Global Business Strategy of British American Tobacco

Overview

British American Tobacco (BAT) is a British Multinational Tobacco company headquartered in London, United Kingdom. It is one of the largest tobacco company around the world. The brands are sold in around 180 markets. The company employs more than 55,000 people and, with over 200 brands in portfolio, and the cigarette chosen by one in eight of the world’s one billion adult smokers.

BAT founded in 1902, when the United Kingdom's Imperial Tobacco Company and the American tobacco company of the USA agreed to form a joint venture,the British-American Tobacco Company Ltd. The company operates in Americas; Asia-Pacific; Eastern Europe, Middle East and Africa; and Western Europe and BAT leaders in more than   60 markets.

Leading Brands

There are four leading brands Dunhill, Kent, Lucky Strike and Pall Mall. They are Global Drive Brands (GDBs).  There are many other famous international and local brands including Vogue, Viceroy, Kool,Peter Stuyvesant and Benson & Hedges.

            

Business Model and Strategy

British American Tobacco (BAT) business model is designed to deliver sustainable growth in earnings for shareholders. It is built around consumers and is supported by consistent strategy, with growth and productivity driven by a winning organization acting responsibly at all times. The strategy and business model drive company’s global operations, supported by a strong commitment to good corporate governance. BAT has world-class science, well-established brands and a range of product innovations that will deliver relevant benefits to consumers now and in future. All this contributes to a shareholder value proposition that continues to evolve but has a formidable track record of success in recent years.

Internationalize process

British American Tobacco follows the overseas production internationalization process. They are running their business all over the world. They manufacture their product in many countries. Manufacturing offshore can reduce the cost of production. British American tobacco made their market faster,reduce their delivery costs and reduce their product cost.

Entry Mode Strategies of BAT

Exporting 

British American Tobacco uses most conventional approach of exporting in emerging foreign markets. It subsidiaries use the system of trading domestically produced commodities out of country. BAT generally depends on Free Trade Zones Company for their exporting products. It started its cigarettes export to China at the end of the decade and over the years, the exporting has spread across its all regions, like, South Africa, Kenya, Nigeria, Middle East, Turkey, and African markets.

Joint Venture

BAT has joint ventured with companies worldwide to expand their operations. In 1902, Imperial Tobacco Company in UK and American Tobacco Company in US formed joint venture as British American Tobacco Company (BAT). During 1992, ventures spread in Russia, Poland, Czech Republic, Ukraine, Romania and Uzbekistan, in 1999, BAT has ventured with world’s fourth largest tobacco company Rothmans International. 

Mergers and Acquisition

BAT merges with Rothmans International (horizontal M&A). It had been announced on 11th January 1999. This global merger was completed on 7^th June 1999. This brings together the number 2 and 4 players which will boast a combined volume exceeding 900 billion cigarettes around the world with some 120,000 employees and a worldwide market share of 16 percent. The merger helped to attain in British American Tobacco’s vision of becoming the world’s leading International Tobacco Company.

Global Business Network of British American Tobacco