Chapter# 1: Global and Bangladesh Economy

CHAPTER# 1
INTRODUCTION
GLOBAL AND BANGLADESH ECONOMY
Chapter Contents
Chapter
hat the objective of the report Hints
is and Introduction
how it has been prepared & what are the challenges faced during the re
Origin of the report
Objective of the report
Scope of the report
Methodology
Limitations
Strategic Management of BATBC
1.0 Introduction
British American Tobacco Bangladesh Company ltd. (BATBC) has been operating since 1910
in the country. The firm manufactures and markets cigarettes. It designs its product line to
focus various customer segments based on their income level e.g., premium segment (Benson
& Hedges), high segment (John Player Gold Leaf), medium segment (Star) and lower
segment (Pilot). It is the highest private sector tax payer of the Country and contributed two-
third of the total tax collection of the industry. The company was listed in DSE and CSE in
1977 and 1996, respectively. At present, 72.9% of its shares are owned by British American
Tobacco Group, and the rest part is held by other investors. The Firm was enlisted with the
DSE in year 1977 and the CSE in year 1996.
1.1 Origin of the Report
The report, titled Strategy Analysis of British American Tobacco Bangladesh Ltd. has been
prepared to fulfill the partial requirement of the course; Strategic Management of MBA
Program, supervised by Md. Hashibul Hassan, Assistant Professor of Jagannath University.
This report deals with the practical application of theoretical knowledge of the course FIN-
6304-Strategic Management
1.2 Objective of the Report
1.2.1 Primary Objective:

The Primary objective of the report is to analyze different kinds of strategies of British
American Tobacco Bangladesh Ltd.
1.2.2 Specific Objectives:
To gain an understanding on the tobacco industry and on the competitive market
scenario.
To study the Internal & External environment through the analysis of the strength
& weakness of the organization and, the opportunities & threat to which it is exposed
To know how effective value chain activities carried out by the organization in order
to provide superior product & service
To evaluate functional level strategy directed at operational effectiveness
To know the overall business scenario of the company
1
1.3 Scope of the Report

The study focuses on the strategic analysis of the British American Tobacco Bangladesh. It
draws attention to different aspects of company strategy formulation and activities related to
it. The study also focuses on companys key financial performance analyzing key revenue
drivers & the overall performance of the company.
1.4 Methodology
This report is an exploratory and descriptive one in nature. All the information incorporated
in this report has been collected from both primary & Secondary Sources
1.4.1 Primary Data
Primary data has been collected through the formal discussion with the BATB officials;
Territory Officers
1.4.2 Secondary Data
BATB annual Report 2015

Half Yearly Report 2016
BATB official Website
Class Lectures
DSE publications
Newspapers
1.5 Limitations
The present study is not out of limitations. But as business student it has been a great
opportunity for us to gather practical knowledge regarding Strategic management of the
company but preparing this report some constraints arises such as
Confidentiality of the data was the first and major limitation while constructing the
report.
We did not have access to all types of recent data.
There is degree of variations in the available market statistics produced by different
sources which often put the report in a dilemma on determining the level of
authenticity of the data collected.
Due to time limitation, many of the aspects could not be discussed in the report.
In spite of all the limitations, we have given the best of our efforts and tried to make the
report as informative and as comprehensive
2
CHAPTER#22
OVERVIEW OF THE ORGANIZATION

Chapter Contents
ut the organization bring here together in a summary form like company background, vision, mission, Produc
Company Overview
Chapter Hints Vision
Mission
Strategic Focus
Key Financial Info, Share Price, EPS
Product Portfolio
Nature of the Industry
3
2.0 British American Tobacco Bangladesh
2.1 Company Overview:
The presence of British American Tobacco in this part of the world can be traced back
to 1910. Beginning the journey as Imperial Tobacco 103 years ago, the Company set up its
first sales depot at Armanitola in Dhaka.
After the partition of India in 1947, Pakistan Tobacco Company was established in 1949. The
first factory in Bangladesh (the then East Pakistan) was setup in 1949 at Fauzdarhat in
Chittagong. In 1965, the second factory of Pakistan Tobacco Company went into production
in Mohakhali, Dhaka. Thereafter it became Bangladesh Tobacco Company Limited in 1972
immediately after Bangladesh's independence. In 1998, the Company changed its name and
identity to British American Tobacco Bangladesh (BAT Bangladesh) aligning the corporate
identity with other operating companies in the British American Tobacco Group.BAT
Bangladesh is a part of British American Tobacco plc, one of the worlds most international
businesses, with brands sold in more than 200 markets around the world. They make high
quality tobacco products for the diverse preferences of consumers, spanning the business
'from crop to consumer' and are committed to embedding the principles of corporate social
responsibility Group wide.
2.2 Vision and Mission & Strategic Focus
Vision is to be worlds best at satisfying consumer moments in tobacco and beyond
Mission is delivering commitments to society, while championing informed consumer choice
4
Strategic focus is the foundations of BATB upon which Their strategy is built. BTAB
continue to concentrate on their activities in all four focus areas and constantly review our
ways of working. Growth requires development of brands by bringing innovations and new
products to meet consumers' evolving needs. Winning organizations consist of great people,
great teams and a great place to work. Ensuring a sustainable business that meets
stakeholders expectations is another part of our strategic focus
2.3 Key Operating & Financial Information
Financial & Operational Performance Summary 2015 2014 2013 2012 2011
Profit After Tax(In Mln) 5,846 6,282 4,924 3,942 2,551
Share Capital 600 600 600 600 600
EPS in BDT 97.43 104.70 81.14 65.59 42.51
Total Contribution to National Exchequer in million BDT 110,505 100,070 84,402 66,969 57,266
The key operating and financial information for the year 2015 along with the preceding
For the Period From 1 Jan 2016 to 30 June 2016

1-Jan-16 1-Jan-15 1-Apr-16 1-Apr-15
In thousands of BDT
To To To To
30-Jun-16 30-Jun-15 30-Jun-16 30-Jun-15
ET PROFIT AFTER TAX FOR THE PERIOD 3,854,478 2,762,846 1,984,578 972,767
Other Comprehensive Income/(Expense) - - - -
Taka Taka Taka Taka

Earnings Per Share 64.24 46.05 33.08 16.21
As Per DSE Current Share Price, EPS, Other Financial Indicators
5
2.4 Product Portfolio
From the customers point of view, the products of British American Tobacco Bangladesh are
divided into four product segments. The segments are Premium, Aspirational Premium, Value
for Money (VFM) and Low. The brands can be identified as below according to their product
segmentation:
Premium: Benson & Hedges , B&H Blue Gold, B&H Switch
Aspirational Premium: John Players Gold Leaf, JPGL Switch, JPGL Special
VFM: Star, Star Next, Star Click
Low: Pilot, Hollywood, Derby, Derby Special

Premium:
Benson & Hedges (B&H) launched in 1997, maintains its dominance in Premium segment
and drives the growth of Premium price segment in Bangladesh market. Within a short time
Bangladesh became a leading B&H market across the British American Tobacco world.
Aspirational Premium:
6
Launched in 1980, John Player Gold Leaf is one of the highest selling brands of the Company
- dominating the High price segment. In 2005, they launched three flavored Limited Edition
Product and Packs under the Taste the World campaign, which were extremely well
received by consumers.
VFM:
Star, launched 40 years ago, is still a dominant brand in this segment. Currently it is the
highest volume generating brand for the Company. At the same time, the cigarette stick
carried a new look with brighter paper and bi-color dye
Low:
In order to meet the demand of the smokers of the increasing Low segment, they have
launched Pilot, Hollywood and very recently Derby Style and Derby Special.
2.5 Nature of the Industry
According to the market is estimated to be 64.2 billion sticks of biri and 51.8 billion sticks of
machine manufactured cigarettes as in 2015.The tobacco industry of Bangladesh is an age old
industry. Three cigarette companies are currently holding 97% of market share in the country
where British American Tobacco Bangladesh (BATB) peaks the market with more than 50%
market share. The main cigarette manufacturers in Bangladesh are:
British American Tobacco Bangladesh (BATB)

Philip Morris International (PMI)
Dhaka Tobacco Industries (DTI)
Abul Khair Tobacco Company (AKTC)
Japan Tobacco International (JTI)
Nasir Tobacco
New Age Tobacco
Segments Brand Company
Premium Benson & Hedges, Marlboro BATB, PMI

Aspirational or Gold Leaf, Pall Mall, Capstan, Winston BATB, JTI
7
Medium
BATB, DTI, Abul Khair
Low Pilot, Derby, Hollywood, Navy, Briton Tobacco
The industry is very price subtle in nature. Most of the tobacco consumers normally buy
tobacco in sticks, not in packs. So it is also a stick selling market. These two features-price
sensitive and stick selling-influences the business philosophies of the companies.
CHAPTER#3
ANALYSIS
Chapter Contents
ection will cover Internal & external environment analysis, Value chain Strategy, Functional level str
SWOT Analysis
Porter Five Forces
Value Chain Analysis
ChapterKey
Hints
Revenue Drivers & Financial Performance at a glance
Functional Level Strategy
Business Level Strategy
Key Strategic Pillar of Business
Cost Management
4Ps of Marketing
8
3.1 SWOT Analysis

SWOT Analysis is an important tool for evaluating the companys strengths, weaknesses,
opportunities and threats. It helps the organization to identify how to evaluate its performance
and scan the internal & external environment
STRENGTHS I WEAKNESS
n
Wide recognition Strong Trade Union
t
International brand Image e Missing a large number of
r consumers due to high price
Strong brand portfolio n
a Restricted to Promotional
Cigarette share in Bangladesh market
l Campaign to some extent
Talented workforce
Diseconomies to scale
Superior technology
Competitive Market/Strategy
Geographically Diversified
Too much process driven in the
Highest Tax Payers production
Large Distribution channel & Sales
Networks
Better product quality relative to the
rival
Effective communication
Loyal customers
9
Strong management team
OPPORTUNITIES E THREATS
Growing Population x Anti-smoking lobbies activities
t
Economic Growth e Increasing Health Concerns
r
Quality Consciousness Level Playing Field
n
Acquisitions/ Takeovers a Smuggled/ Transit cigarettes
l
Financial markets (raise money International competitors are
through debt, etc) coming to Bangladesh Competition
Product and services expansion(Light Technological Advancement
Cigarettes)
External changes (government
Potential of premium segment(B&H Regulations & Law, politics, taxes,
Family) etc)
Maturing categories, products, or
services
Variety customers expectations
3.1.1 Explanation of Strengths:
Wide recognition
BATB is widely recognized as good corporate company for its corporate value and
ethics. The good deeds are in terms of highest tax payment, community services, afforestation
10
programs and helping some social organizations. BATB also has a great brand image for
which it is highly recognized. Its local competitors do not possess such recognition which is
why it acts as strength for BATB.
International brand Image
BATBs premium and medium segment brands like Benson &Hedges, John Player
Gold-leaf are internationally recognized & valued by its loyal customers. In order to ensure
quality product, BATB use global sourcing of all the raw material to maintain consistency in
flavors and quality. There are not much multinational tobacco companies in Bangladesh so
BATB has a low competition in the market when going as an International brand.
Strong brand portfolio
BATB offer products in all price segments in the market. There are brands for
premium customers, medium segment, low as well as very low segment. Thus they have a
wide customer base where almost all their products are the market leaders. Their other
competitors do not have such a wide variety targeted to such a wide range of customers.
Talented workforce
People are BATBs fundamental advantage. This include management, workforces

and all other business partners, who are directly involved in the value chain process. The best
group of workforce is recruited in BATB maintain high standards during recruitment. People
are highly trained and motivated, productive and team-oriented.
Superior technology
Technology used in BATB is superior from the competition in Bangladesh. Their state
of art manufacturing plant in Dhaka is not only sophisticated but also benchmark facility
within the operating companies of BAT in their AMESCA (Africa, Middle East, Sub-
Continent &Asia) region. In this industry technology is the key for superior quality product.
Largest Tax Payer
One of the largest tax payers in Bangladesh: BAT is the largest tax payer in our
country. As a result of this huge amount BATB enjoys a cordial relationship with the govt. of
Bangladesh, unlike its competitors.
11
Geographically Diversified
BATB operations are extensively geographically diversified. They have tobacco

producing plants in all six districts of the country. Their products are found all over the
country in all retailing outlets, thus help them maintain a good grasp on their target market.
BATB does aggressive distribution all over the country unlike its competitors.
Better product quality relative to the rival
As mentioned earlier BAT maintains its consistent quality with good blend of tobacco
through superior technology, thus BATB is always in an advantages position compare to its
competitor.BAT grows tobacco for their own consumption in Bangladesh and they have
completely separate function responsible for tobacco growing and processing, which their
competitors do not have.
3.1.2 Explanation of Weakness:
Strong Trade Union
Trade union is one of the weaknesses for BATB since they are resistant to any
changes. It takes lot of management effort and time to make the union leaders motivated for
any minor changes in the entire process.
Missing a large number of consumers due to high price
BATB is losing a large number of consumers in Bangladesh due to high price of its
products. It is mainly in the very low segment since they are price sensitive. This is where
other local tobacco companies have taken over since they have been maintaining a low price.
Banned from Promotional campaigns
BAT being a tobacco company is not allowed to promote their products through
public media. This makes it hard for BATB to promote since the medium to reach out to the
larger audience, like TV or radio advertisement cant be used
Higher Cost of Production
As BATB maintains international standards in all its transactions, policies, practices

and processed it has to bear a higher overhead compared to its competitors.
12
3.1.3 Explanation of Opportunities
Growing Population
The adult population in Bangladesh is on a growth trend as opposed to developed

nations. This suggests that the cigarette consumption in Bangladesh is also on the rise. The
number of chain smokers is also increasing in Bangladesh. BATB can grab this opportunity
and can make a consumer forecast for the future. It is a very good opportunity for BATB to
grow.
Economic Growth
The economy of Bangladesh is growing at a healthy rate and this has increased the disposable
income of the people. As a result more and more smokers are shifting from Biri to a cigarette
which is favorable for the company.
Quality Consciousness
In Bangladesh the market is still at a primitive stage with very simple requirements of
the consumers. However, the trend is changing and consumers are becoming more and more
quality conscious and are seeking for more value from their brands.
Light Cigarettes:
BATB has a wide range of products targeting any and every kind of smokers Benson
Lights after Benson Special filter is an example of it. And due to the growing popularity of
Benson Lights, BATB is planning to offer light cigarettes in their other brands which can
yield an opportunity to earn higher profit.
Expansion of Product Line
Every year BATB Bangladesh has added some brand in their product line. They also
offer some limited edition pack like recently they introduced Derby LEP, Star Click. This
create a opportunity to attract consumers which lead to increase their sales volume
3.1.4 Explanation of Threats
Anti-smoking campaigns
13
Anti-Smoking lobbies are now getting very strong in Bangladesh. Recent

demonstration against Voyages of Discovery(VOD), a global campaign of John Player Gold
Leaf and government legislation against ban in cigarette advertisement in all media reflects
clear threat for cigarette industries, thus even for BATB.
Increasing Health Concerns
Due to smoking people face heart and respiratory problems and therefore the
consumption of tobacco products are declining in huge numbers as people are getting
conscious about their health. BATB also encountered with such kind of incidences, which
might be a major cause for declination of revenues.
Level Playing Field
In Bangladesh, given the general state of Law and Order a number of the competitors
do not abide by the Laws. There are many instances of violation of the Tobacco Control Act
2005 by the competition. As such BATB often has to operate in situations where the
competition gets an upper hand due to weak law enforcement and BATB has to stay within its
stringent guidelines as per the IMS.
Competitor Strategies
BATBs major competitors are Akij Tobacco and Dhaka Tobacco. They have already
captured maximum share among the very low segment which a high ratio. This is a threat for
BATB; s profit margin. BATB always need to be updated about their strategies or they may
fall behind.
International competitors are coming to Bangladesh
Phillip Morris Incorporation & Japan Tobacco International has already started their
operation in Bangladesh. This is a significant threat for BAT Bangladesh because they are
also multinational tobacco brand to compete against BATB.
Increasing number of Regulations:
14
The government has imposed number of regulations and strict laws about smoking
and selling cigarettes. Its threat for the company since these is sensitive issues with the
companys reputation at stake. A single mistake can be a long time threat to the company.
And the other competitors can use this mistake against BATB.
3.2 Porter Five Forces
3.2 Porters Five Forces
The industry attractiveness for the company is measured on the five forces
coming from Porters five forces model. The implications of the
Porters five forces for the company are given
below.
3.2.1 Risk of Entry by Potential Competitors
Industry is safeguarded from the potential entrants due to government lawful barrier
for setting up new tobacco industry, high capital investment, economies of scale, brand
Image, and specialized know-how, existence of learning and experience curve effect, brand
preference and customer loyalty.
The barriers to entry for the tobacco industry are very strict. Although tobacco products are
commodities in nature, smokers have significant brand preference. Cigarette brands enjoy the
highest brand loyalty of all consumer products, with less than 10% of users changing brands
annually. Therefore, a new entrant would have to provide a large investment of time to
establish local brand loyalty. Retailers might be reluctant to stock products of a relatively new
and unproven brand. The introduction of the operation of Philip Morris International Tobacco
Company selling Marlboro in Bangladesh is really a big threat for BATB. Another threat is
that Japan Tobacco International has also started their journey in Bangladesh. This is an
external threat over which BATB has no control. However, the company should take steps to
increase its market share to combat Marlboro in the Premium Segment.
3.2.2 Intensity of rivalry amongst existing competitors
15
Rivalry depends on mostly in terms of price and quality. International brand image,
major competitors consists of domestic manufacturers are accounted for the rivalry. The
industry is still growing opening the door of opportunity for augmented business as
consumers are up coming from Biri to cigarette. Rivalry in this particular segment is very
intensive in terms of price rather than quality. British American Tobacco faces fierce
competition with Philip Morris in countries like Bangladesh where the Benson and Hedges
and Marlboro are the only choice of middle class and lower upper class people. Both the two
cigarettes are of the same price range.The other reasons behind rivalry are:
Demand by ASU 30 smoker group (Adult smoker under 30) for new product
innovation like, low delivery and US blended cigarette.
International brand image.
Low switching cost among buyers especially in the low segment, as different brands
are available.
3.2.3 Bargaining power of buyers (customers)
The bargaining power of customer is high in the tobacco industry as there is a wide
range of available substitutes. Buyers are well informed about different brands available in
the market through advertising. In the low-priced and very low priced segment, buyers have
high bargaining power as different brands are available and they can choose according to
their taste and preferences. But in the medium priced segment like British American
tobaccos certain brands quality, price and availability of substitutes are key factors for
substitution. In Bangladesh, mid-segment is entirely dominated by JPGL and other
substitutes are few number.
3.2.4 Bargaining power of suppliers
The power of suppliers over the firms that depends on outsourcing of raw materials
including tobacco leaf, wrapping materials filters, cigarette papers and so on, is not so
significant. As cigarettes are classified as Fast Moving Consumable Goods and produced all
over the world, all the firms have the leverage to choose the wrapping materials from
anywhere in world. Tobacco for medium and low price segment cigarette is grown in
Bangladesh and is capable of fulfilling the entire industry demand. 18-20% tobacco for
premium priced cigarette is also grown in Bangladesh and around 80% high quality
tobacco is imported from different tobacco growing countries. Therefore, suppliers tend to
have less leverage to bargain over price and quality.
16
3.2.5 Threats of substitutes

Like all other tobacco companies British American Tobacco now faces huge pressure
from vast availability of substitute products and peoples huge demand for these substitutes.
Scientific advancements has made available such mind-blowing substitutes with less harmful
consequences for tobacco that a lot of consumers have started making the switch and this was
a red alert for the overall tobacco industry. Such substitutes available in the market are:
Nicotine Patch
Nicotine Gum
Electronic Cigarettes
Herbal Smoking Mixture
Hookah
3.3 Value Chain Analysis

British American Tobacco Bangladesh has organized value chain activities which facilitate
the functions of procurement of materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished products to customers. These
value chain activities are categorized into two parts
Primary activities
Support activities
3.3.1 Primary Activities
17
3.3.1.1 Inbound Logistics
Inbound logistics is the most fundamental element of business operations for a

manufacturing firm, involving the processes of receiving, storing and distributing raw
materials for use in production. At British American Tobacco Bangladesh for different brands
raw materials are collected domestically and also being imported from outside Bangladesh.
For the premium brands like Benson and Hedges, Benson and Hedges Lights and
Switch raw materials come from outside the country. For those products raw materials
are imported mostly from Brazil, Mexico so on.
Other hand for the medium and low brands raw materials are collected from the
different part of Bangladesh. They have huge Leaf operation center at Kushtia,
Chittagong where leafs are cultivated for the cigarette production.
BATB procurement department follows strict measures to maintain quality parameters. Any
type of product is quarantined whenever any dissimilarity in these parameters is detected.For
example every single raw materials used for Benson & Hedges are imported. Benson &
Hedges uses 100% Virginia tobacco which is a world class blend.
The tobacco is imported from Brazil, Argentina, Mexico and West Indies
The white cigarette paper is a special type of paper which is imported from
Malaysia. The filter comes from Japan.
The glue, used for wrapping the cigarette paper, is imported from Spain. The ink,
used for printing on the cigarette paper, is imported from France.
There is also a golden wrapper inside the packet which helps keep the cigarette still.
This wrapper is also imported from France
3.3.1.2 Operation
Operation means converting materials into final products .When converting final product
added lots of value.
The Primary Manufacturing Department: The primary manufacturing department (PMD) is

responsible for further conditioning the important tobacco to make it ready for production.
The Secondary Manufacturing Department:
18
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 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. Currently there are 16 cigarette-making machines at Dhaka factory, which are operated
in three daily shifts.
Each of cigarettes 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 manual or by built in sensors and removed from the
production flow. The tobacco from these wastes is removed and reused for cigarette
production. This is added great value from BATB
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.
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.
In Benson &Hedges a very special machine called Protos Focki is used to produce
the cigarettes of BAT. This is an automatic machine capable of producing 10,000
sticks of cigarette per minute. It takes almost one and a half year to build a Protos
Focki
Packaging
For many years B&Hs packs were monotonous and hard to open. But BATB is gathering
customer investment with a stream of bundling developments, for example smaller packs,
side-opening packs that open such as wallets, waterproof packs, re-sealable packs to keep the
substance fresher and packs with adjusted edges
3.3.1.3 Outbound Logistics
19
Outbound logistics is the movement of material. It is basically associated with storing,

transporting and distributing goods to its customers. BATBs distribution is done with the
help of authorized dealers. There are about 56 authorized distributors that distribute the
products to outlets.The distributors use their own vehicles, covered vans, Pannier Box, Tri-
van etc to distribute the product
Distribution Channel
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.
Channel of Distribution
Factory
Sales Depots Internal Carrying Agent
Distributors
Retailer Cash & Carry
Consumer
Regional Go-down
There are five regional go-downs throughout 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. So this five regional go-down adds lots of value
Carrying Contractor
20
They are the party engaged in the physical movement of cigarettes from head office go-down
to regional office go-down. Normally they are the truck owners who take all the risk and
responsibilities of physical movement of goods between 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 go downs to distributor warehouses. They
also take all the responsibilities and risk engaged in physical movement of products.
Opening Stock at Distributors Office:
A part 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. Here it adds lots of value because
here maintain another stock office.
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. Here they adds lots of value because they sell directly to consumer
and also retailers
Retailers
21
Retailers are at the end of the physical distribution system of cigarette selling products
directly to the consumer. The distribution chain shows how the product goes from the factory
to the hands of the consumers. It all starts with the factory where the tobacco is turned into
cigarette and packaged. The cigarette comes out of the factory as a finished good and is kept
in the companys warehouse. Then the tobacco product goes to 6 regional depots. From the
depots, the authorized distributors take it to their distribution warehouse. Then from the
distribution warehouse the distributors use their own vehicles to get it to the market.
3.3.1.4 Departmental Overview (Sales &Marketing)
Approaches to Marketing
BATBs business is about offering adult consumers high quality brands that they will choose
over competitors products. It is not about increasing the number of smokers, or the amount
they smoke or targeting the minor. BATs International Marketing Standards, revised in 2007,
detail its motto to marketing appropriately and only to adult smokers. The Standards apply to
all its companies globally and govern its tobacco marketing across all areas including print,
electronic media, promotional events and sponsorship.BAT has issued additional guidance to
its companies to help address these issues.
3.3.2 Support Activities
3.3.2.1 Firms Infrastructure
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 Companys Head office and Cigarette
factory are located in Mohakhali, Dhaka. A Green Leaf Threshing (GLT) Plant has been set
up in Kushtia. The companys 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 the 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 performs its sales and distribution operation
all over the country through its five regional sales offices. They are located in Dhaka, Khulna,
Chittagong, shylet and Rajshahi. Each of the regions is again divided into operational areas,
22
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 departments.
3.3.2.1 Procurement
BATB follows strict measures to maintain quality parameters. Any type of product is
quarantined whenever any dissimilarity in these parameters is detected. Benson & Hedges
uses 100% Virginia tobacco which is a world class blend. The tobacco is imported from
Brazil, Argentina, Mexico and West Indies. The white cigarette paper is a special type of
paper which is imported from Malaysia. The filter comes from Japan. The glue, used for
wrapping the cigarette paper, is imported from Spain. The ink, used for printing on the
cigarette paper, is imported from France. There is also a golden wrapper inside the packet
which helps keep the cigarette still. This wrapper is also imported from France. Finally, the
authorized gold pack is imported from Turkey
3.3.2.3 Human Resource Management
BAT has been a pioneer in recruiting and creating the best managers in Bangladesh. They
choose the best and most talented graduates each year to ensure that they have the beast and
most effective workforce.The vigorous assessment tools and techniques that BATB
implements help bring in the best talents that add to the sustainable performance of the
Company.
The 12th edition of Battle of Minds, the

flagship talent promoting program of the
Company was launched for universities all over
Bangladesh. Battle of Minds 2015 was bigger
than ever before and posed even tougher
challenges for the participants.. BATB focuses
on the learning and growth of its people with
the aim of developing leadership abilities to
assist the people realize their full potential. This is done by supplying the right opportunities
to learn from their leaders and applying BATs globally recognized learning and development
platforms.
23
The organization continues to provide the people with an environment that listens to
their queries and that nurtures the talent.
More than 240 managers have been trained through programs that helped them
unleash their full potential. BATB focuses on building functional skills and also
provides hands-on experiences to develop individuals as leaders.
With the aim of sustaining the present agenda for talent, 101 employees were
transferred to other roles and 71 were promoted. International assignments were given
to 18 Bangladeshi managers in countries such as UK, Singapore, Cambodia, Poland,
Japan, Korea and Pakistan.
On top of that, 450 employees were provided with leadership and functional skills
training.
3.3.2.4 Technology Development
Information Technology department was mainly acting as a supporting service for all the
other functions of BAT. As the emergence of super information highway another
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.As stated
earlier, BAT uses a state of the art technology Protos Focki which has a capacity of producing
10000 sticks per minute. This is the most efficient cigarette manufacturing machine till date.
This modern machine creates lots of value and it also minimizes cost in B&H. And also
minimize wastage
3.4 Key Revenue Drivers & Financial Performance at a

3.4.1 Key Revenue Drivers
The company has a wide range of brand catering low to the premium segments of the
market. The companys brands include; Benson & Hedges, John Player Gold Leaf, Pall Mall,
Capstan, Star, Pilot and Hollywood. Sale of cigarettes is the source of revenue stream,
accounting for 95% of the net turnover, while processed tobacco leaf export accounts for the
rest 5%, as on 2015. In 2015, the company sold 42,541 million sticks, registering 9.0% YoY
volume growth. At the same time, net revenue from cigarettes sales rose by 14.5% YoY,
24
powered by both price and volume growth. Meanwhile, leaf tobacco export fell by 11.0%
YoY in terms of volume and 23.2% YoY in terms of value. Overall, the company achieved
12.2% YoY growth in top line in 2015, compared to 13.9% YoY growth in top line in 2014.
3.4.2 Financial Performance at a glance
Keeping up with business growth, profit margins have been improving for BATBC.
Gross, Operating and NPAT Margins stood at 46.8%, 33.1% and 14.7% in 2015, compared to
44.3%, 32.4% and 17.7% in 2014. Lower NPAT Margin in 2015 compared to that of in 2014,
is due to higher tax payment in the year. During 9M 2016, the company registered 8.6% YoY
growth in the top line and 24.1% YoY growth in the bottom line. Recently, the company has
reported net profit after tax of BDT 5,432 million with EPS of BDT 90.53 for the period of
nine months (Jan' 16 to Sept' 16) as against BDT 4,379 million and BDT 72.98 respectively
for the same period of the previous year.
Particulars (BDT (Mn) 2014 2015 9M 2016

Net Revenue 35,562 39,895 31,496
Gross Profit 15,768 18,682 14,470
Operating Profit 11,535 13,201 10,664
Net Profit after Tax 6,282 5,874 5,432
Total Asset 27,075 29,591 37,099
Total Equity 11,464 14,610 16,741
**Year ends on Dec. 31
Particular
s 2014 2015 9M, 2016
44.3 9M,
Gross Profit Margin YoY% Growth 2014
46.8% 45.9% 2015 2016
(%) (unaud
ited)
Operating Profit 32.4 3.5 Functional Level Strategies
Margin Net
%Revenue 13.9
33.1% 33.9% 12.2 8.6%
% %
Net Profit after
17.7 27.6 -6.5% 24.1% BATB is a process-
NPAT Margin % Tax14.7% 17.2%%
based organization.
27.6
ROA % 20.7% - BATB has been operating its business under
61.7
the following functional areas:
ROE % 45.1% -
Leaf
Supply Chain
Marketing
25
Corporate and Regulatory Affairs
Information Technology
Legal and Secretarial
Finance
Human Resource
3.5.1 Leaf
The Leaf Department is very strong and efficient at BATB. They are responsible for
all the activities related to leaf growing, communicating with farmers, controlling of the leaf
quality, purchasing, processing, packing, shipping and storing of the leafs etc. People who are
working with Leaf department have to be very responsible. They have to ensure the
continuous supply of tobacco leafs and the quality of it. It is very important job, because the
taste of the cigarettes depends on the quality of the tobacco leaf. However, some of the major
activates done by Leaf
Departments are:
Purchasing
Processing
Packing
Shipping
Storing Leaf tobacco
3.5.2 Supply Chain
To operate a business smoothly, operation activities of that business should be done in

an integrated and appropriate way. In BATB, operation is a major activity. It includes leaf
growing, storing of them, checking of their quality, quality control; send them for
manufacturing, packaging, warehousing, distributing, procurement etc. Making up quick
decisions based on the arisen situation is another activity of Supply Chain at BATB.
Followings are some of the Operations activities:
26
Green Leaf Threshing Plant (GLTP): The GLT plant is in Kushtia. This function is
responsible for procuring the green tobacco leafs and send them to other departments for
further processing.
Primary Manufacturing Department (PMD): here the leaf is being prepared for theproduction
activities.
Secondary Manufacturing Department (SMD): after PMD, the products came into the SMD;
here activities like wrapping tobacco with materials, manufacturing etc are done.
3.5.3. Marketing
To increase the sales, brand image and create a value for the brand is every important
for any organization. This is a center focal point for every organization as the business means
to sell the services or experiences. In BATB, the marketing team is very efficient and
energetic, the verification we can get from their excellent selling records and their highly
appreciated values towards the customers. BATBs marketing department mainly conducts
two activities called Brand marketing and Trade marketing which includes several other
works. Besides this, promotion or advertising activities is very important for any
manufacturing organization. But as the promotional activities of tobacco products are banned
by the government, so it is very difficult task for marketing to run their business. However,
they are also succeeding in this case. The major marketing activities of BATB are:
Building Brands
Trade Marketing & Distribution
Consumer Insights
Managing specialized channels
3.5.4. Corporate & Regulatory Affairs (CORA)
Corporate & Regulatory Affairs (CORA) is one of the important departments at BATB.
As BATB deals with the controversy product, so in conducting the business they have to be
very careful. And this makes them to become a successful organization. However, through the
corporate social responsibility they carry out their responsibilities towards their stakeholders
and the society. CORA mainly performs the following functions:
27
Managing Regulations
Promoting Corporate Social Responsibility
Driving Corporate Communications
Some of their key activities are yearly Free Sapling Distribution, publishing Social Report,
several Awareness Campaigns, and Community Health Services etc
3.5.5 Information Technology
To ensure the security of an organizations information and to complete the work in a quicker
way, IT can help a lot. BATB secures all the information of this organization through the use
of information technology, they regularly update their equipment and software, to speed the
work and save the time, IT came up with several management and technological software.
Followings are the important activities & Software maintenance done by IT at BATB
Business Area Management

Architecture & Service Delivery
IT Management
Prism Database
Business Express
Key Functions 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.
28
3.5.6 Legal
Legal department mainly considers the Legal and Secretarial function of BATB. It helps
BATB to know that what the right procedures to run their business are. As BATB is doing a
debatable business, so they have to conduct their business in a very proper and legal way and
BATB is very careful about this. Legal department handles how to solve the problems, how to
follow and adjust with the states laws, the shares and stakeholders, auditing, AGM etc. The
major activities of Legal department are the followings:
Litigation Management
Trade & Agreement Management
In-house Legal Counsel
Share Management
Record Management
Corporate Governance etc.
3.5.7. Finance
Finance department at BATB does not only work with their financial activities rather they
work in align with the other departments. Finance has various important activities including
the following things:
Setting and delivering against financial objectives

Planning and budgeting for optimal use of resources to grow the business and
to satisfy shareholder expectations
Management reporting to the Board on business performance, current and
future
Statutory reporting and support of investor relations
Audit and business risk management
Acting as a value adding business partner to all functions
3.5.8. HRM
29
Human Resources department of BATB has responsibility for energizing, developing,

retaining and attracting truly talented people all around the country. 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. Areas covered by HR within British American Tobacco Bangladesh are-
Managing performance i.e. measuring & aligning performance, rewarding

performance, managing & administering benefits etc.
Managing organizational learning and development i.e. managing change, designing
& developing the organization, managing organizational climate, Learning in the
organization etc.
Resourcing i.e. recruiting, assessing and selecting, HR planning etc.
Managing careers and development i.e. assessing competencies and potential, career
development systems, coaching and mentoring, training and development
Managing employment relations i.e. managing employment legislation, managing
workplace relations, managing HR customer services etc
3.6 Business Level Strategies
The Vision that motivates BATB employees and drives their operation is the desire to extend
the market leadership through world class performance across all areas of BATB business.
The Four Guiding Principles of BATB are,
Four guiding principles of BATB
1. Strength from Diversity :They respect and celebrate each others differences and enjoy
working together. They harness diversity - of their people, cultures, viewpoints,
brands, markets and ideas - to strengthen business. They value what makes each of
them unique.
2. Open Minded: They are forward looking and anticipate consumer needs, winning with
innovative, high quality products. They listen to and genuinely consider other
30
perspectives and changing social expectations. They are open to new ways of doing
things Freedom through Responsibility
3. Enterprising Spirit: They have the confidence to passionately pursue growth and new
opportunities whilst accepting the considered entrepreneurial risk that comes with it.
They are bold and strive to overcome challenge
4. Freedom through responsibility: They always strive to do the right things, exercising
our responsibility to society and other stakeholders. They use their freedom to take
decisions and act in the best interest of our consumers.
Customer Need & Market Analysis
A portfolio-planning tool for identifying company growth opportunities through

market penetration, market development, product development and diversification is called
product/ market expansion grid. We identified British American Tobacco Bangladeshs
portfolio-planning tool through product/market expansion grid.
Market penetration:
A strategy for company growth by increasing sales of current product to current

market segments without changing product. That means existing product in existing market.
Star, Capstan, Scissors are following market penetration.
Market development
A strategy for company growth by identifying and developing new market segments
for current company products that means new market for existing product. B&H Blue gold is
following market development.
Product development
A strategy for company growth by offering new products to current market segment,
JPGL Switch and Derby Special are following product development.
Market segmentation
Dividing a market into distinct groups of buyers who have distinct needs,
characteristics, or behavior and who might require separate product or marketing mixes.
31
BATB segment there in three categories. B&H and John Player JPGL for business class,
PallMall and Capstan are for middle class and Star, Pilot, Derby, Hollywood are for lower
class.
Target market
Target market is the process of evaluating each market segments attractiveness and
selecting one or more to enter. British American Tobacco Bangladeshs target market is only
Smokers who are more than eighteen (18) year old and above.
Market positioning
Market positioning is the arranging for a product to occupy a clear, distinctive and
desirable place relative to competing products in the mind of target consumers. British
American tobacco, usually determine their distributional channel based on geographically
economically and also based on sales forecast. In the rural area the consumer needs low
priced cigarettes so BATB offers Star, Pilot, Derby, and Hollywood for the villagers. But
Hollywood also attracts young generation from the perspective quality and purchasing price
of the customers , especially Pilot is made for the farmers and other low classed consumers.
B&H and Goldleaf are available everywhere in urban or metropolitan areas. PallMall
positioned for the consumer who are aged between (18 to 25). But for STAR there
distribution is not only geographically they keep the lower income people in mind. Star is
available in all over Bangladesh
3.7 Key Strategic Pillars of Business
2015 was a prolific business year for BATB. Despite cut-throat competition and political
turmoil associated with various other market and regulatory uncertainties, the Company
continued to enhance the value for its shareholders' investments. Continuing with previous
practice, the Company was governed under the strategic pillars of Growth, Productivity,
Sustainability and Winning Organization as the main driving force for its outstanding
attainments. The notable achievements of the business under each pillar, together with the
salient features of such performance are described
32
3.7.1 Growth
3.7.1.1 Economic & Industry Outlook
The year 2015 registered a modest turn

around and performance revival in most
sectors after the nationwide blockade in
first quarter of 2015. The overall
cigarette industry recovered from the
turmoil in first quarter of 2015 and
started growing in the later part of 2015;
however, on a full year basis, the industry had a marginal growth over same period last year.
The growth dynamics of the industry varied across the 4 price segments.
Low segment experienced the highest growth in 2015 while Medium and High
segment has declined driven by the abnormal price increase dictated in the National
Budget in June 2015.
The Premium segment also remained under pressure as the declining trend of the last
few years continued in 2015. Under the current market dynamics due to pricing
policies, the industry growth will be driven by Low segment Economic & Industry
Outlook
3.7.1.2 Company Performance
Profit after tax and EPS was down due to increased corporate tax. This growth was achieved
through a focused business strategy that was supported and implemented by our dedicated
people across all business functions. Our brand portfolio was strengthened through consumer
relevant initiatives and excellence in retail level executions. The focus throughout the year
was to match consumer expectations with the right offers across all segments. The entry of
Japan Tobacco International in the market coupled with Phillip Morris International entering
High segment has further intensified the competitive landscape of the industry.
Sales volume increased by 9% with higher growth in the low segment offsetting the decline
in the upper three segments. They continue to engage with policy makers to ensure that
balanced taxation policies are implemented and the down trading is reduced for the
33
sustainability of the industry. A review on the performance of each of the cigarette segments
follows:
Premium Segment:
Once again Benson & Hedges faced tough challenges in the market with high price increases
in 2013, 2014 and 2015 resulting in a gradual volume decline. The Company continues to
focus on building the equity of Benson & Hedges and has made consumer-centric
investments which have strengthened the brand. This segment is facing competition due to
the increased availability of the smuggled cigarette in the market due to the price
differentiation between local cigarettes and duty free foreign cigarettes. They are closely
watching the activities of the global players of this segment in order to maintain sustainability
of our brand. John Player Gold Leaf delivered a good performance in first half of 2015 driven
by the launch of the new variant John Player Gold Leaf Special. However, the brand suffered
sharp decline in volume after price increase was imposed in this segment during the national
budget in June 2015. An innovative 12s pack was introduced to optimize the pricing benefit
to consumers, but the brand still struggles to regain its pre-budget base
High Segment:
The current High segment has declined in volume as consumers are moving down to Low
segment brands. Despite the decline in volume, Star Filter has performed well to strengthen
its position in the segment. They have continued regular market investment behind this
segments brands by consistently improving quality to meet consumer preference.
Medium Segment:
Due to change in pricing structure dictated by National Budget in June 2015, their previously
Medium segment brand Star Filter has been placed at High Segment and they are paying
higher taxes for the brand Star Filter despite being a medium segment brand to the consumers
Low Segment:
34
The Industry share in this segment has increased from 67% to 74% (on calendar year basis).
Low segment share has reached almost 80% level, They believe that the growth of this
segment is driven by the lack of proportionate price increases in low segment while the other
segments continued to experience consistent price increase. The massive growth in this
segment is a major concern for BATB and believes that government revenue is also lagging
due to the down trading to this segment.
3.7.1.3 BATBs Contribution to National Exchequer
In 2015, the Company contributed BDT 11,051 crores as Value added tax, Supplementary
Duty, Health Development Surcharge (HDSC), Income Tax & Customs duty. This represents
an increase of BDT 1,044 crores. BATB contributed 68% of the total VAT, SD & HDSC
collected from the Cigarette industry. The Company will continue to support Government
proposals that help to establish a sustainable level of tax contribution to the National
Exchequer while ensuring a sustainable growth for the industry and promoting a level playing
field among market players. Since this is a matured industry, it must not be stretched too far
without considering the market segment dynamics and its ability to absorb price increases
3.7.14 Financial Performance (Discussed in the key financial performance part)
3.7.2 Productivity
In line with 9% growth in sales volume, the overall supply chain has been challenged to
deliver on-time in full production. As a result, manufacturing capacity was scaled up and also
modified to cater to different pack formats. A series of productivity initiatives were
undertaken not only to improve machine efficiency but compensating for the disruption in
production while scaling up the factory. The year 2015 also marks the highest ever buying
and processing of green leaf. Their leaf growing area was also revamped through various
35
productivity initiatives to process this incremental leaf volume while not increasing the land
area used.
3.7.3 Sustainability
Climate and environmental conservation has always been an issue of intense importance for
Bangladesh. This is more so, as according to various naturalists reports, Bangladesh will
remain a vulnerable nation to the impacts of climate change in the decades ahead. With that
in consideration, BATB believes that business has a key role to play in helping society to
achieve the necessary sustainable balance of economic growth, environmental protection and
social progress in ways that will build value for all our stakeholders
3.7.4 Winning organization
The year-end attainments of the Company in 2015, even with so many challenges confronted,
demonstrates the resolves and determination of the Board, Management and overall the
peoples of BATB. The outstanding performance of the year is the ultimate achievement of its
hardworking people and the efficiency of the teams
3.8 Cost Management Analysis

The Company is able to mitigate this through delivering a number of cost control
initiatives that resulted in minimization of cost of goods sold per unit in 2015.
Furthermore, The Company continued its company-wide smart cost management

program and analyzed and explored all opportunities to reduce costs structures. This program
has helped to optimize the operating expenses of the Company and focused resources on
areas that were required to fuel growth and sustainability
As a result of all these efforts, the Companys operating margin has marginally
improved from 32% in 2014 to 33% in 2015
3.9 4Ps of Marketing Analysis_BATB

36
3.9.1 Product
BATB has a wide variety of brands in its product line. It has international premium quality
(centrally managed) brands such as Benson & Hedges (B&H) both full-flavored, lights and
variants such as B&H Switch; aspirational premium brands (regionally managed) such as
John Player Gold Leaf (JPGL) both full-flavored and lights; Value for money (locally
managed) brands like Star filter, Star NEXT and Capstan; while the low category (locally
managed) include brands such Pilot, Hollywood & Derby Style and Special.
BATB brands are available in three types of SKUs (Stock Keeping Units): Hinge lit (HL),
Soft-Cup (SC) and Shell and Slide. All international and local brands are available in 20s HL
and 10s SS pack (except B&H Switch).
3.9.2 Price
Competitive price is being offered by BATB while keeping pace with the competitions.
BATB products are available in the entire price segment of the market except the very low
segment. As around 87-90% of the total cigarettes are sold in sticks rather than whole pack,
price segmentation has been done on the basis of per stick price. In the premium segment at
Tk. 11, the parent products are Benson & Hedges full-flavour, B&H Blue Gold and B&H
Switch. These international brands have excellent product image with a segment share/
volume share of 99.7%.In the aspirational premium price segment at Tk. 7.5, John Player
Gold Leaf is the bread and butter for the company with international image in both full-flavor
John Player Gold Leaf Special versions. It has a 100% volume share in the market.
In the low price segment at Tk.2.5, the brands are Pilot, Hollywood and Derby Style &
Special. These brands have a fluctuating volume share depending on the region, due to tough
local competitors such as DTI and AKTC. Products are delivered to the ultimate consumers
through its designated distributors.
3.9.3 Place
Entire Bangladesh has been divided in to six geographic regions headed by 5 Regional
Managers (RMs). These regions are Dhaka Metro, Dhaka Outer, Chittagong, Khulna, Sylhet
and Rajshahi. Regions are again divided into strategic areas and headed by Area Managers
37
(AMs). Under each Area Manager, there are Territory Officers who are responsible for their
defined territory. Therefore, companies managers are continuously monitoring the
performance of one or several distributors and ensuring effective distribution to all the district
markets.BATB has classified the types of outlets in 3 categories: Grocery, Convenience and
HoReCa (Hotel, Restaurant & Caf). The distributors cover groceries and convenience
outlets, whereas HoReCa channels are covered by company designated HORECA managers
to promote premium brands only in the Metropolitan cities of Bangladesh.
3.9.4 Promotion
BATB has strict CORA guidelines for promoting its brands. Apart from CORA guidelines,
there are strict IBG guidelines for promoting international brands. For such kinds of brands,
advertisements and promotional activities are same all over the operating companies of
British American Tobacco. Again from legal point of view, under Company Act 294 (B), BAT
cannot run any promotions directly to its ultimate smokers like any other company. In
Bangladesh, the government has banned all sorts of advertisement mediums for tobacco
product promotions. This includes television advertisements, newspaper ads, sponsored
events, billboards, buntings, planograms, leaflets, dummy packs, posters etc. Only permission
based one-to-one consumer dialogue and placement of PMM and facing is allowed
nowadays. Hence this industry is consistently becoming very dark. On top of that, recent
government regulations have been imposed which forces to display Graphical Health
Warning (GHW) on 50% of the cigarette pack.
38
CHAPTER#4
FINDINGS
Chapter Contents
s some important facts regarding the company & its strategic analysis.
Findings
Chapter Hints
4.0 Findings
BAT Bangladesh is a part of British American Tobacco plc, one of the worlds most
international businesses, with brands sold in more than 200 markets around the world. They
make high quality tobacco products for the diverse preferences of consumers, spanning the
business 'from crop to consumer' and are committed to embedding the principles of corporate
social responsibility Group wide. The major findings of the report as follows:
They start their business with a vision worlds best at satisfying consumer moments
in tobacco and beyond delivering products under different segments: Premium
Segment(B&H, B&H Blue Gold, B&H Switch), Aspirational Premium(JPGL, Pall
Mall, Captain), VFM( Star Full Flavor , Star Next) & Low(Pilot, Derby , Hollywood)
39
International Brand Image, Strong Brand Portfolio, Large Market share are the
strength while weakness are strong trade union, Diseconomies to scale, restricted to
promotional campaign
The opportunities are the growing popular, economic growth, quality consciousness
whereas major threats are anti-smoking lobbies activities, increasing health concern,
transit cigarettes, Entry of international brands
The introduction of the operation of Philip Morris International Tobacco Company
selling Marlboro in Bangladesh is really a big threat for BATB. Another threat is that
Japan Tobacco International has also started their journey in Bangladesh
The bargaining power of customer is high in the tobacco industry as there is a wide
range of available substitutes .The power of suppliers over the firms that depends on
outsourcing of raw materials including tobacco leaf, wrapping materials filters,
cigarette papers and so on, is not so significant
BATB value chain activities have been divided into Primary & support activities.
Primary activities include inbound logistics, operations, outbound logistics, sales &
marketing, services & support activities include procurement, product & technology
development, HRM, administrative , & finance structure. These activities add greater
value for the organization
The tobacco is imported from Brazil, Argentina, Mexico and West Indies. The white
cigarette paper is a special type of paper which is imported from Malaysia. The filter
comes from Japan. The glue, used for wrapping the cigarette paper, is imported from
Spain. The ink, used for printing on the cigarette paper, is imported from France. In
Benson &Hedges a very special machine called Protos Focki is used to produce
the cigarettes of BAT
The Company sells their product to the distributors; in turn the distributors sell to the
retailers and cash & carry as well
BAT has been a pioneer in recruiting and creating the best managers in Bangladesh.
They choose the best and most talented graduates each year to ensure that they have
the beast and most effective workforce
BAT uses a state of the art technology Protos Focki which has a capacity of
producing 10000 sticks per minute
In 2015, the company sold 42,541 million sticks, registering 9.0% YoY volume
growth. At the same time, net revenue from cigarettes sales rose by 14.5% YoY,
powered by both price and volume growth. Lower NPAT Margin in 2015 compared
to that of in 2014, is due to higher tax payment in the year. Sales volume increased by
40
9% with higher growth in the low segment offsetting the decline in the upper three
segments
The major marketing activities of BATB are Building Brands, Trade Marketing &
Distribution, Consumer Insights, Managing specialized channels
A portfolio-planning tool for identifying company growth opportunities through
market penetration, market development, product development and diversification is
called product/ market expansion grid.
In 2015, the Company contributed BDT 11,051 crores as Value added tax,
Supplementary Duty, Health Development Surcharge (HDSC), Income Tax &
Customs duty. This represents an increase of BDT 1,044 crores.
The Company is able to mitigate this through delivering a number of cost control
initiatives that resulted in minimization of cost of goods sold per unit in 2015
CONCLUSION
British American Tobacco Bangladesh Ltd., being one of the leading tobacco
companies of in the Bangladesh ensures value addition at every stage of the value added
activities. They have shown consistent ability to improve their operating margin and to
increase market share through different strategies. They continue to focus on meeting
consumer expectations through our strengthened brand portfolio. They have been preceding
contingency strategies to hold market share and increase their premium brand sales. To
remain competitive and market leader in the industry they continuously work on several price
compliance strategies to deliver customer right product at right price during Budget. From the
analysis we can conclude that BATB Bangladesh displays growth in its business performance
consistently over the years by formulating their strategies. In the same way they should
contribute extensively on research and development for better variety of tobacco leaves that
will be less injurious for health and more cost effective for the customers
41
BIBLIOGRAPHY
http://www.batbangladesh.com
http://www.batbangladesh.com/group/sites/BAT_9T5FQ2.nsf/vwPagesWebLive/DO9T
5K3S?opendocument
http://www.batbangladesh.com/group/sites/BAT_9T5FQ2.nsf/vwPagesWebLive/DOA
53FZC?opendocument
http://www.bat.com/group/sites/uk__9d9kcy.nsf/vwPagesWebLive/DO9DCL3B/
$FILE/medMDA87PVT.pdf?openelement
http://lankabd.com/dse/stock-market/BATBC/british-american-tobacco-bangladesh-
company/company-profile?companyId=89&goToHomePageParam=true
http://www.dsebd.org/displayCompany.php?name=BATBC
British American Tobacco (2011, December). The Country and Company Profile.
Bangladesh
http://www.thedailystar.net/business/bat-bangladesh-receives-aaa-rating-105535
42
http://archive.tobacco.org/news/52475.html
Distribution Manual of British American Tobacco Bangladesh (4th ed.). 2015
Theory of Strategic Management with Cases, International Edition, 9th Edition by
Gareth R. Jones, Charles W. L. Hill
http://www.alacrastore.com/company-
snapshot/British_American_Tobacco_Bangladesh_Company_Limited-3833016
43

Chapter# 1: Global and Bangladesh Economy

Enviado por

Dados do documento

Descrição original:

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Chapter# 1: Global and Bangladesh Economy

Enviado por

Direitos autorais:

Formatos disponíveis

CHAPTER# 1

1.2.1 Primary Objective:

1.3 Scope of the Report

1.4.2 Secondary Data

BATB annual Report 2015

OVERVIEW OF THE ORGANIZATION

2.0 British American Tobacco Bangladesh

2.1 Company Overview:

2.2 Vision and Mission & Strategic Focus

Vision is to be worlds best at satisfying consumer moments in tobacco and beyond

Mission is delivering commitments to society, while championing informed consumer choice

2.3 Key Operating & Financial Information

Profit After Tax(In Mln) 5,846 6,282 4,924 3,942 2,551

Share Capital 600 600 600 600 600

EPS in BDT 97.43 104.70 81.14 65.59 42.51

For the Period From 1 Jan 2016 to 30 June 2016

Taka Taka Taka Taka

As Per DSE Current Share Price, EPS, Other Financial Indicators

2.4 Product Portfolio

Premium: Benson & Hedges , B&H Blue Gold, B&H Switch

VFM: Star, Star Next, Star Click

Low: Pilot, Hollywood, Derby, Derby Special

2.5 Nature of the Industry

British American Tobacco Bangladesh (BATB)

Segments Brand Company

Premium Benson & Hedges, Marlboro BATB, PMI

3.1 SWOT Analysis

Strong management team

International brand Image

Strong brand portfolio

People are BATBs fundamental advantage. This include management, workforces

Largest Tax Payer

BATB operations are extensively geographically diversified. They have tobacco

Better product quality relative to the rival

3.1.2 Explanation of Weakness:

Strong Trade Union

Missing a large number of consumers due to high price

Banned from Promotional campaigns

Higher Cost of Production

As BATB maintains international standards in all its transactions, policies, practices

3.1.3 Explanation of Opportunities

The adult population in Bangladesh is on a growth trend as opposed to developed

Expansion of Product Line

3.1.4 Explanation of Threats

Anti-Smoking lobbies are now getting very strong in Bangladesh. Recent

Increasing Health Concerns

Level Playing Field

International competitors are coming to Bangladesh

Increasing number of Regulations:

3.2 Porter Five Forces

3.2 Porters Five Forces

3.2.1 Risk of Entry by Potential Competitors

3.2.2 Intensity of rivalry amongst existing competitors

3.2.3 Bargaining power of buyers (customers)

3.2.4 Bargaining power of suppliers

3.2.5 Threats of substitutes

3.3 Value Chain Analysis

3.3.1 Primary Activities

3.3.1.1 Inbound Logistics

Inbound logistics is the most fundamental element of business operations for a

The Primary Manufacturing Department: The primary manufacturing department (PMD) is

The Secondary Manufacturing Department: