PHI 401 Section: 10: Procect On "British American Tobacco"
PHI 401 Section: 10: Procect On "British American Tobacco"
PHI 401 Section: 10: Procect On "British American Tobacco"
Section: 10
Letter of Transmittal
Ridma Khan
Senior Lecturer
Department of History & Philosophy
School of Humanities & Social Science
North South University
Dhaka – 1215
Dear Madam,
In accordance with your instructions, we have worked on the project on “BRITISH AMERICAN
TOBACCO”; and are most pleased to inform you that we are done with our project, it is both a
pleasure and privilege for us to present you this report.
The project has helped us gain an in depth knowledge on the implementations of theories and
tactics - taking on the theories we learned in the class and applying them in real world scenarios.
We have tried our best to accommodate and combine as much data, facts and information as
possible to depict and associate with the course materials.
We are grateful to you for your considerate cooperation at every step of our journey in making
this audit; and we hope you find this report practical and helpful. We also hope you find our hard
work and dedication while evaluating the project-work.
Sincerely,
Sakibul Hasan
ID: 1610708630
Md. Nafiul Kadir
ID: 1610698030
Laboni Akter
ID: 1510541630
Sharif Uddin Fahim
ID: 151 215 3030
Sultana Arafa
ID: 1520991631
S.M Sakibul Islam
ID: 1511295031
Sumya Hossain
ID: 1631314030
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Report on British American Tobacco
Acknowledgment
We are very grateful to our honorable course instructor Ms. Ridma Khan, who has guided us
overcome the many obstacles we faced while doing the project. Her guidance has been of
outmost importance in preparing this report and completing the project. We have learnt a great
deal from this course, from the absolute basics of human wants, needs to real-world use and
implementations of promotional strategies and methods as a stimuli opposed to those reactions.
All of us hope that we have been able to do justice to the teaching we have obtained through our
work on this project.
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Report on British American Tobacco
Executive Summary
British American Tobacco is the biggest publicly traded tobacco company on the world. Like
some other association, BAT has additionally confronted diverse debates every now and then.
They have refreshed themselves ceaselessly yet it is a hard undertaking for such a major
company to frequently settle on moral choice in all aspects of their esteem chain. They do
diverse CSR exercises, they distribute social bookkeeping reports and take part in get-togethers.
This report gives a concise thought regarding BAT and their distinctive activities toward settling
on moral choices. There is a nitty gritty substance about their social bookkeeping report. It
likewise incorporates the viability of their social bookkeeping process. They have some specific
procedures to deal with their workers. There are distinctive kinds of hypotheses which help to
unravel moral predicaments. Hypothesis of Egoism, Utilitarianism Theory, Ethics of Rights and
Justice, Ethics of Duties – these speculations are clarified quickly about BAT's debate about tyke
work. As any sort of moral choice is influenced by various circumstances, we included how
chiefs of BAT are influenced by these.
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Table of Contents
Company Background.................................................................................................................................1
Social Accounting Process..........................................................................................................................2
1. Ethical Approach:................................................................................................................................2
2. Environmental Approach:....................................................................................................................3
3. Social Approach:.................................................................................................................................3
Effectiveness of the process.........................................................................................................................4
Ingenuousness:........................................................................................................................................4
Dignity at work:.......................................................................................................................................4
Progression:.............................................................................................................................................4
Revelation:..............................................................................................................................................4
Completeness:.........................................................................................................................................4
Disclosure:...............................................................................................................................................4
Stakeholder management.........................................................................................................................5-7
1. Shareholders:.......................................................................................................................................5
2. Employees:..........................................................................................................................................5
3. Consumers...........................................................................................................................................6
4. Civil society.........................................................................................................................................7
5. Government.........................................................................................................................................7
Application of Theories............................................................................................................................7-9
1.Theory of Egoism..................................................................................................................................7
2. Utilitarianism Theory..........................................................................................................................8
3. Ethics of Rights and Justice.................................................................................................................8
4. Ethics of Duties...................................................................................................................................9
Situational Influences in Ethical Decision Making...............................................................................10-11
1. Moral Intensity..................................................................................................................................10
2. Moral Framing...................................................................................................................................10
3. Systems of Reward............................................................................................................................10
4. Authority...........................................................................................................................................11
5. Bureaucracy.......................................................................................................................................11
6. Work Roles........................................................................................................................................11
Sustainability of Bat..............................................................................................................................12-13
Bibliography..............................................................................................................................................14
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Company Background
British American Tobacco Bangladesh, one of Bangladesh's biggest multinational corporations,
is the market leader in cigarette manufacturing. It's a British American Tobacco Group
subsidiary. BAT Bangladesh is currently the highest tax-paying company. Back in 1910, the
organization launched its first sales warehouse at Armanitola in Dhaka. Following India's
partition in 1947, Pakistan Tobacco Company was founded in East Pakistan in 1949. After
Bangladesh's independence from Pakistan, it was renamed Bangladesh Tobacco Company (BTC)
in 1972.
In 1998 Bangladesh Tobacco Company renamed to Bangladesh British American Tobacco (BAT
Bangladesh), which is part of BAT plc. The primary company of the company is tobacco, which
covers tobacco leaf, cigarette and pipe tobacco growing, processing, production and marketing.
They also export tobacco leaf to European countries around the world. BAT Bangladesh is the
first corporation to receive "class A" status in Bangladesh. They maintain within the business a
strong internal communication. Thus, by keeping a strong level of communication, they try to
satisfy the requirements of clients.
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BAT understands that a single company can't solve the environmental crisis. So, BAT is working
with others. They are members of the Nairobi Water Roundtable working together with local
government, NGOs and other significant businesses, including Diageo and Coca-Cola, to
discover water scarcity alternatives in the region.
Environmental Management in Tobacco Growing:
By working closely with the farmers, Bat operates to mitigate the environmental hazards
connected with the agricultural element of the tobacco production process.
Environmental criteria are a key component of the industry-wide Sustainable Tobacco Program
and their expert field engineers provide technical help to farmers in fields such as sustainable
soil, water, biodiversity, forest and pest management. This can be seen in the advantages of
agrochemical use, which in tobacco growing is usually considerably smaller than other similar
plants.
BAT also has various programs in place to reduce deforestation as wood is needed for the curing
process. Because of such efforts in 2017 nearly 99% of the wood used by their farmers came
from environmentally sound renewable places.
3. Social Approach:
Usually social approach has a wider transmit than the other approaches. It covers a wide breadth
of issues ranging from human rights, health and safety, community relations, equal opportunities
etc.
Human Rights:
These are the more usual concerns of social and environmental reporting, and they are important.
However, BAT thinks that their product's unique characteristics and company methods in
marketing and defending their product dominate the societal effects of their company. In reality,
they'd expect BAT to have a strong record on those parts of their company that they can regulate
more readily, if only to counterbalance it's more basic problems with other problems.
BAT knows or ought to know that its actions do lead to loss of life. The addictive product can
also been seen as a violation of human rights that emphasize free will and freedom of thought.
About health risks:
BAT has had its feet in unclear waters when it comes to the matter of clearly stating and
awareness creating among its users about the harmful nature of tobacco products. BAT tried to
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generate more doubt on the matter than clarity. In illustrating the addictive nature of nicotine,
BAT still utilizes ambiguous language and totally denies the hazards of passive smoking.
Estimates of the impact of its products:
BAT has so far refused to accept any estimates of the impact of its products on premature death –
and certainly does not take partial responsibility for them. They estimate that around 1 million
individuals will die early from the present annual sales of BAT based on commonly accepted
epidemiology and market share of BAT.
Progression:
BAT reports on its social and environmental performance and it is a real commitment to continuous
improvement and accountability. BAT has won prizes from the company "Price Water House Coopers"
for its social and environmental reporting from the ACCA and for "Building Public Trust.
Dignity at work:
BAT aims at removing all forms of bullying, defamation and harassment from their work
environment.
Ingenuousness:
BAT shares its own scientific research on health issues as a socially accountable and responsible
company. They communicate with their employees as well as stakeholders quite openly.
Ensuring the intended target customer only. This means the exclusion children, and anyone not
considered an adult. Also, secure the optimal factory location.
Complete transparency regarding public policy positions.
Revelation:
BAT has released its 16th year sustainability report ' Transforming Tobacco ' with GRI (Global
Reporting Initiative), which is a worldwide acknowledged framework for measuring and commu
nicating the company's social, financial and environmental performance.
Completeness:
BAT is dedicated to listening to its critics. And to learn more about their shortcomings and enhan
ce them based on legitimate criticism
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Disclosure:
Stakeholder management
1. Shareholders:
BAT Bangladesh is among the first companies to be listed on Dhaka Stock Exchange and
Chittagong Stock Exchange. It is doing its business over 100 years in this region and current
ranked amongst the top 10 companies in terms of market capitalization. About 71.29% BAT
Bangladesh shares hold by BAT Group and other 12.06% is owned by different investment
corporation in Bangladesh; Shadharan Bima Corporation, Bangladesh development Bank
Limited, Government of people's Republic of Bangladesh. And a further 10.91% is owned by
other shareholders.
On the other hand, BAT Bangladesh are the largest private sector tax payer in the form of
supplementary duty and a value added tax. They are successfully established themselves as a
company contributing to economic, social and Human Resource Development of the country.
2. Employees:
BAT Bangladesh has more than 1300 people working as direct employees. They always recruit
the best employee all over the country. One has to go a long assessment process to get a job here.
The company employs permanent employees as well as varying number of seasonal and
temporary workers as required. Workers are leveled in different categories. Such as,
1. Permanent
2. Probationer
3. Temporary
They also provide indirect employment to farmers, distributors and suppliers linked with BAT
Bangladesh.
3. Consumers
For a business whose products pose real risks to health, it is important that it operate in a
responsible way. Consumer engagement is often not easy for any company, but for the tobacco
industry, in particular, it is especially challenging after decades of widespread mistrust and
skepticism among many key stakeholders. However BATs Customer engagement has brought
many benefits beyond acting as a forum for the exchange of views. In the past, BAT has held a
number of independently facilitated stakeholder dialogue sessions on key issues including
sustainable agriculture, climate change, sustainability reporting and human rights. These sessions
enabled the company to understand the expectations of its consumer and to jointly develop
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solutions to our biggest challenges. Customer engagement has helped the company to make the
right kind of improvements to its business.
4. Civil society
In September 2016, there was a fire at the factory of one of BATs third-party packaging
suppliers in Bangladesh, in which 39 people tragically lost their lives. From the time of the
accident, BAT worked closely with the Bangladesh Government which coordinated both the
investigations into the cause of the fire and compensation for the victims and their families.
Although the outcomes of the formal investigations are yet to be disclosed, there has been no
suggestion that BAT was to blame for this tragedy. The Government has provided compensation
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to the victims and their families through its Workers Welfare Fund – to which BAT has
contributed more than £2.21m since 2011.
Sustainable agriculture: Farming for the future- To ensure the farmers’ success in all
aspects of farming BAT has undertaken programs to inform farmers about various
environmentally friendly sustainable agriculture techniques, and developed skills training
programs for their application.
Safe drinking water: Bringing smiles to one hundred thousand people everyday
BAT Global Graduate Program: (Marketing) in Bangladesh
Solar home systems: Bringing ray of hope in rural communities.
5. Government
In Bangladesh, BAT support balanced regulation of the tobacco industry and believe strongly
that it should participate and support the government with developments, enactments and
compliance with future laws. Truly effective tobacco regulation needs co-operation between the
Government and the industry. BAT has always maintain a good relation with GOVERNMENT
also the GOVERNMENT as it’s the highest tax payer of the country, however there are some
controversy regarding corruption.
In 2017 Alison Blake, the British high commissioner to Bangladesh, has been accused of
lobbying on behalf of British American Tobacco (BAT) after it sought her help in a long-running
battle with the country’s revenue authorities. BAT is disputing a £170m claim for unpaid VAT
brought by the government of Bangladesh against its subsidiary BATB. The claim has been
recognized in the country’s courts but BAT, in a letter to Blake seeking her support, boasted of
its “proud history of more than 105 years of investment and revenue contribution in
Bangladesh”. The company described the demand as “baseless” and signaled that it may take the
matter to the international court of arbitration.
Applications of theories
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In the 21st century, Ethics is no more of an option. It has become an organizational priority.
Organizations are constantly facing issues regarding ethical behavior besides this there is peer pressure
from a different type of stakeholder to act ethically responsible. From the organization internal view, they
need to consider their company benefits and increase the shareholder profits besides this they are bound
to consider the mass people’s interest those are living in the same society.
However, over the years, BAT faced these kinds of moral issues. In the current business scenario, for
different aspects of people, being correct or incorrect is varied from person to person based on their
interest. In any event, different kinds of hypotheses have been created after some time to allow people to
unravel moral issues.
Additionally, being a world’s one of the top tobacco business company BAT has faced a lot of debate
over the year due to their business process and the decision they have made. They were blamed for
different types of issues which they have performed deceptively from the individuals' perspective. The
ethical issues BAT faced from time to time are:
1. BAT were also accused of using conflict to sell cigarettes in fragile African and Middle East
nations.
2. They were accused of dodging vat by the National Board of Revenue (NBR)
3. They utilizes child labor to develop, process and sell tobacco in Bangladesh.
We're going to examine the main moral problem that BAT faced, using child labor. Every day children
were working for more than 16 hours and couldn't go to school from their work. Here we have
implemented some theories on the above issues and provided solution how they can act accordingly.
1.Theory of Egoism:
“Ethical egoism is the view that each of us ought to pursue our own self-interest, and no-one has any
obligation to promote anyone else’s interests.”
According to the theory of egoism, BAT should think about their interest. Basically they did it
but for the short time of period. They thought, using child labor will decrease their operational
expense and increase their productivity. Eventually, they will get the most of profits, if they
followed theory of egoism, they wouldn't have utilized child labor. Since theory of egoism says,
an activity will be ethically right if the leader keeps his eyes in the long term interest. But in the
long run the consequences will not be good for BAT. In the long run, they would be blamed for
violating human rights and face lawful issues. A Swedish crusade aggregate revealed utilizing
child labor. They confronted this circumstance and they pledged to examine child labor issue in
Bangladesh.
Decision based on theory of egoism: Being aware of the theory of Egoism, BAT should not be
using child labor as it would cause the reputation of their company and Brand Image in the long
run.
2.Theory of Utilitarianism: “According to utilitarianism, an action is morally right if it results in the
greatest amount of good for the greatest number of people affected by the action”
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This theory suggest that an activity will be ethically right if it’s results in the most remarkable measure of
happiness for the activity-influenced general population. In this situation, if using child labor gives the
most prominent measure of happiness to the influenced general population, it would be ethically correct
at that stage. What the law says does not create a difference. Child labor's ethical quality is based on the
happiness and torment it brings to people. We're going to think about two distinctive decisions and
evaluate how they affect the choices associated people.
Decision: According to the Utilitarianism theory, using child labor is morally right for BAT. It
results in the greatest amount of pleasure. It is a consequential theory which is mainly result-
driven. As the result of using child labor is ethical, so the decision is.
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torment. We're going to think about two distinctive decisions and evaluate how they affect the choices
associated people.
Decision: According to Ethics of Rights and Justice, if BAT followed this, they wouldn’t have used child
labor. Using child labor is not morally right according to this theory.
The factors which influenced BAT to take ethical decision is described in the following:
1. Moral Intensity
The higher the moral intensity, the higher chance of making an ethical decision is. Moral
intensity depends on different factors. They are-
Magnitude of consequences: In Bangladesh, child labor is forbidden by law. Yet in the
production of tobacco, BAT continually uses child labor. They do so because the result of
violating child labor law is very small because there is a lack of law enforcement. If
proper law enforcement practice existed, BAT would not be able to employ kids in the
manufacturing of tobacco
Social consensus: People usually do not see child labor as a crime because of
Bangladesh's bad socio-economic state. Rather, because of the economic advantage the
families of children get from their work, they approve it. On that principle, BAT
capitalizes.
Probability of effect: The chances of penalizing BAT for using child labor is very small.
Therefore, in this aspect they are unethical.
Temporal immediacy: The child labor position in Bangladesh could only be changed
with strict enforcement of the law. It is time consuming, so in this aespect, the moral
intensity is low.
Now, considering all the factors, moral intensity is very low on all regards. As a result, BAT is
making unethical decisions in their business.
2. Moral Framing
How a person is presenting a situation impacts an ethical decision making. Language is a key
factor here. The Group Head of Corporate Affairs at British American Tobacco, Simon Cleverly
said, “We believe this report presents a misleading and inaccurate view of our tobacco leaf
farming supply chain in Bangladesh, a country where we have a long-standing history of
working with farmers and the government for mutual benefit.” [ CITATION Bri16 \l 1033 ] Now, he
presented the whole fact in a way that people will focus more on the wellbeing of the farmers
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instead of the real issue which will eventually make people think that whatever BAT is doing is
justified regardless of the ethical codes of conduct.
3. Authority
BAT's senior managers are usually engaged in ethical decision-making. Usually staff have no scope to
engage in ethical decision-making. So, they do what the senior managers order them to do. And they are
strongly encouraged to do that. They have strategies of reward that encourage staff to be more obedient to
their bosses.
4. Systems of Reward
After all, BAT is a business organization. They will look for profits. To be a profitable
organization they will try to do whatever they need to do. However, not all the employees or
managers are unethical in their personal life. Yet they will keep making some unethical decision
regarding child labor at work because of the organizational culture.
Moreover, if anyone does so, chances are that they might face punishment for that. So, we see
that employees won’t get any rewards for their ethical behavior regarding child labor issue. So,
the employees will keep acting unethical on the issue regardless of their personal character.
5. Bureaucracy
Being a Multinational Company BAT has some hard & fast rules that the employees must follow. Mostly
it has negative effects on ethical decision-making. Despite being flexible, there is still bureaucracy in
BAT. The organization's objectives are set by senior managers and under any conditions must be met by
staff. They also adopt a powerful hierarchical framework and labor division. As a consequence, there is a
huge gap between the labors, staff and top executives. It increases the opportunity for more unethical
choices.
6. Work Roles
All BAT members have particular roles and responsibilities to play. And they are assigned that they are
supposed to follow strictly in written form. They also receive a complete set of guidance on what to
value, how to act, etc. Because the work roles restrict the employees, they cannot engage and make any
ethical choices on their own.
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Sustainability of BAT
BAT has an immense responsibility to believe that company has a key role to play in assisting
society to obtain the needed sustainable equilibrium of economic growth, security of the
environment and social development. So that their CSR activities are planned to contribute to the
economic, social and environmental sustainability of the community in which it operates. BAT
CSR initiatives are in perfect alignment with the millennium development goals (MDG) of
united nation. Some activities are given below:
Safe drinking water plan: They are having recognized the gravity of water and
sanitation and in the context of the MGD goals; BAT Bangladesh has stepped forward
with a safe drinking water project. besides, BAT has installed 53 filtration plants to make
water free from arsenic and other harmful contents in arsenic prone areas in the country.
All the 53 plants now purify 270,000 liters of drinking water, meeting the need of
135,000 people every day.
Solar home systems: To make electricity available Bat is giving away solar home
systems free of cost to rural communities of the country. And as we know the company
has installed 1,366 units of solar home system in 15 villages of Bandarban and
khagrachari districts, expressing the community and its people in the off grid areas of the
country, more than 800 rural people are connected with electricity for the first time.
British American Tobacco Bangladesh always concerned about their strategic approach to
sustainability, which come up with creating shared value. Since in any business, they deliver
value for our shareholders, but this should not be at a “cost” to society. So the concept of shared
value and mutual benefit is central to their whole approach to sustainability- by taking action to
address their impacts today, They can create value for the future business and for stakeholders
across value chain.
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HARM reduction: Bat is committed to working to reduce the public health impact of
smoking, through offering adult consumers a range of potentially reduced-risk products.
b) BAT approach: According to our secondary research of BAT, their approach is based
on transparent independently assured reporting, stakeholder engagement, a detailed
materiality process and sound governance procedures.
Their process for stakeholder engagement includes formal partnerships, collaborations
and memberships, contributing our expertise and sharing information, and ongoing
dialogue as part of their day-to-day business.
Their materiality process identifies the key areas that have the greatest significance to
their business and stakeholders. This determined their sustainability agenda and the
content of their reporting.
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