Sustainable Marketing Of Business Operation - Myassignmenthelp.Com

Question: Discuss about the Sustainable Marketing Of Business Operation. Answer: Introduction The British American Tobacco is a multinational and multipurpose operating tobacco company that has its headquarters present in London, United Kingdom. It is a public traded business organization in UK, which has managed to operate in Singapore and in other places for delivering extensive products and services to meet the demands and expectations of the customers in the different market segments. British American Tobacco holds a leading market position and has managed its operations worldwide by selling its most popular brands like Dunhill, Kent, Lucky Strike and Pall Mall. There are few other brands as well including Kool, Rothmans and Benson Hedges. It is listed in the London Stock Exchange and is considered as a major portion of the FTSE 100 Index. The tobacco company was introduced in the year 1902 and American Tobacco company and Imperial Tobacco company work in partnership to form this company(Bat.com, 2017). The chairman of the company was James Buchanan Duke and the organisa tion managed its operations all over China, Canada, Germany, Australia and New Zealand.They are featured in Dow Jones Sustainability Indices for 16 consecutive years till today . Launched in 1999, the Dow Jones Sustainability Indices (DJSI) track the corporate sustainability performance of the worlds largest companies("British American Tobacco - Dow Jones Sustainability Indices," n.d.) Sustainability is maintained to create a better future of the company and deliver shared value to the consumers, shareholders and other stakeholders too like the suppliers, consumers, etc. It is needed to manage the business operations in a sustainable manner and at the same time, maintain consistency in preserving the ecological balance in nature. The company wants to grow and expand its business worldwide and to do so sustainable approaches are being followed such as the introduction of light cigarettes consisting of lesser nicotine. Though tobacco consumption is harmful, still with the introduction of light cigarettes, the demands have increased from women and girls. This increased the customer base and sales revenue too. To remain socially responsible within the socio-economic environment, the company has put label on the packets to make people avoid the smoking habits (Chan, He Wang, 2012). Taxes are put to increase the prices of the products so that the customers do not buy th ose. It could be understood that the products and services were being sold and at the same time making consumers know about the harmful effects caused by consumption of tobacco. The target markets of BAT are the Philippines and Indonesias market segments because these countries are considered as developing countries with 30 percent of the population habituated to smoking habits. The level of education is poor as well, which makes it a tobacco friendly market to enter for BAT. With the introduction of smokeless and light cigarettes, the company has managed to target other market segments with female customers too. The sustainability management principles are managed to follow the rules and regulations to create a sustainable environment and at the same time, create a positive impact on the organisation (Cherian Jacob, 2012). The principles include not misleading the consumers about the risks associated with the tobacco consumption, selling the products only to the adult smokers, not forcing the consumers to smoke or not to smoke and making a clear statement about the promoting of sales of tobacco products. Company Analysis Sustainability Efforts To manage sustainable business, BAT has been focusing on implementation of Corporate Social Responsibility (CSR) through the enhancement of market performance and value delivering to its stakeholders and major shareholders (Responding to A Changing World, 2016). Further analysis on the triple bottom line and footprints of BAT are stated below. Sustainability according to Triple Bottom Line Social Sustainability In terms of social sustainability, BAT has benefited the society by introducing e-cigarette. In 2013, it was the first international tobacco company to launch a Vapour ProductVype in the UK ("E-cigarettes and NGPs," 2017). They call it Next Generation Products (NGPs). BAT has invested more than US$1 billion over five years in developing a world-leading portfolio of products in the NGP category. BAT stated that it has clear benefits for society in potentially helping reduce smoking-related disease ("E-cigarettes and NGPs," 2017). Environmental Sustainability BAT has used the environmentally friendly resources to produce the products that can create lesser harmful impact on the environment (Kim et al., 2012). Many programs are launched, such as deforestation is prevented, and a clean environment is created for making sure that environmentally friendly approaches are undertaken during the production of tobacco products at BAT. In Bangladesh, BAT has distributed around 91.5 million saplings to the countrys afforestation including 4 million saplings alone in the year 2016 (Annual Report, 2016). More importantly, that is the positive actions that can reduce the carbon emission (Responding to A Changing World, 2016). Economic Sustainability Economically sustainable is crucially important for any business, including BAT. If they are successful in developing and bringing to market a range of products that meet the needs of adult smokers seeking potentially less risky alternatives to cigarettes, it will benefit the society, as well, it will make commercial business sense to them and their shareholders ("E-cigarettes and NGPs," 2017). On the other hand, BAT also meeting the needs of farmers by economically paying them fair wages, which enable them to live better ("Sustainable agriculture and farmer livelihoods," 2017). This is economically sustainable for both BAT and their farmers. Footprints Ecological Footprint In terms of ecological footprint, BAT has been focusing on retain most of the resources they consume and recycle most of the waste they generate to fulfil the goal of maintaining appropriated carrying capacity ("Environmental and supply chain management," 2017). BAT targeted that by 2025, to reduce the energy use by 25%, and reduce the waste to landfill by 80% against year 2000 baseline (Responding to A Changing World, 2016). It so far has reduced 16% of energy use and 67% of waste to landfill (see Appendix 2). Water Footprint From Appendix 2, clearly, BAT also focuses on water footprint. As its goal is to reduce 35% of water withdrawn by 2050. It is getting the positive result by reducing 29% in the end of 2016 (Responding to A Changing World, 2016). Carbon Footprint BAT also continue to work towards its long-term target to cut 80% of carbon dioxide equivalent (CO2e) emissions by 2050 and have so far achieved a 47% reduction from their 2000 baseline (Responding to A Changing World, 2016). Marketing Strategies The marketing mix 4P strategy is used by evaluating the product, place, price and promotion done by BAT tobacco company. Product In November 2016, BAT announced the launch of glo (e-cigarettes) in Sendai, Japan (see Appendix 3). The company stated that the product is similar to the cigarette, but with reduced risk potential, glo heats rather than burns tobacco, producing around 90% less toxicants than a conventional cigarette ("E-cigarettes and NGPs," 2017). This means BAT is keep on innovating for its product to be sustainable. Which can better meet the needs of smokers who are seeking potentially less risky alternatives to cigarettes, and will help to meet the objectives of a number of leading public health professionals ("E-cigarettes and NGPs," 2017). Place BAT sells its products to the wholesalers and it has been established in a proper location so that the targeted market segments consisting of the consumers are aware of its existence and the products and services delivered (Chan, He Wang, 2012). On the other hand, the distribution places of the products are provided with No Cigarette sells to Minors and other slogans, to sustain its last link of product value chain (see Appendix 4). Price BAT's product prices have increased due to the use of a variety of environmentally friendly components and resources such as tobacco leaf. Emphasis on environmental protection, providing customers with a rich mouthfeel of premium tobacco that can cause less harm to them while balancing ecosystems("Environmental and supply chain management," 2017). Another reason for the price increased is BAT does caring its original sources of supply chain, farmers, to ensure they are paid reasonably according to the raw materials supplied ("Sustainable agriculture and farmer livelihoods," 2017). It has further encouraged them to provide the best quality raw materials. Therefore, the approaches are sustaining its business. Promotion BAT promotions are done through advertisements, event sponsorship and by using direct mail advertisements so that they can have a better control of the audience (BAT, 2016). The tobacco items are promoted in bars and restaurant, nightclubs where people are often found to smoke. Their brand image is also boosted by doing a lot of charity event such as donation to the community ("Campaigning and engagement," 2017). This has also caused controversy over the tobacco industry. All walks of life believe that the CSR conducted by the tobacco companies will have the more negative impact on society than the positive contribution. Sustainable Marketing Campaigns In 2016, BAT launched Thrive, their sustainable agriculture and farmer livelihoods programme to all BAT-owned and strategic third-party suppliers worldwide ("Enhancing livelihoods," 2017). Thrive is focused on the farm and farming communities by satisfying the needs and requirements of the farmers, which were considered as source of tobacco leaf needed to produce their products. This has created long-term relationships with the suppliers and engaged them within the business operations for maintaining openness and transparency all throughout too ("Enhancing livelihoods," 2017). Aligned with the five Capitals (financial, natural, physical, human and social. Strength) that will have a demonstrable positive impact for farmers and their communities. This will also enable a more tangible way of measuring BAT contribution to the UN Sustainable Development Goals, including those relating to poverty, hunger, decent work and economic growth, life on the land and partnerships ("Enhancing livelihoods," 2017). This promoted the message of responsibly using the tobacco products and even created a positive mindset among the customers. SWOT Analysis of BAT Sustainability and Its Comparison with Competitors The Strength of BAT One of the strength of BAT is the environmental program, it has always been one of the companys most crucial goals, especially in reducing carbon emissions (Responding to A Changing World, 2016). In fact, at the end of 2016, 27 locations across all regions were certified to the ISO 14001 environmental standard (Responding to A Changing World, 2016). As mentioned above, they are as well continuing to work towards their long-term target in cutting carbon dioxide equivalent (CO2e) emissions. On this point, according to World Health Organization (2017), BAT has 795 thousand of metric tonnes CO2 equivalent, while Philip Morris International has the similar amount at 627 thousand. Whereas, Japan Tobacco has the anomalously high volume at 5,304 thousand of metric tonnes (Tobacco and its environmental impact: an overview, 2017). It indicates the investment around 20 million each year in environment and related areas has an effective response (Responding to A Changing World, 2016), and it can be one key strength of BAT due to its positive and responsible public image given its commitment to the environment. The Weakness and Opportunity of BAT In terms of dealing with the smuggling, BAT still has the long way to go. Each year, one-third of all legally exported cigarettes, end up illegally smuggled across international borders (LeGresleyLindblom, 2002). It has enable tobacco to enter markets cheaply and thus stimulating consumption, consequently increasing the burden of ill health caused by its use (Joossens Raw, 2000). In Asia, 555, State Express and Benson Hedges, which belongs to BAT are the smugglers brands of choice, mainly in Bangladesh (LeGresleyLindblom, 2002). In this regard, EU Commission report states that PMI has effectively met its objective of reducing the prevalence of PMI contraband on the illicit EU tobacco market in 2016. As demonstrated by an 85% drop in the volume of genuine PMI cigarettes seized by member states between 2006 and 2014 ("Illicit Trade in the EU," 2017). It has created a positive and reliable brand image to the public. Thus, it can be seen as an opportunity aspect for BAT to enhance its sustainability efforts on compacting illegal trading. The Threat of BAT The threat of BAT is that Article 13 of the Framework Convention on Tobacco Control (FCTC) requires a complete ban on all forms of tobacco advertising promotion, and sponsorship, including CSR (Organization, 2008). It harder the tobacco industry situation in terms of conducting the marketing campaign or promoting corporate brand. However, it provides the chance for BAT to put more sustainable efforts on their supply chain and tackle the environmental issues ("Environmental and supply chain management," 2017). The Truth behind the "Success" of BAT Sustainability Marketing Efforts BAT and Malawis Child Labour In 2000, BAT co-founded the Eliminating Child Labour in Tobacco Growing Foundation (ECLT) and launched its pilot project in Malawi (Otaez, Muggli, Hurt, Glantz, 2006). From one perspective, the project helps 10,000 children have access to quality basic education and will not be in child labour ("ECLT Foundation," 2011). In the short term, 10,000 children benefit from it, in the future, society will benefit from these children. Secondly, they helped 3,000 households in using energy-saving stoves to reduce wood consumption ("ECLT Foundation," 2011). Which as well reduced the carbon footprint for the environment. These aspects advocate BATs sustainable marketing efforts are successful. From another perspective, however, researchers found that, in stark contrast, BAT and PMI together are estimated to make $10 million in profits from child labour each year in Malawi alone via the use of unpaid child labour during the same time (Advertising, Promotion, and Sponsorship: CSR, 2011). Factually, 10,000 of children affected by the ECLT are just part of 1.4 million child labour in Malawi (BBC, 2017). Besides, BAT has not changed its tobacco buying practices. It pointed out BAT is just using child labour projects to enhance company reputations and distract public attention from how they profit from low wages and cheap tobacco (Otaez et al., 2006). Under the Iceberg of BATs Next Generation Product On the other side, BATs NGPs aims to become a next generation tobacco player (Williams-Grut, 2017). From a public health standpoint, glo appears to be healthier than smoking, especially for people who are using glo to quit. Still, for young people who have never smoked, research from the US Centres for Disease Control and Prevention and the University of Hawaii Cancer Centre suggests it could pose a substantial risk, as teens who try e-cigs are three times more likely to take up smoking (Williams-Grut, 2017). In addition, in its release announcing the launch of glo in Canada, BAT says it "delivers a cleaner experience," but admits in a footnote: "These qualities do not necessarily mean that this product produces less adverse health effects than other tobacco products."(see Appendix 5 ) (CISION, 2017). Most importantly, BATs own internal tests suggest that, NGPs are less harmful than cigarettes. However, there are fewer external studies verifying these findings and internal testing by companies is largely seen as unreliable in the science community unless verified by a third party such as the US Food and Drug Administration (Williams-Grut, 2017). Recommendations and Conclusion: The paragraph will discuss more about the current sustainable issues faced by BAT, and then provide three appropriate recommendations to improve the sustainable situation of tobacco smuggling, child labour in Malawi, and the NGPs of BAT. The Suggestions to Reduce Illegal Smuggling in Bangladesh Spain and Andorra Spain are one of the few countries in the world to have tackled smuggling successfully (Joossens Raw, 2000). From their past experiences, the only action to control cigarette transit at international level will solve the smuggling problem. In 1997 there was a close collaboration between the authorities in Spain, France, Britain, Ireland, and Andorra and the European Anti-Fraud Office (OLAF) reduced the supply of smuggled cigarettes from Andorra. As a result, contraband cigarettes, which had accounted for 12% of the Spanish market in early 1997, held only 5% by mid-1999 (Joossens Raw, 2000).Tax revenue collected from legal cigarette increased by 25% in the same year. The methods can also be implemented by Bangladesh. By reducing the supply into the country at container level through intelligence, customs activity and cooperation, and technology (Joossens Raw, 2000), together with closer inspection of border goods and strengthening of patrolling by police on major smuggling routes. On the other hand, SUTL, a Singapore-based trading company, served as the primary middleman for the smuggling of BAT brands into Bangladesh (Joossens Raw, 2000). The Bangladesh government can pressure on SULTs subsidiary on local forcing it to stop the illegal smuggling. In this case, BAT has an inevitable responsibility, hence, the company should actively cooperate with the Bangladesh government and provide reliable information to improve the smuggling situations (Joossens Raw, 2000). The Methods to Improve Child Labours Situation in Malawi It is undeniable that transnational tobacco companies financially benefited from tobacco produced by children as young as 5 years of age in Malawi and other tobacco-growing societies (Otaez, Muggli, Hurt, Glantz, 2006). While the ECLT and related projects they launched did benefit several thousand children, they have had a negligible overall impact on the overall problem of child labour and the number of child labourers in Malawi (Otaez et al., 2006). In case BAT and other major transnational tobacco companies were genuinely committed to improving the socio-economic conditions of child and adult tobacco farm workers, they should rectify harmful business practices by implementing and enforcing a policy that they would not purchase any tobacco grown using child labour (Otaez et al., 2006). Besides, they should also conform with the core conventions of the United Nations International Labour Organization (ILO) that cover not just child labour but the whole range of labour rights concerns, such as right to organize, adopt a monitoring program that ensures that third party monitors will visit the tobacco fields periodically to perform audits (Otaez et al., 2006). Also, commit to public reporting of results of the monitoring and to revealing the names of workplaces where BAT purchase tobacco as Nike did in April 2005 (BBC NEWS, 2005). The actual cost of implementing these policies, which could substantially end or potentially eradicate child labour, would be about US$10 million per year, the cost of replacing child labourers with adults paid at minimum rural wage in Malawi (Otaez et al., 2006). While modest compared to the $400 billion in revenues the tobacco industry generates annually (YachBettcher, 2000), this amount is more than the US$575 000 per year ($2.3 million over four years to pay for activities such as constructing schools) the industry spends on child labour projects in Malawi (Otaez et al., 2006). Thus, government intervention, public pressure and the company consciousness are required to address child labour problems. The Approaches ensure Next Generation Products to be More Sustainable E-cigarettes are a double-edged sword ("The E-Cig Quandary," 2016). Despite they could potentially advance smoking cessation, currently they are a disruptive product of unknown safety and efficacy ("The E-Cig Quandary," 2016). Researchers indicated that if regulated properly, e-cigs could bolster overall harm reduction by helping smokers quit tobacco cigarettes or helping them smoke less. The trick will be regulation ("The E-Cig Quandary," 2016). For teenagers who have never smoked, researchers suggest it could pose a substantial risk, as young people who try e-cigs are three times more likely to take up smoking (Williams-Grut, 2017). More, the NGPs product like glo has such a clean and fashion designs (see Appendix 3). It undoubtedly results in teens perceive scant risk in e-cigs, which increases their chances of smoking. Trends in youth e-cig use are especially worrisome, since they presage behaviours that may be difficult to alter once young e-cig consumers become adults ("The E-C ig Quandary," 2016). Therefore, a 2014 FDA proposal recommended restricting sales to minors, mandating disclosure of ingredients, and requiring warning labels that state nicotine is an addictive substance to eliminate exposure to potentially toxic chemicals ("The E-Cig Quandary," 2016). BATs own internal tests claim that, NGPs are less harmful than cigarettes. However, there are fewer external studies verifying these findings (Williams-Grut, 2017). To be seen as more reliable in the science community, BATs NGPs have to be verified by a third party such as the US Food and Drug Administration (Williams-Grut, 2017). It ensures NGPs are safe for the users and minimize its potential negative effects. Thus, achieving its sustainable goals socially, environmentally and even economically.