Strategy for British American Tobacco - Essay Example

Evaluation of Current Strategy for British American Tobacco Background Information British American Tobacco commonly known as BAT is a British conglomerate organization functional in about one hundred and eighty nations with its headquarters in London, United Kingdom. According to several business sites such as Bloomberg and Forbes, BAT is one of the five leading and most productive tobacco firms worldwide. Its level of productivity is supported by the fact that it is the leading tobacco producer in about sixty of the one hundred and eighty markets within which it operates. In as much as it functions in different nations, some of its brands like Dunhill, Pall Mall and Kent appeal to consumers throughout the world. Being a structured multinational as it is, BAT currently derives its strategy from its organizational vision. Its current strategy revolves around delivering growth today and at the same time, laying a foundation that is suitable for future investments (www.bat.com). Similarly, the current BAT strategy aims at exploring its wings and grasping new opportunities within and outside the tobacco industry. The exceptional growth that BAT has exhibited since its establishment in 1902 to date has majorly been funded by productivity and delivered by its winning and thriving workforce, which is well-appointed to handle all the emerging market issues responsibly. This report aims to provide more insight on the suitability, acceptability as well as the feasibility of the BAT strategy mentioned above by taking into consideration all the key factors that play a role in it strategic position. Similarly, this report sheds light on some of the relative merits that BAT would register, in case it opted to embrace an alternative organizational strategy. Strategic Evaluation The evaluation of strategies is of great significance to any business majorly because it provides an opportunity for the management and all the parties involved in a project to gauge both the efficacy and the inefficiency of its plans as an organization (McGrath 2013, pg. 195). In like manner it is far-reaching because it enables the organization understand the dynamism demonstrated by the extent to which socio-economic, political as well as technological issues affect the market. Suitability The suitability of a strategy refers to a theory that helps to provide reassurance on whether a specific strategy is ideal in finding a solution to a given business issue. Suitability looks into a how fit a strategy may be as well as whether it provides prospects that an organization may exploit with the aim of enhancing productivity (Cox 2000, pg. 207). The BAT approach mentioned in the introduction is suitable for its business objectives. This is majorly because it enables the organization stand out among its competitors and widens its business scope by opening more opportunities, a fact that has enabled BAT acquire stake in other subsidiaries such as Tekel organization as well as Bentoel Group of Companies. Integration of the PESTLE Analysis tool The BAT strategy mentioned above is suitable because it employs the PESTLE analysis tool to look into the political, economic, social and technological factors that affect its growth and productivity as an organization. Under political factors, BAT approach takes into consideration factors such as when one of their markets is to hold their next elections and how the lections may change some of the policies that regulate the operations of BAT (Winkler 2012, pg. 67). In order to ensure that they avert any risks that may come their way, the BAT strategy looks into some of the most likely contenders and gets their views on various businesses policies notably those that affect the operations of BAT. Before opening its doors in a potential market, the BAT strategy helps the management assess the development of property rights within the nation as well as how well the nation and its citizens have respect for the rule of law. The BAT strategy has mechanisms that assess pending legislations that are relevant to its operations and all matters that govern taxation. Over and above, the BAT strategy has been credited for its cautious and well-timed approach, which enables the organization to arrive at wise verdicts that are in line with its objectives (Winkler 2012, pg. 73). At the same time, the strategy has been celebrated because it takes into respect various government insights with reference to corporate policies, corporate social responsibilities, environmental issues as well as matters that govern customer production. With reference to economic factors, the BAT strategy employs the PESTLE tool to evaluate the economic stability of any of its markets or any potential market. Understanding whether a market is usually stagnant, declining or increasing helps BAT put in place the right scheme to enable it remain relevant for a considerable duration within that particular market (www.bat.com). Apart from economic stability, the strategy considers the rate of unemployment notably whether the nation hires based on skill or experience. The current BAT strategy is appropriate as it also takes into consideration the extent to which the citizens of a given nation have access to credit and how the trend of globalization may affect it as an organization. In relation to socio-cultural factors, the BAT strategy, which focusses on present growth and future investments, employs the PESTLE analysis tool to help it make sense out of matters such as the rate of growth exhibited by the citizenry of a particular nation as well as the access to health services (Ton 2014, pg. 327). Similarly, it looks into the level of education within a given population, the extent of social morbidity and how it may change in the future. The strategy is similarly of great significance as it assess the attitude that the society exhibits towards given products and how all that may affect its business. Given that technology plays a critical role in ensuring that the growth and productivity of BAT remains in line with its objectives as a business, its current strategy looks into all the new technologies that it can embrace in its production process (Ton 2014, pg. 330). That notwithstanding, the strategy takes into effect the extent to which its competitors have embraced the new form of technology and how supporting developments in research and infrastructure may yield positive returns for the business. Integrating the Five Forces Analysis Tool The current BAT strategy takes into consideration the fact that for its products to remain striking to the consumers for a long duration, then it has to understand all the five forces that regulate the market. This includes the role of supplier power, whereby BAT acknowledges the number and input of its suppliers as well as their role in ensuring that their products remain unique. The same applies to buyer power, where BAT acknowledges that all the buyers within a market play a critical role in ensuring that their strength within the market does not change (Rumlet 2011, pg. 14). The strategy acknowledges that competitive rivalry is important for the stability of any market, and this prompts BAT to put in place mechanisms that ascertain that it remains relevant within the market. Apart from the factors discussed above, the BAT strategy understands the threats posed by new entrants as well as that of its customers substituting its products for others. Over and above, the current BAT strategy is suitable as it addresses all the prospects that come BAT’s way as well as all the challenges that it goes through. Acceptability The acceptability of a given business strategy refers to how well it is embraced by stakeholders as well as all the parties involved in its daily operations. The major reason as to why the current BAT strategy has been recognized by stakeholders is that it takes into consideration the needs of all the parties involved in its functionalities. The clientele who consume BAT products find their merchandises appealing and that shows that they have accepted the approach that BAT employs in the production process (Rumlet 2011, pg. 16). In as much as different employees have a myriad of opinions on how their ideal working environment should be, the BAT strategy has been accepted by its employees as it always incorporates their expertise and their experience. It is for that reason that its workforce is described as being well organized and the foundation on which BAT’s production process is laid. The BAT strategy appeals to its shareholders majorly because in as much as they put in their funds in the form of investments, they routinely get good returns (www.bat.com). Given that the current BAT strategy employs various tools such as the five forces and PESTLE to analyze any potential market before venturing into it, the strategy manages to avoid risks, a fact that intensifies both financial and non-financial outcomes. Feasibility The feasibility of any strategy refers to its ability to succeed using the resources availed to it. In as much as BAT products have been portrayed to affect human health thereby making the process of production quite expensive, its current strategy is indeed achievable. The strategy, which as mentioned in the section above focusses on present growth and future investments, has no doubt generated good results for the British multinational. This is because the conglomerate has used the resources at its disposal to successfully take up most of the prospects it ponders productive, thereby enabling it open its doors to in roughly one hundred and eighty nations. Though the process of BAT expansion has been hindered by the fluctuating and highly demanding market, the organization has continuously practiced the strategy (Rumlet 2011, pg. 23). This is demonstrated by the fact that it has often gone overboard and explored non-tobacco avenues. Moreover, this implies that it is concrete and that all that is needed is to put up a reliable workforce, which is ready to give their best in the course of discharging their duties. Additionally, one that is responsible notably because most of BAT products pose a risk to human health. Alternative Strategy A substitute strategy that would be employed by British American Tobacco in an attempt to remain relevant within the market for a significant duration would be to concentrate on top line growth, while at the same time laying emphasis on reliable and sustainable margin expansion (Doty 2012, pg. 74). This approach would ensure that BAT delivers relentless value to its shareholders and all other relevant stakeholders over a long period. In order to efficaciously carry out the strategy highlighted above, British American Tobacco would need to further increase its already broad range of products and make use of its geographical reach, notably because it at present functions in over one hundred and eighty nations across various continents. In like manner, BAT would have no choice but to nurture its workforce, to ensure that they achieve the highest possible level of expertise and that they share the same values. One of the advantages of the strategy highlighted in the paragraph above is that it would enable BAT form and understand a significant customer base. Understanding the customer will come in the form of comprehending the age, gender, geography, values and consumption patterns of its customers, an event that would give it competitive edge over its competitors. As is always the case competitive edge is important as it normally ensures good returns for the organization. Overtime, several businesses have often found it rather challenging to produce high quality products, sell them at an average cost and earn good returns (Rodgers 2011, pg. 67). By embracing the strategy highlighted in the paragraph above, BAT would be making good use of the input of its suppliers, designers as well as researchers who are tasked with the responsibility of carrying out market studies. The strategy would similarly enable BAT make use of its producers and distributors and at the same time make considerable returns. Conclusion As discussed in the essay, the current BAT strategy, which focusses on contemporary progression and future investments, is quite sustainable, acceptable and feasible. In as much as its strategy has often proved prolific, the organization can similarly emphasize widening its already broad range. Over and above a good business, strategy is essential in ensuring that an organization remains strong within the fluctuating and highly demanding economy. 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Rogers, K. (2011). Substance use and abuse. New York, Britannica Educational Pub. in association with Rosen Educational Services. Rumelt, R. (2011). Good strategy, bad strategy the difference and why it matters. London, Profile. http://www.books24x7.com/marc.asp?bookid=49989. Ton, Z. (2014). Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits. Houghton Mifflin Harcourt Publishing Company. Whitten, D. O., & Whitten, B. E. (1990). Handbook of American business history. New York, Greenwood Press. Winkler, M. (2012). The Bloomberg way a guide for reporters and editors. Hoboken, N.J., Bloomberg Press. http://site.ebrary.com/id/10513719. Appendix 1 Table Showing Global Drive Brands Dunhill Kent Lucky Strike Pall Mall Cigarettes Sold 49 billion 67 billion 33 billion 83 billion Volume Growth 2% 1% 11% 3% Number of Markets 130 + 90 + 80 + 110 + Appendix 2 A Appendix 3 Appendix 4 Read More