tobacco often fail to communicate the right important information about their products to the government agencies and also to public which is vital to note and also to understand. This has marked impacted on the performance of the organization in the recent times in the Asian countries which is market weakness for the British American Tobacco.
Technological resources (Strength):
According to the Dewhirst (2019), the British American Tobacco has been advertising the products like the electronic cigarettes or the vapes in the country of Canada. Despite the competitions coming from the other company, the British American tobacco has been able to develop the right profits and the financial performance (as shown in the above statistics) from the vape brands like the Blu and Logic, MarkTen XL and Vuse that is important to note. It has been mentioned in the resource that the various factors like the youth and Y generation awareness to the new generation cigarettes such as the electronic ones have a great deal of benefit over the traditional ones and this shift in perception has helped the financial performance of the British American Tobacco company’s subsidiaries in the Canada and American countries. The point of the sale devise, the product display activities and the advertisement has been found to be effective to attract the young generation to the new generation, health friendly cigarettes that is important to note and understand as well which can be seen as a strength for the organization.
Financial resources (Strength):
Current ratio:
The financial ratios of British American Tobacco define the strength of the company in competitive market. The debit ratio of the company is that 48.49% and gearing under the 1 year is that 11.24%. Besides that, Gearing Under 1 Year (excl. Intgbl).
Competences:
British American Tobacco has the financial strength and strength of human resources that help to develop the company in competitive market. For the competences of British American Tobacco, it is essential to analysis the value chain. There are primary and secondary factors to analysis the value chain.
Fig: Financial report of British American Tobacco
(Source: UK Value Investor, 2018)
Value chain Analysis:
Primary:
Customer service: Customer service is the essential factor to develop the business in the competitive market. The human resource of the company focuses on the marketing and advertising to enhance the attraction of customers as well as makes the good relationship with customers and human relationship that helps to develop the business in the global market. As result, the management of eth company collect the feedback of customers and innovate the product to meet the demand of customers that helps to develop the company in the global market.
Operation: Operation is the essential factor to develop the business in the competitive market. The most important factor is that the quality of raw material has the significant role to improve the product and it helps to develop the business in the global market. As well as different factors are related with the development of product and develop the company such as machining, packing, assembling and testing. The management of the company should follow all of the process to maintain the quality of product and makes a position in the global market (Frederick, 2019).
Marketing: Marketing is another factor to develop the company in the global market. The management of company follow the marketing strategy to develop the business such as advertisement, promotion of the product through the social media as well as communicate with local retail business for the development of the business. Communication strategy and customers psychology is used by the management of company to develop the business in competitive market. Besides that, the company innovate the electronic cigarette that increase the attraction of customers so, innovative products help to develop the business in the market (Toebes, 2018).
Secondary:
Human resource management:
According to the finacial report, the company employed approximately 89,182 persons worldwide in 2020. The most distinctive competencies of the organization are the activities such as the corporate social responsibilities, environmental social governance, the technology use, and the employee engagement activities plus the business campaigns for the political engagement (Caponnetto et al., 2018). The other distinctive competencies of British American Tobacco are the operational excellence and the regulation in the international environment of the company. The final three distinctive competencies of the British American Tobacco company lie in the areas of human resource management, operations and the sales that adds value to the societies and the employees as well as other authoritative stakeholders of the company.
VRIO analysis:
VRIO is defining by four factors such as value, rare, imitability, and organization. All of these factors analysis is essential to develop the business in the global market.
Value: Competencies allow the business to grow and expand the business in global market. The value of the company is depending on different factors such as brand value of the product helps to develop the business as well as the company invest to the research and development to innovate the product that enhance the attraction of customers. The management make the good relationship with suppliers and customer that helps to develop the business as well as the company has the strength to develop the capital that helps to develop the business (Fisher et al., 2020).
Rare: The management of British American Tobacco think regarding the effect of use of cigarette so, the management should be prepared to take the challenge and be adaptable at every situation. British American tobacco has the international presence that helps to develop the business in the global market. The company has strong team work and innovative work to expand the business.
Imitability: Imitability of British American Tobacco is depending on the different factors such as product quality that helps to develop the business in the competitive market. The management of the company follow marketing strategy to develop the business in the competitive market. As well as according to the feedback of customers innovate the product to meet the demand of customer. The company provide the reasonable pricing to the product that develop the business in the competitive market (Lizares, 2019).
Organization: British American Tobacco focuses on the resources to develop the business in the global market. The company has the financial strength as well as invest to the research and development for the innovation of product that enhance the attraction of customers. The management provides the proper training to employee to improve the skill and knowledge to develop the business as well as maintain the working culture to develop the productivity of company. The company follow the marketing strategy to develop the business (Miethlich & Oldenburg, 2019).
| Core competency | Value | Rare | Imitability | Organization | Implecation |
| Corporate social responsibilities | Moderate | Moderate | High | High | Competitive advantage |
| Environmental social governance | Moderate | Moderate | High | Moderate | Competitive advantage |
| Sales and marketing | Moderate | Moderate | High | Moderate | Competitive Advantage |
| Technology management | High | Moderate | Low | High | Temporary advantage |
| Operational excellence and waste management | High | High | Low | High | Temporary advantage |
Table 1: VRIO analysis
(Source: Created by learner)
Thus, from the VRIO analysis, it can be clearly said and mentioned that the operation excellence is the most critical core competency of the company followed by the technology use and management to produce the best of the scientific and health friendly products of the company and these two core competencies are allowing British American company to grow effectively and expand at the same time. The waste management in the processes, quality monitoring and manufacturing or logistics or marketing activities of the company that is the British American tobacco is helping the market leadership and developing of the competitive advantage of the company, in global tobacco market that is critical to understand as well (Gallagher et al., 2019). The technology leadership and innovation in terms of the technology management as facilitated in the company British American Tobacco by IBM is critical to its position as a market leader in the modern times and is vital to note. These two core competencies of the company are markedly important for the British American Tobacco unitization company and other areas such as the corporate social responsibility and the environmental social governance areas needs to be managed and addressed with right strategies.
Strategy recommendation and evaluation:
Apply SW component of the TOWS matrix:
| Strengths
The technological and the operational excellence are the major core competencies of the company that is British American Tobacco, and this is important to note and understand as well. These areas need to act upon well by the company to develop more market shares and enter new markets around the world that is important to note. |
Weaknesses
The social management in terms of the child labor and other are the main problems and there has been incidents of conflicts with United Kingdom government as well that has affected the brand trust. Thus, with the engagement campaigns, environmental management practices, cooperate social responsibility activities, and the stakeholder meetings plus regulatory compliances – the market and the company growth in the global sphere can be ensured.
|
Suitability
For the strengths and opportunity quadrant, the technology leadership as well as the operational excellence (with waste management) – there is an opportunity for the market entry in new country and only by utilizing the technologies present in those countries and the engaging the local labor from that country – such a change is actually possible that is important to understand. The British American tobacco should be focusing on environmental and the lean management as well as corporate governance and social marketing activities in different countries so as to improve the perception and gain the confidence of the consumers in the new demographics that is important a strategy and critical to be noted. Moreover, the community development programs and more of the environmentally friendly operations and health friendly tobacco products and evidence should be developed by the British American tobacco company in order to manage the internal and the external issues of the company rightly. The workforce engagement and the child labor issues are the major problems in the company in many countries and that is why, with right regulatory policies and support to staffs – the market leadership as well as the revenues can be gained in different parts of the world.
Acceptability
The five stakeholder groups who will be important for the change will be the corporate social responsibility staffs, the regulatory bodies and policymakers, the non-governmental organizations, and the consumers of the company that is important. As it can be seen from the power interest matrix before that the various groups such as the regulatory bodies and the policy makers are of high interest, and they need to be complied with as they are the most critical stakeholder groups (Crosbie, Eckford & Bialous, 2019). They are the legal bodies, and, in every way, the British American Tobacco company needs to be complying with their rules and regulations to make the business and their global organization – a socio-politically responsible organization. And this will also mean that more interest will be given to the public interest by the organization here due to the better kind of public private relationship developed. Secondly, the key stakeholders are the staffs of the organization who needs to be very closely supported and assisted by British American organization here is the corporate social responsibility staffs (CSR) and the consumers of the company who will be at the direct providing and the receiving end of the corporate social responsibility actions and social marketing activities of the company. The staffs need to engage in their work and only by working closely with the scientific resources at the company, the CSR staffs can be able to handle the needs of the consumers from the moral, ethical, environmental, or philanthropic or social strategies. For the delivery for such corporate social responsibility actions in different countries, the joint venturing with the non-governmental organization at different parts of host country will be needed for British American Tobacco.
| High (keep satisfied)
Regulatory bodies policy makers
|
High (Key stakeholders, manage closely)
corporate social responsibility staffs consumers |
| Low (Minimum effort)
|
Low (keep informed)
non-governmental organizations |
By collaborating well with the three main groups that is the Regulatory bodies, corporate social responsibility staffs and consumers, the Return on capital employed and the Current Ratio can be improved upon greatly (Crosbie et al., 2018). They will be more engagement of these stakeholders in the business affairs, internal and external factors of the British American tobacco and that is how, proper strategies will reduce risk and improve the return as in revenues as well.
Feasibility
The collaboration between the various stakeholders in the company is critically needed to adjust the internal factors well and respond to the external needs of the British American Tobacco that is important to understand. The corporate social responsibility staffs can only work well if the assistance is given properly by the finance staffs, operations and the research and development teams in the right ways and only by using the proper information flow techniques, the strategies planned can be delivered in the right manner (Gallus et al., 2021). The technological skills need to be developed in the corporate social responsibility staffs and the environmental social governance staffs and here, the information technology experts will play a key assistive role that is important to note and on the whole, the overall training programs should be developed by the human resource at British American Tobacco (Dewi et al., 2020). The strategic planning in terms of how much money needs to be paid in terms of the corporate social responsibility and the corporate governance activities needs to be done well and the aspects of what is known as the Interest cover and Gearing ratio will be covered in this that is important to be managed here and if needed, the corporation in question here can be engaging the external financial investors and consultants as well.
References
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Bauch, B. (2021). British American tobacco equity research-still, thank you for smoking (Doctoral dissertation).
British American Tobacco UK, 2021, available at: https://www.bat.com/
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Caponnetto, P., Maglia, M., Prosperini, G., Busà, B., & Polosa, R. (2018). Carbon monoxide levels after inhalation from new generation heated tobacco products. Respiratory research, 19(1), 1-4.
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