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British American Tobacco, the second largest Tobacco Company in the world

Executive Summary A new corporate guideline has been implemented recently by the British American Tobacco p.l.c. and BATB needs to implement the global guideline as well. The corporate brand definition of British American Tobacco defines the attributes as winning, enterprising, honest, and open minded and responsible. It also summarises them in a corporate brand essence: winning with integrity. Defining the corporate brand means identifying the specific values that different stakeholders would be attributing to BAT if they think about the company in a specific way. These should be attributes which are significant and relevant to stakeholders, which differentiate BAT from competitors and thus drive preference for the company, which are mainly intangible values and which are authentic to its business and its culture. People are very unlikely to regard BAT as winning, enterprising, honest, open minded or responsible just because the company say so. These are not virtues that BAT should loudly proclaim for itself; they are attributes that the company


would like stakeholders to associate with it. Stakeholders need reasons to believe for themselves and BAT’s communications and engagement should encourage them to judge for themselves. CORA is the custodian of the corporate brand. It is the responsibility of CORA in all Group companies to ensure that all corporate communications are aligned effectively with the corporate brand definition. Moreover, BAT’s visual identity provides a fresh, contemporary look and feel for its communications and aims to enhance the heritage and equity of its corporate signature, the yellow 3-leaf symbol and blue logotype, by maintaining the integrity of the way it is displayed. In order to effectively communicate the corporate guidelines the internal communication tools can be used. The aim is to build awareness among the employees about the new corporate guidelines. At BATB, project deals with the first two stages of Awareness and Creating Understanding among Employees Internal Communications is a part of the corporate communications team of CORA. It is the function which engages with the internal stakeholders of the company. The recipients of internal communications are all the 1300-plus employees, belonging to both management and non-management. The responsibilities of Internal Communications include planning and developing appropriate communications tools, methods and messages as well as advising other functions in developing cross-functional communications tools or activities. All the internal communication tools are to be used for this communication. Thus the following tools that is to be used: Focus: An internal magazine of BATB which takes a people-centered approach to events and issues in business. It is released in every quarter. BATB News: A monthly news edition which focuses on internal activities.


Baithak: A cyber tool allowing managers to share the latest information in news, within functions and eventually with other Operating Companies. LN: Lotus Notes is the intranet which connects all managers. Briefings: These are sessions are conducted by members of the Executive Committee. This is one open forum where all the employees of BATB are assembled in groups. Apart from these formal channels, all communication channels that are NOT being controlled by Corporate Communications are also to be used, e.g. communication through the line, team meetings, grapevine, etc. We need to develop the Key Questions first: – What messages do we need to communicate to help our target audiences to do (think/feel) what we want them to? We need to communicate that corporate guidelines are very important in the way we do business. – Which messages are most important for which audiences? The audience has been divided into two parts – Management and NonManagement. Management - we need to communicate that each of them needs to take ownership of the ‘areas of responsibility’ outlined to them. They need to be apprised by the Executive Committee. Non-Management – The employees need to have a brief overview of the B.P and they have to know that these are being followed in BATB and are ethically aligned to their business. A survey was carried out, with a sample size of 95 (33 – managements; 62 nonmanagements) to find out which is the most effective tool for each target audience and the following result was found:


Roadshow (sharing of company plan) has been the most successful tool especially for the factory workers while BATB News (video news) received the lowest score. Skip Level is probably more popular among the factory workers as they like the dinner that comes with the meeting. The management have demonstrated a preference for electronic media as they have given the highest rating to ‘Lotus Notes’ and ‘Bulletin Board’ where as the factory workers have shown the strongest preference for ‘face-to-face briefing’. Baithak (intranet site) is a central point for all managers to connect and share information and managers gave it the highest rating among all tools. However, not all features of Baithak are used or preferred to the same extent. ‘Room Reservation’ is the most popular and useful feature followed by the ‘Bulletin Board’. For the purpose of communicating the corporate guidelines, the developed a plan for communication such as providing company-wide, consistent messages to create employee awareness. It might be through a consistent presentation template. Employees can be engaged so they have ownership and are actively involved in putting the CB Model into practice. For Implementation of the Communication process, the following steps have been set up as guidelines for the “Internal Communications Executive”: Using common tools like brochures slides etc. across the company, utilising existing meeting forums as much as possible, training & provide communication kit to managers that communicate the CB model to teams. This is how the CB model can be communicated successfully across the organization and feedback about the implementation can be received by using some of the measurement tools like forming focus group employee panels, interviews, survey questionnaires etc.

Chapter One


Company Overview 1.1 British American Tobacco Group The British American Tobacco Group is one of the world’s leading international manufacturers of cigarettes, marketing its products in almost every country worldwide. It is clear leader in a competitive and fast moving business. The group consists of four tobacco subsidiaries and they are: • British American Tobacco Company Limited, which produces cigarettes in over 45 countries for domestic and export markets in Europe, Australasia, Latin America, Asia and Africa. • Brown & Williamson Tobacco Corporation is the third largest tobacco company in the US. • 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. BAT subsidiaries operate in more than 90 countries employing around 173,000 people. Multi-national, multi-cultural and multi-disciplined, British American Tobacco Group, a world-class group of tobacco companies. BAT offers a brand for every taste and preference.

1.2 British American Tobacco Co. Ltd. British American Tobacco, the second largest Tobacco Company in the world is also the world’s most global tobacco company. Based in London, UK, it operates in more than 50 countries with the strength of 100,000 employees and sells more than 250 brands in more than 180 markets worldwide. 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 on the world stage. Extent of operation of British American Tobacco Company is given below: • America-Pacific (USA, Japan, South Korea) • Asia-Pacific Australasia)

(China,

Indo-China,

Taiwan,

South-East

Asia,


• Europe (50 countries including Russia) • Latin America (Central & South America, Mexico, Caribbean) • Africa (More than 50 countries) • MESCA (Middle East, South & Central Asia) Today British American Tobacco sells the leading brands in over 30 markets covering 102 countries, has more than 200 brands worldwide, employs more than 55,000 people and produces some 2 billion cigarettes every day. More than a billion people across the globe enjoy smoking tobacco. One in every eight chooses a British American Tobacco brand. In order to support the company's business goals the merger of British American Tobacco with Rothmans International had been announced on 11 January 1999. This global merger was completed on 7th June 1999. This brings together the number 2 and 4 players which together will boost a combined volume exceeding 900 billion cigarettes around the world with some 120,000 employees and a worldwide market share of 16 percent (Phillip Morris has a 17 percent share). The merger is a major step forward in British American Tobacco’s vision of becoming the world’s leading International Tobacco Company.

1.3 British American Tobacco Bangladesh British American Tobacco Bangladesh a subsidiary of British American Tobacco was established in 1971 and since than it has been the market leader in the country. Based in Dhaka the company has one packaging factory in Dhaka and one leaf-processing factory in Kushtia. The company currently employees more than 200 managers and 1300 employees. In its brand portfolio British American Tobacco Bangladesh has a wide range of cigarettes for different consumer segments. Starting from Benson & Hedges (Lights & Regular), which are currently imported from Europe to locally produced International Brands such as State Express 555 and John Player Gold Leaf (Lights and Regular) and also National Brands like Capstan, Star family and Scissors family are members of the portfolio. British American Tobacco Bangladesh is involved in various community services in the country. Afforestation is the pet project of the company, which was started in 1980 and till now the company, has planted 32 million trees across the country. In this regard, British American Tobacco Bangladesh has


won many awards during last 28 years but the most prestigious of all are Prime Minister Afforestation Award in 1993, Presidents Award in Agriculture in 1975, Sports Journalist Award and FAO Award in 1998. Besides this, the company is also involved in vegetable seed multiplication project, supports philanthropic organizations like Sandhani and other Social and Cultural groups. The Company has its Head Office and the cigarette factory in Dhaka, a Green Leaf Threshing Plant in Kushtia and a number of Leafs and Sales Offices throughout the country.

1.4 Relation with the parent company The following figure shows the flow from the parent company to BATB: BRITISH AMERICAN TOBACCO GROUP

Brown & Williams Tobacco Corp.

British American Tobacco Company Ltd.

British American Tobacco (Germany) GmbH

Souza Cruz S.A.

America-Pacific

Latin America Parent Company Subsidiaries Europe

Regional Operation Company in Concern


Africa

Asia-Pacific MESCA British American Tobacco Bangladesh Limited Figure: 1

1.5 Company Vision

Relation with BAT Group

“To extend our leadership through World Class performance� BATB is already a leader in the Bangladesh cigarette market. In the future the company wishes to extend the present leadership through world class performance. The company believes that the management already possess world class product and people. Right now they need to concentrate on improving their process capability. This company proved itself to be a world class company by achieving the prestigious MRPII recognition. Now the whole process is going to accelerate more and altogether it will reach the level of world class performance and gradually it will extend its leadership in all aspects in a very competitive environment.

1.6 Company Mission Double the net revenue by 2005 The company is planning to double its net revenue by the year 2005. That means in the span of 5 years time the revenue must rise at a tremendous rate. This requires a continuous and consistent growth in revenue in the coming years. One thing must be noted here that the target is to increase the revenue rather than the profit. This is because BATB is a responsible company and


wants to generate profit for all its stakeholders and create and maintain a winwin situation for all.

Growing our share of the total tobacco market The biri segment has captured the major share of the total tobacco market. BATB plans to uptrade the smokers in the country and wishes to transfer their smoking habit from biri to cigarette. This is also coherent with the first objective of the mission as more people will start smoking BAT brands instead of biri, more the revenue will increase.

Dominating key identified segments The total brand portfolio of the company is divided into 3 major segments- high, medium and low. BATB is already dominating the high and medium segment in the market. But it is facing tremendous competition in the low segment. BATB wishes to dominate all the key identified segments and they are planning accordingly. The company doesn’t have any brand competing in the very low segment.

1.7 Historical Background of BATB British American Tobacco Bangladesh (BATB) Company Limited is the recognized leader in Bangladesh cigarette market, with a long established reputation for providing its consumers with consistently high quality brands. The journey of this company started long back. BATB was established back in 1910 as Imperial Tobacco Company Ltd. with head office in Calcutta. In the very beginning Imperial Tobacco Company (ITC) launched a branch office at Moulivibazar Dhaka in 1926. Cigarettes were made in Carreras Ltd., Calcutta. Imperial and Carreras merged into a single company in 1943. After the partition in 1947, cigarettes were coming freely from Calcutta, but introduction of customs barriers in 1948 between India and Pakistan interrupted the smooth flow of cigarettes from Calcutta to East Pakistan. In March 01, 1949 Pakistan Tobacco Company (PTC) came into existence with head office in Karachi; with


the assets and liabilities of ITC Limited held in Pakistan. The then East Pakistan Office was situated in Alico Building, Motijheel. In order to meet the increasing demand, the first factory in the then East Pakistan was established in Chittagong in 1952. From this time onwards requirements for cigarettes for East Pakistan markets were met from products manufactured in Karachi. In 1954 PTC established it’s first cigarette factory although high-grade cigarettes still came from West Pakistan. The Dhaka factory of PTC went into production in 1965. After the War between India and Pakistan in 1965; the import of tender leaf from India for the production of Biri was stopped. This gave a big boost to cigarette business. It was at that time the East Pakistani entrepreneurs set up 16 cigarette factories in this region. After independence, Bangladesh Tobacco Company (Pvt.) Limited was formed on 02 February 1972 under the Companies Act 1913, with the assets and liabilities of PTC. Shareholding position for GOB and BAT was 1:2. BTC (Pvt.) was converted into a public limited company on 03 September 1973. British American Tobacco played a pivotal role in BTC's creation in 1972 and since then has been involved in BTC's development every step of the way. To pronounce the successful relationship with British American Tobacco, BTC has changed its name and identity to British American Tobacco (BAT) Bangladesh Company Limited on March 1998.

March 1949

Formation of Pakistan Tobacco Company (PTC)

1954

PTC opened its first factory in Fouzdarhat, Chittagong

1962

Opened a branch in Moulavibazar, Dhaka

1965

Building of a factory in Mohakhali, Dhaka

February 1972

Incorporation of Bangladesh Tobacco Company with a paid up capital of Tk. 400 million

March 22, Changed its identity from Bangladesh Tobacco Company (BTC) to 1998 British American Tobacco Bangladesh Company Limited (BATB) Source:

BATB


Table : 1

BATB History

1.8 Structure of BATB 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. Different departments have different structure according to their function and responsibility.

Chairman

Managing Director

Deputy Managing Director

Finance Director

Rep. of ICB

Rep. of Ministry of Finance

Rep of Ministry of Industry and Commerce

Rep. of BAT

BOARD OF DIRECTORS

Source: BATB Figure: 2

Board of Directors

The “Board of Directors” and Executive Committee (EXCO) govern the overall activities of the company. The "Board of Directors" is composed of 10 members who are called Directors. The Chairman heads the “Board of Directors”. Chief


Executive of British American Tobacco Bangladesh is called the "Managing Director" who is normally appointed by "BAT Holdings". Managing Director of the company is the chairman of the Executive Committee. This committee includes the head of all the functional departments.


BRITISH AMERICAN TOBACCO BANGLADESH

Emil Moskofian Managing Director

Golam Mainuddin Deputy Managing Director

Rashed Ahmed Head of Marketing

Mahbubur Rahman

Paul Thompson

Head of Legal & Secretarial

Head of Operations

Source: BATB

Alan King Head of Finance

Figure: 3

Ezaz Ahmed Choudhury Head of Leaf

Arif Shahriar Head of Human Resources

Executive Committee

Vasanda Kadarasen Head of CORA

Head of IT


1.9 Functional Areas BATB has been operating its business under the following major functional areas: •

Production

Leaf

Finance

Human Resource

Brand Marketing

Trade Marketing and Distribution

Information Technology

Corporate and Regulatory Affairs

Business Development

1.10 Ownership Status of the Company British American Tobacco Bangladesh is listed in the "Dhaka Stock Exchange (DSE)". It has an authorized capital of Tk. 400,000,000 of 40,000,000 ordinary shares of Tk. 10 each. British American Tobacco Bangladesh, which encompasses 62% of the shares of the British American Tobacco, London. The Government held 32% of its shares. Subsequently the government has gradually sold its holdings to different organizations of the country. The composition of shareholders on December 31,1999 were:

Raleigh Investment Co. Ltd. UK Investment Bangladesh

Corporation

Sadharan Bima Corporation

65.91% of 26.99% 2.86%


Bangladesh Silpa Rin Sangstha

0.84%

Government of Bangladesh

0.65%

Sena Kalyan Sangstha

0.52%

Others

2.23%

Source: Table : 2

BATB Investment Percentage

1.11 Physical Infrastructure of the Company The infrastructure of the company has a broader field where the company plays its important role. BATB has 6 Regional Trade Marketing Offices (RTMOs), 12 Regional Sales Depots, 1 Factory, 1 Green Leaf Threshing Plant, 7 Leaf Depots and a Head office consisting of Corporate Head office and Production Head office. The Company’s Head office and Cigarette factory are located in Dhaka. A Green Leaf Threshing (GLT) Plant has been set up in Kushtia and it has started operation from April 1995. The company’s products are manufactured in the factory at Mohakhali, Dhaka. The Plant Manager who reports to the Production Director at the Head Office heads Dhaka factory. The company’ procures tobacco leaf maintaining the international standard and it imports processed tobacco leaf for its international brands. It procures green tobacco from the registered farmers of the leaf area mainly for it’s local brands. The company’s authorized leaf areas are located in Kushtia, Chittagong and Manikgonj. But bulk of tobacco leafs comes from Kushtia region. The Chittagong area is under development process and it now covers Rangunia and Lama. The company operates 7 leaf depots in he leaf area. 4 of them are located in Kushtia region, 2 of them are located in CDA and other 1 is in Manikgonj, The company provides all sorts of supports to the registered


growers through its depot personnel. This includes technical know how, agricultural inputs and financial assistance. The company performs its sales and distribution operation all over the country through its five regional sales offices. They are located in Dhaka, Khulna, Chittagong, Sylhet and Rajshahi. Each of the regions is again divided into operational areas, each of which in turn is divided into territories. To perform its sales and distribution smoothly, the company operates 10 sales depots in different locations of the country and it has 63 authorized distributors.

1.12 Tobacco Cultivation in Kushtia Tobacco cultivation in Kushtia Leaf area was first introduced in 1967 with an area of 10 acres. It was expected to expand to 650 acres by 1971 Flue-cured and air-cured tobacco were cultivated in Kushtia and the Leaf Department achieved self-sufficiency in cigarette tobacco by 1975. Tobacco cultivation though registered growers and procurement of the product tobacco is done through four leaf depots In Kushtia. Those depots are Meherpur, Jhenidah, Chechua and Allardarga Leaf Depot. Kushtia Leaf Factory stands on 4.31 acres of land and is located at about three kilometers away from main town. The Green Leaf Threshing (GLT’) plant could complete the entire leaf purchase in 1995. A team of management including the Plant Engineer, Processing Manager, Shift Manager, Quality Control Manager, Leaf Account and the Leaf personal Manager is managing the GLT plant. The Plant Manager is the team leader of GLT management team.

1.13 EHS Policy & different CSR activities: All the activities in the manufacturing unit and Green Leaf Threshing Plant ensure that work is conducted in a manner to minimize environmental pollution. Kushtia a GLT has won British American Tobacco’s EHS (Environment, Health and Safety) Merit award for the year 1995 and 1996 for


achieving consecutive two years of operation with zero accident. The company also received the prestigious EHS Silver Award for 1999 without any lost time accident in any part of the company, which was the second year in a row.

Afforestation Afforestation Vision: Establish British American Tobacco Bangladesh as the leading corporate promoting sustainable forestry management in Bangladesh.

1.

Introduction

No one can deny how important the forest diversity is for mankind. Almost everyone to meet their needs uses different kinds of plants, either wood or non-wood. Several of wood from forest has been used for raw materials for housing, furniture, and other tools for human needs. As their main source of vegetable nutrients to sustain their lives, people consume non-wood substances from the forests, such as fruits. Roots of the trees are used as raw materials for different kinds of medicines. In addition, forest is home for many different kinds of fauna with countless value. Another importance of the forest is to prevent flood disaster through its function in reducing surface flow and increasing water infiltration into the ground. Furthermore, the existence of the forest would protect the soil from erosion due to the continuous rainfall. To provide all these natural services, it is generally estimated that 20-25 percent of the total land area of a country should have forest cover. While the loss of individual species catches our attention, it is the fragmentation, degradation, and loss of forests and other ecosystems that poses the gravest threat to biological diversity. Forests are home to much of the known terrestrial biodiversity, but about 45% of the Earth’s original forests are already gone, cleared mostly during the past century. In Bangladesh, it is widely suspected that the amount of land left with any forest cover is no more than 6% of the total land area of the country. Since more that 80% of the total population in Bangladesh live in the villages, they


have to heavily depend on fuel-wood for both domestic and external consumptions. It is estimated that about 85% of the total fuel/energy requirement of these rural households is met through various natural sources including the village forests. Note that the population density of Bangladesh is 868 inh/km2. Its population is projected to grow to over 200 million by 2050. Coupled with commercial extraction, this puts enormous pressure on the existing forest resources. 2.

Importance of Forest Resources in Tobacco Industry

Wood in all its guises in central to processing: from drying tobacco before getting to the plants, through to cardboards and wrappers, cigarette bodies and filters. The flue-cured tobacco used for manufacturing cigarettes mostly depends on fuel-wood for curing. Interestingly enough, even bidi consumers are now showing preference towards flue-cured tobacco. On the other hand, the filter process is predicated on a reliable source of quality pulp for cellulose, and for the correct length of fiber for starting the basic process. The reliance of imported wood products, some of which may be derived from nonsustainable hemlock, entails a number of problems. It is not known yet to what extent the paper and pulp used by the tobacco industry comes from sustainable forests. Likewise, through its operations, the tobacco industry explicitly or implicitly influence the status of forest diversity. For example: • As a land-owner, the tobacco industry has an impact on forest diversity through building, development or sudden changes in landuse which destroy biodiversity-rich habitats or reduce the variety of local species. • Tobacco industry has an impact on forest diversity through its supply chain and use of raw materials, for instance, sourcing fuelwood from Ipil-Ipil plantations which replace native forests, or using products from species which are over-harvested. 3.

Backdrops of BATB Afforestation Initiative

Presently BATB enjoys a market share (volume) of about 50% in the cigarette industry. All BATB cigarettes are heavily depended on flue-cured tobacco. It is generally estimated that for one kilogram of tobacco to be flue-cured, five


kilograms of fuel-wood is required. Hence, for a long time, BATB had been widely accused of deforestation, especially in its growing areas. Interestingly enough, though there are a number of companies involved in the tobacco industry (none of which has any significant presence with respect to afforestation), BATB has singularly and frequently enough been pointed at for the loss of forest cover. The sustained flow of access to fuel-wood enables to keep the total production cost of tobacco in check. In other words, to meet the operational requirements of fuel-wood, it had been recognized that BATB has to put back to the nature at least what it extracts. Subsequently, BATB had initiated its afforestation drive in 1980. Setting a 5-year cycle of harvesting, BATB decided to promote planting of Ipil-Ipil due to its fast-growing characteristic. Since the forest resource base of the country was alarmingly denuding due to various natural (biological attrition) and anthropogenic reasons (e.g. population pressure), BATB felt that, as a responsible company and as a development partner of the country, it must assist and contribute in rehabilitating the forest ecosystems. Hence, while setting the targets for its afforestation initiative, BATB decided to plant 1.5 saplings for 1 tree harvested by the tobacco industry. Moreover, to ensure spreading the benefits of its afforestation efforts across the country, BATB decided to go well beyond its growing areas. So far, BATB has either planted or distributed some 43 million saplings countrywide with a survival rate of 90%. 4.

Emergent Issues

Based on a trend analysis, over the period of 1995-2002, crop volume of British American Tobacco Bangladesh has increased by 350% whereas fuel-wood requirement increased by 250%. This is largely due to the fact that about 70% of our fuel-wood requirement has now been met through alternative sources. Dependence on alternative sources has to be carefully monitored since it, in reality, diminishes the opportunity for the households to use them for domestic purposes. And this then, in turn, forces increased use of fuel-wood for domestic purposes and hence contributing towards setting a vicious cycle. On the other hand, all over the world, stakeholders are more and more becoming vocal on environmental issues putting special importance on responsible environmental-friendly behavior by the businesses. Responding to


this stakeholders’ expectation, for instance, globally many MNCs have already registered themselves in the Business in the Environment (BiE) Index. British American Tobacco is one such company. Interestingly enough, though BAT had had world class standards of environmental performance (brown or pollution issues) in place, after the launching of BAT Biodiversity Partnership in 2001, BAT’s ranking jumped from 32nd to 18th. Similarly, in the Dialogue 1 of the Social Reporting process of British American Tobacco Bangladesh, after screening and clustering the expectations put forward by the stakeholders, environmental performance (including biodiversity-friendly afforestation) was one of key issues identified. 5.

Objective/Key Platform ☼ Meet the wood fuel requirement of the tobacco industry in Bangladesh. ☼ Encourage use of alternative wood fuel for tobacco curing. ☼ Contribute in increasing the forest cover of native species. ☼ Utilize afforestation initiative to demonstrate corporate social responsiveness.

6.

Projections/Scenario ♦ Tobacco Growing – industry requirement o 47.22 mln kg for 2004 o 76.4 mln kg in 2012 ♦ Woodfuel Requirement – 30% of the total tobacco o 78.68 mln kg for 2004 o 124.9 mln kg for 2012 ♦ Saplings Requirement - 40 Kg woodfuel/plant on average o 1.97 mln saplings for 2004 o 3.12 mln saplings for 2012 ♦ Factoring-in 90% Survival Rate o Additional 0.197 mln saplings required for 2004 – total 2.17 mln o Additional 0.312 mln saplings required for 2012 – total 3.43 mln


With respect to 1:1.5 ratio as well as exotic and native species perspectives: ♦ Sapling requirement o 3.25 mln saplings for 2004 o Similarly, 5.15 mln saplings for 2012 ♦ Projected costing o Tk 3.58 mln (Tk 1.1/sapling) in 2004 o Tk 6.7 mln (Tk 1.3/sapling) in 2012 ♦ Reserve (non-harvesting) forest of native species – 0.7 mln each year o @Tk2.5 per sapling in 2004 – Total Cost Tk 1.75 mln o @Tk3.5 per sapling in 2012 – Total Cost Tk 2.45 mln 7.

Key Performance Indicators  Plant and distribute saplings (preference on fast-growing varieties) of the amount of 1.5 times the tobacco industry requirement every year  Plant and distribute annually 700,000 saplings of native varieties ♦ 50% of the native variety saplings will be distributed and planted in the growing areas. ♦ 50% of the native variety saplings will be planted in strategic locations through strategic partnerships

Biodiversity British American Tobacco Bangladesh is the first company in the country to embrace biodiversity into in our way of work. British American Tobacco Bangladesh drafted its Biodiversity Conservation strategy in the year 2002 which is also a first of its kind by any corporate in Bangladesh. The primary objectives of the Strategy is raise awareness among company’s internal and external stakeholders, promote biodiversity and sustainable use principles in the operations of British American Tobacco Bangladesh, showcase ‘best practice’ examples and influence others to participate in biodiversity conservation. Our tobacco production demands uses from goods from the natural environment, such as tobacco, paper and board.


The use of these natural resources in our operations requires us to contribute in the environmental sector of the country. British American Tobacco has committed itself to attaining world class standards of environmental performance. In line with this approach, British American Tobacco focuses on reducing waste, promoting recycling, cutting water consumption, using raw materials efficiently, improving soil quality, introducing alternatives to agricultural chemicals and wood fuels in tobacco growing, reducing fossil fuels dependence, and limiting atmospheric emissions. In addition to that British American Tobacco believes that, as a conscious and responsible corporate citizen and as a user of biological resources for its operations, it must contribute towards ensuring sustainable utilization of natural resources and conservation of biodiversity. Hence British American Tobacco has entered into a biodiversity partnership with four independent international NGOs which specialise in the conservation of biological diversity. They are: Fauna and Flora International, Earthwatch Institute (Europe), Tropical Biology Association, and Royal Botanic Gardens Kew. The objective of the Partnership is to work towards the conservation and management of biodiversity in ways relevant to sustainable development. Fundamental to the achievement of this objective in the longer term, is the development of a process of governance and leadership through which companies operating in controversial sectors can engage effectively with nongovernmental organizations (NGOs) in order to help promote biodiversity conservation and management.

DISHARI- A Basic IT Education Centre Introduction: Project “IT Education” is one of the BATB’s social initiatives to respond to SMC. To respond to the country’s thrust sector, BATB shall endeavor to leverage IT opportunities in Bangladesh by providing basic IT Education in the rural areas. Project Objectives: British American Tobacco Bangladesh established Dishari, a basic IT education centre in support of its commitment to be a development partner of


Bangladesh and to support the government's emphasis on IT. The objective of Dishari is to provide computer education, free of cost, to those who can less afford it. It works with a philosophy of providing a platform to the students which will help them in their endeavor to grow in future. Backdrops of Dishari initiatives: Dishari a basic IT education centre was born in July 2002 to spread IT education among the youth of the country who can less afford it. British American Tobacco Bangladesh has taken this initiative in support of its commitment to be a development partner of Bangladesh and to support the government's emphasis on IT. The education centre is aimed at providing basic computer education to those who can less afford it. Dishari works with a philosophy of providing a platform for students which will help them grow in future. Dishari started its journey with a few students in Chechua, Kushtia. Since then 3 more centres of Dishari have been established, one at Moulvibazar in Sylhet in May 2003, the 3rd one at Manikganj in April 2004 and the 4th and the last one at Chokria in Cox’s Bazar. Till date 342 students passed out from the 3 centres of Dishari who have a basic understanding of IT. So far, 101 female students have passed out from Dishari. Dishari Chokoria kicked off on 10th April 2005. The class environment in this centre is the same as that of the other 3 centres. Dishari has produced students who accomplished very positive results. Some of the students have got jobs in the areas of data entry, computer composition, VDO editing, CD writing and as computer teachers in schools. Last but not the least; three students of Dishari have endeavored into a small business providing various computer services in Kushtia. Dishari seeks to provide quality education to the students through its unique facilities. The centre provides the following facilities which are:


Future of Dishari British American Tobacco Bangladesh remains committed to bring continuous improvement to Dishari. As part of that commitment 3 students from the 3 centres of Dishari have been provided with financial support to pursue an advanced level of IT education outside Dishari based on their merit and skills. This is a commitment that the company will pursue in the future.

1.14 Commitment to Develop the Future British American Tobacco has over the decades consistently invested in the Bangladesh market through BATB. Thus BATB has always been in the business of manufacturing and marketing brands that meet standards found anywhere in the world. The company believes in attracting the best talent available by offering a challenging working environment with international career development opportunities. Individuals here are entrusted with significant responsibility and autonomy, and investment in people through regular training and career development has helped to establish a culture, which encourages people to think creatively, generate new ideas and approach problems from a number of different perspectives. In the quest of becoming a World Class Company by achieving the visions, strategic imperatives and the values, the company has launched a change management program called – Winning In Our World in 1999. The objective is to bring about a cultural change by embedding the WOW Values and removal of barriers. To this effect the company has organized different workshops, employee care and development activities throughout the year with direct participation of its people. With state-of-the-art machinery, world-class people, and a portfolio of worldbeating brands, British American Tobacco Bangladesh couldn't be anything but instinctively international.


People's attitudes have changed much over the time. Without this changed attitude of excelling in their performance it would not have been possible to make so much progress. This spirit of people will help in achieving the company's Vision and Mission and ultimately to be a world lass company. Lotus notes is a highly evolved advanced communication system of BAT through which all the employees of BAT worldwide communicate among themselves. This is a hi-tech device that helps to provide quick and uninterrupted communication and factual information. Quantum is a marketing information tool with the objective of effective utilization of marketing spends through better targeting and evaluation of BATB’s marketing activities. This is a strategic investment that helps BAT to achieve competitive edge in case of facing any competition. The company has implemented Tetra CS/3, a totally integrated software package that links Manufacturing, Finance, and Distribution providing one set of clearly understood information that can be used throughout the company. Apart from this software, the company uses several other software packages for some specific purposes that can also be shared throughout the company. Another important development with regard to accessibility of information is the implementation of the Global Enterprise Network (GEN) standard. GEN provides a standardized IT infrastructure throughout the British American Tobacco group that allows users to access their work areas from any location within the group. Also the company has developed a system to have better control of its supply chain process. This has made a major impact in terms of automating the entire supply chain process from shipping godown to retailer, providing on-line information at every stage of the secondary supply chain. As a company that aspires to be the world class, the company also looks at the interests of its suppliers and trading partners. A team is currently looking at how the company can support them as they strive to improve their performance.


Chapter 2

Core Functional Areas 2.1 Leaf Department At the time of the liberation war in 1971, only 600 acres of land were used for the production of cigarette type’ of tobacco. Major portion of the total local requirement of cigarettes were imported from West Pakistan. Immediately after the independence, owing to the shortage of foreign exchange, import had to be reduced. There was an urgent need for increasing local production of tobacco. The sustaining efforts of the company and the response of the farmers were so effective that the country became self sufficient in cigarette tobacco by 1975. In recognition to that outstanding performance, the company was awarded the President’s Medal in 1976. In 1996, the company purchased about 5500 tons of tobacco leaf from its registered farmers. The Leaf department is involved in cultivating and purchasing flue-cured tobacco. BAT does not do not own farmland nor does it employ farmers directly to produce the tobacco it uses for cigarette production. Instead, each year the company registers thousands of farmers along with their land, to grow and cultivate tobacco crop. The company provides seed, fertilizer, and other loans to the farmers throughout the crop season to ensure quality growth. At the end of the season BAT buys fixed quantities of tobacco from the farmers, paying rates based on the grade of the crop. Tobacco growing and buying activities is conducted throughout the country. The two main areas are Kushtia Leaf Division and Chittagong Development Area.

Green Leaf Threshing Plant (GLT) The tobacco crop is processed at the Green Leaf Threshing (GLT) plant in Kushtia. The purpose of the GLT is to convert the tobacco into a form suitable for cigarette production. The tobacco is brought to a uniform moisture level and temperature. Initial blending of the different grades of


tobacco takes place at the GLT. The processed tobacco is sized and packed before delivery to Dhaka factory. The Leaf department makes an estimate of the quantity of tobacco that BAT will need to purchase for the based on the input of the Sales & Operation Planning (SOP) committee. Based on these estimates the number of farmers and the amount of land, which will have to be registered, are fixed. The leaf season begins in the month of July. At this time tobacco seedbeds are prepared to generate the seed that will be distributed to the farmers for cultivation. Plantation in the registered lands occurs during October and November. BAT provides the necessary fertilizer, pesticides, and other loans to ensure proper growth for the crop. Farmers use their own irrigation and plowing methodology to prepare the land. Harvesting and curing begins at the end of January and continues till March. Almost 100% of raw tobacco is 'flue' cured. The buying process begins in mid-February and continues till the end of May. The farmers bring in their cured tobacco in the form of bales to the buying courts in the depots. The tobacco is graded according to set criteria and purchased at these sites. All relevant information is marked on the bales and stored at the depots till shipment to the GLT. At the beginning of the season the various depots distribute registration forms to the farmers in its region. BAT strives to maintain an ongoing relationship with its registered farmers. Information on each farmer is maintained at the depots through in-house database software called Integrated Leaf System (ILS). On the basis of these records a decision is made on whether to register the farmer for the following crop season. Buying courts are located at the depots. The farmers bring their tobacco to these sites in the form of bales on a specific day and time. At the buying courts the bales are graded, priced and weighed. After the tobacco is bought and graded it is stored in the depot godowns; each bale identified with its grade, weight, and price. These bales are stored in the depots and moved to the GLT when needed for processing.


Tobacco Processing The Green Leaf Threshing Plant in Kushtia is used to treat the raw tobacco and convert it to a form suitable for use in cigarette production. It is a seasonal factory operating for six months of the year, on two shifts per day. The remainder of the year is used to clean the machinery and make modifications as necessary. Each tobacco leaf that is processed at the GLT is separated into four components- tip, lamina, stem, and by product. At the beginning of the process flow, tips of the tobacco leaves are cut off by a calibrated cutter. The leaves are then passed through the sand reel where foreign materials and dirt are separated. The tobacco leaves are then proceeds to the threshing line to separate the lamina from the stem by hitting the leaves. The separated lamina are then dried and the re-dried lamina is then packed at a temperature of about 43 Degrees Centigrade with approximately 12% moisture content for storage. The separated stem, meanwhile, moves to the stem dryer where it is re-dried for storage purposes and then sent to the stem packer. The moisture content level of the stem is brought to around 12% at the time of storage. Byproducts are sold to the outside contractors.

The GLT's main objectives are as follows:

1. Separate Lamina from Stem 2. Retain physical and chemical properties of the leaf. 3. Removal of foreign materials. 4. Conversion of bale to packed dry product capable of long storage.

After the tobacco is stored in the depots, it is brought to the godown at the GLT for processing. The GLT godown has a capacity of around 500 tons. The different 'buying' grades of tobacco are combined in fixed proportions to


create 'packing' grades. The packing grades are further blended at Dhaka factory. This final blend goes into the different brands of cigarettes. Although the primary objective of leaf department is to ensure continuous supply of tobacco, leaves were exported in a highly competitive world market as well. Exports of tobacco during 1997 earned BATB in excess of two million dollars, with sales being made to UK, Hungary, New Zealand, Egypt, and the USA.

Leaf Tobacco Export Volume

Year

Quantity

Value

Price/Kg

(Metric Ton)

(US Dollar)

(US Dollar)

1993

329.1

877,000

2.66

1994

259.2

677,400

2.61

1995

279.2

672,700

2.41

1996

182.4

516,400

2.83

1997

987

2,201,500

2.23

1998

1130.2

2,250,400

1.99

Source: BATB Table :3

Leaf Tobacco Export Volume

Important functions that Leaf Department carries out

• •

Provides technical know how, financial assistm1ce and agricultural inputs to the Registered farmers. Purchases tobacco leaf from the growers. Processes tobacco leaf ready for insertion in the Production Department.


Provides storage and transportation facilities in carrying tobacco to and from the factory. Strengthens social relationship through different community development projects in the leaf areas, like encouraging and helping to build a vegetable garden at the premises of the growers. Exports tobacco leaf.


Head of Leaf

Export Manager

Leaf Blender

Assistant Leaf Blender

Leaf Social Projects Manager

Leaf IT Manager

GLT Plant Manager

Leaf Finance Manager

Maintenance Manager

Deputy Leaf Finance Manager

Processing Manager

Leaf Human Resource Manager

Assistant Leaf Finance Manager

Coordination Officer

Divisional Manager (Kushtia)

Divisional Manager (Chittagong)

Regional Manager (Chittagong)

Regional Manager (Cox’s Bazar)

Leaf Officer

Leaf Officer

Agrochemical Manager

Shift Manager, 1

Shift Manager, 2

Regional Manager (Jheneidah)

Area Leaf Manager

Regional Manager (Meherpur)

Leaf Officer

Regional Manager (Chechua)

Regional Manager (Allardarga)

Regional Manager (Manikganj)

Area Leaf Manager

Area Leaf Manager

Leaf Officer

LEAF ORGANOGRAM Figure: 4

Leaf Organogram


2.2 Production Department The Head of Production looks after the production and takes necessary steps to smooth out the production process. The entire production process is performed at the Dhaka Factory. The motto of Production Department is to ensure the high quality and productivity, steadily for the last few years. The production department has been very successful in meeting the challenges and the company now produces a wide range of filter cigarettes to meet the market demands. All the local brands are now available with its international brands.

Existing Production Facilities Capacity Output: The country’s biggest manufacturing plant is owned by BATB with a capacity of 80 million (rounded) sticks of cigarettes per day in 3 shifts. Actual Output: Presently the factory is producing 60 million sticks per day hence they need 70.000 kg of tobacco leaf. Reasons for the difference: The market is the main reason for the difference between actual and capacity output. Wastage is approximately 4% - 5% of the tobacco leaf used and it occurs in three from namely - rejection, yield loss and accountable loss.

Raw Material Used: The following table summarizes the raw materials used for producing cigarettes. The procurement sources are shown in the same table.

Raw Materials Bulk Tobacco

Source Locally produced in leaf areas


Blending Tobacco

Imported

Cigarette Paper Imported Filter Material

Imported

Packing Material

Local

Source: BATB Table :4

List of Raw Materials

Initial Storage in Dhaka Processed tobacco from the Green Leaf Threshing Plant (GLT) in Kushtia and imported tobacco are brought and stored in the Bangladesh Machine Tools Factory (BMTF) godown. BATB has rented 5 godowns at the location with a total area of around 130,000 square feet. The tobacco is transferred to Dhaka factory for cigarette production as needed. The godowns are maintained and guarded by the outside contractors. Tobacco is brought in from the BMTF to Dhaka factory as is required for production. Dhaka factory has one bonded godown, which is used to store, imported wrapping materials and two non-bonded godowns to store tobacco. The tobacco is released from the godowns to the production floor as specified by the production schedule. Issues from the bonded godown are in control of custom officials and transferred in small quantities as needed. Relevant taxes and tariffs are paid at issue. Issues of tobacco to the production floor from the non0bonded godowns conducted daily in large quantities as specified in the production schedule.


Production Process The Primary Manufacturing Department: The primary manufacturing department (PMD) is responsible for further conditioning the domestic and important tobacco to make it ready for production. The tobacco passes through a set of integrated and regulated machinery whose purpose is to blend the different 'packing grades' in specified proportions, convert the bales into 'rag' suitable for use in cigarettes, and bring tobacco to a uniform temperature and moisture.

The Secondary Manufacturing Department: The secondary manufacturing department (SMD) uses the tobacco that is blended and conditioned by the PMD along with wrapping materials to manufacture cigarettes. The PMD delivers its final processed tobacco to the Cut Tobacco Store (CTS). The CTS has a 50-ton storage capacity and the tobacco is stored there typically for one and a half days before it is used. The SMD brings in the processed tobacco from the CTS as needed for production along with wrapping material.

Currently there are 16 cigarette-making machines at Dhaka factory, which are operated in three daily shifts. Shift engineers and officer's monitor shift activities to ensure quality production. The flow of tobacco and cigarette paper to the cigarette making machines are regulated by six (programmable Logic Controlled) PLC controlled feeders. These feeders send in the required quantities at the right time to ensure smooth production. Each brand of cigarette is monitored by a separate feeder. In addition to the tobacco and cigarette wrapping material, filter rods are fed into the machines for cigarette production. The machines combine these three inputs to generate cigarettes as output. Defective cigarettes are either identified manually or by built in sensors and removed from the production flow. The tobacco from these


wastes is removed and reused for cigarette production. The manufactured cigarettes are deposited in trolleys and carted to the packing machines. There are currently 18 packing machines at Dhaka factory. These machines are equipped with the wrapping material used to pack the cigarettes. Almost all of the wrapping materials used are imported. Local companies, however, conduct the printing work that is required. The manufactured cigarettes are fed from trolleys into the packing machines, which generate the packed cigarette as output. The flow is monitored closely to identify and eliminate defective products. In addition to the cigarette manufacturing and packing machines, Dhaka factory has two Secondary Production Units (SPU). These are used exclusively to produce the State Express 555 and John Player Gold Leaf brands. These modern production lines are different from the other machinery in that both cigarette manufacturing and cigarette packing can be conducted in one process flow. This reduces the time needed to manually put the cigarettes into trolleys and cart them to the packing machinery. The SPU makes approximately 8000 cigarettes per minute. Defective cigarettes are detected by sensors in the machines and are removed automatically. In addition manual checking is conducted for quality control purpose.

Filter Rod Department The filter rod department is responsible for manufacturing the filters needed in each cigarette. It plans its production in coordination with the PMD and SMD to make sure that the right quantity is available at the right time. Two filter sizes are produced- 11 mm and 20 mm. There is one machine that produces 3333 rods/minute and 2 others that produce 1800 rods/minute. For filter rod manufacturing, 100% of the materials are imported and therefore, wastage is closely monitored.


The finished cigarette stock is brought in from the holding room at the SMD and kept at the shipping godown prior to delivery. The godown has a capacity of 260 million cigarettes. Trucks belonging to the outside contractors arrive daily to deliver the stock to the various Regional Trade Offices (RTO) around the country. The marketing department issues a daily shipping program specifying the stock that needs to be allocated. This information is input in software to generate a truck allocation scheme. Trucks going to Dhaka carry 2 million cigarettes per trip and those going outside Dhaka carry 3 million cigarettes per trip. VAT documents are sent along with the trucks. In the manufacturing area significant progress had been made in the computerization of business process. Planning, scheduling, and material ordering are operating under an integrated system. This approach is likely to reduce stocks in hand thereby releasing cash tied up in working capital. In 1997 wireless networks had been installed in the Kushtia leaf areas linking the four depots and the GLT plant for both voice and data communication. These investments support the core operational processes bring efficiency and productivity gain to these areas.

Production Personnel Activities Production HR Manager: Production HR Manager deals with the factory personnel department and he is the head of this department. Production Training and development Manager and Employee Relations Officer help him to deal with the personnel affairs and trade union. Operations Development & Regional EHS Manager: He has been assigned the responsibility to ensure the overall safety of the factory. He is responsible for monitoring and maintaining the safety standards in the factory. Management of the factory is very much concerned about safety of the workers at the production premises. Quality Services Manager: Quality Services Manager is responsible for enduring the quality of the products. The quality of the products has been


given the prime importance by the management. “Quality First� is the slogan of the company and all products undergo rigorous quality testing.


Head of Production Coordinating Officer

Manufacturing Manager

Quality Services Manager

Asst. Quality Services Manager

Technical Development Manager

Procurement Manager

Project Engineer

Security Manager

Security & Services Manager DF

Human Resource Manager: Production

Coordinating Officer

Operations Development & Regional EHS Manager

Planning & Logistics Manager

EHS Manager

Coordinating Officer Material Procurement Manager (Papers & Spares)

SMD Shift Manager

D Shift Manager

Processing Manager

Maintenance Engineer E&E

Maintenance Manager

Maintenance Engineer PMD

Material Procurement Manager (Printing)

Services Manager

Production Training & Development Manager

Production Planner

Maintenance Engineer HL

Maintenance Engineer SC

E Shift Manager

C Shift Manager

ORGANOGRAM Figure: PRODUCTION 5 Production Organogram

Industrial Relations & Welfare Manager

Wrapping Material Manager

Employee Relations Officer

Leaf logistics Manager

Primary Supply Chain Logistics Manager

Leaf Import Logistics Manager


2.3 Trade Marketing & Distribution Department Mission and Objectives of TM&D Department

“Reach our target consumers in the most efficient and effective way by becoming benchmark supplier to the trade within strategic channels in every market place where we do business� The major focus of the TM&D department of BATB has always been reaching the target smokers by ensuring proper distribution reach and thus ensuring the availability of all our brands in the targeted outlets. At the same time it must be done in an effective and efficient way by reducing cost and to make higher profit. The TM&D is targeting to become the benchmark supplier in the trade in terms of diversified brands, their volume and also promotional activities. TM&D is maintaining their existing strategic channels like convenience, grocery, HoReCa etc and also exploring new opportunities to increase their distribution reach within their existing as well as in the new markets. Thus TM&D is contributing significantly in achieving the company mission. The Trade Marketing and Distribution department identifies the areas in which best practice must be achieved to enable markets meet the Trade Marketing and Distribution objectives, which are: 1. Create an efficient entry barrier against international competition. 2. Improve our benchmark supplier status to the trade pioneer among all FMCG companies.

Six critical factors to achieve TM&D mission: 1. Secondary Supply Chain/ Product Management: Optimize cost and performance while ensuring achievement of brand objectives. The associated sub-activities are: ď ą

Supply chain strategy/management


Order management

Order fulfillment

Trading Terms

Inventory management

2. POP (point of purchase) Management: Create effective competitive entry barrier at point of sales while driving international brands. The associated sub-activities are: 

Display

Promotions

In-store Communication/Advertising

Implementation

HoReCa (Hotels, Restaurants and Cafes)

3. Account Management/ Channel Development: Create an effective entry barrier while driving brand imagery, awareness and trial in HoReCa and superior grocery outlets. The associated sub-activities are: 

Account planning

Account profitability

New business development

4. Strategy and Planning: Ensure effective implementation of EMF (effective market focus) process to support achievement of company’s objectives. The associated sub-activities are: 

TM&D planning

Cycle planning

Coverage planning


5. Resource Management: Ensure that TM&D organogram is responsive to the changing trade and company needs. The associated sub-activities are: 

Financial planning and management

Manpower planning

Organization development

Management information for marketing overview

6. Information Management: Drive Quantum business benefits to the fullest. The associated sub-activities are: 

Market Intelligence

Internal Monitoring

Information Technology

Customer Satisfaction

Head of Trade Marketing

Coordinating Officer

Trade Finance Manager

Cycle Planning Manager

Structure of TM&D Department

Trade Development Manager

Trade Marketing Training Manager

Marketing IT Manager

Merchandising and Sales Promotion Manager

Analysis and Reporting Manager

Quantum System Manager

Demand Manager


Source: BATB Figure: 6

Trade Marketing Organogram (Head Office)

Regional Trade Marketing Office (RTMO) The British American Tobacco Bangladesh has a well-defined mission for the marketing and distribution of products, which is to reach the target consumer in the most efficient manner by becoming the benchmark supplier to the trade within the strategic channels in every market where the company operates. A well-organized trade marketing team is working continuously to make this mission successful; furthermore the whole country has been divided into six regions to perform the marketing activities efficiently. Moreover the regions are further spitted into 11 areas. Right now there are 6 regional managers, 12 area managers and 42 territory officers working under the Head of Trade Marketing. At present, there are 63 distributors involved with BATB who are responsible to make the products of the company available throughout the country.

Head of Trade Marketing

Regional Manager

Area Manager

Territory Officer

Six regional managers Two area managers under each regional manager

For each territory


Source: BATB Figure: 7

Trade Marketing Organogram (Regions)

The British American Tobacco Bangladesh considers the distributors as their customers. They have identified the distinction between the ‘customers’ and ‘consumers’ in a proper way. Consumers are those who buy cigarette for smoking. The Company sells their product to the distributors; in turn the distributors sell to the retailers and cash & carry as well. Cash & carry are nothing but wholesalers. Cash & Carry are needed because at times the retailers may not have adequate funds to buy the required quantity. However, the company is trying to discourage the use of these wholesalers to control the price of their product in the market. Generally, the trade marketing and distribution team performs three main activities, which are trade coverage, cycle implementation and training & development.

Trade Coverage: Accumulating primary data from the market is a function of trade coverage. There is a team working to identify retailers who contribute eighty percent (80%) of their total sales volume. The Territory Officers (TO) are responsible for making a route plan by which they can identify which outlets to visit and in what frequency on the basis of those classes. The Territory Officers have to visit at least 12 outlets a day and collect raw data from the retailers on the call card in the Laptop computer. A set of questions regarding the various aspects of the out lets make up the call card. There is a database at the RTMO, which is updated regularly by using those calls. This database serves as a powerful tool to identify and classify different outlets in terms of volume sales, outlet characteristics and consumer profile.

Cycle Implementation: The marketing people of BAT have divided the whole year into 13 cycles and each cycles focuses on a particular brand,


Furthermore, the brand marketing group along with trade marketing people develop promotional campaign plans for each brand. They also select the brand for the cycle and develop cycle instructions and send it to RTMOs. After that the trade marketing team develops some objectives and implement those within their territory, which helps to follow the proposal cycle instructions. The regional manager and the area manager(s) then brief the TOs about the cycle objectives and in turn the TOs brief the distributor and ultimately work with the retailers. In this regard the contract merchandisers generally perform well to accomplish the TO’s job, at the end of each cycle, the TOs prepare a cycle evaluation report.

Training & Development: To train the working people is one of the most important jobs of any TO. They generally train the people working for the distributors, for example distribution representative and also the contract merchandisers within his territory. They also train the retailers about how to approach customers, if necessary.

Retail Outlet Classification The British American Tobacco Bangladesh has classified all the retail outlets into three categories, these are - Convenience, Grocery and HoReCa.

Convenience Outlet: All shops where consumers generally go without any purchasing intention fall in this category. The consumers like to buy product on impulse from this sort of outlets. These outlets generally maintain a limited product range and do not offer flexibility in prices. Grocery: These are the outlets where consumers visit on a regular basis with a purchasing intention. They generally make a list of items before they will visit these sorts of outlets. These outlets typically offer variety in terms of product range and also flexibility in prices. HoReCa: Shops like hotels, restaurants, and cafes are considered in this category. The prime characteristic of a HoReCa is that the shops must have a


seating arrangement. It is assumed that consumers visit those shops with the intention to spend some time. These outlets range from small roadside cafes with seating arrangements to luxurious restaurants or fast food outlets.

Relation between TM&D and Production The Marketing Department and the Production Department activities are highly correlated. According to the needs of the Marketing Department, Production Department carries out the cigarette manufacturing. The marketing Department forecasts the sales volume of the different brand cigarettes for the coming business year and based on this, prepare a marketing plan known as the Sales Operational Plan (SOP). According to the Plan, Marketing Department communicates the brand wise sales target for each month to the Production Department. Based on the SOP, Production Department sets its production schedule. The inventories of cigarettes are also evaluated at this stage to find out the actual output to be produced.

Channel of Distribution Factory

Sales Depots

Internal Carrying Agent

Distributors

Retailer

Consumer

Cash & Carry


Two distribution Channels are named as: Distributors

Retailers

Consumers

Trade Channel:

Distributors

Cash & Carry

Retailers

Consumers

Supply Channel:

Source: BATB

Figure: 8

Channel of Distribution

Regional Go-down: There are five regional go-down through out the country to fill every regional demand just at the time of need, and to overcome various uncertainties related to physical distribution of products, every regional go-down is directly controlled by separate Regional Manager to face the regional physical distribution challenge.

Carrying Contractor: They are the party engaged in the physical movement of cigarettes from head office godown to regional office godown. Normally they are the truck owners who take all the risk and responsibilities of physical movement of goods between two warehouses. Distribution Warehouse: All distributors have their own warehouse, where cigarette can be kept safely while not degrading its product quality. Distributors buy the cigarette from BATB and from that point ownership and all responsibilities of the products go under the distributors.


Internal Carrying Agent: They are like carrying agent but carry small volume of products. Normally they are local truck owners. They carry products from, regional godowns to distributor warehouses. They also take al the responsibilities and risk engaged in physical movement of products. Opening Stock at Distributors’ Office: Apart from the warehouse, every distributor also maintains another stock at their office. This stock is for maintaining any change in market demand instantly. Dealers sometimes sell cigarette through their counters to face special situation. Delivery Van: All the delivery vans are owned by the dealers to assure the supply of cigarette on the door of wholesalers, cash & carries and retailers just according to their demand. There are two types of delivery vans. One is Scooter van and another is Rickshaw van. Cash & Carry: They are businessmen who sell cigarette directly to consumers and at the same time they sell cigarette to the retailers. Retailers: Retailers are at the end of the physical distribution system of cigarette selling products directly to the consumer.

2.4 Brand Marketing Department Marketing operation of BATB is carried under two heads, Brand Marketing and Trade Marketing & Distribution (TM&D) that is the rename of the former Sales Department. As TM&D affairs are managed by the Regional Manager, Brand Marketing is managed by the Group Brand Manager. Marketing Research assists Brand Marketing.

Structure of Brand Marketing Department


Head of Brand Marketing

Coordinating Officer

CORA Marketing Manager

Senior Brand Manager VFM

Brand Manager JPGL

Group Brand Manager Premium Brand

Brand Manager B &H

Senior Brand Manager DVFM

Marketing Intelligence Manager

Product Development Manager

Assistant Marketing Intelligence Manager

Brand Executive JPGL

Figure: 9

Brand Marketing Organogram

Source: BATB

The Brand Marketing department concentrates on satisfying consumers’ needs from within the brand portfolio. Once consumers’ needs are understood and evaluated, brands can be made available, accessible and desirable through strong, consistent communication. The brand marketing elements covers the adopting of products, logistics and brand marketing policies that best meet the needs of particular trade channels and strategic customers. The Brand Managers and Brand Executives are responsible for

Brand Marketing Finance Manager


the allocated brand(s). They are responsible for all type of brand management activities. Market intelligence includes the in market research teams. The team keeps constant eye on the market situation. Through continuous research, market research teams generate useful market information for the brand managers. Interface is required between brand marketing and research which is carried out by any project that is divided by three phases: •

Preparation prior to the study

Collection and analysis of data

Presentation and utilization of information

Vision of Brand Marketing To be the undisputed leader of Bangladesh tobacco market within five years •

Dominate value share

Dominate volume share base

Destination brand in key segments.

Mission of Brand Marketing: Promise of future profit growth •

Grow quality share: ASU30

Owning the medium and premium segment (90% share)

Core Strategies of Brand Marketing Aggressive: 1. Expand the premium segment growth. 

Internationalism, destination status & image differentiator: Youthful


2. Expand Mid segment 

Key differentiators: international standard with affordability & distinctive image: masculinity/ adventure.

3. Dominate volume base 

Build the critical mass.

Protect BAT’s leadership.

Innovative: 1. Investigate & build new segments 

Lights

New brands & line extensions.

2. Product Enhancement 

Packaging, Spec. change & higher satisfaction.

3. Creative communication 

Focused: HoReCa (Hotels, Restaurants and Cafés), Rural Penetration.

4. Consumer Insight 

World-class knowledge base: consumer research & market tracking

Description of the Major Brands

BENSON & HEDGES This brand was launched in early 1997 in order to give consumers the choice to purchase a fresh, duty paid legal alternative to the widely available smuggled version. To generate product awareness, international image campaign was introduced in key outlets in Dhaka and Chittagong. Distribution was later extended to Sylhet and Khulna. The objective behind introducing the brand was to gain price leadership, not profit. Later its


distribution base was expanded and brand imagery was changed from father’s brand to modern, more appealing; towards ASU 30 (adult smokers under 30). The company arranged successive music events staged under “Golden Tones”, “Star Search”, “Live and Explosive” etc. banner. The demand of this product is largely high all over the world. Very recently BATB has set up plants to produce it in Bangladesh. BATB has started producing B&H in a large scale after the head office approves the quality standard of the B&H cigarettes produced in Bangladesh. It is mainly the processing part of ‘cut rag’, which is done locally. The copy line of the brand is ‘Be Gold’.

BENSON & HEDGES LIGHTS The Benson & Hedges Lights is a new member of B&H family. It is a new variant of the existing Benson & Hedges. It was first introduced in 1998 in Dhaka and Chittagong. The objective was to give the smokers more options within the same brand and to keep pace with the modern trend of smoking light cigarettes throughout the world. STATE EXPRESS 555 It is the profitable brand of the company. The 555 centenary celebrations took off in the spirit of 100 years on 5-5-1995 when five planets were aligned. Bangladesh, like many other countries, celebrated the introduction of the new centenary pack with birthday parities special promotional events, and integrated advertising & promotion activities. The copy line of the brand is ‘Smoothness Above All Else’. JOHN PLAYER GOLD LEAF It is the leading international brand of the world. It is the cash cow and the key-driving brand for BATB with the highest spending in brand support. 1995 was an important year for John Player Cord Leaf as the brand was relaunched in the new international pack. Given the importance of the brand for the company and the risk associated with such change, the management of change process included four phases to properly condition the consumer


and the trade to the new pack. Specific materials were use ahead of the relaunched to announce the change to the consumers and to the trade. JPGL recorded strong growth in 1996. Investment in in-store and on-store permanent merchandising ensured brand availability, quality image and showed company’s favorable commitment towards the retail trade partners. JPGL launched its first ever international sponsorship in 1996,with John Player Gold Leaf Formula 1 powerboat team competed in the UIM world championships in more than ten races. The final race was attended by a delegation of Bangladesh sports journalists. Another famous international promotional activity was ‘Voyage of Discovery’, which was a long journey of a JPGL yacht that stopped at 12 international ports, lastly bringing an end at Chittagong port. In June 14, 1998, the price of JPGL was increased from Taka 2 to Taka 2.5 and volume share reduced substantially with the invasion of transit brand London. In December 16, 1999, the price was re-fixed at Taka The ultimate objective of the brand is to upgrade the low segment consumers into medium segment. The copy line of the brand is ‘John Player Gold Leaf – Follow The World Adventure’.

JOHN PLAYER GOLD LEAF LIGHTS To keep pace with the global trend of lights and to support British American Tobacco Bangladesh’s corporate objectives of establishing leadership in lights segment in Bangladesh, the management of BAT launched JPGL Lights in 1997 in some selected outlets in Sylhet as a part of test marketing. JPGL’s association with the worldwide F-I powerboat racing was also successfully exploited in 1997 through a consumer promotional event under the banner of ‘JPGL Carnival’, which took place in five key cities. The company launched the brand in 1998, with the unique product feature of ‘white tipping paper’.


STAR FILTER A new image for a promising future 1995 was an excellent year for Star Filter as the brand demonstrated an outstanding volume and growth of share. This performance was the result of a major blend improvement, supported through an appropriate communication campaign, as well as the launch of a new advertising campaign with the theme of The Flavor of tradition and modernity. SCISSORS FILTER Scissors filter has been helping BAT to regain segment leadership in the medium price segment till 1995, as the brand has experienced dramatic increase in volume and market share. The brand distribution was gradually extended to different parts of the country with the help of focused brand support, emphasizing on POS materials and consumer promotions.

The company currently offers the following products to the cigarette market:

Different Products of BATB and Their Prices

Price (Tk./pack) 71

B & H, SE 555, B & H Lights

52

Rothmans

36

JPGL

26

Capstan

16

Star, Scissors

Table :5

Source: BATB

Current Portfolio

Price List


BATB has strategic implications for different brands: • Destination/Strategic Brand: B&H, JPGL and Star. • Supporting/Profit Opportunity Brand: SE 555, Star Classic, Capstan and Scissors.

Chapter 3 Support Functional Areas

3.1 Finance Department

Head of Finance CORA Finance Manager Internal Audit Manager

Deputy Corporate Finance Manager

Billings & Invoice Manager

Taxation Manager

Budget Manager

Deputy Corporate Finance Manager

Product Costing Manager

Senior Corporate Finance Manager

Treasury Manager

Deputy Treasury Manager

Brand Marketing Finance Manager

Trade Marketing Finance Manager

Leaf Finance Manager

Production Finance Manager

Support Finance

Structure of Finance Department


Source: BATB

The Supporting Finance managers, Audit Manager and Treasury Manager assist the Head of Finance. The Finance Department comprises of six areas. They are: • Treasury: Corporate (L/C opening, fund management, banking relationship etc.) • Core Finance and Management Accounts: Corporate • Marketing Finance: Supporting • Excise Management: Supporting • Taxation: Corporate • Audit: Separate • Insurance: Corporate The Core Finance and Management Accounts activities includes monitoring and controlling all the Accounting and Financing activities of the company such as product costing, invoice pricing, taxation etc. Audit Manager manages all the internal and external auditing of the company. Finance department of British American tobacco Bangladesh has to deal a wide range of activities. Finance department ensures the custodianship of all company assets by verifying their physical existence, monitors and assesses proper informational needs pertinent to company's interest, develops accounting procedures and ensures the achievement of financial growth of the company. Finance department finances the equipment, personnel, and operational facilities. It prepares and verifies consolidated financial statements of all centralized and decentralized cost centers and cost units. It obtains accounting report from all units in each month, monitor sales collection, and process management information using computer and other system and keeps all sorts of financial analysis and calculation update. It carries out auditing by internal, external, and international auditors and


verifies the efficiency and effectiveness of inventory control, security, wastage, working procedures, supervision of machine maintenance, workers safety, advertising tools etc. It also takes care of hedging, foreign exchange risk coverage, options, futures, insurance, bank account, bank reconciliation, sales ledger, working capital management etc. finance department is headed by finance director. There is a "Company Secretary" tagged with Finance Director to advice the Finance director about the interest of the "Board of Directors" and to look after the share dealings. The main objectives of this department is to ensure custodianship of all company assets, monitor the financing activities and generate useful information pertinent to the company activities to achieve financial growth of the company. Functions of Finance Department 

Finance company assets, personnel and operational facilities of the cigarette factory, leaf factory and head office. Prepare and verify consolidated financial statement of all units of the company.

Monitor and control all financial activities of the.

Monitor sales collections.

Process Management information.

Structure capital policy.

Carry out by auditing internal and external auditors.

Financial Performance of BATB over the years

Turnover & Profit (in million)

199 199 3 4

199 5

199 6

199 7

199 8

Gross Turnover

887 907 1072 1265 1502 1432 14233

1999


8

0

9

3

0

2

Supp. Duty & VAT

647 658 7883 9180 1048 9802 10029 6 8 0

Net Turnover

240 248 2846 3473 4540 4521 4203 2 2

Operating Expense

189 205 2462 2988 3837 3618 3730 6 0

Trading Profit

506 432 384

485

703

903

474

Interest Expense

39

73

81

131

132

Profit before Taxation

467 405 331

412

622

771

341

Profit after Tax

299 286 310

337

486

504

237

Dividend

220 240 240

240

320

360

200

Table :6

Source: BATB

27

53

Financial Performance


3.2 Human Resource Department Structure of Human Resource Department Head of Human Resource Coordinating Officer

Human Resource Development Manager

Training Manager

Human Resource Manager: Production

Industrial Relations and Welfare Manager

Employee Relations Officer

Production Training and Development Manager

Resourcing and Remuneration Manager

Human Resource Services Manager

Payroll & Funds Manager

Human Resource Manager: Leaf


Head of Human Resource is the head of the department. The Human Resource Development Manager, Production HR Manager, and Resourcing and Remuneration Manager work under him.

Activities of HR Department The HR process is carried out through the following four ‘Guiding Principles’. Open Minded It encouraged within the organization to be able to maintain an environment where the managers can have open-minded approach to various strategic decision-makings. Enterprising Spirit The core asset of the organization will come from the enterprising spirit embedded in the minds of the managers, resulting from effective strategies. Freedom through Responsibility Managers at all levels work with freedom of responsibility in their areas of functioning. Strength from Diversity The company derives its drive for effective attainment of goals from the strength of diversity it creates. BATB believes in the strength of human resource and uses the modern concept of resource utilization. Every job description is carefully designed and modified under dynamic environment. The company believes in the concept of best fit and trains and develops company personnel as the key ‘human capital’ of the company. The Human Resource Department thus concentrates all its activities for the development of human resource for the benefit of the company. The department also believes in maintaining harmonious relationship between


the management and workers all the times. The department ensures that managerial development contributes to organizational development. The departments’ various activities cover setting criteria for the selection procedures. Interview techniques, training standards etc. According to the BAT policy guideline, the department maintains the personnel through formulation policies on wages, fringe benefits, annual leave, training calendar, provident fund, performance appraisal etc. Remuneration is managed centrally and there is never any negotiation but settlement. It also settles with the trade union for Long Term Agreement (LTA) between management and workers and the ‘collective burgeoning agents’. The concept behind the industrial relations is always ‘win-win’ situation. As the competitive world is changing with the speed of light, Training and Development becomes an integrated part to stay on the top. Thus BATB puts great importance to training and development of managers and employees. The company has Technical Training Center at the Dhaka Head Office, which organizes different training programs for its management people around the year. As a subsidiary of BAT, BATB sends its managers for training to BAT group of companies.

3.3 IT Department Information Technology department was mainly acting as a supporting service for all the other functions of BAT. As the emergence of super information highway and other technological advancement made the business world more competitive, BAT also made necessary adjustments towards the changes and in continuation with that process IT was made a separate department in February 2000. The head of IT is also a member of the executive committee and he is supported by the function support IT managers.


IT Structure of BAT Head of IT

Technology IT Manager

Services IT Manager

Marketing IT Manager

Systems Administration Manager

Assistant Manager, IT Services

Communication & Group Working Manager

Assistant Manager, IT Services

Figure: 12

Operations IT Manager

Corporate IT Manager

Leaf IT Manager

Quantum System Manager

IT Organogram

Source: BATB

Three Local Area Networks (LANs) have been set up in the Head Office to channel necessary information among the Head Office, main Factory and Kushtia leaf factory. Three LANs are connected via a Wide Area Network (WAN). BAT has a private E-mail network through which management personnel can deal with each other even with the foreign suppliers.

IT Strategy British American Tobacco Bangladesh IT department drives the demands of its business and processes. IT delivers comprehensive, timely, and relevant business information to decision makers wherever they are located. This will

Logistics IT Manager


allow the organization the maximum agility and flexibility to identify new opportunities and quickly respond to competitive challenges.

Key Objectives of IT • Establishing and maintaining information and infrastructure architecture to support knowledgeable business users who incorporates IT into their decision making and of doing business, supported by specialist team who manages and seeks continuous improvement, outsourcing where possible. • Resilient communication infrastructures that are flexible and are able to take new technical innovation to keep the cost down. • To adopt global application convergence strategy that meets the local business requirements, and develop local applications where appropriate, outsourcing data processing where possible. • To support the changing organizational structure and requirements, IT continues to make available innovative services and training. • To develop application and promote the use of the group working tools as first choice of communications and to become center of excellence for group working. • To develop and retain IT professionals.


3.4 Corporate And Regulatory Affairs Department The Corporate & Regulatory Affairs Department (CORA) of the company is dedicated towards achieving the company’s fifth strategic imperative, which is: To be a responsible company in an industry seen as controversial Globalization and increased scrutiny of businesses by consumers and the general public mean that companies are today judged not only by the quality of products that they produce but also the manner in which they carry out their business activities. It is therefore, an imperative that corporate bodies are responsible not just in their businesses but also in the social domain that they operate in. British American Tobacco’s philosophy has been to be conscious corporate citizens wherever they operate, respectful of local cultures The company recognizes that it manufactures a product, which carries significant risks. In this light, the company believes that only informed adults should use its products and that under-age persons should not smoke. It also believes that the company must act, behave and carry out its business activities in a manner accepted by society at large as responsible. This includes dissemination of the company’s positions on issues. The Corporate & Regulatory Affairs function is charged with driving reputation management to the heart of the business and ensuring the company’s involvement as a leading development partner of the country. The CORA Vision To become the most respected FMCG company among key stakeholders

Reputation management involves identifying and prioritizing the company’s stakeholders and preparing and implementing plans to engage and communicate with these stakeholders.


Structure of CORA The Corporate and Regulatory Affairs Department programs are lead by the Head of Corporate Affairs who is assisted by the Company Secretary and the CORA Managers. The company’s Legal and secretarial function also reports in to the Head of CORA. The Company Secretary looks after the legal sides of the company such as trademark Protection, Infringement of Company Rights, Distributor Agreement, and Trust Fund etc. He also looks after the share market activities of BAT shares.

Head of CORA

Coordinating Officer

CORA Manager, Economic Issues

Asst. Co. Secretary

Company Secretary

CORA Manager, Social Responsibility

Executive, Legal and Regulatory Affairs

Executive, Share and Agreement

Confidential Assistant

CORA Manager

CORA Manager, Shareholder Communication

CORA Manager, External Communication

Public Relations Officer

CORA Marketing Manager

CORA IT Manager

CORA Executive, Internal Communication

Executive, Media Relations


Source: BATB

Figure: 13

CORA Organogram

BAT Code of Conducts, instructed by CORA, on Tobacco Marketing In a competitive market, BAT wants adult smokers to choose its brands over those of its competitors. Advertising has two purposes – to maintain brand loyalty and to encourage smokers to switch brands. Advertising provides consumers with information to make choices. BAT believes that the use of tobacco products should be an adult choice. Advertising programs, including promotional activities for tobacco products should be carried out in a responsible manner.

The guiding principles for the company’s advertising are stated below and for the purpose of these principles, and adult is defined as anyone who is 18 years of age or more. 1. Advertising is intended for, and will be directed at adult smokers. 2. Advertising will not be false or misleading. 3. Advertising will not make health claims about tobacco products or smoking. 4. Advertising will not depict the use of tobacco products as being important to sexual success. 5. Any person appearing in advertising will not be younger, nor appear to be younger than 25 years of age. 6. Where television and/or radio advertising is permitted, it will only be broadcast in those hours when programming is primarily directed at adults.


7. Print advertising will not be placed in publications primarily directed to persons under adult age. 8. Cinema advertising will not be shown during films directed primarily at persons under adult age or at times when the audience is likely to comprise primarily of persons under adult age. 9. No payment shall be made for the placement of advertising or tobacco product in any film produced for viewing by the general public. 10.Advertising will not be displayed on billboards directed at or in close physical proximity to schools or other facilities used mainly by persons under adult age. 11.Direct marketing, market research and sampling of tobacco products will only be carried out with, or in relation to adult smokers. 12.Promotional items and premiums bearing tobacco trademarks will only be directed at adults.

Activities of CORA The Corporate and Regulatory Affairs Department of the company is dedicated for maintaining a good image of the company to the society by keeping customers, media, government, suppliers etc. contended. The company believes that as a corporate citizen, it has a conscious duty towards the societies well being. The company promotes and sponsors various community development programs to increase its image in the society.

The department maintains good and continuous liaison with the media, government and other pressure groups in order to protect its business image from any unwanted situation in the context of prevalent anti smoking campaign, nationally and internationally. The company enjoys credibility with a majority of stakeholders for its transparent business systems and as an honest taxpayer. In 1999, the company generated Tk 980 crore from its turnover of about Tk 1400 crore.


As a conscious corporate citizen, BATB has been actively involved in the promotion of national art, culture and sports. Sponsors of BAT are well known. In the sports field the company sponsored quite a few national and international events. In addition, the company also gave financial and material assistance to Diabetic Association of Bangladesh. Shandhani, Red Crescent and Center for the Rehabilitation of the Paralyzed, Jahangirnagar Teachers Club and Bangladesh Botanical Society. Academic institutions, literary associations, cultural groups, charitable institutions and community development projects continued to receive support from BAT. To ensure that the country’s wood fuel reserves are not depleted as a result of curing tobacco leaf by firewood, BAT launched its afforestation program, which is still continuing in preservation and development of the environmental and natural resource of the country. As part of the community development programs, BAT distributes seeds and seedlings of vegetables to the interested farmers free of cost every year. The company has pioneered commercial production of quality vegetable seeds in the country leading to it being awarded by the Food and Agriculture Organization. The company believes that as a corporate citizen, it has a conscious duty towards the society’s well being. The company promotes and sponsors various community development programs to increase its image in the society. CORA is also entrusted with upholding the image of the company as a good corporate citizens through a range of activity that include issue based relationships with key stakeholder groups such as media, government and suppliers. The company’s contribution to society as a whole is well known i.e. an afforestation program that has seen 30 million trees planted in 20 years. This has led to it being awarded first prize in the Prime Minister’s award for afforestation in 1999. International bodies such as the FAO and the World Bank have recognized this program as an exemplary initiative by a private sector company.


3.5 Business Development Department This is very new department in BATB, which has started its operation from July 2000. Business Development Manager looks after the department. BAT as group use to be a diversified business organization back in the 80’s and early 90’s. World famous brands such as Yardley, Avon etc. were BAT brands, before the decision was made to change the track from diversification from single business concern. Now it has only a financial division, which this includes mainly insurance business operating in UK. BAT Bangladesh has separately established this department, in accordance with the BAT guidelines. The main function of this department is finding out potential business opportunities for BATB. The plans and strategies are still at very initial stage and therefore, are kept strictly under confidence. British American Tobacco being a responsible company is carrying out various social responsible activities for the past several years and based on that a research was conducted by the company last month, March 2005, with the following objectives: • Corporate Social Responsibility Portfolio activities of different multinational companies and the annual expenditure behind it • Corporate Social Responsibility communication of different multinational companies and annual expenditure behind it • Visibility of CSR activities of each company among the mass population. • Cost-benefit analysis of each company


The significance of the study was:

• To find out the position BATB among the companies involved in CSR activities • Identify effective CSR activities and CSR communication tools • Effectiveness of BATB’s CSR portfolio in reputation enhancement

And the findings were totally unexpected. “In spite of BATB covering the four most effective type of CSR activities, BATB’s CSR portfolio failed to be the most effective in terms of cost-benefit analysis (Investment in CSR Vs Visibility) comparing to other companies in 2004”


Chapter 4

Case on CSR Initiatives & its visibility dilemma

4.1 CSR activities carried out by BATB: Afforestation British American Tobacco Bangladesh started its afforestation programmed in 1980 when the Chief Conservator of Forests approached the company for assistance in replacing Bangladesh’s depleted woodland with forests. In the last two decades, British American Tobacco Bangladesh has distributed and planted more than 42 million saplings. Most of these plants are located in Kushtia, Rangpur, Manikganj and Chittagong including the hill tracks. The trees have been planted along the roadsides, canal banks and on some farmers’ premises. The programme also covers 300 of the 900 mile canal banks in Kushtia, Rangpur and a vast area next the railway tracks in Kushtia near Hardinge Bridge. Initially it was a difficult task to motivate reluctant farmers to plant trees, and the motivational campaign was carried out by dedicated managers with a technical background in agronomy. The demand for saplings grew steadily when the farmers realized there was an economic benefit from planting trees, and today, the company is flooded with requests for saplings from farmers every year during the planting season. The preferred tree variety for the afforestation was Ipil Ipil, because it is fast growing as well as commercially viable. Neem is another variety used, mainly due to its natural pest deterrent properties. Apart from its herbal value, Neem is also commercially viable. Varieties of fruit bearing tree saplings like Guava, Jackfruit are also distributed. Every year, sapling nurseries are established at British American Tobacco Bangladesh’s tobacco leaf depots and on farmers’ premises from where distribution of millions


saplings takes place annually. Trained field staffs lend their support to planters in all stages of their afforestation program. With the aim to achieve a balance between native and exotic species, 3.5 million saplings were distributed in 2003 with new 15% native species. We aim to improve this coverage of native species further over time. A new dimension has been added to our Afforestation programme by introducing commercial Afforestation in Chittagong The afforesation program extended it’s realms in city from the year 1993 when the company started distributing saplings in Dhaka. The company received the Prime Minister’s 3 rd prize in 1993 and 1st prize in 1999 and 2003 for tree plantation.

Compost Pits Compost pits are a source of natural fertilizers for the farmers. As a part of bio-friendly agricultural practices, we provide the know-how and bear full costs to erect compost pits in the homesteads of the targeted farmers. This assistance is also supported by an ongoing awareness campaign. This contributes in significantly reducing dependence on the use of chemical fertilizers for agricultural productions while enabling to decrease the cost of production. It has been reported through a study funded by BATB and undertaken by Bangladesh Agricultural University that the organic matter content of the soil is less than 1%. Success will be measured against the positive shift in organic matter content in the reporting areas. Hopefully this initiative will make positive biodiversity contribution from eco-system rehabilitation and sustainable use perspectives. Till date 2370 BATB registered farmers has received support from us in erecting compost pits in their homesteads.

Green Manuring BATB provide the know-how and provide free seeds for ploughing and green manuring by the targeted farmers. These seeds are sowed in the fields and after these plants known as Sun Hemp (Dhoincha) reach a certain height, they are ploughed and mixed with the soil. The cultivation of sun hemp increases soil‘s organic composition and is a eco- friendly sustainable method of soil enrichment. Our field experience suggests that 50% of the farmers manage to successfully conduct seed multiplication from which they


can internally source seeds for the following years. It has been reported through a study funded by BATB and undertaken by Bangladesh Agricultural University that the organic matter content of the soil is less than 1%. Success will be measured against the positive shift in organic matter content in the reporting areas. Hopefully this initiative will make positive biodiversity contribution from eco-system rehabilitation and sustainable use perspectives. Till date 10,328 farmers has received seeds from us for green manuring.

Neem Decoction machines Promoting the concepts of integrated pest management, we also provide training and set-up the neem decoction tool in strategic locations for use by the target population. This machine helps extract the juice out of the neem plants which is used as natural pesticides for the plants. Our goal is to use environment friendly pesticide in our operations and that is why use natural, antiseptic properties of the neem plant through neem decoction. Our field experience suggests that 1 unit can support at least 50 farmers. Success will be measured against the percentage of chemical pesticide usage in the reporting areas (BBS). Hopefully this initiative will make positive biodiversity contribution from eco-system rehabilitation and sustainable use perspectives.

Sanitation Support To support the target for universal sanitation coverage, we provide costs to erect latrines for farmers and these will be available for sharing within the village. This assistance is also supported by an ongoing awareness campaign. Till date we have distributed 12436 latrines among our registered farmers.

Monthly Health Check Our registered farmers are provided health care support from our depots every month. A doctor sits in the depot in a particular day each month so that our registered farmers can come and receive free prescriptions for their health problems. Till date 2560 recipients have received health care support from us from this initiative.


Comprehensive Health Care Support A comprehensive health care support system has been introduced this year which will run parallel to the existing monthly health check. The service will be outsourced to a nationally reputed NGO health network called Smiling Sun (created jointly by the Government and USAID) whereby health care support will be provided to the farmers’ families (farmer, his wife, his children and his dependent parents) at three different levels (static clinic, satellite clinic, mobile paramedic). This will include free prescriptions, free medication and medical tests support. In addition, national immunization effort will be complemented through our own initiatives for essential vaccinations for the farmers’ families. This will also be done through the Smiling Sun network.

Educational Assistance A number of meritorious children from our farmer base are selected each year to receive 500 taka per month for a period of 2 years to enable them to complete their higher secondary education. Education has remained a national high-priority issue while the major thrust by the development sector has been on universal primary education. Hence, may it be limited in scope, the aim here is to address the gap in terms of patronage in higher level education. A set of criteria will enable to screen the recipients whose academic performance throughout the two years will be closely monitored and continuation of support to individuals will be subject to individual’s academic performance in the reporting period. On the other hand, these recipients will act as the ‘biodiversity ambassadors’ who will assist in creating awareness in their respective localities. In addition, depending on their interest and availability of Dishari IT centre in the locality, some of these students will also be encouraged to receive free IT education from one of our Dishari IT centre. Presently we are providing assistance to 48 students.

Malarial Prevention Malaria is a recurring problem, especially in the Chittagong area. Each year in Chittagong region a number of affected farmers are given mosquito nets assisted by an ongoing awareness campaign. Till date we have distributed mosquito nets among 49 villages of Chittagong region.


Vegetable Growing Seeds of different vegetables types (focusing on export markets) are distributed free while training are provided through appropriate third parties to the interested farmers. This initiative will serve dual purpose – meeting the nutritional requirement while creating income opportunities. Hopefully this initiative will make positive biodiversity contribution from eco-system rehabilitation and sustainable use perspectives.

Dishari Dishari – a basic IT education center was born in Chechua, Kushtia in 2002 to spread IT education among the youth of the country. In May 2003, the second center of Dishari kicked off in Moulvibazar. BATB have taken this initiative to contribute to the promising IT sector of the country which is a thrust sector of the Government. The education center is aimed at providing basic computer education to those who can less afford it. Dishari works with a philosophy of providing a platform for students, which will help in their endeavors to a brighter future. In 2004 a third centre of Dishari in Manikganj has started to spread IT education to more students in Bangladesh. So far more than 300 students have passed out from Dishari So far Dishari has produced students who have accomplished promising results by being employed in the areas of data entry, word processing, video editing, CD writing and as computer teachers in schools. Last but not the least - three students of Dishari have endeavoured into a small business providing various computer services. Dishari is one of BATB’s endeavors to help flourish the mettle of many brilliant students.

4.2 Background of the research: Only MNCs were selected as national companies in comparison with the existing MNCs who are practising CSR for a long period of time, are merely new in this area. And secondly, five MNCs were included in the sample size based on the most effective company in Bangladesh in terms of CSR in 2004.


The five MNCs that were selected: • Standard Chartered Bank in Bangladesh (SCB) • Dutch Bangla Bank Limited (DBBL) • British American Tobacco Bangladesh (BATB) • Unilever (UL) • Grameen Phone (GP)

4.3 Findings of the research: Various CSR initiatives, the communications tools used and the investment on CSR activities carried out by each of the five MNCs were first collected. Then a survey was carried out to identify the public opinion on different CSR related activities of different company.

Perception mean wise ranking 37.07 40.00

35.81 32.57 30.63

24.50

30.00 Perception 20.00 Mean 10.00 0.00

BATB

GP

DBBL SCB

UL

Companies

Figure: 14

Perception of CSR activities


Regarding Perception Mean BATB is having the highest position. This maybe because of the fact that, BATB is covering the four most effective type of CSR activities (except investment in Hospital) which are investment in health, poverty alleviation, afforestation and free education. While, Although GP is covering 4 most effective types of CSR activities but despite that GP is having second position. As respondents valued more on investment behind “Poverty Alleviation”, that is why GP can’t achieve the highest position.

Average Companies Visibility Percentage

Total CSR

Inv.

InEfficiency Ratio

SCB

45.36

23.73

1.91

DBBL

38.04

47.52

0.80

BATB

28.71

24.48

1.17

UL

53.27

28.9

1.84

GP

40.63

68.24

0.60

Table :7

Financial Performance


Figure: 15

Visibility Vs. Total investment in CSR

Most Effective Companies Ranking 103

120

101 85

100 Response Rate

80

65

66

60 40 20 0

BATB

DBBL

GP

SCB

UL

Companies

Figure: 16

I.

TABLES

Most effective companies in CSR


1.

Table 1.0 – How effective do you think Internal Communications has been in communicating the company’s business information, strategies, values and events? all

mgt

non mgt

95

33

62

Very effective

54%

42%

60%

Effective

44%

55%

38%

Somewhat effective

2%

3%

2%

Ineffective

0%

0%

0%

Sample

2.

Table 2.0 – Rating given for each tool by management and non management (on a scale of 1 to 6; 6 being most effective and 1 least effective)

all

mgt

non mgt

Sample

95 mean scores

33

62

Focus

4.4

4.0

4.7

BATB news

4.0

3.5

4.3

Skip Level

4.2

3.5

4.7

Baithak

4.4

4.4

n/a

Roadshow

5.3

4.2

5.9

Alaap

4.7

n/a

4.7

3.

Table 3.0 – Rating given for preferred method of communication (on a scale of 1 to 6; 6 being most preferred and 1 least preferred)


Communication method

all

mgt

non mgt

Sample

95

33

62

mean scores Face to face

4.9

3.9

5.4

Notice boards

3.1

2.4

3.6

Printed matter

3.8

3.7

3.9

Video

3.9

4.0

3.8

Baithak

4.0

4.0

n/a

Lotus notes

4.5

4.5

n/a

Bulletin board

4.4

4.4

n/a

Canteen

3.4

3.9

3.1

4.

Table 4.0 – Which is the most favourite section in Focus? (on a scale of 1 to 6; 6 being most favoured and 1 least favoured)

Content of Focus

mgt

non mgt

95 mean scores

33

62

Project Update

3.8

4.3

3.5

Personal Experience

4.2

4.8

3.8

International News

3.9

3.6

4.1

Strategic Initiatives

4.1

3.7

4.4

News on Business Partners

3.7

3.9

3.6

Lifestyle

3.5

3.5

3.5

Quiz

3.9

3.5

4.1

Jokes

3.8

3.9

3.8

Sample

All


5.

Table 5.0 – What employees would like to see in BATB News? (on a scale of 1 to 6; 6 being most preferred and 1 least preferred)

Type of news

all

Sample

95 mean scores

Mgt

non mgt

33

62

Project update

4.3

5.2

3.8

Corporate event

4.5

5.0

4.2

International news

3.9

4.5

3.6

Strategic initiatives

4.2

4.3

4.1

News of business partners

4.0

4.2

3.8

Business performance

5.1

5.5

4.9

Brand news

4.9

5.5

4.5

CSR

4.8

4.7

4.9

6.

Table 6.0 – What sections of Baithak are preferred? Sections on Baithak

All mgt

Sample

29

(on a scale of 1 to 6; 6 being most preferred and 1 least preferred) mean score News

4.3

Bulletin board

4.7

E-media desk

2.6

Room reservation

5.0

Online chat

2.5

Music

4.0

CORA

2.9

Business tools

4.3

Global tools

4.4


7.

Table 7.0 – How employees rate the Roadshow? (on a scale of 1 to 6; 6 being excellent and 1 poor)

Features of Roadshow

All

mgt

non mgt

Sample

95

32

62

mean scores content

5.5

5.5

5.5

presentation

5.5

5.4

5.5

ease of comprehension

5.0

5.1

5.0

response to queries

5.1

4.8

5.2

II SURVERY QUESTIONNAIRE Department

Cod e


Internal Communications Survey Questionnaire The following questions pertain to the various Internal Communication tools and services, and are devised to measure their effectiveness in keeping you informed.

FOCUS (Applicable to all) F1. How many issues have you read in the last 12 months? Please tick one. 0 1 2 3 Can’t recall

F2.

Which is your most favourite section? (Rate each section on a scale of 1-6). Multiple sections may have the same rating.

6 means most while 1 means least favourite one. Project updates (Social Reporting, SAP, SRM, Torpedo etc.) Personal Experiences (Territory Experience , Earth Watch Fellows, People from abroad) International news (BAT Operating countries and Globe House) Overview of Strategic Initiatives (WOW_GP etc.) News on Valued Business Partners (distributors, suppliers, farmers)


Lifestyle (Food, Health, Living) Quiz Jokes Others (please specify)


F3.

How frequently do you think Focus should be published? Please tick one.

1/ year 1 / 6 months 1/ 4 months 1/ 3 months 1/ 2 months

F4.

Are you satisfied with Focus? (Tick in the appropriate cell) Satisfied

Somewhat satisfied

Dissatisfied

Writing style Information Design Size Distribution

F5.

Do you have any suggestions for improving Focus? For office use


BATB NEWS (Applicable to all) N1. How many BATB News have you seen in the last 12 months?

0 1 2 3 4 5 6 7 8

N2. How frequently do you think BATB News should be published? Please tick one 1/ 3 months 1/ 2 months 1/ month

N3. Which of the styles of the BATB news do you prefer? (Please tick one) A newscaster reading news from a news desk


(studio setting) clippings

and

intermittent

video

Continuous video clippings with background voice/ commentary Different style in different editions N4. What would you like to see covered in BATB News? (Rate them on a scale of 1 to 6). You can give the same rating to multiple sections. 6 means most preferred one while 1 means least preferred one. Project updates (Social Reporting, SAP, SRM, Torpedo etc.) Corporate Events (AGM, Convention, Afforestation etc.) International news (BAT Operating countries and Globe House) Overview of Strategic Initiatives (WOW_GP etc.) News on Valued Business Partners (distributors, suppliers, farmers) Business Performance (Sales, Production, Wastage etc.) Brand News Corporate Social Responsibility Others (please specify) N5. How long would you like the BATB News to be? Please tick one

Less than 5 minutes 5 - 10 minutes 10 – 15 minutes 15 – 20 minutes


N6. What’s your most used method of watching BATB News? Please Tick one. CD sent by CORA Group watching Meeting

in

Monthly

Baithak Canteen Other (Please Specify)

N7. Do you have any other suggestions to improve BATB News? For office use

SKIP LEVEL MEETING (Applicable to all)

S1. Have you ever participated in a Skip Level Meeting? Please Tick one. Yes No


S.1.1 If you have participated in a Skip Level Meeting, please answer the following 4 questions, if no, please move on to question S2. a. Did you like participating in the meeting? Yes No b. If yes, why? (You can choose more than one option) Informal environment Gives a chance to meet people Gives a chance to voice your opinion Others (Please specify below)

For office use

c. If no, why not? (Please specify) For office use

d. Have you or your team or department ever been directly benefited from the discussion in a skip level meeting?


For office use

S2.

Do you like the concept of skip level meetings? Please tick one. Yes No

S3.

How frequently do you think skip level meetings should be held?

1/ month 1/ 2 months 1/ 3 months S4.

Are you comfortable about the confidentiality of the matters discussed during the meeting?

Yes No ALAAP


A1. How many Alaap sessions have you attended in the last 12 months? 1

7

2

8

3

9

4

10

5

11

6

12

A2. Did you like the Alaap sessions? Please tick one Yes No A3. Rate the following features of the Alaap sessions (Place a tick in the appropriate cell, 6 means excellent and 1 means poor) 6

5

4

3

2

1

Content/Informat ion Presentation Style & Design A4. If you don’t like Alaap, please specify why For office use


A5.

Do you have any other suggestions to improve the Alaap sessions? (Please specify) For office use

BAITHAK (only applicable to managers in Dhaka and Kushtia) B1. Which feature/ section of Baithak do you like most? (Please rate from 1 to 6; give 1 to a section you dislike very much and 6 to the section you love) Multiple sections may have the same rating. News Bulletin Board BATB E-Media Desk Room reservation Online chat Music & Videos CORA Site Business Tools (Indirect, MYDAS, Learning Centre) Global Tools (About BAT group, Global Corp ID Guide)


B2.

How often do you visit the following sections in Baithak? (Please give the frequency of visit for each section) Every day

At least twice a week

Once a week to once in 15 days

Less than Once in 15 days

Never Don’t know

News Bulletin Board BATB Desk

E-Media

Room reservation Online chat Music & Videos CORA Site Business Tools Global Tools B3.

What do you dislike about Baithak? (You can select more than one)

Not accessible to all Homepage is not updated regularly Not user-friendly Others (specify) …………………………………………………………


B4.

Do you personally find BAITHAK easy to use?

Yes, very easy to use Relatively easy to use 0 1 easy to use Not very Not at2 all

B5.

Do you have any other suggestions to improve Baithak? (Please specify) For office use

ROADSHOW (Company plan communication) R1. How many Roadshows have you attended in the last 12 months?

R2. Did you find it an effective means of two way communication? (Please place a tick in the appropriate cell) Very effective Somewhat effective Not effective


Not effective at all

R3. Rate the following features of a Roadshow session from 1 to 5. (Place a tick in the appropriate cell) 5 means most excellent while 1 means very poor 5

4

3

2

1

Content Presentation Ease of comprehension Response to queries R4.

Do you have any other suggestions to improve the Roadshow sessions? For office use

GENERAL (Applicable to All) G1. Which is your most favourite tool? (Please rank from 1 to 5) Rank Focus


BATB News Skip Level Meeting Road Show Baithak G2. How helpful are the tools in communicating company’s business information, strategies, values and events?

very helpful

somewhat helpful

not helpful

not at all helpful

Focus BATB News Skip Level Meeting Baithak Road Show

G3. What’s your most preferred Internal Communication method? Which one is the next? (Please rate them from 1 to 6 according to your choice, where 6 is the most preferred method and 1 is the least.)

Face to face briefing Through notice boards Printed materials (newsletter, magazine)


Via video ( BATB NEWS and Business Connection) Baithak Via lotus notes Via bulletin board Message board on canteen tables G4. How would you rate Internal Communication’s assistance during Cross Functional projects? Supportive/Useful Somewhat useful Not supportive G5. How effective do you think Internal Communication is in communicating company’s business information, strategies, values and events? very effective

effective

somewhat effective

ineffective



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