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CHANGE MANAGEMENGT PROJECT REPORT OF

PAKISTAN TOBACCO COMPANY

SUBMITTED TO
SIR DR.NAVEED AKHTER
SUBMIITTED BY
CREATIVES
SEMESTER
BBA-VII(B)
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DATE OF SUBMISSION
8TH DEC 2012

Creatives
1.
2.
3.
4.

Bilawal Murtaza
Mir shahnawaz
Sadam Mangnejo
Waqar Ali rahoojo

ACKNOWLEDGEMENT
We are grateful to our teacher sir Dr. Naveed Akhter for teaching us
Change Management. His versatile knowledge in this field and
unique teaching style has developed my knowledge and cleared
many Change management concepts.

We are more grateful to Sir for assigning this report, which has
further helped us in evaluating many interrelated dimensions of
Change.

Finally we bestow our thanks to all who have directly or indirectly


supported us with their assistance and guidance to compose this
report and accomplish broader vision to visualize things in Change
concepts.

THANKING YOU

CREATIVES

Executive Summary
The main purpose of this report is to highlight the change
management concepts in relevance to the Pakistan Tobacco
company and to know what factors are responsible for change,
along with their impacts and implementation. This Project
includes the history, introduction of PTC and the change
management concepts along with the reasons and after affects of
Change in the company
The purpose of this project plan is to:

Highlight the change areas of PTC


Explore the factors responsible for change.
Understand the concepts of change in practical business
practices
It is the intention of this change management plan to ensure that
the readers have understood clearly about the change concepts
and their relation to Pakistan Tobacco Company.

Table of Contents
ACKNOWLEDGEMENT..................................................................................................
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ACKNOWLEDGEMENT
Executive Summary.................................................................................................... 5
History........................................................................................................................ 7
Business principles..................................................................................................... 8
Mutual Benefit............................................................................................................ 8
Core Beliefs................................................................................................................ 8
Brands........................................................................................................................ 9
Embassy............................................................................................................. 10
Contribution to KPK.................................................................................................. 11
Financial Over View.................................................................................................. 11
Applying the Hofstede Model.................................................................................... 12
Applying the change process theory........................................................................13
Applying the Strategic Type...................................................................................... 13
Factors responsible for change................................................................................. 14

Being an analyzer........................................................................................... 14

External factors............................................................................................... 14
o

Competitive market..................................................................................... 14

Economic conditions.................................................................................... 15

Social activities............................................................................................ 15

International affiliation.................................................................................15

Internal factors................................................................................................ 15
o

Future capacity:........................................................................................... 15

Enhancement:.............................................................................................. 15

Employees................................................................................................... 16

Stock holders pressure.................................................................................16

Management................................................................................................ 16

Change affected Areas............................................................................................. 16

Organization fit and balance (results)......................................................................18

History
Pakistan tobacco company is the first multinational to set up its business in
Pakistan in 1947 and beginning operations out of a warehouse near Karachi Port,
Pakistan Tobacco Company Limited was incorporated in 1947 immediately after
independence, when it took over the business of the Imperial Tobacco Company of
British India which had been operational in the South Asia since 1905.
The company prides itself in being the first multi-national company to begin its
operations in Pakistan. Its parent company, British American Tobacco has been in
business for over 100 years now with a presence in over 180 countries. The Group
has built an international reputation for making and marketing high quality brands
for the millions of informed adults who choose to consume tobacco.
Pakistan Tobacco Company is part of the British American Tobacco Group, one of
the world's most international business groups, with brands sold in 180 markets
around the world. It is located in Jhelum, Pakistan.
From being just a single factory operation to a company which is involved in every
aspect of cigarette production, from tobacco cultivation to packaging this company
has evolved and grown with Pakistan.
PTC is the largest excise tax generator in the private sector in the country. In 2004
alone, PTC paid the government close to Rs.16 billion in excise and sales taxes.
This amounts to over Rs. 50 million per working day. Over one million people are
economically dependent on the industry in Pakistan.
PTC has two state of the art factories and employs more than 1,700 people while
indirectly providing livelihoods to more than a million people who are involved in
various aspects of the business.
Their strategy reflects our vision, being the champions of growth, productivity,
responsibility and a winning organization.
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Pakistan Tobacco Company Limited is part of the following trade and industrial
associations:
Cigarette Manufacturers Association Of Pakistan (CMA)
Management Association Of Pakistan (MAP)
Overseas Investors Chamber Of Commerce & Industry (OICCI)
Anti-Counterfeit and Infringement Forum (ACIF)

Business principles
Pakistan Tobacco Company is a commercial enterprise and its primary role is to
build long term shareholder value by meeting consumers preferences for highquality tobacco products. However, they believe that by absorbing and balancing a
wider range of expectations, they are best placed to continue building a sustainable
tobacco business.
The four Guiding Principles are:
Strength from Diversity
Open Minded
Freedom through Responsibility
Enterprising Spirit
Mutual Benefit
The principle of Mutual Benefit is the basis on which we build our relationships
with our stakeholders. We are primarily in business to build long term shareholder
value and we believe the best way to do this is to seek to understand and take
account of the needs of all our stakeholders.

Core Beliefs
They believe in creating long term shareholder value.
They believe in engaging constructively with our stakeholders.
They believe in creating inspiring working environments for our people.
They believe in adding value to the communities in which we operate.
They believe that suppliers and other business partners should have the
opportunity to benefit from their relationship with us.

Brands

Pakistan Tobacco Company has considered themselves as customer oriented


company. They aim to offer a product that excels in all aspects and exceeds the
expectations of our consumers.
Pakistan Tobacco Company invests in trying to understand the consumers
preferences and ensures that adult smokers make informed choices about different
brands available in the market. They have put in particular effort in promoting two
of our Global Drive Brands, Dunhill and Pall Mall; and two of their great value for
money brands, John Player Gold Leaf and Gold Flake.
Dunhill

Dunhill, a premium global brand, celebrated its centenary in 2007.


2008 was an exceptional year for Dunhill in Pakistan as the brand witnessed
exponential growth; fuelled by its re-launch in July. Going forward, Dunhill is
poised to strengthen its foothold in the premium segment.
Benson & Hedges

In 1873, Richard Benson & William Hedges started a partnership in London.


Benson & Hedges was launched in Pakistan in March 2003 and has since been able
to build strong brand loyalty among its consumers showing excellent year on year
growth.
John Player Gold Leaf

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The story of John Player Gold Leaf has to start from the story of its founder, John
Player. An enterprising businessman, John Player started a small tobacco selling
business in 1877 and turned it into a thriving cigarette company, John Player and
Sons.
John Player Gold Leaf has become an institution in itself, becoming one of the
most recognizable cigarette brands in the country. John Player Gold Leaf has
recently been declared the largest Urban Brand in Pakistan, beating out products
across the F.M.C.G. spectrum.
Capstan by Pall Mall

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Capstan has a rich heritage, originating in Britain in the 19th century. The brand
was created under the auspices of W.D. & H.O. WILLS at Bristol and London. And
is the largest selling brand in Pakistan.
Gold Flake

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Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS
where it was a premium brand around the end of the 19th century. Launched in
1982, in 'soft cup' packaging, the brand took off when it was repositioned in the
Value For Money (VFM) segment and later a 'hinge lid' variant was introduced in
2000.
Gold Flake has grown tremendously as a brand since 2004, making it the largest
volume brand in Pakistan, and the second largest brand in British American
Tobacco's Asia Pacific region. The key to Gold Flakes success has been its novel
engagement schemes which have fuelled growth over the years. Through consumer
relevant initiatives, Gold Flake has established itself as a fresh and modern offering
in the VFM segment and is all set to consolidate its position as the major volume
driver for Pakistan Tobacco Company.
Embassy
Embassy, is a leading volume brand in Pakistan, and is most
popular in Punjab where it enjoys a leading position. Having built
its heritage over a number of years, Embassy thrives on its brand
loyalty and locally tailored taste characteristics .

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Contribution to KPK
Khyber Pakhtunkhwa (KPK) produces approximately 77% of all the tobacco
grown in the country, and as such, it forms the basis for tobacco cultivation in
Pakistan. Pakistan Tobacco Company has a long history of association with the
people and land of KPK, where tobacco cultivation forms a large part of the agroeconomy. At the same time, our Green Leaf Threshing plant and one of our two
factories are located in Akora Khattak in the KPK adding to the industrial base of
the province.

Financial Over View

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Applying the Hofstede Model

1. Power Distance
The power distance in PTC is low as The power was distributed equally
among all irrespective of their designations. Every individual regardless of
his level in the hierarchy enjoyed equal benefits and rights.
2. Masculinity vs. Feminity
Ptc is a masculine oriented organization this refers to the effect of
differences in male and female values on the culture of the organization.
Organizations where male employees dominate their female counterparts
will follow different policies as compared to organizations where females
have a major say in the decision making process of the organization. Male
employees would be more aggressive as compared to the females who would
be more caring and softhearted..
3. Collectivism V.S individualism
PTC follows collectivism as this organization strongly relies on team work.
Here individuals with a common interest come together and work in unison
as a team. These organizations believe that the output is always more when
individuals exchange their ideas, discuss things among themselves to come
out with innovative ideas. In such a scenario the employees share a healthy
relationship and take each others help when required.
4. Uncertainty Avoidance Index
The uncertainty avoidance index Is high as employees know how to respond
to unusual and unforeseen circumstances. It deals with the tolerance level of
the employees in both comfortable and uncomfortable situations.
5. Term Orientation
Term orientation is high as well as this organization focus on long term
relationship with the employees. In such organizations people have a steady
approach and strive hard to live up to the expectations of the management.
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Employees get attached to the organization and do not look at short term
objectives.
Applying the change process theory
Life cycle theory of change fits this organization.
According to this theory, Change is imminent; that is the developing entity has
within it an underlying form, logic, program or code that regulates the process of
change and moves the entity from a given point of departure toward a subsequent
end that is prefigured in the present state
Characteristics of a Life Cycle Theory:
1. The progression (order + sequence) of change events in this model is a
unitary sequence (follows a single sequence of stage or phases) and is
cumulative (earlier stage traits are retained in later stages).
2. There is such a progression to the final end state which is pre-figured and
requires a specific historical sequence of events.
3. Each of these events contributes a piece to the final product, occurs in a
prescribed order, and sets the stage for the next. Each stage of development
is seen as a necessary precursor of succeeding stages

Applying the Strategic Type


This organization is certainly an analyzer as it is mix of prospectors and defenders,
in short a balance between two, this organization combines the strength of both
strategic types by putting in more resources to achieve optimum results resulting in
maximizing profits by decreasing level of risk the entrepreneurial problem is how
to locate and exploit new products and market opportunities while simultaneously
maintaining a firm base of traditional products and customers. Same is the case
with PTC as they need to go for new products and new opportunities in tobacco
while meeting the expectation of the old customers and maintaining the same
quality of old products.

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Factors responsible for change


The factors which were responsible for change in the PTC were
Being an analyzer
External Factors:
o competitive market
o Economic conditions
o Social activities
o Political influence
o International affiliation
Internal factors
o Future capacity
o Enhancement
o Employees
o Stock holders pressure
o Management

Being an analyzer: An analyzer is an organization which works by


obtaining the strength of both the defenders and prospectors but along with
that if the strength is increased so is the weakness, thus it is important to face
the weakness as well, by replacing and improving things and systems over
time, certainly by adapting to the change and the environment, This
equilibrium is accomplished by partitioning production activities to form a
dual technological core.

External factors:
o Competitive market: PTC was going through tough times in the market
as the competitors were taking over the market share and were
penetrating the market, which resulted in the loss of sales and due to the
pressure from the stakeholders PTC was forced to move on to bring
changes to cope up with the competitors pressure.
o Economic conditions: the economic conditions also affect the change in
an organization as the major influences on a MNC like Pakistan Tobacco
Company is excise and the tax rates.
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o Social activities: The culture and the society in which the organization is
prevailing also influences change in an organization because the
employees and the customers are from that social setup thus it highly
impacts. As most of the production of Tobacco is done in KPK province
but due the unfortunate security conditions and the hostile social relations
of the Talibans with the exterior world forces to change the organization
and fit in the environment,
o International affiliation: Pakistan tobacco company is affiliated to
British tobacco company and thus has international affiliation, any
change to its parent company will directly affect Pakistan tobacco
companys policy

Internal factors:
o Future capacity: as PTC has envisioned bright future and has slowly
took over most of the tobacco dealers in Pakistan so it was important for
them to take steps which could help them in coming over the future
initiatives, this was forced by the management as they had to acquire the
market change and use it in a positive way to make their way out of the
market and to beat the competitors
o Enhancement: AS previously mentioned that PTC was going for
expansion and extension so they needed that particular amount of labor,
technology and infrastructure which could handle such an expansion
keeping in view the PEST factors of the economy of Pakistan.
o Employees: we have learnt in the course that there are three major factors
responsible for the change in an organization, employee is one of them,
an organization cannot work without employees it is a group of people
who work together and it is
o

Stock holders pressure: another factor contributing to this part is the


stock holders pressure, the stock holders continuously pressurize the
management for profits which instantly force the organization to go for
rapid changes keeping in view not to lose the stock holders market and to
increase the sales by bringing up many change concepts and applying
them in the company

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Management: Management also plays an important role in bringing the


change, as most of the times the change manager is from the
management, he/she is responsible to bring change in the organization
with or without the help of the change agents, thus same happened in
PTC, every manager reported the defects and the new requirements to the
upper management or carried it on by his/her own authority.

Change affected Areas


The organization went through numerous changes due to the
above cited factors,
Objectives
Due to the hostile conditions in KPK and warning by the Talibans the organization
was forced to redo their strategy related to the farmers and field of tobacco in those
areas and the security implications were more tightened.
Employees
The employees are the recipient of change plan. PTC believes in employee
empowerment and thus went for heavy changes some which were requirement of
the market and some which they themselves invented, PTC opted for portal
integration, this helps the employees keep them connected for formal and non
formal discussions, apart they have introduced the family day policy as per this
policy every quarter a day would be specified on which all the employees along
with their families could have a get together all the expenses would be paid by the
organization.
Technology
Technology is considered the engine of growth in todays world. Perhaps the
greatest challenge for Contemporary organizations is the acquisition and
integration of technology in its strategy, structure and process. Pakistan Tobacco
Company heavily relies on technological uses from production of tobacco till
safety of the employees. PTC has a Complex designed Technological department
which assures that everything is going smooth and safely. The changes which
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occurred were the updating of the servers and expansion of networking systems;
they also installed SAP which is integrated business management software.
Infrastructure
PTC was forced to create more jobs and for that had to order more furniture and
renovation of the old assets and a new security department to cope up with the
evils at hand and they started a project named Single server centralization which
would them integrate whole the activities within the organization with the other
departments. Thus the infrastructure enormously changed, including the new
machinery, vehicles and offices and equipment.
Globalization
The management of international economic and political forces what is today
known as internationalization and globalization is yet another important factor
influencing decision making of organization. The change which took place relevant
to globalization is the project which PTC started as global existence in this project
the centralization was enhanced so that PTC and its parent company could be
merged all around the world as a person sitting in Islamabad could access the
database and portals in Toronto, new York and where ever the organization exists
Below are the major changes which happened in the organization. Another project
they have started is cultural exchange program in which the employees from
various backgrounds are made to work into workshops for getting closer. For
example employee from Bangladesh is invited over to Pakistan to for trips and
discussions with the Pakistani employees.

Outcomes of Change
Security: due to the change happened the security was increased all over from
operations to marketing, thus increasing the costs but minimizing the risk and
achieving its objective of safer environment and employee satisfaction
Employee satisfaction: because of the employee integration and employee
security the loyalty highly increased and employee was retained not only the
employee worked better but along with that had high motivation, thou employee
satisfaction is costly but they bought a lot more then expected.

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Market leader: due to the enhanced technology and development PTC was using
to the edge technology and secures the highest share in market not only being the
market leader is enough so they thrive to go for any new market
Higher sales: Pakistan Tobacco Company has the highest sales and is the highest
tax payer of Pakistan, thus the change they brought seems successful as they fitted
in and balanced, which helped them meet their annual objective.

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