British American Tobacco Malaysia

Executive Summary

British American Tobacco Malaysia is a largest tobacco company in Malaysia. This company is under a large tobacco group which is British American Tobacco Group. It is the second largest tobacco group in the world. Back to Malaysia, it owns 60% of market share in Malaysia.

BATMalaysia producing and distributing risky product which is cigarette, it is restricted by many laws and regulation which set by the Malaysian Governments. One of the acts is Tobacco Products Control Act, 1993. Furthermore, BATMalaysia promoting a campaign which is youth prevention programs, it is to prevent youngster to have a contact with cigarette. BATMalaysia is playing an important role in Malaysian economy. It’s distributing around 3% of tax revenue for Malaysian Government which is count in billions. In social factors, cigarettes are always only allowed to sell to adults but nowadays many underage kids start smoking which is uncontrollable. BATMalaysia is not just selling cigarette, it is also telling everyone that the harmful of smoking too, but it is not effective which number of people smoking is just increasing yearly. There is a research and development on cigarette department in BATMalaysia, their job is to minimize the harmful of cigarette. The most important resources BATMalaysia depend on are tobaccos plantation, the plantation of tobacco is not harmful to the soil. On the other hand, the company is committing a high standard of environment protection like save energy.

1.0 INTRODUCTION

British American Tobacco Malaysia (BATMalaysia) is a combination of two large tobacco companies which is Rothmans of Pall Mall Berhad and Malaysian Tobacco Company Berhad which makes it become the largest tobacco company in the country. The merging was on 3rd November 1999 and it is very successful. Today, BATMalaysia owns 60% market share and ranks amongst the top 25 companies on Bursa Malaysia Securities Berhad in terms of market capitalization. This company owns quite a lot of brand of cigarettes and the famous brands are Dunhill, Kent, and Pal Mall. BATMalaysia is a company who produces, manufactures and distributes cigarette. This company is under a group which is British American Tobacco Group, the world second largest tobacco group. This group has 45 cigarette factories in 39countries, and more than 60,000 employees worldwide.

For such a large company, there must have a macro environmental forces which impact the company in terms of political, economical, social, technological, and natural factors.

2.0 POLITICAL ENVIRONMENT

British American Tobacco Malaysia is clearly producing risky product which is cigarettes and tobacco products. So there is a tobacco control legislation set by the Malaysian Government which is Tobacco Products Control Act, 1993. This act is to restrict smoking in public places, advertisement of tobacco products is prohibited, youth should not smoke, sales to age under 18s is not allowed, and every pack of cigarette needs to show a picture of harmful of cigarette. BATMalaysia using youth prevention programs to counteract the Malaysian government’s tobacco control legislation. This youth prevention program is to both promote tobacco and discourage smoking to the younger generation at the same time. The tobacco industry needs the young market, BATMalaysia used marketing strategies to target the youngsters which going deep into sports, entertainment, packaging and affordability. BATMalaysia sponsored sports event with Dunhill brand like football cup and snooker which is popular in Malaysia. In entertainment, BATMalaysia used music to promote Benson and Hedges brand.

3.0 ECONOMICAL ENVIRONMENT

A Malaysian tobacco industry is a wide ranging industry because it is included producing, manufacturing and distributing. Tobacco industry contributed 3% of GDP in Malaysia and it is represent 8% of the Malaysian Government’s total indirect tax revenue, which is about 3% of the government’s tax revenue. Tobacco is the most cultivated non-food crop in Malaysia. A lot of Malaysian farmers decided to grow it because the price of tobacco is very stable. The major tobacco plantation areas in Malaysia are Terengganu, Sabah and Kelantan.

A pack of cigarette is affordable to any level of salary which is just RM10 per pack in Malaysia, anyone is afforded to buy.

4.0 SOCIAL ENVIRONMENT

In terms of age, BATMalaysia believes that tobacco product should only sell to adult smokers which anyone under 18 is not allowed to purchase and use, but the numbers of underage smoking is increasing every year and there’s no way to stop it. Furthermore, customers who chose to smoke should be also receiving the information about what they purchased and BATMalaysia is able to provide that information with them about the brands. In Malaysia, there is more than 50% of male smoking and numbers of female smoking is increasing every year.

5.0 TECHNOLOGICAL ENVIRONMENT

BATMalaysia has their own research and development on their product which is cigarette. The R&D activities are focused on better understanding on the harmful of tobacco and developing less harmful products to address this issue. This business is not persuading people to smoke, but to offering quality brands to people who decided to smoke. Everyone knows that smoking is bad for health, so BATMalaysia is trying to cut down the risk of smoking their brands by improving the cigarette filter which currently reducing 7times more of nicotine compares to others. But the best way to keep healthy is to quit smoking.

6.0 NATURAL ENVIRONMENT

The business of BATMalaysia is depended on natural resources which is plantation. Tobacco plants are the same plant as tomatoes and potatoes. There are 3 types of tobacco plant which are Virginia, Burley, and Oriental. All these tobacco plants are harmless to the soil and it can earn a good income with small part of a land. On the other hand, BATMalaysia are committing high standard of environmental protection like saving energy by installing automatic doors at pedestrian entrances and installing energy saving system for lightning in factory.

7.0 CONCLUSION

British American Tobacco Malaysia is a tobacco company who produces, manufactures and distributes their product themselves. It is a very independent company which can operates itself without any other assists of external parties. Although it is selling product which is harmful to human bodies, which there is a huge demand in the market. So to reduce the harm of cigarette, BATMalaysia never stop doing research on developing less harmful product to overcome this issue.

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References

British American Tobacco Malaysia,2011. Who we are, and The British American Tobacco Group. [online] British American Tobacco Malaysia. Available at:

British American Tobacco Malaysia,2011. Tobacco’s Economic contribution. [online] British American Tobacco Malaysia. Available at:

British American Tobacco Malaysia,2011. Marketing. [online] British American Tobacco Malaysia. Available at:

British American Tobacco Malaysia,2011. Youth Smoking Prevention. [online] British American Tobacco Malaysia. Available at:

British American Tobacco Malaysia,2011. Our views on smoking. [online] British American Tobacco Malaysia. Available at:

British American Tobacco Malaysia,2011. Environmental Management. [online] British American Tobacco Malaysia. Available at:

Research and Development at British American Tobacco,2011. About R&D. [online] British American Tobacco Malaysia. Available at:

Borio, G., 1997. The rise of the cigarette, [online] Available at

Assunta, M., 2004. Industry sponsored youth smoking prevention programme in Malaysia: a case stud in duplicity [online] tobacco control. Available at

References: British American Tobacco Malaysia,2011. Who we are, and The British American Tobacco Group. [online] British American Tobacco Malaysia. Available at: British American Tobacco Malaysia,2011. Tobacco’s Economic contribution. [online] British American Tobacco Malaysia. Available at: British American Tobacco Malaysia,2011. Marketing. [online] British American Tobacco Malaysia. Available at: British American Tobacco Malaysia,2011. Youth Smoking Prevention. [online] British American Tobacco Malaysia. Available at: British American Tobacco Malaysia,2011. Our views on smoking. [online] British American Tobacco Malaysia. Available at: British American Tobacco Malaysia,2011. Environmental Management. [online] British American Tobacco Malaysia. Available at: Research and Development at British American Tobacco,2011. About R&D. [online] British American Tobacco Malaysia. Available at:  Borio, G., 1997. The rise of the cigarette, [online] Available at Assunta, M., 2004. Industry sponsored youth smoking prevention programme in Malaysia: a case stud in duplicity [online] tobacco control. Available at