Management Report of British American Tobacco

Student Name: GABOR ELENA DIANA 

Student ID: 21429976

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Executive summary
British American Tobacco is the world's second-largest tobacco firm, operating in 180 different
countries and delivering its products there. In this study, first and foremost, an industry analysis
of BAT will be presented, including Porter's 5 forces analysis, PESTEL analysis, and SWOT
analysis. After that, a position will be taken concerning an explained component of BAT's
position on the international trade market. In the third and last section, we will go into greater
detail about the political and economic factors. And last, in the final section, we will talk about
the social and environmental elements that affect BAT.

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Contents
Executive summary.........................................................................................................................2

Introduction......................................................................................................................................4

Analysis of the BAT industry..........................................................................................................5

Porter's five-force model..............................................................................................................5

PESTEL analysis.........................................................................................................................6

SWOT analysis............................................................................................................................7

BAT's position in the international commerce market....................................................................9

Factors in BAT's favour include both political and economic ones..............................................10

BAT for the development of social and environmental factors.....................................................11

Recommendations..........................................................................................................................12

Conclusion.....................................................................................................................................13

Reference list.................................................................................................................................14

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Introduction
With a presence in 180 countries, British American Tobacco is the second-largest tobacco
company on the planet. As a starting point, Porter's five forces, PESTEL, and SWOT analyses of
BAT's industry will be discussed in this report. As a result, BAT's position in the worldwide
trade market will be taken into consideration following this discussion. Finally, in the third and
last segment, we'll get more specific about how politics and economics play a role. Finally, in the
concluding section, we'll discuss how society and the environment influence BAT.

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Analysis of the BAT industry.
Researchers and analysts use industry analysis as a market assessment method to examine the
industry's competitive variety. British American Tobacco's industry analysis includes a statistical
chart of demand-supply, as well as a level of rivalry within that industry, as well as a future
potential assessment (British American Tobacco and Peter Stuyvesant Collectie, 2000).
It is possible to analyze the market in three ways:
1. The five-force model of Michael Porter
2. Analysis on PESTEL
3. Analyzing the strengths and weaknesses of a situation
Porter's five-force model
Michael Porter introduced Porter's 5 forces technique in 1980. The five forces hypothesis was
referenced in Michael Porter's book, 'Competitive Strategy: Techniques for Analyzing Industries
and Competitors (Strong, 2014). The following are BAT's five hypotheses:
Rivalry in the workplace
Industries compete with one another for the sake of acquiring an advantage and making a profit.
Several factors within BAT give it a bit extra effort to keep fighting.
There are threats from possible newcomers
Any company can easily and frequently enter the market. Newcomers can always get an
advantage in the market and take it over, therefore there is always a chance of this happening.
BAT can mitigate these hazards in the following ways:
 By developing new eco-friendly vaping products like an eco-friendly e-cigarette.
 Insisting on R&D as part of a new strategic plan that will allow BAT to grow more healthily.
Suppliers have the right to collectively bargain
Products' quality and pricing are closely related to the organization's ability to negotiate with its
suppliers. BAT can make use of these techniques to implement this correctly:
 New raw materials need to be discovered
 supply chain management needs to be strengthened
 Competitive advantages can be gained by improving the design of existing products
(Association Of Research Libraries. Systems And Procedures Exchange Center, 2016).
Negotiating rights for buyers

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This is a reference to the opposite product on the market, which is now unavailable. Buyers
apply this right to lower the price, enhance the quality, etc. When BAT's customers use their
right to bargain, they can reduce this company's output to an acceptable level (Carlisle and
Parker, 2017). To implement this strategy, BAT needs to expand its consumer base by producing
and distributing new items.
The threat of replacement goods and services
There are a variety of similar products on the market but at varying pricing. There is always a
possibility of a substitute product for a certain product. BAT produces and exports products of
tobacco and there are so many competitors on the market confronting the struggle of grabbing
the lash of the market.
 Making the company service-oriented to earn greater reviews
 Ascertaining what a person's wants, needs, and desires are
PESTEL analysis
The macro-environment of any organization is studied using a PESTEL analysis, which is
sometimes referred to as a PEST analysis. This PEST study or broad factor analysis is necessary
when analyzing the external environment (Feys and Probert, 2019). Outside influences on an
organization's infrastructure are referred to as PESTEL factors.
Political
Political issues have been maintained by BAT's highest echelons to ensure that the company
continues to move forward without interruptions. There is a direct correlation between the
political climate of a country and its economy (Aristotle, 2017). There's a good likelihood that
you'll get involved in a local political dispute. BAT always seeks to establish a close relationship
with the country's political climate by providing money or other resources.
Economic
To avoid a loss on the product's first outing, it is necessary to cut a healthy profit margin.
Consumers' faith in BAT is more likely to be gained or lost based on a country's inflation rate,
monetary system, etc.
Socio-cultural
Society is made up of various components, one of which is the individual human being. And the
morality of civilization is shaped by its cultural basis. The goal of a company's products is to
entice customers to buy them (Rosler and Squibb, 2013). BAT, for example, needs to focus on

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socio-cultural issues to better understand human nature and attract customers if it wants to
develop globally with its product.

Technological
Nowadays, there's no arguing with technology. A human life without the aid of technology is
unthinkable. But there is a variation of technological breakthroughs based on geography. They
can see other planets from Earth using technologies like those in the UK, China, and South
Korea. Countries such as Madagascar and Liberia are technologically backwards, as are Somalia,
South Sudan and the Sudanese Republic. According to recent news, BAT intends to begin
production on a new formula one racing car. For BAT, this will be a ground-breaking
technological breakthrough.
Environment
Another important aspect of our lives is the environment. Environmental dangers cannot be
controlled, but they can be minimized. An organization can do good for the environment by
regulating waste materials, making everything more environmentally friendly, and taking care of
the current greenery, among other things (Gifford, 2013). If the corporation is going to
accomplish all of this, it will need to conduct extensive research into local environmental
conditions. BAT was recently recognized as a Climate Leader by a European assessment for its
environmental stewardship.
legal considerations.
The legal aspects of an organization's services and goods assist it to preserve its legality. This
period of fierce competition necessitates that corporations find and exploit any advantage they
can find. To deal with these issues and find a solution, attention must be given to legal aspects.
SWOT analysis
SWOT stands for the specific terms of a business: strengths, weaknesses, possibilities, and
threats. For a corporation with a rich history like BAT, a SWOT analysis includes the following:
Strengths
 A well-known brand
 Has benefited from mergers and acquisitions as a means of developing its business.
 The evaluation of market performance is positive.

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 The markets' supplies are reliable.
 The market strategy was successfully implemented.
Weaknesses
 Making fewer contributions to R&D
 Failing outside of the primary business.
 The ultimate financial planning is not done correctly.
 It's difficult to cope with the problems caused by newcomers 
Opportunities
 The shipping reward has been reduced, resulting in lower transportation costs.
 A new market will be opened as a result of the accord, the government claims
 introducing customers to new fashions
 Low rate of inflation
Threats
 Existing products may go extinct or constitute harm to the ecosystem as a result of the Paris
agreement (2016).
 It is possible to view raw materials gathered from the environment in a derogatory light.
 BAT faces a threat and a challenge from the start since new technologies can make other
companies better than BAT (Seth, 2018).
 Another challenge for BAT is that local distributors are becoming more and more dominant
daily. Because of other competitors, they have to pay a bigger margin.

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BAT's position in the international commerce market
It is a company's success and acquisitions that determine its place in the market. A company's
position in the marketplace is referred to as its trade market position. British American Tobacco's
commercial market position is discussed here. A lot of time is going to be spent on BAT.
In total, this international company has operations in 180 nations. Non-nicotine cigarette
products and items are also included in this category. BAT is one of the world's largest cigarette
firms in terms of sales volume. BAT was founded by the merger of the imperial tobacco
company and American Tobacco Company, which took place in 1902. In 2020, a study found
that BAT's retail volume alone accounted for 12.2% of the total market share (Hongkong And
Shanghai Banking Corporation, 2017). You can choose from a wide range of brands, including
Dunhill, Rothmans and Rothmans & Camel as well as Kent and Pall Mall. British American
Tobacco (BAT) generated total revenue of UK£12.3 billion, 90% of which came from tobacco
sales .
BAT's primary objective is to manufacture cigarettes, but as the world changes, so do BAT.
Foresees that by 2030, there will be 50 million people who use a variety of different items. The
end goal of making non-frameable products will be a total of three million dollars, which will
allow the company to grow globally.

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Factors in BAT's favour include both political and economic ones
Political forces play a significant role
Political elements are the most important to keep to improve profitability in a specific market or
circumstance. There are 180 nations in which British American Tobacco does business, and each
one has a distinct political climate. By entering these markets and taking on political challenges,
BAT will be able to overcome the political environment in the market. These are the things that
BAT needs to keep an eye on:
 BAT's products, how significant and sought after are them on the market
 BAT's products, how significant and sought after are them on the market (Adolf, 2015)
 When it comes to taxes and the tax system, it's important to keep an eye on wage benefits,
labour benefits, etc. 
 Tariffs and levies related to personal items should also be taken into consideration.

Factors of production
Inflation, savings, interest, and currency exchange rates are all included in this section. Aside
from that, a company's overall demand and overall supply are influenced by the economy. By
analyzing interest rates, inflation rates, monetary policies, and other variables, British American
tobacco can predict the trajectory factors and other contractual things.
 The first step is to assess a market's economic stability
 Government participation in products 
 The economic status of educated individuals 
 The economic status of educated individuals 
 Additional revenue (Robert Bryan Lindsay et al., 2014)
 Proportion of employed
 The rate of growth
 The rate of return

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BAT for the development of social and environmental factors
Social determinants
It's critical to maintain the other macro variables of an organization to adequately represent the
option. Factors relating to society and the environment. The culture and values of a society are
the primary determinants of how individuals behave in a given location (Marmot and Wilkinson,
2014). The market for British American tobacco supply and demand will be shaped by common
beliefs and attitudes.
 The population's behaviour
 Features of the population
 The societal structure
 Gender roles and other societal divisions
 Entrepreneurship piques your interest.
 BAT's products are being reviewed.

Environmental determinants
The environment is the most crucial factor. Every industrial enterprise gets its raw materials
from the environment. To run a business successfully, you need a good weather effect to attract
people and get them to buy your items (Hutchins and American, 2016).
Because of the disparities in market positions, there is a significant risk of a catastrophic
environmental situation. To deal with these disasters, many regulations and boundaries must be
followed by specific places and markets.
 The weather in a certain location
 There's a chance you'll be hit with a lot of bad luck.
 Climate change could be severe.
 Inadequate waste management
 Pollution of the air and water
 When it comes to maintaining ecological equilibrium, there are a few things to consider.
 Suggestions for endangered spices

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Recommendations
Even though BAT has had a fantastic trip over the past 20 years, the company must continue to
develop. Infrastructure, internal and exterior layouts, tactics that will assist the product to be
better, changing, and so on are all important components of improving the product's quality.
From that standpoint, the following suggestions might be useful:
Increasing the speed with which existing environmental issues are addressed and making it more
environmentally friendly
 Contributing more to the 'GoGreen' project
 Concentration on non-nicotine goods and large-scale production
 For their own sake, achieving carbon neutrality
 lowering the products' health impact
 Consider the options available to customers.
 Waste management and biodiversity are two topics that come to mind while thinking about
waste management (Lund, 2016).
 Keeping the focus on human rights
 Keeping the public's health and safety in check
 To execute a proper marketing channel, blend with new individuals and cultures.
 When a lawsuit is robust and contains a lot of information, an organization will do well.
 Increasing the value of BAT's product in order to attract more customers

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Conclusion
It may be considered that BAT's journey here was a successful one after 120 years. However,
there were numerous ups and downs, including losing a lawsuit for selling the Marlboro
cigarette, facing financial loss, lacking a marketing mix strategy, forming a joint venture with the
Lightning Path, expanding business globally, and developing new products, including non-
nicotine products. BAT must exercise and execute new adaptations in this developing era to
retain and maintain sustainable development. BAT, being a multinational corporation, is required
to develop and implement innovative services while also analyzing and improving the company's
structural landscape.

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Reference list
Adolf (2015). Natural selection of political forces,. Lawrence, University Press Of Kansas.

Aristotle (2017). Politics. Indianapolis, Indiana: Hackett Publishing Company, Inc.

Association Of Research Libraries. Systems And Procedures Exchange Center (2016). Collective
bargaining. Washington, D.C.: Association Of Research Libraries, Office Of Management
Studies.

British American Tobacco and Peter Stuyvesant Collectie (2000). British American Tobacco Art
Collections. S.L.: British American Tobacco, [Ca.

Carlisle, J.A. and Parker, R.C. (2017). Beyond negotiation : redeeming customer-supplier
relationships. Chichester England ; New York: Wiley.

Feys, B. and Probert, C. (2019). PESTLE analysis. 50Minutes.

Gifford, C. (2013). Technology. New York: Scholastic.

Hongkong And Shanghai Banking Corporation (2017). British American Tobacco plc : global,
diversified and resilient. London: Hsbc.

Hutchins, E.B. and American, O. (2016). The evaluation of environmental determinants.

Evanston, Illinois: Division Of Education, Association Of American Medical Colleges.

Lund, B. (2016). Business communication that really works! : technology for business. Los
Angeles, Calif.: Affinity Pub. ; [Lincolnwood, Ill.

Marmot, M.G. and Wilkinson, R. (2014). Social determinants of health. 2nd ed. Oxford: Oxford
University Press.

Robert Bryan Lindsay, Kenaston, K.R., Schroeder, R.K. and Fish, U.S. (2014). Steelhead
production factors. Portland, Or.: Oregon Dept. Of Fish And Wildlife.

Rosler, M. and Squibb, S. (2013). Culture class. Berlin: Sternberg Press.

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Seth, C. (2018). SWOT analysis. S.L.: 50Minutes.com.

Strong, H. (2014). Marketing and management models : a guide to understanding and using
business models. New York, Ny: Business Expert Press.

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