Enterprise and Social Responsibility in a Tobacco Industry - Coursework Example

Enterprise and Social Responsibility in a Tobacco Industry A tobacco industry is composed of people and companies that invest in the growth, management of sales, advertisement, shipment, the distribution, as well as its related products. It is considered as one industry which is essential for those who are in search for understanding the operations of specific companies and also modern public relations techniques. Although this global industry is quite progressive, it continues to receive criticisms during the onset of mid-twentieth century until the recent years. Laws governing different countries around the world have various restrictions, imposed heavy taxes more often, yet, trillions of cigarettes are still being smoked each year. Tobacco is an example of a trade goods, like that of foodstuffs in economic terms whereby, price is set according to crop yields which normally depends on local weather conditions. There are several considerations for tobacco business and it include the value of species grown for tobacco production, the overall quantity on the market, the health of the plants, the area or locale where plant was grown, the product quality and many other. These factors are dealt properly by tobacco manufacturers like the Altria Group of companies. The parent company (Altria Group Inc., 2009) of the famous Philip Morris USA, John Middleton, Smokeless Tobacco Company, Ste. Michelle Wine Estates and Philip Morris Capital Corporation is the Altria Group. Among the companies of Altria, Philip Morris USA is known as the largest tobacco company in US, with exactly half of the total U.S. cigarette market. Moreover, the leading producer as well as marketer of smokeless, moist tobacco is the U.S. Smokeless Tobacco Company while John Middleton is still the leading manufacturing business of large machine-made cigars. It is Althrias pride that Ste. Michelle Wine Estates belong to the top 10 premium wine producers in the United States. Altria Groups tobacco companies is proud to have created successful and popular brand names like Marlboro, Skoal, Copenhagen, and Black & Mild. The expansion of Altria Groups tobacco companies tobacco products is driven by constant innovation. Altrias Stakeholder Engagement The Altria Group operating companies believe that in their business, listening to and conversing with people regarding the issues and concerns surrounding their products as well as their businesses is essential. Thus, the employees meet with growers, suppliers, retailers, and adult consumers on a regularly basis. They ensure that there is interaction with investors, elected officials, community leaders, media, scientists, public health professionals, and other members of the public, interested in tobacco issues. Aside from that, news reports are being monitored, survey public opinions are gathered, conferences are being attended, and other means are applied just to stay informed regarding the emerging business trends and views. Consequently, discussions have resulted and have led in taking actions towards addressing concerns questioned by some stakeholders risk management processes and many other decision making concerns. Altria have learned through experience on how wide variety of stakeholders contribute to their companies by providing information and improve business decisions. The companies in fact, consider their stakeholders in each part of their business Altria Group Inc., 2009. Critically Appraisal of Altrias current approach to Corporate Governance Altria Group believes that their good corporate governance is a foundation of strong business performance. They ensure to be transparent as far as governance practices and policies are concerned; responsive to the feedbacks of shareholders while managing the organization for long-term success. Integrity and responsibility are significant aspects that are integrated with Atrias companies as they carry out its the businesses. Several ways are being adopted and implemented to achieve each companys viability as well as long-term success in the marketplace. In particular, they give attention to the wide-range overarching efforts and also highlights some of the operating companies unique strategies and programs: Managing responsibility, Stakeholders Engagement, Environment, Compliance and Integrity, Business Partners, Contributions and Communities and Government Relations. To carry out all tasks and responsibilities, the Organization was established and are governed by the following significant authorities: Board of Directors, Board Members, Independent Presiding Director Charters for Board Committees specifically consist of: a) Audit Committee; b) Compensation Committee; c) Executive Committee; d) Finance Committee; e) Nominating; f) Corporate Governance and Social Responsibility Committee; and g) Innovation Committee (Altria Group Inc., 2009). Codes and Guidelines There is an existing and visible Code of Business Conduct and Ethics for all employees (Murphy, 2004) that has been adopted by the Altria Group, Inc. Board of Directors which is focused to provide guidance to directors in facilitating with ethical issues, provide systems to report unethical conduct, and foster a culture of honesty as well as accountability. The code of business conduct and ethics provisions are concerned about Conflicts of Interest, Corporate Opportunities, Protection of Confidential Information, Fair Dealing, Companies Assets Protection and Proper Use, Compliance with Laws, Rules and Regulations, Trading on Inside Information, Political Contributions and Activities, Foreign Payments, Other Legal Standards, Compliance and Reporting of Any of the Illegal or Unethical Behavior, Waivers and Amendments. Director Qualifications and Board Composition According to the companies guidelines the number of Board of Directors shall be fixed from the time to time solely by the Board. All members of the Board, except the Chief Executive Officer as well as the Deputy Chief Executive Officer, shall reach the independence requirements for being the Directors of the Company, as modified as well as amended by the Board (from time to time). In addition, the the Deputy Chief Executive Officer and Chief Executive Officer shall be recused from the acts of the Board, even if it is acting as the Board or as the committee of the Board, with due respect to acts of each committee of the Board which is needed to be comprised entirely of Directors who meet the NYSE independence requirements listing standards, that has been modified and amended on a regular basis. Similarly, The Nominating and Governance Committee is tasked for reviewing the qualifications as well as independence of the Board members and its various committees on a certain periodic schedule and as the composition of the Board in general. The said assessment will consist of members’ qualification as independent, and as consideration of diversity, skills, age, and experience aligned in the context of the Boards needs. The Nominees for Director will have to be recommended to the Board and by the Governance Committee in accordance with the principles, bylaws, and policies of the Company. The fundamental responsibility of the Directors is to practice their business judgment in good faith as well as with due care to act in the manner that they reasonably believe to be according to the best interests of the Company and also to discharge the many obligations bound to the the Certificate of Incorporation of the Company. The term that each Director shall serve in every term has a duration of one year. Risk Assessment and Management Process Every Altria Group company is tasked for developing an integrity plan and annual compliance in order to meet the Altria Group Standards. The Chief Compliance Officer of Altria Group reviews each of the annual plans, provides guidance as well as recommendations for the purpose of meeting quality standards. The group require each company to conduct monitoring, auditing and evaluation of priorities important and in fact, established in the plans as well as risk assessment processes. The said activities ensures specific action steps, promote continuous improvement, identification potential risks prior to the compliance and during this process, it also works to address the issue by utilizing management strategies to lessen the risk in the systems of communications, training and audits. As part of the implementation of the risk management web-based employee training courses is being developed to heighten awareness and appropriate use within the company to acquire guidance and support. Performance Evaluation and Compensation The Human Resources and Compensation Committee or HRCC is responsible for the review and approval of corporate goals and objectives pertinent to the Deputy Chief Executive Officer and Chief Executive Officer compensation. The evaluation process is based on the performance of the Chief Executive Officer as well as Deputy Chief Executive Officer according to the set goals and objectives. The Board also conducts annual self-evaluation to assess whether it or its committees are functioning effectively. According to the 2006 report of Altria Group, Inc., directors who are also full-time employees of the Company will receive no additional compensation for the rendered services as a director. During 2005, non-employee directors accepts an annual cash retainer amounting to $40,000 as well as an amount of $2,000 for every Board as well as Committee meeting attended (an amount of $2,500 for committee chairs). On the other hand, several factors were considered when setting the base salaries (individual performance rating, prior experience, level of responsibility and the relationship therein base salaries paid within the businesses). Numerical weights were not assigned to any factor though. The salaries among executives are presented below (Altria Group Inc., 2007): Although the company (Altria Group Inc., 2009) has existed since 1985, the operation continues the modest venture supporting the expansion and innovation of Philip Morris USA, which is the largest U.S. tobacco company. Work Cited Altria Group Inc., 2009 Our history, accessed 1 Jun 2009 Altria Group Inc., 2007 Compensation committee matters, accessed 1 Jun 2009 Altria Group Inc., 2009 Compliance risk assessment and management process, accessed 1 Jun 2009 Murphy, J. E. 2004, Code of business conduct and ethics for directors, Altria Group Inc., accessed 1 Jun 2009 Read More