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British American Tobacco Plc Overview Economics Essay

P1 History of British American Tobacco Plc.: British American Tobacco was born international’; British American Tobacco has been in business for more than 100 years, trading through the turbulence of wars, revolutions and nationalizations as well as all the controversy surrounding smoking.

The business was formed in 1902, as a joint venture between the UK’s Imperial Tobacco Company and the American Tobacco Company founded by James ‘Buck’ Duke.

Despite its name, derived from the home bases of its two founding companies, British American Tobacco was established to trade outside both the UK and the USA, and grew from its roots in dozens of countries across Africa, Asia, Latin America and continental Europe.

Mission: Our mission is to achieve leadership of the global tobacco industry in order to create long term shareholder value. Leadership is not an end in itself, but a company that leads its industry, is the preferred partner for key stakeholders and is seen to have a sustainable business, should be valued more highly.

Objective:

British American Tobacco is the world’s most international tobacco group, successfully pursuing a consistent strategy that is building long term shareholder value.

Shareholders Influence:

Bat always try to keep the commitment that they made with their investors. Under this, share holder can raise any question regarding the operation procedure of Bat Plc. And the shareholders can even choose their Board of Director.

P2 British American Tobacco achieves the value of shareholders interest by maximizing the share value that is they regularly distributing dividend among share holders.

P3 Responsibility of Bat Plc: British American Tobacco p.l.c. is owned by shareholders whose rightful expectation is that we should grow its profitability by the members of its Group competing effectively for market share amongst adult consumers of tobacco products.  In doing so, we take a long term view and believe that high standards of behaviour underpin sustainable shareholder value. 

P4 The basic financial difficulty in any society is to offer a set of system for allocating resources and/or use among persons who can't make happy their supplies, known inadequate wealth. The policy that each economic system provides function within a framework of formal institutions (e.g., laws) and informal institutions (e.g., customs).

What and how much will be produced? Literally, billions of different outputs could be produced with society's scarce resources. Some mechanism must exist that differentiates between products to be produced and others that remain as either unexploited inventions or as individuals' unfulfilled desires.

How will it be produced? There are many ways to produce a desired item. It may be possible to use more labor and less capital, or vice versa. For whom will it be produced? Once a commodity is produced, some mechanism must exist that distributes finished products to the ultimate consumers of the product. The mechanism of distribution for these commodities differs by economic system.

P5 Until ten years ago the term "Welfare Work" was a phrase without meaning in the industrial world. Today it stands for a definite policy on the part of employers which may bring about the solution of many of the vexed problems of labor and capital. The leaven of this policy already has begun to work.

A branch of welfare work through which the company has had a great influence on the people and the surroundings of the neighborhood is that of landscape gardening. At the time when welfare work was started the surroundings of the factory were like those of most industrial plants—anything but attractive. After the company has made its own property beautiful with lawns, shrubbery and vines, it taught the people of the neighborhood, by lectures and demonstrations, the principles of landscape gardening. As a result of this campaign of education the factory neighborhood has been change from a region of tumble-down houses, ash heaps and tin cans to a neighborhood of beautiful homes and well kept yards.

P6 The impact of Macro-economic (Monetary and Fisca)l Policy on the economy

There are some differences in the economic effects of monetary and fiscal policy, on the composition of output, the effectiveness of the two kinds of policy in meeting the government’s macroeconomic objectives, and also the time lags involved for fiscal and monetary policy changes to take effect. We will consider each of these in turn:

Effects of Policy on the Composition of National Output

Monetary policy is often seen as something of a blunt policy instrument – affecting all sectors of the economy although in different ways and with a variable impact.

In contrast, fiscal policy can be targeted to affect certain groups (e.g. increases in means-tested benefits for low income households, reductions in the rate of corporation tax for small-medium sized enterprises, investment allowances for businesses in certain regions)

Consider as an example the effects of using either monetary or fiscal policy to achieve a given increase in national income because actual GDP lies below potential GDP (i.e. there is a negative output gap)

(i) Monetary policy expansion: Lower interest rates will lead to an increase in consumer and business capital spending both of which increases national income. Since investment spending results in a larger capital stock, then incomes in the future will also be higher through the impact on LRAS.

(ii) Fiscal policy expansion: An expansion in fiscal policy (i.e. an increase in government spending) adds directly to AD but if financed by higher government borrowing, this may result in higher interest rates and lower investment. The net result (by adjusting the increase in G) is the same increase in current income. However, since investment spending is lower, the capital stock is lower than it would have been, so that future incomes are lower.

In UK lots of multinational organization are operating, Many people from different part of the world also visited in UK for different purposes, if the global economy fall the business of UK based company also fall down. As a result they faces difficulties to earn profit and ultimately the shareholders suffer.

P7 Perfect Competition:

A market is said to be perfectly competitive when firms perceive that they individually have no noticeable influence on market price. The outcome in such an industry is efficient in the sense that the cost of the last unit of output (marginal cost) would just equal what consumers would be willing to pay for that unit. Perfect competition is a regarded as a benchmark market structure for evaluating other market structures.

Market Structure and Competition:

The market structures tells us about the environment within which an enterprise functions and the nature of external pressure on the enterprise. The elements of market structure that we look at are concentration ratio, stability of market shares, conditions of entry and exit of firms. FDI Policy

Stability of Markets Shares

A limitation of the above summary measures of concentration is that they ignore the dynamic changes in the market shares of individual firms. Market shares of dominant firms may increase or decline over time. Greater churning of market shares in given market suggests greater intensity of competition.

P8 Market forces and organizational Response: Organizations always responses positively toward market forces.

P9 Company Summary: This section presents the key facts & figures, business description, and products & services offered by the company.

Major Competitors: This section first selects the competitors based on assets, sales, focus of business, or geographic reach. Then all the competitors are profiled.

Key Business Strategies of Each Competitor: It talks about the current and future strategies of each company. All business, marketing, financial and organizational strategies are discussed here.

Comparative SWOT Analysis: Our comparative SWOT analysis is a valuable step in assessing your company's and you competitors’ strengths, weaknesses, opportunities, and threats. It offers powerful insight into the critical issues affecting a business.

Comparative Financial Analysis: This section compares the recent financials of the company and its competitors. The financial performance of each segment of all the companies is also discussed here. The objective is to evaluate the financial health of the company vis-à-vis its competitors. The stock price comparison helps us in evaluating the performance of the company position versus its competitors from an investor’s viewpoint.

There is an important role for tobacco control advocates in the policy development process in regulatory agencies.

P10 The buying and selling of goods and services across national borders is known as international trade. International trade is the backbone of our modern, commercial world, as producers in various nations try to profit from an expanded market, rather than be limited to selling within their own borders. There are many reasons that trade across national borders occurs, including lower production costs in one region versus another, specialized industries, lack or surplus of natural resources and consumer tastes.

One of the most controversial components of international trade today is the lower production costs of “developing” nations. Both the United States and the European Union have imposed severe restrictions on imports from Asian nations to try to stem this tide. Clearly, a company that can pay its workers the equivalent of dollars a day, as compared to dollars an hour, has a distinct selling advantage.

P11 Consultation with UK SME representative bodies on domestic and European matters consistently shows that the main issue for their members is regulation. The 2007 EU Observatory Survey found that 36% of SMEs within Europe reported that regulations acted as a constraint or had presented difficulties in the previous two years.

Whilst progress has been at the EU level, for example on the promotion of the “Think Small First” principle and the European Commission’s commitment to reduce administrative burdens by 25%, we believe a much more ambitious set of measures should be introduced

Another important issue is access to finance, where we believe action should be focused on improving the demand side, in particular investment readiness, and the supply of modest amounts of finance for entrepreneurs who, for various reasons, are deemed to be a higher risk.

In order to grow, SME must also have access to new markets. Generally, exporting firms have been found to benefit from greater productivity growth than non-exporters.

P12

The UK has to make a decision on membership of EMU in the next two years. The monetary and fiscal regimes in the Euro Area and in the UK do not differ greatly. However, we argue that membership of EMU will increase the stability of the economy and the credibility of the policy framework, and hence will enhance the prospects for growth and higher incomes and employment.

M1 Here is one of many possible models of problem solving.

Problem identification What is my concern?

Goal definition What do I want to achieve or change?

Brainstorming What can I do?

Consequences What might happen?

Decision How should I do it?

Implementation Do it!

Evaluation Did it work?

M2 Appropriate technology (AT) is technology that is designed with special consideration to the environmental, ethical, cultural, social, political, and economical aspects of the community it is intended for. With these goals in mind, AT proponents claim their methods require fewer resources, are easier to maintain, and have less of an impact on the environment compared to techniques from mainstream technology, which they contend is wasteful and environmentally polluting.

M3 In September 2001, British American Tobacco and a number of other tobacco businesses agreed a set of voluntary International Tobacco Products Marketing Standards, to be applied by no later than the end of 2002. Within British American Tobacco, these Standards, which built on our previous Advertising Principles, have continued to govern the marketing of tobacco products by all Group companies. During 2005, stakeholders in dialogue asked us to review the content of the Standards to ensure that it continued to be appropriate. The Board of British American Tobacco p.l.c. has provided these updated Standards to all Group companies. Group companies are expected to begin applying them on 1 July 2007 and to confirm full adherence by no later than 30 June 2008, provided in all cases that their application is not in breach of relevant laws. British American Tobacco p.l.c. believes there is sufficient scientific evidence to support a less restrictive regime for the advertising and promotion of certain smokeless tobacco products, on the basis of their potentially lower health risk. Group companies will, however, continue to apply these Standards to the marketing of these products, pending further dialogue with regulators.

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