Business overview of British American Tobacco

British American Tobacco (BAT) is the world’s second largest tobacco group by global market share. BAT produces cigarettes demanded by one-eighth of the world’s one billion adult smokers and this particular company is holding robust market position in each of their regions. Besides that, BAT has leadership in more than 50 markets. Based on last year’s performances (2009), BAT’s subsidiaries enabled the worldwide government to gather more than £26 billion a year in taxes, including excise duty on their products which total up to almost nine times the Group’s profit after tax.

BAT, which was founded in 1902, has existed as a significant global presence for over 100 years. By 1912, the company had become one of the world’s top dozen companies by market capitalization. This company works with thousands of tobacco farmers worldwide, producing some 724 billion cigarettes through 50 cigarette factories over 41 countries. The company employs more than 600,000 people worldwide. BAT’s workforce is of multi-cultural and they have devolved structure, with each local company having wide freedom of action and responsibility for their own operations. Within a framework of principles, standards, policies, strategies and delegated authorities, decisions are made as close as possible to the local stakeholders of each business.

BAT operates according to responsibility seeing that their products pose risks to health. The business stresses on managed responsibility as it is integral to their strategy and through dialogue with their stakeholders, they are working towards commercial objectives in ways consistent with changing expectations of a modern tobacco business.

This international tobacco group is the only group with a significant interest in tobacco leaf growing. Their companies run leaf programmes providing direct agronomy support to farmers, covering all aspects of crop production and environmental best practice. In 2009, the group purchased about 400,000 tonnes of tobacco leaves, grown by more than 250,000 farmers.

BAT ensures the employees’ welfare. The company has specially carried out a global employee opinion survey also known as “Your Voice” to give them a secure and confidential way to voice their opinion about working at British American Tobacco.

BAT’s business starts with their consumers and brands. The company focuses more on meeting preferences of adults who have chosen to consume tobacco and differentiating their brands from their competitors rather than encouraging people to start smoking or to smoke more. The business’ portfolio of more than 250 brands is based on distinct ‘must-win’ consumer segments which are: international, premium, lights and adult smokers aged below 30. ‘Dunhill’, ‘Kent’, ‘Lucky Strike’ and ‘Pall Mall’ are the four Global Drive Brands which cover the premium and value for money price segments. They grew by 4 per cent in 2009 (8 billion more cigarettes). The business is also increasing the profile of Vogue in the super premium segment and Viceroy, a leading low price international brand besides developing their Global Drive Brands. The growth of their brands is driven by innovation ranging from filters to flavours and packaging to cigarette formats. The business provides a mix of brand balanced between premium, mid-price and low-price.

Besides that, the business applies the four managerial functions in its organization management; planning, organizing, leading and controlling. We have also interviewed a manager of British American Tobacco Singapore for further understanding.

2.1 Planning

In the field of management, planning is an action to achieve a specific goal. Planning can be divided to long run, immediate or short run period according to the types of the business. Planning is the key for a company’s growth, so it is very important to maintain a company strategy. A company which has set a plan does not ensure that it will succeed, but without planning, the company will guarantee to fail. Planning has to consist of finances, products, management, and the most important things are competition and markets.

Planning is also a mission, goal, objective of a company. Mission is the reason for the existence of the organization. Goal is a desired future that the organization tries to realize. Objective is a target or proposes that someone or a team has to put their effort to achieve. However, a plan is a blueprint of the resource allocations, schedules, and other actions necessary for attaining goals (Mr. Richard Daft, 2009).

Planning is a mental predisposition to do things in an orderly manner, to think before acting and to act in the light of facts rather than guesses (Urwick, 1998-2009). Planning is the best way for the employee to carry out their work efficiently as by this way, the company’s goal can be achieve easily with minor difficulties.

In my opinion, planning is a work that we done it for our future. All the skills we need for planning are analyzing, forecasting and predicting for the future. This means that planning is entirely depending on prediction. In addition, planning has the combination of “foretelling”. Planning allows us to have some mental preparation for the things will happen in the future. Other than that, the profit and reputation of a company are always influenced by the planning of manager.

A plan should be a realistic anticipation. Planning always influences the management of the company. Managers should set goals for the organization to achieve. Besides that, proper planning also helps the organization to achieve their goals by making use of all available resources and time effectively and efficiently. Planning firstly decides a certain destination, and then assesses the all possibility of the road and lastly decides the specific process of the plan. Therefore, through planning, the organization will clearly know where they are going. Moreover, planning includes allocating limited resources. Therefore, a manager should always be careful to plan in this section in order to ensure that the company isn’t making any loss.

Furthermore, the two important main things in planning is choosing alternatives and making a decision. Basically, planning includes making choices between all the available possibilities. So, we do not need to do any planning if the situation only occurs with only one possible alternative since there is no other choice. Accordingly, making decision is one step ahead of planning. For example, a manager would usually be surrounded by more than one choice. So he needs to choose the best choice depending on the requirements and recourses of his company. A part of this, the government always influences the planning of manager. In any businesses today, rules and regulation affects organizations big and small. It can either derail plans or even worse, stop plans.

How can a plan be set? There are many ways for us to set a plan. Firstly, the manager has to define the target of organization clearly. Next, the target of the manager which has been set must be specific and realistic; therefore, the organization can easily understand what they should do in order to succeed. Other than that, the plan of the manager which has been set is not only for the organization to understand, but also to let the public clearly understand what the company will be like in the future. Thirdly, while a manager is planning, he must refer to previous case, and learn from it. Then only he is able to decide the company’s budget. Finally, the manager has to audit at every certain period.

Another way to set a plan is, when a manager planning, he or she must evaluate the instant situation of the company. After that, the manager has to decide where they want to go then they should know how to go.

As we know, planning brings a lot of advantages to us in order to prevent wasting our time in unnecessary cases. Planning is the most important thing when setting up a business because it will minimize the resources used and save time for the company. Without planning, the employees of the company will aimlessly work and nothing will be done by the end of the day.

When planning, the manager will know where the organization is progressing whether towards the goals and how far they are from their goals they have achieved. If the organizations do accordingly to the plan effectively, they can reduce the unnecessary effort and time to achieve the goals.

Other than that, planning helps the management to focus on research and clarify their development. Planning also helps the management to avoid from any not necessary mistake and discover hidden opportunities.

Through the interview we had with a manager of British American Tobacco (BAT) Singapore, we know that their goals and objective are like most organization: maximizing profits and sales volume. However in order to do that, they must have strategic plans in place to ensure sustainability otherwise it will be running like chicken without head. In his leadership their company has achieved their goals and objectives clearly. When he is planning for his company, he has met many problems. There are many different issues and peculiarities to setting objectives. Sometime, he will feel a little difficulty, because there are too many ranges he has to consider when planning. But, he will try his best to solve the entire problem as this is his responsibility.

A plan of a company always influences the profit and reputation of the company. The manager of BAT which we have interviewed says that both profit and reputation is important to the company and goals set are dependent on the activity itself. For example, “When profit is the agenda, then we formulate plans for higher sales with minimal costs involved. However, if reputation is at stake, then we need to weigh the pros and cons before we embark on any projects. Relevant stakeholders need to understand and agree before we embark on any projects,” says the manager. Planning includes allocating limited resources. How does he plan in this sector in order to ensure that the company isn’t making any loss? Limited resources could still bring in profits but the target will be smaller. So careful planning is very important to ensure every step of the plan is well covered and executed. Monitoring progress must also be in place to gauge effectiveness so that any deviation from plan is detected early or plans revised when there are hiccups.

In addition, the government also plays an important role, when the manager is setting his plan. The rules and regulations affect organizations directly. In order to have control, he says that he must at least look back in to past historical data and events, and look for similarities over the years to gauge recurrences for his plans. This will give him a little more grip and expectation. In their business, taxes will affects they most so the most important timing in a year is normally during the budget speech by their Finance Minister. Moreover, the sales are a part of important of the business. The manager of BAT told us that it is difficult to prevent sales from dropping after any price increases. What is important is how they plan to continue selling before price increases any further. For example, they will sell to customers more stocks either two or more weeks before price is increased. This is to cushion off loss of sales after price increase. Once price is increased, price promotions or “old price” offers is given to both customers and consumer to try maintain their loyalty.

Based on the interview, we can clearly see that manager plan for their company is always according to the theory of planning because the plan of a company is always influencing the profit and reputation of a company. In short, both profit and reputation is important for the company of British America Tobacco when setting a plan. The theory of planning has mentioned the significance of limited resource. The manager of British America Tobacco says that careful planning is very important, as this limited resource could still bring in profits but target will be smaller. Besides, the government is also influencing their company directly. What will affect the most are the taxes of government. All in all, we must know the theory of planning in order to plan a good plan for the company.

2.2 Organizing

Organizing is the managerial function which can be defined as making sure there are available resources to carry out a plan. It is an act of rearranging elements following one or more rules that involves the assignment of tasks, grouping of task into departments, and the allocation of resources of organization. Besides that, organizing can also be referred to as assembling required resources to attain organizational objectives.

Organizing is the management function which usually follows after planning. Organizing can be broken down into organization structure, line relationship, staff relationship, span control, and centralization and decentralization. The organization structure is the framework in which the organization defines how tasks are divided, resources are deployed, and departments are coordinated. The line relationship is the authority which flows vertically down through the structure of the chain command for example, from the managing director to manager, to supervisors, and to other staffs. There is a direct relationship between superior and subordinate, with each subordinate responsible to only one person.

The staff relationship arises from the appointment of personal assistants to senior member staff. Person in a staff position normally have little or no direct authority in their own right but act, as an extension of their superior and exercise only ‘representative’ authoritative. Span control is the number of individuals who are directly responsible to a particular manager.

The last one is centralization and decentralization. Centralization is a process where the concentration of decision making is in a few hands (top management). All the important decision and actions at the lower level, all subjects and actions at the lower level are subject to the approval of top management. The implication of centralization can be a reservation of decision making power at top level, a reservation of operating authority with the middle level managers and also a reservation of operation at lower level at the directions of the top level. Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. Authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. The implication of decentralization is the subordinates get a chance to decide and act independently which develops skills and capabilities. This way, the organization is able to process reserve of talents in it, diversification and horizontal can be easily implanted, and also concern diversification of activities can place effectively since there is more scope for creating new departments

Organizing is important in factors affecting the organization. There is no standard formula for the best way to organize an enterprise. Among the most important of these factors are strategy, size, environmental conditions, and technology. In strategy, managers organize in order to achieve the objectives of the enterprise for which they work. The strategy of the enterprise affects organizing decisions. Changes in strategy frequently necessitate changes in the way the enterprise is organized. In size, small enterprises tend to exhibit less formalization, centralization, and complexity in their organizational structure. Enterprises of the same size may be organized quite differently because of differences in strategy, environmental conditions, and technology. In environmental conditions, the key factor in the external environment that is relevant to organizing is uncertainty. Some enterprises face competitive environments that change rapidly and are quite complex, while others face relatively stable conditions. Generally, turbulent environment calls for organizing decisions that lead to less formalization and centralization in the organizational structure. The last one, in technology, the processes by which an enterprise transforms inputs into outputs may also affect organizing decisions. Some research suggests that organizing decisions that lead to high degrees of formalization, centralization, and work specialization are more appropriate for routine technologies and that the converse is true for non-routine technologies.

Organizing plays a central role in the management process. Once plans are created, the manager’s task is to see that they are carried out, given a clear mission, core values, objectives, and strategy. The role of organizing is to begin the process of implementation by clarifying jobs and working relationship. The organizing process can best be illustrated in the diagram below:

DIVISION OF WORK

The first process of organizing includes identification and division of work which shall be done in accordance with the plans that are determined previously

DEPARTMENTATION

Once the work of identifying and dividing the work has been done those are similar to be grouped

LINKING DEPARTMENT

When the process of departmentalization was completed, linking of departments has to be done so that those departments operate in a coordinated manner which gives a shape to overall organization structure

DEFININGHIERARCHAL STRUCTURE

Each employee should also know from which has to take order and to whom he is accountable/responsible

ASSIGNING DUTIES

On completion of departmentalization process assigning duties

Through the interview with the BAT manager of Singapore, we discovered that he is a very organized manager. Before making any sales, he ensures that there is enough ready stock to enter into the market by allocating sufficient amount of resources. He also divides the work among all his subordinates equally and according to their job description to ensure a smooth marketing process. According to the manager which we have interviewed, he says organizing his group is very important because without organizing first, sales volume cannot be maximized. The manager also organizes the sales path for his subordinates in order to ensure that they are supplying the company’s products to the right retailers with sufficient amount of product supplies.

Without a doubt, if we are to compare the real life incidence of the manager of BAT Singapore with the organizing theories of managerial function, there are many similarities such as allocating resources and staff relationships. The real life organizing in a company by a manager, such as the manager of BAT Singapore, will mostly practice about the same theories as stated above. Therefore, all in all, every company’s manager will apply the organizing function in his company although the way they organize their company may vary slightly from one another.

2.3 Leading

A leader is a person who guides and inspires others in doing and performing tasks. An organization wants its employees to contribute in achieving the organization’s goals. Leading from the management means that the leader is someone who influences others to achieve the goals and objectives. In other words, this also means that they are people who are able to influence without forcing. A better leader is to be needed to achieve the unattainable goals. This is because the organization needs the people to help in achieving the company goals. (Thomas S.Bateman Scott A. Snell)

Organizations need the people at all levels to do the things that their people want and also help to create and develop the company’s vision and future. A leader must clearly understand the company’s mission and vision. Thus, a leader needs to create a vision and encourage others to achieve the company’s objective. An organization needs the right people to do the right thing in a right way and at the right time.

Transformational leadership is defined in terms of how the leader affects his followers, who are intended to trust, admire and respect the transformational leader. Bass has identified three ways which are increasing their awareness of task importance and value, getting them to focus on team or organizational goals, rather than their own interest and activating their higher order needs in which leaders transform followers. Besides that, transformational leadership theory creates a positive change in the followers when they take care of each other’s interests and act in the interests of the group as a whole. In this leadership style, the leader enhances the motivation, moral and performance of his follower group. So according to MacGregor, transformational leadership is all about values and meaning, and a purpose that transcends short-term goals and focuses on higher order needs.

Transformational leadership theory can be divided into four components: charisma or idealized influence, inspirational influence, intellectual stimulation and personal and individual attention. Charisma influence is the degree to which leader behave in admirable ways to cause the followers to identify with the leader has a clear set of values and acts as a role model for the followers. Inspirational motivation is the degree to which the leader how to inspire and motivate the followers with the reasonable goals and offers meaning for their current tasks and duties. Intellectual stimulation is the degree to which the leader challenges assumptions and encourages creativity to the followers. These can be done with the employees creatively to solve the problem and achieve the organization mission and goals. Personal and individual attention is the degree to which the leader attends to each individual follower’s needs and acts as a mentor or coach. The leader will also appreciates and admires the individual’s contribution to the team. This will inspire the followers to further achievement and growth. (Bass’ Transformational Leadership Theory)

Actually, effective managers are not necessarily true leaders. This is because many supervisors, administrations and top executives execute their responsibilities successfully without great leaders. But these positions afford the opportunity for leadership. An organization’s success or failures are due to how the manager leads the company. A manager has the rights to influence the people to do what you want them to do. As a manager, we must also always be asked to play the roles of both leader and follower as if the people report to you, and you report to your boss.

Motivation refers to forces that energize and sustain a person’s efforts. All important work behaviours are motivated. Managers need to motivate people to join the organization and to remain in the organization. Besides that, managers must also motivate people to overcome obstacles and also move the organization towards a better future always. On the other hand, managers must understand the human nature. It is because an organization always wants the employees to be able to work hard to obtain a higher productivity. (Thomas S.Bateman Scott A. Snell)

Through an interview with the manager of BAT Singapore, we can clearly know about the company’s goals or vision must be aligned with the company’s objective. “A good vision also helps us to strategize our activities or plans to move the company ahead,” says the manager. Besides that, the manager develops leadership through the training which helps him in his basic requirements. On the other hand, the other method is through coaching. Coaching others or being a coached by your own self. We must be open to personal development to succeed. A manager, who plays a role as a leader in the company, also needs to accept the criticism and feedback even though it may not be pleasant to hear.

The manager also thinks that most managers can be transformational leaders. It is because in today’s global business environment, change is the only constant. As a leader, if without a vision, there will be a standstill in the way we do business. So, it is very important that a leader be the catalyst of change. The common issues that always occur in leading especially in a new environment and the most difficult issue is to get the buy-in from your peers and subordinates and the most common is the misunderstood. As a manager we need to overcome these issues is to tackle individual team leads and align our goals and strategies. If we are able to achieve this, half the battle is won. If there signs of being misunderstood, revisit the issue and explain again.

The manager leads and manages all the employees’ performance through a set of written objectives from the start of the years and also conducting timely review to gauge level of performance. In a very formal front, at least twice per year is recommended. On the other hand, in the informal approach, as and when necessary when deem appropriate. This enables both employer and employee to realign the objectives and address gaps in performance. It is wrong to leave it to last minute only to find that the objectives are not met and blame it on the employees.

From the interview, we can clearly understand that the manager evaluate an employee’s job performance depending on the job scope. Among some measurement in the sales department, sales volume, distribution, market returns. These are operational objectives. Leadership performance is just as important as it tells us potentials of individuals to move up the ladder. Through this as well, we are able to motivate and develop the employee to progress further or farther. In the last, we can know the manager motivate the employees. It is because motivation comes in different forms with cash incentive being the most common. Non-monetary rewards are just as important, for example, a pat on the back for job well done, recommendation for performance award. Another form of motivation is lending your ear to those who have complains and grouses.

Through the interview, we can clearly determine that the manager of BAT Singapore does apply the leading management function in his daily work. In leading, he agrees that most managers are transformational leaders. We also found out that the manager motivates his subordinates after evaluating them based on the employees’ performance according to their job scope.

2.4 Controlling 

Controlling is one of the management functions. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, controlling is a foreseeing action whereas earlier concepts of controlling were used only when errors were detected. Controlling in management can be defined as setting standards, measuring actual performances and taking into corrective actions in an organization. No matter how difficult, standards should be established for every important task. Although the temptation may be great, lowering standards to what has been attained is not a solution to performance problems. On the other hand, a manager needs to lower standards when they are found to be unattainable due to resource limitations and factors external to the business. Corrective actions are necessary when performance is below standards. If performance is anticipated to be below standards, preventive action must be taken to ensure that the problem does not recur. If performance is greater than or equal to standards, it is useful to reinforce behaviours that led to the acceptable performance.

What is controlling? Controlling is a formal, target-setting, monitoring, evaluation and feedback systems to provide managers with information to determine strategy and structure are working effectively and efficiently. A good controlling system should be flexible so that the manager can respond as needed provide accurate information about the organization and information in a timely manner.

Controlling provides a method for ensuring that the organisation is moving towards the achievement of its goals. Steps must be taken to set work standards and to communicate them to the staff. Controlling is also a system of measures must be devised to assess staff performance according to these work standards. Managers must monitor the performance of the organisation as well as their progress in implementing strategic and operational plans. Where there is a variance between actual performance and the acceptable work standards, the cause must be in identified and corrective action taken. Controlling includes establishing and understanding what is required to achieve goals, measuring what actually happen or is being done, identifying deviations between planned and actual results, and taking corrective action if there is a deviation.

Controlling includes span of control which can be divided to broad span of control and narrow span of control. Span of control is the number of subordinates who report directly to a given manager. The management is always concerned about the appropriate span because it affects coordination of the organization. Broad span of control have flat organization structure, have fewer hierarchical levels and also results in quick communications but can lead to overworked managers. A manager with a broad span of control may be overextending himself and face difficulties in coordinating their activities. Narrow span of control have tall organization structure and many hierarchical levels. As levels in the hierarchy increase, communication gets difficult and also the extra levels result in more time being taken to implement decisions. A manager with a narrow span of control can give his subordinates closer supervision but he may be under-utilized.

  The factors influencing the span of management are competence of supervisor and subordinates, dispersion of subordinates, extent of non-supervisory work, degrees of required supervision, extent of standard procedures, similarity of tasks, frequency of new problems and preferences of supervision. There are 3 types of controlling in management. First is steering controls and second is screening controls while the last is post-mortem controls. Steering controls is detect deviation from standards and to allow corrections to be made before a particular sequence of events can be completed and is also only valid if the manager has relevant and timely information. There are 3 tools which are involved by using this control: budgets, stock ratios and network analysis. Screening controls refers to specific aspects of a procedure that must be approved or specific conditions that must be met before work can continue. There are only 2 tools needed in this control: ratio analysis and queuing theory. The last controlling type is post-mortem control is referring to examination of the causes of deviations from standards after the activity has been completed. The findings are applied to similar activities in the future. Only one tool is needed in this controls that is break-even analysis.

Controlling process establishes standards, goals, or targets against which performance has to be evaluated. The standards must be consistent with the strategy. Managers at each level need to set their own standards by measuring actual performances. Managers can measure outputs resulting from worker behaviour or they can measure the behaviour themselves. The more unorganized the task, the harder it is to measure the behaviour of employees.  

Besides that, controlling must be related to meaningful goals and standards set must be high but attainable.

From the interview with the manager of BAT Singapore, he applies controlling by making sure that his subordinate prepares a report at the end of every month in order to monitor all the employees’ sales performances. By doing so, the manager is able to control all of the salesmen’s and other employees. According to the manager, his span of control is broad. This enables him to communicate easily with his subordinates at the lower level, such as the salesmen, to get a better and more precise report about the sales volume. Although the workload may be more for him, this method is definitely easier to hasten sales and control everyone so that he is able to maximise his company’s profit. Besides that, the “flattened” hierarchy of the company allows the manager’s immediate subordinates, which are of the same level and ranking, to be able to discuss and come up with more suggestions to improve the company’s sales performance.

All in all, we can conclude that the manager of BAT Singapore also applies a part of the controlling managerial function. However, the manager chooses to benefit a broad span of control in his role in BAT. The real life case and theory of controlling are rather similar to each other; however, it is not necessary that every company practices the same controlling method. Therefore, controlling method may vary from one company to another.

3.0 Conclusion

In conclusion, a company which does not implement the four managerial functions; planning, organizing, leading and controlling, into its organization will definitely be unable to maximize profits and sales volume. The function of a manager, without a doubt is definitely very important in making sure that a company or group is operating smoothly and going in the right direction, which is towards the company’s objective and goals.

A manager who practices planning in his organization can ensure that the resources of the company as well as time to be saved and used efficiently to stimulate maximum profit generation. Besides that, if a manager also implements organizing while managing his organization, it can be concluded that all operations will run smoothly without any problems. On the other hand, a manager who benefits the leading managerial function can also increase sales performances of the company. If leading is done the right way, a manager will be able to motivate his staff and subordinates to perform better in the company, and thus increase the company’s performances. Lastly, if a manager is able to integrate the controlling function while running his organization, the company is most likely to run all operations smoothly. Sales can be controlled easily and company performances can be at the maximum point.

The case study of this assignment on a manager of British American Tobacco Singapore clearly shows the differences and similarities of the managerial functions being applied in the real business world.