Ethical
- How ethnical standards in different parts of the world can have an impact on the company’s image.
- How will changes to the planned environment standard affect BAT?
- Firms must be seen to act in a responsible manner and consider impact on people, communities and natural environment.
- Restrictions on Trade?
- Disposal of waste and pollution controls.
British American Tobacco (BAT) set out their core beliefs, shown below, in a published report ‘Corporate Social Responsibility’ found on their website.
BAT believe:-
- the health impact of tobacco consumption should be reduced whilst respecting the right of informed adults to choose products they prefer
- that public smoking should be approached in a way that balances the interests of smokers and non-smokers’
- that underage people should not consume tobacco products
- in the provision of accurate, clear health messages about the risks of tobacco consumption.
- in the appropriate taxation of tobacco products and the elimination of illicit trade
- in regulation that balances the interests of all sections of society, including tobacco consumers and the tobacco. British American Tobacco (2003a)
BAT’s Corporate Social Responsibility report, defines plans to improve their social image by making the products more acceptable to the public and therefore influence the external environment in a positive manner. This report covers numerous items, but below is a selection of these where improvement to BATs’ image, and therefore products, are sought.
- ‘Our companies will take steps to enhance their efforts to communicate about the risks of smoking and will continue to work to make our views on the risks of smoking clear to governments, employees, consumers, the media, business partners, NGOs and shareholders.
- Pursue dialogue with stakeholders to establish what role, if any, we should have in providing advice to parents not to smoke around young children, especially babies, and advising smokers to be considerate of those with conditions such as asthma.
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Welcome suggestions from our stakeholders on how we can encourage the Atmosphere Improves Results campaign and the UK Health and Safety Executive to cooperate effectively in developing practical ventilation solutions.
- Offer further support to the Greater London Authority investigation into public smoking.
- Continue to try to engage with regulators, health authorities and relevant scientific and medical specialists to establish scientific criteria for research protocols and product testing in the development of products that might offer lower risks.
- Seek to test market such a product in the UK as soon as is practicable.
- Continue to seek to engage with government, public health bodies and the medical profession in discussing potential messages to smokers about smoking fewer cigarettes and quitting smoking sooner as steps that may help to reduce risk.
- Recognising that there is controversy about lower tar, both about how it is measured and whether lower tar products are associated with any reduction in population health risk.
- Continue to call on the UK Government to raise the UK minimum age for tobacco sales from 16 to 18.
BAT also states:-
- ‘The principle of Responsible Product Stewardship is the basis on which we meet consumer demand for a legal that is a cause of serious diseases. Therefore, our products and brands should be developed, manufactured and marketed in a responsible manner. We also aspire to develop tobacco products with critical mass appeal that will, in time, be recognised by scientific and regulatory authorities as posing substantially reduced risks to health.’
British American Tobacco (2004b).
The above implies that BAT understands their changing social environment, although they have to be aware that these changes will affect them in the following areas: -
The public are no longer willing to suffer the ailments that cigarettes produce and the growing number of public lobbies reflects this. BAT must demonstrate a commitment to invest further funds into development of a ‘safer cigarette’ that can reduce the level of illness perceived with the higher tar varieties. The ‘low-tar’ brands have been seen to have the same effect as the higher tar cigarettes, therefore carrying the same health factor.
Although it could be said that the taxes raised are ploughed back into the health service, BAT claim that these taxes are not directly given to the NHS, although this is argued by anti smoking lobbies, such as ASH, that a drain still exists on the economy to treat people with self-inflicted diseases relating directly to smoking.
The affect of secondary smoking is now well documented and this area is particularly prevalent in the tertiary industry such as public bars, restaurants and clubs (e.g., the death of Roy Castle) and adds weight to the public request to ban smoking from public areas. Scotland propose ‘to outlaw smoking in pubs, cafés and restaurants in Scotland are a stepping stone to a total ban’ (News.Scotland.com, 2004) will intensive this lobby. Direct comparisons have been made between smoking and drinking alcohol. Recent studies have proven that alcohol has a direct link with the rising crime statistics, the government could be put in an awkward position if they tried to ban smoking from public areas and not drinking.
BAT must continue to encourage the government to reduce underage smoking by raising the legal age limit to 18. The campaign on the packaging to advise smokers of the health issues needs to continue and improved.
The price of cigarettes differs from country to country with the United Kingdom being one of the highest tariffs; this is because of the taxes that are applied in the UK. It can be claimed that the government enjoy this money making scheme, indeed Former Chancellor Kenneth Clarke pioneered the steep rises in tobacco tax in the early 1990s, claiming ‘it was the only tax that made him popular when he increased it.’ Action on Smoking and Health (2004). Therefore the smokers are paying a higher tax on a habit that is frowned upon by non-smokers. It is worth noting that Mr Clarke is a now a Director of BAT.
On a local note, the BAT factory in Southampton is now locked on both sides by residential development. This area is known as a deprived ward. While initially the residents of these houses may have been employed by BAT, this is less likely to be the case now. Reluctance on the part of these residents for an expansion of BAT activities on the site may have an adverse impact on the economic viability. Especially if the factory is dependant on 24 hour working and out of hours delivery schedules.
Should this viability jeopardise the long-term future of the factory then this could cause some difficult decisions for local planners and economy development offices. BAT would likely look for residential planning permission on the site, thereby maximising their disposal of the assets. Southampton Council may wish to retain it for employment, there being a shortage in this area, and local residents may be split, depending on their present circumstances.
BAT are know for their support in local areas and have ‘supported the Southampton Enterprise Agency as long ago as 1981’. BAT ‘raise money for community projects in disadvantaged urban areas’. (Worthington, 2003, p.297). Benefiting both the community and the local government
In conclusion, it can be said that the following external environmental issues will affect BAT in the next 5 – 10 years.
Smoking is now seen as a major cause of cancer and a life-threatening drug. These changes and the proven health risks plus lack of public areas to smoke, will mean that in the next 5 – 10 years there will be fewer smokers.
Pressure has been brought on the government to ban smoking from public places, they are reluctant to do so as yet due to the comparisons made by the tobacco industry to alcohol. Although the social environment will benefit there will be a backlash in the reduction of sales of tobacco relating to less money through taxes in the public purse as well as falling revenue for BAT, thus causing inflation in another area, which will not be popular.
Lower tar cigarettes are now being claimed to be just as dangerous as the high variety brands. This marketing ploy tries persuading the consumer that they are improving their health and being socially acceptable whilst allowed to carry on with their habit. Research has shown that there are no proven health benefits and that the consumers will either have to give up smoking or switch to the ‘safer’ cigarette when produced.
BAT have a strategic plan for the next 5 years in which they intend to provide a safer cigarette and raise the age limit of smokers, this may look to decrease the numbers of smokers and will have a direct effect on the majority of external issues. By discouraging smoking they will reduce the taxes available to the government but it can be argued that this compensates the fact that so much will not be need to treat them via the NHS.
All external points raised lead to the reduction in demand due to other issues, apart from price. These external influences covered above, may make BAT reduce their workforce, relocate or may leave them open to a buy-out situation all of which will affect their long term plans.
Recommendations for BAT in light of the changing environment: -
Continued research and development on the ‘safe’ cigarette with an achievable time scale in which to have this on the market. With the original market opportunity decreasing, the safe cigarette will ensure that another product from BAT will maintain a market share.
BAT should also continue to discourage young people from smoking as well as investigate the effects of long-term smoking. They must be seen to provide financial aid to counteract the effects of smoking – both direct and non-direct smoking.
Although taxes on this product are unlikely to be reduced, lobbies to the government may enable BAT to fix the price so that in time the EU countries prices will match the price charged in the United Kingdom. Therefore creating a level playing field and as BAT now have a ex-government minister on their payroll, they need to maximum this asset to increase their lobbing of the government.
Other opportunities, which utilise the technology and workforce within BAT already, needs to be sought, to keep in line with BAT’s corporate community involvement. (Worthington, 2003, P.297). These opportunities need to be explored due to falling markets.
BAT need to undertake a review of their assets to ensure that a return can still be had on these. They also need to re-assess their employment base and downsize their largest expenditure – the workforce.
BAT do need to look elsewhere to expand the demand of their products in the future and therefore continue their share of the world-wide market and revenue. They could do this by looking to expand into Eastern European markets where smoking is still seen as a status of wealth, although this will have a limited life span as larger countries are looking to educate third world communities in this area.
Bibliography
Action on Smoking and Health (2004). [Internet]. No location given, Action on Smoking and Health URL available from [Accessed 25 January 2004].
British American Tobacco (2004a) Statement of Business Principles. [Internet]. No location given, British American Tobacco URL available from: [Accessed 25 January 2004]
British American Tobacco (2004b). Social Report. [Internet]. No location given, British American Tobacco URL available from [Accessed 25 January 2004]
News.Scotland.com (2004). Anti Smoking bill will lead to a total ban. [Internet]. No location given, The Scotsman URL available from [Accessed 7 February 2004]
Worthington, I. and Britton, C. (2003) The Business Environment. 4th. Great Britain, Pearson Education Limited.
