Opportunity for Cigarette Companies - Essay Example

Topic: Globalisation – Opportunity for Cigarette Companies Affiliation: ExecutiveSummary Cigarette companies, just like many other business enterprises, are currently operating in a very dynamic business environment. The fall of globalisation has enhanced business operations for some players, and at the same time adversely affected those of others. As globalization continues to open up global markets and operational opportunities for cigarette companies, public health concerns are increasingly influencing the whole process. The number of non-communicable diseases attributed to tobacco continues to increase, and so are the realized deaths in the same line. Amid this, cigarette companies have not failed to realize operational benefits from emerging markets and increasing cigarette demand across the globe as a result of globalisation. In this respect, globalisation is a success factor for cigarette companies. While tobacco laws are essential in safeguarding the interests of the consumers and the public at large, they should not be used for the purpose of “killing” the operations of cigarette companies and the industry in general. Contents Introduction 4 Findings 5 Globalization and the Future Success of Cigarette Companies 5 Globalisation and Cigarette Companies: Legislation and/or Regulations 9 Conclusion 12 Reference List 13 Introduction Globalisation has continued to open up regional, national, and international boundaries for trade, commerce, and investments. It has also enhanced interdependence between countries and improved state relations as the global economic system grows and develops. Globalisation influences economic sectors differently, depending on the variables that move each sector. For the cigarette industry, globalisation has enhanced its global coverage as new markets emerge and global demand for tobacco and cigarettes exacerbate. Therefore, cigarette companies continue to experience a favourable environment in undertaking their operations as globalisation persists. On the other hand, the operations of cigarette companies and the growth and development of the industry have triggered critical concerns relating to public health. Legislations and/or regulations have and continue to be enacted to control and regulate tobacco businesses across the globe. The primary objective is to reduce smoking levels, and at the same time address public health issues that are leading to high numbers of deaths related to non-communicable diseases caused by tobacco. While globalisation is favouring the operations of cigarette companies, the implemented legislations and/or regulations might hinder or interfere with the business success of cigarette companies. The underlying concerns for tobacco should be addressed in a way that does not adversely affect the business aspect of cigarette companies. Findings Globalization and the Future Success of Cigarette Companies Trade, commerce, and investments at the local, regional, national, and international levels have been revolutionized by globalisation. The continued conversion of the world into a global village has interlinked markets, economies, and countries across the globe (Ahsan & Anabelle, 2008, p.162). As a result, diversity in business has been created and players in the different sectors of the economy have embraced operational dynamism as provided for by globalisation. Consequently, this has undoubtedly enhanced the environment within which businesses thrive. Cigarette companies are in the forefront when it comes to reaping the benefits of a globalised world. Globalisation has made it necessary for global markets to be liberalised. Liberalisation has translated to the emergence of new markets or opening up of markets that had not been previously entered. Reaching out to a wider market and growing global demand implies that the future operations of cigarette companies are hardly prone to failure if the current trend continues. Moreover, globalisation has forced many economies around the world to adopt the free market economy system, thereby giving domestic and foreign firms an opportunity to expand, grow, and develop both locally and internationally (Jain, 2011, p.271). Obtaining tobacco is critical to the continuity of the operations and business undertaken by cigarette companies. The success of cigarette companies is highly influenced by the availability of the raw primary material they use; tobacco. Availability of tobacco is not only influential today, but also in future relative to business continuity in the long run. For this reason, securing a reliable source of tobacco is fundamental in ensuring that cigarette companies build a strong operational portfolio both in the short term and in the long term. Supply of raw materials has become relatively guaranteed, thanks to globalisation. For companies that can hardly manage to obtain primary materials locally, globalisation has provided a favourable platform for consistent exportation and importation of raw materials. Moreover, this has translated to the realization of strong business ties between manufacturers and suppliers of raw materials. For cigarette producers, having a continued flow of tobacco from within and without the domestic boundaries makes it possible to meet future demands. Another outstanding contribution of globalisation to the future success of cigarette companies pertains to production costs. Labour and other costs of operation significantly influence the success of any given business. On the same note, fixed and variable costs have to be accounted for across all the operations that a firm engages in. globalisation has persistently increased foreign investments around the world. These investments are tailored towards taking advantage of low costs of operation, especially in relation to labour. Firms can monitor different regions or countries around the globe where raw materials and labour costs are relatively cheaper. Barriers that could have previously hindered moving to such regions have been minimized or alleviated altogether by the fall of globalisation. The future success of any given business enterprise depends on that enterprise’s ability to identify opportunities and exploit them before any other enterprise does it. In the light of the social issues that are befalling the cigarette sector from time to time, it is fundamental that cigarette companies identify their strongholds and the most beneficial markets, taking into account the likely impacts of tobacco laws and regulation of cigarette companies across the globe. Globalisation has presented all the opportunities for an enhanced current and future business success, but the companies also need to be sensitive to the social and economic concerns raised by the consumers, regulating agencies, and the public at large. Technology is key a driver of business operations in the contemporary times. Development of new and improved technologies varies from one country to another. While some countries are the beneficiaries of already developed technologies, some are the actual developers. Technology transfer from one country or location of development to another has been accelerated by globalisation. In most instances, technology transfer is a win-win situation for both the source and the recipient. Transfer of technology is impacting positively on almost every sector of the global economy. Cigarette companies stand a better chance to exploit new and improved production technologies. While some cigarette companies are basically the recipients of technology transfer, others have invested in designing and developing their own technologies. These technologies can be applied appropriately in more than one sector, meaning that they can be used within and without cigarette manufacturing. Sharing of these technologies can allow cigarette companies to gain access to markets and economies that would otherwise remain substantially difficult to enter (Pampel, 2009, p.129). On the same note, new and improved technologies are continuously enhancing effectiveness and efficiency of business undertakings. As a result, firms can reduce their operation costs and invest in expansion projects that improve future business prospects. The future success of cigarette companies will also depend to a greater extent on the global trends in consumption of cigarettes. In the year 2011, the performance of the UK top ten cigarette brands as given by ASH (2012, p.1) were: Source: ASH Fact Sheet: The UK Tobacco Industry While demand for cigarettes fluctuates from one region or country to another, the general global trend shows that cigarette demand has been increasing over time. It is estimated that global cigarette consumption will hit 9 trillion cigarettes by the year 2025, right from the leading domestic consumer levels to the rest of the world (ASH, 2007, p.4) as shown below: Source: ASH Fact Sheet: The UK Tobacco Industry Globalisation is a factor that will heighten the demand for cigarettes in future, making it possible for cigarette companies to run successful business prospects. Globalisation and Cigarette Companies: Legislation and/or Regulations Protests have often been experienced in the cigarette industry from time to time, as the involved stakeholders push for legislations and/or regulations of the operations undertaken by cigarette companies. For quite a number of years now, the primary objective of these protests has been to try and address the existing and emerging public health issues relative to consumption of tobacco products. Non-communicable diseases have been on the rise, making it necessary to mobilize the public against cigarette smoking (King & Siegel, 2001, p.509). Arguments against globalisation of the cigarette industry by cigarette companies have also been accelerated by the rising global cases of underage smoking. Advertising, marketing, and promotion of cigarettes across the globe have significantly exacerbated as globalisation provides more effective and effective technologies to enhance these practices. Concerned parties argue that governments and all relevant authorities and agencies should join hands in regulating the cigarette industry to ensure that the public is not misled into smoking. However, it is important to note that a substantial percentage of smokers meet the legal age for cigarette consumption. Smoking-related illnesses and health complications are in the contemporary times killing more people than communicable diseases, say HIV/AIDS (Armstrong & Porter, 2007, p.94). For this reason, protestors in the cigarette industry are concerned about the global trend along this line, thus their argument against globalisation of the cigarette industry. While globalisation has enhanced global economic integration, cigarette production has always been subjected to some kind of regulation in one way or another. In this respect, protestors are interested in making the already operational legislations and regulations stricter. Arguments against globalisation of the cigarette industry are deeply rooted in public health concerns. This means that constraining globalisation of cigarette production by cigarette companies will curtail the operations and business line of these companies. Personally, I disagree with the legislations and/or regulations that protestors in the industry advocate for. If public health is something to go, cigarettes are not the only threat to public health. However, this does not mean that cigarettes do not pose a public health risk. There are numerous counterfeit products in circulation across the globe today, and they remain relatively unaccounted for in relation to public health risks. Legislations and/or regulations enacted to address globalisation of the cigarette industry should be oriented towards minimizing health risks to the public, while promoting the business operations of cigarette companies. Any measures or policies implemented in the industry should seek to enhance corporate responsibility of cigarette companies, as opposed to curtailing their operations. In so doing, the interests of both the public and the companies are safeguarded. This is in line with the fact that many other sectors of the global economy are not without their threats or risks that affect the public in one way or another. Globalisation should be allowed to take its course and resolve the issues that arise in its process. Creativity and innovativeness have been spurred by the globalisation process. In the process, issues, concerns, and challenges are likely to occur, all of which can be addressed in line with the achievement of globalisation. Embracing globalisation cannot be two-sided, where one party advocates for it and another curtails the same. Operationalization of globalisation should be uniformly held, with all stakeholders playing their respective roles. In this respect, the creativity and innovativeness spurred by globalisation can address all the underlying issues in due time, thereby making it irrelevant to regulate the pursuit of globalising cigarette companies. Arguments against protestors in the cigarette industry do not imply that globalised firms have the freedom to offer unhealthy products across the globe. Amid the persistent globalisation in the contemporary times, firms should become health-conscious in developing their products and services. Instead of curtailing the operations of cigarette companies, all stakeholders in the industry should design a common interest to develop products that address public social and health concerns. At such a time, there would be no need to push for constrained globalisation of cigarette companies. Conclusion The global cigarette industry is diverse and dynamic, especially in the context of globalisation. Globalisation has provided the industry with immense business opportunities, resulting in growth, development, and expansion of the industry all over the world. Amid this, public health concerns on the use of cigarettes and tobacco-related products pose substantial challenges to the operations of cigarette companies. However, the globalised business environment continues to increasingly become favourable for these companies to thrive. Reference List Action on Smoking and Health (ASH), 2007. Tobacco: Global Trends. [Online] Available at: www.ash.org.uk [Accessed October, 2012]. Action on Smoking and Health (ASH), 2012. Fact Sheets: The UK Tobacco Industry. [Online] Available at: www.ash.org.uk [Accessed October, 2012]. Ahsan, U. & Anabelle, B. (2008). Contemporary Globalization, London: VDM Verlag. Armstrong, M. & Porter, R. (2007). Handbook of Industrial Organization, Volume 10, London: Elsevier. Jain, J. (2011). Tracing the Origin and Exploring the Causes and Consequences of Globalization, London: GRIN Verlag. King, C. & Siegel, M. (2001). “The Master Settlement Agreement with the Tobacco Industry and Cigarette Advertising in Magazines,” New England Journal of Medicine 345(7):504-511. Pampel, F. (2009). Tobacco Industry and Smoking, London: InfoBase Publishing. Read More