REPORT ON BRITISH AMERICAN TOBACCO

 

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1.0 Introduction

1.1 History of the Organization

British American Tobacco (BAT) is the world’s most international tobacco group. British American Tobacco is the second largest Tobacco Company in the world .With a market share of 17.2 per cent, they make the cigarette chosen by one in seven of the world’s one billion adult smokers and make nearly two billion cigarette world wide everyday. BAT holds strong market positions in each of its regions and has a leadership in more than 50 markets of the 180 markets where they have an active business presence. In total BAT employs nearly 90,000 people world wide and has over 80 factories in 68 countries.

Tracing its heritage back to a joint venture formed by the Imperial Tobacco Company of the United Kingdom and The American Tobacco Company of the United States in 1902, today's British American Tobacco Company was born. It was quickly expanded into major markets including Australia, Canada, China, Germany and South Africa. Throughout the 20^th century, BAT traded through wars, revolutions, nationalizations and controversy surrounding smoking.

Time periods	Events
1998	De-merger of financial services and British American tobacco PLC. listed on the London stock exchange as a stand-alone business
1999	Global merger with Rothmans International
2000	Imperial Tobacco Canada became a subsidiary
2001	Major investments announced in South Korea, Turkey, Vietnam, Nigeria and Egypt
2003	Won the bid for Italy’s state tobacco company, ETI
2004	The US businesses of our subsidiary Brown & Williamson combined with R. J. Reynolds to form Reynolds American, in which BAT has a 42 per cent share
2005	Share price rose above ?10 for the first time
2006	Expanded test-markets of smokeless Swedish-style snus in Sweden and South Africa and began a pilot  in Japan
2007	Share price rose above ?16 for the first time

BAT has a plan to build their business in three ways:

F Organic growth in their existing markets

F Quick and effective entry into new markets and

F Potentially attractive acquisition, joint ventures or other strategic alliances.

The merger of British American Tobacco with Rothmans International had been announced on 11^th January 1999.This global merger was completed on 7^th June 1999. This brings together the number 2 and 4 players which will boast a combined volume exceeding 900 billion cigarettes around the world. The merger will help to attain in British American Tobacco’s vision of becoming the world’s leading International Tobacco Company.

The British American Tobacco Group is one of the world’s leading international manufacturers of cigarettes, marketing its products in almost every country worldwide.

 

British American Tobacco (Germany) GMBH is a leading cigarette company in Germany.

Souza Cruz S.A. is the market leader in Brazil and a world leader in tobacco leaf export.

Its aim is to grow its share in the world market and its profitability within the share- by offering more brands against competitors, and by running its business efficiently and well. With its current position and plans, BAT is heading towards obtaining its objective, which is to be the world’s number one in tobacco industry.

Tobacco Companies	Percentage
Philip Morris	18.7
British American Tobacco	17.1
Japan Tobacco	7.7
Imperial Tobacco	3.5
Gallaher	3.1
Altadis	2.1
others	47.8

 

 

BATB strictly practices the industrial safety measures and is committed to conform to internationally accept environmental standards. All of the BATB areas are equipped with sufficient equipment, gears and water supply. BAT group head quarters recognized BATB’s level of safety practices with awards. It has also received five times the prestigious “Prime Minister’s Award” for afforestation and nine times “Zero Accident Award”.

British American Tobacco Bangladesh is involved in various types of social activities. It is proactively involved in afforestation program in the rural areas of the country since 1980’s. Every year it distributes amongst the farmer and other agencies over two million plants free of charge.  Till now the company, has planted 5 million trees across the country. Besides this, the company is also involved in vegetable seed multiplication project, supports philanthropic organizations like Sandhani and other Social and Cultural groups, IT education in the name of Dishari.

The parent company of BATB is called BAT Co or British American Tobacco. They are the major shareholder of BATB. The operations of BATB are done according to BAT Co regulations and BAT Co looks after the management of BATB. BATB management is trained by BAT Co and on many occasions BAT Co sends their own managers to work in BATB.

Different departments have different structure according to their function and responsibility. BATB maintains a modern organizational structure headed by Managing Director. Managing Director is the operational head and national sales manager. Head of every department carries out their functions with the help of line managers. Other positions of the organ gram are directors, regional manager, secretary, assistant manager, area manager, territory officer, supervisor and other staffs.

The “Board of Directors” and Executive Committee (EXCO) govern the overall activities of the company.  The Board of Directors is responsible for protecting the rights and interests of all shareholders and is held accountable for the overall management of the entity.

The British American Tobacco Bangladesh Board consists of nine Directors, comprising the Non-Executive Chairman, five other Non-Executive Directors and three executive Directors which include the Managing Director. The key functions of the Managing Director are clearly defined. The Board is responsible for the overall system of internal control for the company and for reviewing the effectiveness of these controls.

Responsibilities for implementing the company’s strategy and day to day operations are delegated to the Executive Committee, which meets monthly. The Executive Committee is chaired by the Managing Director. The other members include the Deputy Managing Director and the functional heads of Human Resources, Corporate and Regulatory Affairs, Operations, Leaf, Marketing, Finance and Information Technology.

The composition of shareholders of BATB as at 31^st December, 2006 was as follows:

	Raleigh Investment Co., UK	39,545,358 shares	65.91
	Sadharan Bima Corporation (SBC)	1,692,397 shares	2.82
	1.06
	0.52
	Other Bangladeshi Shareholders	3,340,234 shares	5.58
	40,000,000 shares	100.00

 

 

 

 

 

 

Table 4: The Composition of Shareholders in 2006

 

 

 

 

Mission

Growing our share of the total tobacco market.

Dominating key identified segments.

 

Brand Marketing 

Trade Marketing

CORA.

Along with the core functions there are some support functions such as

HR

IT

Finance

 

 

 

 

 

 

 

 

 

	Flow Chart:  Organizational Structure
		Sources- BATB

 

 

 

 

 

 

 

 

 

 

 

 

	Flow Chart:   Executive Committee

 

 

 

BATB

Figure 5: Executive Committee

1.5  Existing Programs of the Organization

§   Exports finished products

§  Offers quality products at competitive price

§  Offers more than 250 off-patent and on-patent molecules

§  Offers facilities for contract manufacturing

§   Provides assistance in product promotion and training in overseas markets

1.6 Future Programs of the Organization

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

The four building blocks of our strategy are Growth, Productivity, Responsibility and developing a Winning Organisation. Each is interdependent and essential for delivering profit growth and long term business sustainability.

"We have confidence in our strategy, we believe that our business is sustainable and we expect that British American Tobacco will continue to grow." Paul Adams, Chief Executive, British American Tobacco.

Although our products pose risks to health and our industry can be seen as controversial, our products are legal, calls for prohibition are exceptionally rare and about a billion adults globally choose to smoke. We work continuously to manufacture and sell our products responsibly.

Through more than 100 years of operations, we have built a strong international reputation for high quality tobacco brands to meet consumers’ diverse preferences.

And, over the past five years for example, we have delivered significant shareholder value with a total return of 294 per cent, compared to 89 per cent for the FTSE 100 as a whole.

Q&A with Paul Adams, our Chief Executive, about the way ahead. 

 

This report is a descriptive one, which was administered by collecting primary and secondary data. Descriptive Research has an important objective: gives description of something marketing characteristics of function (Malhotra, 2006) and also the description of phenomenon or characteristic associated with an object population (who, what, when, where and how of a topic, Copper, 2006).

An effective guideline to recruit, select, direct, supervise & control the overall activities of Field Force”, it is a difficult and complicated task and no single method is appropriate for preparing the report. For this reason, a number of procedures have followed to prepare a meaningful report. The methodology of the task can be depicted as follows:

2.1 Statement of the Problem

The main focus of this report is on the strategic human resources management practices in the public or private sector organizations in Bangladesh. It also pays attention to the potential and existing employee of the organization. The main purpose of this report is to be familiar with the various dimensions of human resource activities in the organization.

 

2.3 Objectives of the Study

The objective behind this study is something broader. Objectives of study are summarized in the following manner:

To observe the working environment in multinational company.

To have some practical exposures that will be helpful for my future career.

To Find out the areas needed to be improved in order to make the business efficient and effective.

To identify the problems and to provide measures to solve them.

2.4 Collection Procedure of Data

Personal interview technique was the primary tool used in collecting information. Oral Interview with distribution field force in order to discuss about the related matters before preparing the report. Area Manager and Territory officer of BATB from Dhaka division (Area 4) were the main sources of secondary data.

This study covered two types of data, which are:

  Primary data

Primary data has collected through unstructured personal interviews and discussions with officials of British American Tobacco Bangladesh Limited.

2.4.2 Secondary Data:

Secondary data has been collected through relevant books, annual report and different manuals of BATB, and other published papers.

2.5 Analysis of Data

Collected data are analyzed by using percentages, graphs to draw the conclusion. All the data have shown in tabular form.

 

3.0 Findings of the Study

3.1 Nature of SHRM & HRIS

A comprehensive Human Resource Strategy plays a vital role in the achievement of an organization’s overall strategic objectives and visibly illustrates that the human resources function fully understands and supports the direction in which the organisation is moving. A comprehensive HR Strategy will also support other specific strategic objectives undertaken by the marketing, financial, operational and technology departments.

In essence, an HR strategy should aim to capture "the people element" of what an organisation is hoping to achieve in the medium to long term, ensuring that:-

• it has the right people in place
• it has the right mix of skills
• employees display the right attitudes and behaviors, and
• employees are developed in the right way.

BATB is a public limited company. Management Director is the operational head and appointed by the British American Tobacco. Head of every department carries out their functions with the help of line managers.

 

3.2 Nature of Corporate Strategy

Open-Minded:

We are open minded and encourage everyone to contribute, by actively listening; by being genuinely receptive to new ideas and the ideas of others; by being open to different perspectives and by questioning and challenging the conventional.

Freedom with Responsibility:

We have the freedom to take decisions and act, by accepting personal responsibility, within the parameters of the organisation’s strategic goal.

Strength from Diversity:

We actively utilize our diversity of people, cultures, viewpoints, brands, markets and ideas to create opportunities and strengthen performance.

 

Enterprising Spirit:

We have the confidence to seek out opportunities for success, to strive for innovation and to accept the considered risk taking that comes with it.

3.3 Formulation of Corporate Strategy

Over the last decade or so, our market share has increased by nearly 50 per cent.  We are now the second largest international tobacco Group, accounting for some 17 per cent of the global market.

In this section, we explain briefly why leadership is important to us and summarize the key elements of our strategy which we believe enable us to continue building a sustainable business in tobacco.

As we can see that BAT has the strategy to achieve their main goal through growth, productivity & responsibility. So that we see that

 

 

 

 

“SUCCESS AND RESPONSIBILTY GO TOGETHER”. So in a sense we can say that BAT is very responsible to the society as well.

 

2) External Recruitment: For any kind of external recruitment in a distribution house, except for the post of Driver/puller, newspaper advertisement will be given for the post(s). Position of Manager, Accountant, and computer operator needs to be recruited externally if suitable candidates are not found from distribution house.  Recruitment should take place in at least two steps. There will be a written test and in the second step there will be an oral test. Presence of respective Territory Officer is recommended in the Viva. Final selection will be done on the basis of pure performance in the recruitment process.

 

1) DR/ Salesman:

As this role is directly market oriented and it needs physical effort. That is why; young and energetic person should be recruited to work as salesmen. Experience will be given priority. DR/Salesmen having competitive company experience are better not to be recruited for loyalty issue and confidentiality maintenance.  Minimum qualification of salesman needs to be HSC. In terms of recruiting DR, screening of resume and calling for interview is not a hard and fast rule.

 

3) Manager:

• House manager is a post which requires high extent of leadership quality, education and operational knowledge.
• Following qualification is a pre requisite for house manager applicant:
• Educational qualification- Minimum graduation
• Experience about dealing with cash, comfortable in billing and account management
• Basic computer knowledge- MS Word, MS Power point, MS Excel

 

Interested persons will be asked to provide resume in the house. Distributor himself or general manager will be involved in resume screening based on above mentioned criteria.

 

Oral interview:

Selected candidates those will be successful in the written test will be asked to face an interview with Distributor and General Manager of the house. During the interview, candidates will be noticed on following parameters:

•  

•  

  Guarantor: Other than personal guarantee, candidates are required to complete another Tk.150.00 stamp by a guarantor, who will guarantee the candidate, that if for any misconduct of the candidate during his job the organization is affected, the guarantor will be held liable. Two photograph of the guarantor will also be attached with the stamp.

   

  4) Accountant:

  The screening and recruitment process will be same as Manager in case of distribution house accountant.

  • In the written test, passing score will be a bit different than that of a manager and question will emphasize more on numeric calculation capability and information management
  • Oral interview will be much lenient that that of a manager. Basic communication will be judged.

   

  Probation:

  Candidates are on a probationary period for six months. During probation period, candidate will be in continuous on the job training from his immediate supervisor (General Manager or distributor)

  • His capability, commitment, attitude will be observed and necessary improvement feedback will be given by house management
  • After successful completion of the probationary period, candidate will become permanent employee of the organization.  
  • Probation will not be applicable for any candidate who will be internally recruited/ promoted from within the distribution house FF.

   

  Appendix: Confirmation letter, FF Service agreement

  Job Succession Planning:

  There should be an alternative option against all the positions related with  in house activities and administrative work. The designation against which immediate successor needs to be decided are:

    House Manager

    Accountant

    Computer operator

  House manager will look after computer operator activities while he is absent. In terms of successor, external recruitment will be preferred

   

  Termination Process:

  The employee needs to be circulated with one month notice in lieu of one month salary prior to the date of termination.

  • The termination will be applicable upon receiving of all the distribution house assets in proper form including ID card.
  • The distributor himself will take the decision about the termination of distribution manager. General Manager of the house (where applicable) will negotiate with the distributor but termination letter will be signed off by the distributor.
  • During probation period, distributor might terminate anyone anytime without issuing prior notice. Similarly, any incumbent might resign anytime without prior notice during probation perio

   

  Salary of distribution FF will be divided into two broad categories. One is the monthly fixed salary (Fixed portion) and the other one is variable part. Variable part will be based on performance. Any incumbent going through probation period will only receive the basic part of the salary. Variable portion will be applicable upon completion of the probation period.

   

  Apart from Monthly basic salary, there will be other thing incorporated in Fixed Part and that is Daily Allowance. This can be rephrased as food allowance. Daily allowance will be uniform amount for all FF. Ideal Food allowance amount is 40 Tk/day for all field force.

  Total Fixed Salary in a month = Monthly Basic + (Daily allowance * working day).

   

  4. Telephone Facility:

  It is suggested that telephone facility needs to be provided for the functional use of limited distribution FF.

  • According to need and importance, Distribution manager and sales supervisor will avail mobile phone facility within their benefit scheme.
  • The benefit will be activated upon confirmation of job. The mobile set along with connection will be provided by distributor.
  • Fixed amount will be provided monthly for mobile charge. The amount will be Tk 500 for sales supervisors and Tk 900 for distribution manager.
  • The phone will be fully possessed by the above mentioned FF, in addition of their functional use they can use it for their private reasons and take the mobile with them during leave.
  • In case of Malfunction/ mechanical problem, the concerned FF will repair the set at per the warranty provided by the distribution house.
  • Upon termination of job, concerned FF will have to return it back to the distribution house

   

  3.6 Strategies for Recruitment, Selection and Retention

  Recruitment is the process trough which the organization seeks applicants for potential employment. Selection refers to the process by which it attempts to identify applicants with the necessary knowledge, skills, abilities and other characteristics that will help the company achieve its goals, companies engaging in different strategies need different types and numbers of employees. The strategy a company is pursuing will have a direct impact on the types of employees that it seeks to recruit and selection

  

  Figure 7: Ways of Generating Human Resources

   

  BATB Training and Development enables  people to discover their own personal leadership skills and qualities in an enterprising, safe and supportive learning environment, which make working with British American Tobacco Bangladesh's talented and emerging leaders both a pleasure and a privilege.

  3.9 Promotional strategy, transfer, discharge, resistance to change strategy

  Traditional approaches to career planning, performance appraisals, reward management and employee development must be re-appraised in light of the vision, characteristics and mission outcomes as reflected in the HRM plans, policies, and practices.

   

  3.10 Career development strategy

  :

  It is more of a future-oriented training. Only executives get the opportunity to take part in this type of training. As the company has future plan and clear knowledge about the potential vacuum in the future it continues to improve its workforce.

  The company provides functional as well as general management training.

   

  General Management Training: Except functional training all other trainings is General Management Training

   

   Management Development Program:

  The company has management development program. It is an ongoing process. The development program is separated in different small modules.

  For the management development program both on-the-job and off-the-job methods are used.

  The management development program is aimed at improving managerial performance. It is mostly educational process and the executives have gone through lots of reading and think about what might increase their productivity.

   

  The program is also come as fringe benefit for the executives. But it is almost a pleasure trip in disguise of training. The trainings they had were merely attending the programs and they had lot of time roaming the tourist spots of the countries.

   

  Coaching, understudy assignment, job rotation and committee assignment are the on-the-job method the company uses for management development program.

  Only horizontal job rotation is used in the company. The method is now discontinuing in the company. The employees don’t feel belongings in the new department. It results lower productivity and quit. As a matter of fact, who posted under job rotation, 50 per cent among them quit from the organization.

  The company has committee assignment on-the-job management development program method. But it is not very widely used.

  Lecture and Simulation Exercise are off-the-job methods that the company uses.

  The company always considers cost before go for any type of training. If the on-the-job training is less costly then the off-the-job training then it goes for on-the-job training.

   

  3.11 Strategic pay rewards and benefits

  Bonus payment:

  • For distribution house FF, only one bonus will be applicable and that is festival Bonus.
  • Festival bonus amount will be equivalent to maximum one month Basic salary.
  • This amount might be paid in one big festival in a calendar year (Preferably Eid ) or at the end of each year. This is subject to the discretion of distributor.
  • Festival bonus will not be applicable for any employee who is going through probation period.
  • A person serving more than 9 months will be eligible to receive full festival bonus.
  • Confirmed employee serving less than 9 months will get 50% of the bonus.

   

  3.12 Strategic performance evaluation methods limitations results benefits

  There are various kinds of method for measuring performance appraisal. But we get information that BATB uses only three type of performance method. These are at below:

  1. 360-degreefeedback
  2. Experience based.

  We describe those at below:

  1.360-degree feedback

  One currently popular methods of performance appraisal is called 360-degree feedback. With this method managers peers, suppliers or colleagues are ask to complete questionnaire
   

  2. Experience based

  BATB measure the performance of employee by experience. For example MR. X has been working in BATB for three years and MR. Y has been working in SQUARE for two years. So BATB favor MR. X for his more experience. 

  3.13 Strategic disciplinary action

  All employees are expected to meet performance standards and behave appropriately in the workplace. Disciplinary or corrective action is a process of communicating with the employee to improve unacceptable behavior or performance. You may take disciplinary action when other methods such as coaching and performance appraisal have not been successful.

  Square uses the following disciplinary action against the employee.

  Suspension

  A suspension is an action which places an employee for disciplinary reasons in a temporary status without duties and pay.

  Removal

  Removal is an involuntary separation of an employee from employment. . A disciplinary removal is the most severe disciplinary action

  Investigations Policy

  The Investigations policy states the Company reserves the right to use any lawful method of investigation which in its sole discretion it deems reasonable and necessary to determine whether any employee has engaged in conducts warranting disciplinary action.

  Disciplinary action Form

  This Disciplinary Action form is used by an employer to document a warning to an employee for his or her unsatisfactory performance. It details the shortcomings and clearly states consequences for non improvement or recurrence. It is signed by both the employer and the employee being warned

  3.14 Strategic grievance handling

  Grievance as used in the Agreement pertains to the application or interpretation of any provision of the Agreement.

  As BATAB is a company huge operational activities, it faces various hazardous events and grievance. So to get rid of this fact it follows some principles to settle the grievance. These are:

   Settlement of grievance

  • Try to settle in early stages.
  • Review past settlements.
  • Is the settlement asked for consistent with violation?
  • Is the settlement asked for precedent setting?
  • Make a permanent record of the settlement

  Preventing Grievances

  • Be proactive, not reactive.
  • Listen/Listen/Listen.
  • Don't assume, check.
  • Respond to problems as soon as possible.
  • Don't blame others.
  • Take responsibility.
  • Know your contract and letters of understanding.
  • Know your rules of conduct.
  • Check with others.

   

  3.15 Strategic collective bargaining process

  BATB follow two type of collective bargaining process in various settlement issues. These are:

  Traditional Collective Bargaining

  Traditionally, the principle of equal power frames negotiations for both the union and employers. Negotiating techniques labeled 'rights-based' or 'traditional' CB have been developed to allow each side to maintain the appearance of power in the face of confrontation. Based on experience of what constitutes success, each side will have given much thought to the composition of its bargaining committee, to the list of demands it will make, and to strategies for winning.

  Non -traditional Collective Bargaining

  Using the 'we vs. them' approach of traditional CB may accomplish a desired contract that results in improved working conditions for nurses

  3.16 Ways of limiting the activities of trade union

  • Developing common approaches to spot and tackle problem behaviour
  • Developing a media and communication strategy to explain better trade union policies.
  • Promoting good governance, democracy, education and economic prosperity among employee.
  • Developing inter-cultural dialogue within and outside the Union;
  • Continuing research, share analysis and experiences in order to further understanding of the issues and develop policy responses.

  3.17 Need for union free organization

  BATB is a private organization that’s why trade union is not essential here.

  3.18 Strategies for improving productivity

  Our overall approach to productivity is about using our global resources to increase profits and generate funds for reinvesting in our business.

  Today, all companies are trying to cut costs. Our approach is integrated – aiming to establish a lower cost base while improving the quality of products and the speed they get to the market, as well as our effectiveness in terms of how we deploy our people and capital.
  To remain competitive, it’s important to reduce the complexity and costs across our entire supply chain, while also improving our service to retailers and ensuring product freshness and integrity. We have programmes in place to find reductions in our Overheads and Indirects (anything we spend money on other than leaf, wrapping materials, cigarette making machinery and permanent labor costs) and make the most of our global buying power. In short, our aim is smart cost management. As a Group focused on our consumers, marketing is a large part of what we do and we are working to ensure we effectively and efficiently deploy our marketing resources.

   
  In order to maintain a strong balance sheet, capital effectiveness is an important part of our productivity strategy and includes a focus on inventory levels, utilizing our assets, financing and other uses of capital.

   

  v  While recruiting, it is better that distributor will look for young and energetic and to some extent experienced (Accountant, computer operator, House manager) person to work as Field force.

  v  Distributor must have a specific set of FF for BATB business operation. Part time service in other business apart from BATB will not be accepted by company.

  v  While working in distribution house, FF needs to abide by the company policy regarding any business operation issue. Issues about stock lifting, Issuing stock in the route, distribution, setting ceiling and flooring on stock, market price communication, etc. will be totally as per BAT management instruction.

  v 

  Support from BATB:

  v  As FF deals with BATB business, company might come up with various FF motivating programs/ promotion for them according to company policy and situation concerned. This will be additional support from the company’s end to motivate FF.

   

  v  Arrangement of necessary training will be conducted for the FF (DR, Sales supervisor, Manager) for their development and better business understanding. Training like TSE, Brand academy etc. might be rolled on according to the decision of BATB company management.