NAME :- MUHAMMAD TAHA YASEEN

ID :- 54488

CLASS :- BBA-ERP

SUBJECT :- PRINCILPLE OF MANAGEMENT

PROJECT :- CASE STUDY OF PAKISTAN TOBACCO COMPANY

DATE :- 13-MAY-2010

SUPERVISOR :- SIR OVAIS AHMED

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CONTENT:-
...................................................................................................................................................1

NAME :- MUHAMMAD TAHA YASEEN..................................................................................1

ID :- 54488...................................................................................................................1

CLASS :- BBA-ERP..............................................................................................................1

SUBJECT :- PRINCILPLE OF MANAGEMENT..............................................................................1

PROJECT :- CASE STUDY OF PAKISTAN TOBACCO COMPANY .....1

DATE :- 13-MAY-2010.......................................................................................................1

SUPERVISOR :- SIR OVAIS AHMED..............................................................................................1

INTRODUCTION:.........................................................................................................................4

TOBACCO HISTORY: ................................................................................................................4

TOBACCO BUSINESS PRINCIPLES:..............................................................................................4

Location:....................................................................................................................................5

VISION:.......................................................................................................................................6

MISSION STATEMENT:................................................................................................................6

Total Number of Employees:......................................................................................................9

Reason for decreasing Employees.............................................................................................9

Awards Won in the current year:...............................................................................................9

Focus of the Organization..........................................................................................................9

Organizational Culture.............................................................................................................10

TOP MANAGER.........................................................................................................................10

ABOUT CEO/MD:......................................................................................................................10

HEAD OF BUSINESS DEVLOPEMENT:........................................................................................10

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Slump in International Tobacco Industry but Growing PTC:.....................................................10

Pakistan Tobacco industry:......................................................................................................10

Cigarette production in Pakistan:.............................................................................................11

Cigarette Buyers:.....................................................................................................................11

Image:......................................................................................................................................12

International Tobacco Industry overview: ...............................................................................12

Issues and Threats for the Tobacco Industry:..........................................................................13

International Industry:..............................................................................................................13

Pakistani Industry:...................................................................................................................15

PTC Views on the above stated Issues:....................................................................................15

References:..............................................................................................................................16
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PAKISTAN TOBACCO COMPANY:

INTRODUCTION:
Pakistan Tobacco Company limited is part of British American
Tobacco, the world’s most international tobacco group, with brands sold in 180
markers around the world.

They start the operations in Pakistan began in 1947, making then one of Pakistan first foreign
investment. They produce high quality tobacco products to meet the diverse preferences of
millions of consumers, and they work in all areas of the business, from crop to consumers.

This company is committed to providing consumers with excellent products and to

demonstrating that they meeting his commercial goal in the manner expected of a
responsible tobacco group the 21st century.

TOBACCO HISTORY:
From being the first multinational to set up its business in Pakistan
in 1947 in beginning operation out of a warehouse near Karachi part, they have come a long
way.

From being just a single factory operation to a company which is now involved in every
aspect of cigarette production, from crop to consumer they have evolve and grown with
Pakistan. However, what is significant about these 62 years is the effort that Pakistan
Tobacco Company has demonstrated in the development of the country. By being
instrumental in the campaign for modern agricultural and industrial practices, they have
helped in the development and progress of the agricultural industrial sector in the country

TOBACCO BUSINESS PRINCIPLES:

Pakistan Tobacco Company is a commercial
enterprise and our primary role is to build long term shareholder value by meeting consumes
preferences for high quality product, however. They believe by that absorbing and balancing
a wider rang of expectations, they are best. Placed to continue building a sustainable
Tobacco business.

Link other multinational enterprises benefiting from economic glob lasting, British; American
Tobacco also faces increasing demands to be more transparent and to demonstrate high
standards for corporation contacts that might in the past have been taken on trust in today’s
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rapidly changing world, last and successful business can be perceived as powerful and self-
interested and can face barriers to trust. As a Tobacco business the group can face more than
others. In addressing these, a further challenge is that major enterprises like British American
Tobacco often encounter varying and at time conflicting stakeholder expectation in different
countries and cultures.

The four guiding principal are:

Strength from diversity

Open minded.

Freedom through responsibility, and

Enterprising spirit

Location:
Registered Office:

Pakistan Tobacco Company Limited

Dubai Plaza, Plot No. 5

Street 20, Salman Market, F-11/2

P.O. Box 2549

Islamabad-44000

Telephone: +92 (51) 2083200, 2083201

Fax: +92 (51) 2111913

Web: www.ptc.com.pk

Regional Sales Offices:

North Punjab & N.W.F.P.

House # 57-A/6, Satellite Town

Rawalpindi

Telephone: +92 (51) 4582390-91

Fax: +92(51) 4582392

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VISION:
Corporate vision is a short, succinct, and inspiring Statements of what the
organization intends to become and to achieve at some point in the future, often in
competitive terms. Vision refuse to the category of intentions that the broad, all inclusive and
forward thinking. It is the image that a business must have if its Goals before it sets out to
reach them. It describes aspirations for the future, without specifying the means that will be
used to achieve those desired ends.

MISSION STATEMENT:
A mission statement is an organization vision translated into
written forms. It Make the concrete the leaders view of the direction and purpose of the
organization. For many corporate leaders it is a vital element in any attempt to motivate
employees and to give them a sense of priorities.
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Total Number of Employees:

Total number of employees as at December 31, 2008 was 1,655 (2007: 1,668).

Reason for decreasing Employees

• Organizational restructuring
• Telecom sector attracted many employees of the company at high pays, as a result
high turnover of employee observed. This issue is somewhat now resolved by the
company as it has started paying more incentives to the employees and also giving
training and development courses to its employees.

Awards Won in the current year:

The Company was awarded the following Awards:

• Corporate Excellence Award by the Management association of Pakistan

• BAT’s Global Environmental Health & Safety Award
• BAT’s Global Leaf Award.
• 25th Corporate Excellence Award in Business and Industry Category
• PTC Annual Report for 2007 was recognized as the best in its category by ICAP

Focus of the Organization

The Company focuses on the following operational targets:
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• Continued strong volume and profit growth.

• Increased focus on productivity savings.
• Launch of the 3rd cycle of our social reporting dialogues.
• Improved corporate governance.
• Environment, Health & Safety

Organizational Culture
Our culture consists of values we derive from our 4 guiding principles. We are currently in the
process of launching internal campaigns to further inculcate these values into the daily lives
of our employees. Our guiding principles in brief are:

TOP MANAGER

ABOUT CEO/MD:
“Real business is not just about profit but also how these profits are
achieved. Our corporate strategy reflects hour strong commitment to responsibility provides
the foundations for our people, growth and productivity”.

Nick Hales, CEO/MD.

HEAD OF BUSINESS DEVLOPEMENT:

“As a forward-looking tobacco company, they
have a long history of responsible business conducts and practice. They are one of the largest
excise revenue generated and they have played a major role in developing Pakistan is
industrial sector”.

Naveed A.Ahmed, Head of Business Development.

Slump in International Tobacco Industry but Growing PTC:

Pakistan Tobacco industry:

Tobacco industry makes a significant contribution to all sectors of the economy, from farming
to manufacturing to retailing. The tobacco industry is the largest employer in NWFP, besides
this the other one million persons are dependent on it countrywide. On the other hand, its
contribution to the government revenue receipts is very sizeable by the way of federal excise
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duty and sales tax. According to a study carried out, the industry is the single largest
contributor to federal excise duty. (Study by The News)

Cigarette production in Pakistan:

According to press reports, Pakistan’s total cigarette market is around 89 billion sticks. While
the legitimate sector supplied 74 billion sticks to the market, the remaining 15 billion is
cigarettes were either smuggled into the country or marketed by counterfeiters and non-duty
paid manufacturers inflicting heavy losses to the federal exchequer. Cigarettes are the most
highly taxed products in the country and up to 78 per cent of the retail price is realized by the
federal government in the form of federal excise duty and sales tax. Pakistan has long porous
border with India, China and Afghanistan which makes it impossible to completely seal them.
(Study by The News)

Cigarette Buyers:
The firms that manufacture finished goods act as purchasers themselves, buying it from the
farmers. They serve as intermediaries that purchase, process and resell.

In the local market, Twenty-nine percent (29%) of men and 3.4% of women smoke cigarettes
regularly, concluded the National Health Survey, while the Pakistan Society of Cancer
Prevention says 37% of men and 4% of women over 15 years of age are smokers. According
to Pakistan Pediatric Association, 1,000 to 1,200 children between the ages of 6 and 16 years
take up smoking every day.

Cigarette consumption in Pakistan is five times higher than in India with 620 cigarettes per
adult per annum against 119 for India. This shows that the market for tobacco industry is
very immense locally. (Reference: NUST Research Center)
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Image:
The industry has a negative image among its consumers and the general public. This is due
to the various health hazards associated with tobacco consumption. People are also blaming
the government for its support for the industry. Smoking is the cause of lung cancer in 90% of
the cases. Its users get addicted to it.

Although the companies can not change the nature of their product, they are trying to build a
socially responsible image in the eyes of the consumers. PTC is currently engaged in various
programs such as afforestation, Mobile doctors program, Youth smoking prevention, learning
resource centers. The laskson group has set up Lakson medical center (Sahiwal hospital) and
a Medical complex in Sawabi NWFP. (Reference: NUST Research Center)

International Tobacco Industry overview:

Phillip Morris began his tobacco sales in England in 1847. During their rise to the top, Phillip
Morris & Co., Ltd. has developed into two divisions, Phillip Morris USA and Phillip Morris
International. The combined sales of these cigarettes has given Phillip Morris USA a market
share of 49.9%, just under half of the total cigarette sales in America (taken from
http://www.phillipmorrisusa.com). This level of excellence is rivaled by their main competitor,
Reynolds American, Inc. Reynolds American, Inc. is the newly formed parent company of the
R.J. Reynolds Tobacco Company and Brown and Williamson Tobacco USA. This merger took
place on July 30, 2004, and combined R.J. Reynolds (the 2nd largest tobacco manufacturer in
the country) with Brown and Williamson Tobacco USA (the 3rd largest tobacco manufacturer
in the country) (taken from http://www.reynoldsamerican.com). This merger created a
company with a market share of approximately 33.3%, the only figure that comes close to
Phillip Morris USA’s whopping 49.9%These days, R.J. Reynolds Tobacco and Reynolds
American, Inc. have diversified their product lines to include items not involving tobacco.
Their acquisition of food giant Nabisco shows this trend away from tobacco, and is perhaps
the largest reason why their tobacco products have lost their market share to Phillip Morris.
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Issues and Threats for the Tobacco Industry:

International Industry:
In the last decade or so, there has been a large anti-smoking backlash in the United States.
The recent out-of-court settlement of $360 billion between "Big Tobacco" and participants in
a class action suit has spurred the development of anti-smoking coalitions in other parts of
the world.

The decline in smoking in North America, especially the United States, has been offset by a
strong push from the large tobacco companies to find converts in the developing world. As
tobacco control is tightening in the West, transnational tobacco companies are becoming
more active in developing countries. The result is that tobacco use is declining at the rate of
1.5% in the West but at the same time it is increasing at the rate of 1.7% in the developing
countries.

While the anti-tobacco movement in the USA helped lower cigarette sales, Big Tobacco, the
largest US companies: Philip Morris, R.J. Reynolds and Brown and Williamson, as well as the
British American Tobacco Co., have continue to expand overseas. They have flooded the
markets in Asia and Eastern Europe with advertisements, promotional products and cut-price
brands designed to encourage new smokers.
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Some of the government sanctions, which have been primarily handed down from the FDA,
have been a minor hindrance to the tobacco companies themselves, such as compliance
checks for ID requirements where tobacco is sold (Benjamin, 2000). However, some have
been much more damaging to the product and the companies, requiring a label on the
package that would deter customers, the regulations on their advertisements, and the lawsuit
settlement that resulted in the yearly payment to state governments (Benjamin, 2000). A
dwindling market has been created by these sanctions. By imposing such sanctions, the
government has been changing tobacco’s image to be more ugly and unattractive. This
“deglamorization” of tobacco has lead to decreases in sales margins in recent years (Viscose,
2002). It also deters the sale to barely-legal young adults who may want to experiment,
causing a potential profit loss for the tobacco companies.

WASHINGTON (Reuters) May 22, 2009 --“Cigarette companies systematically lied for years in
order to sell tobacco products they knew were dangerous”, a U.S. appeals court said on
Friday May22, 2009. The U.S. Court of Appeals for the District of Columbia ruled the
companies, including Altria Group Inc. and its Philip Morris USA unit, violated federal
racketeering laws by conspiring to lie about the dangers of smoking.

British American Tobacco has become the latest UK Company to be targeted in Russia with
threats of legal action for "misleading" consumers and infringing their rights and for "nicotine
genocide", allegedly for making huge profits at the expense of Russians' health, by the
country's consumer rights agency, Rospotrebnadzor.

Furthermore, Scotland is going to ban cigarette displays in stores; Crackdown includes

outlawing vending machines after research found underage smokers are among their main
users.
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Tobacco is a pesticides dependent crop as its broad and succulent leaves provide favorable
conditions for the development of many pests and diseases. The pesticides used in the
tobacco cultivation happen to assimilate in the leaves which then sometimes become an
integral part of the leaf. These leave are then processed and used in manufacturing the
cigarettes, and thus consequently the final consumer also consumes some doze of pesticides
during smoking. This leaves some bad impacts on the body in case of continuous smoking
like; vomiting, headache, respiratory problems, and convulsions.

Pakistani Industry:
The News Pakistan (May 22, 2009)-- With World No-Tobacco Day on 31st May 2009,
expectations run high because nothing short of withdrawal of the controversial Statutory
Regulatory Order (SRO) legitimizing the creation of designated smoking areas in Pakistan will
be acceptable to anti-tobacco networks, alliances, and campaigners working at both the
national as well as the global levels.

On May 27, a collaborative activity has been planned with the Ministry of Railways for
implementation of Article 6 of the No-Smoking Ordinance, which ordains that all public
transport has to be smoke-free. The activities will conclude with a ‘No Smoking Awareness
Campaign with the Traffic Police’ on May 30th. More than 8,000 stickers prepared by the
Traffic Police will be distributed on the occasion.

PTC Views on the above stated Issues:

At Pakistan Tobacco Company, we have long accepted that smoking is risky. Our business is
not about persuading people to smoke; it is about offering quality brands to adults who have
already taken the decision to smoke. We strongly believe that smoking should only be for
adults who are aware of the risks.

In a nutshell, our view on smoking is this:

British American Tobacco companies produce fine quality products that provide pleasure to
many millions of adult smokers around the world. Along with the pleasures of cigarette
smoking come real risks of serious diseases. We also recognize that for many people
smoking is difficult to quit.

Smoking is a cause of various serious and fatal diseases such as lung cancer, respiratory
disease and heart disease.

The risks associated with smoking are primarily defined by epidemiological (population
statistical) studies that show that groups of lifetime smokers have a far higher incidence of
certain diseases than comparable groups of non-smokers. These risks tend to be greater in
groups that start smoking younger, smoke for longer, and smoke more cigarettes per day.
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The statistics, however, do not tell us whether a particular individual smoker will avoid an
associated disease by smoking less, and all smoking behaviors are associated with
significantly increased health risks. Studies also show that the only way to avoid smoking-
related risks is not to smoke in the first place, and the best way to reduce the risks is to quit.

Similarly, the discussion on the issue of Pesticides inclusion in the tobacco can be detained to
the statement that we have a modernized manufacturing process for the production of
cigarettes, which ensures the removal of such pesticides out of the tobacco leaves.

References:

 www.thenetwork.org.pk/pressrelease.
 NUST Research Center
 Business Recorder (www.brecorder.com)
 Pakistan Tobacco Board (www.ptc.com.pk)