Task 1: Company Background
Rothmans, Benson & Hedges Inc. is a Canadian firm that manufactures and distributes tobacco products. It was founded in 1873 by William hedges and Benson Richard in London. The firm opened its branches in Canada and United States in the 1900s and the American branch broke away from the parent company in 1928 when it was purchased by Philip Morris. The firm is in the tobacco industry and it is headquartered in North York in Ontario Canada. Rothmans, Benson & Hedges Inc. was founded when the Canadian units of Benson & Hedges merged with Rothmans International which is owned by Philip Morris. The company is considered as one of the world’s leading tobacco firms with six of the fifteen international brands including the global number one cigarette brand and a variety of other tobacco products. The Philip Morris International has employed a diverse workforce of more than eighty thousand employees working across the globe engaged in the selling of its products in more than one eighty markets. Rothmans, Benson & Hedges Inc. is an affiliate of the Philip Morris International with almost eight hundred employees working in sales offices across Canada, its corporate offices in Toronto and its manufacturing facilities in Quebec, Ontario, and Brampton.
There are various cigarette brands controlled or owned by Rothmans, Benson & Hedges Inc. and they include Craven which is part of the firm’s premium brand strategy and it is mainly meant for the Canadian market. Other brands include Davidoff, Philip Morris, Next, Accord, Mark Ten, Canadian Classics, Belmont, Belvedere, Number 7, Rothmans and Benson & Hedges which is the company’s flagship brand alongside the Rothmans. The firm’s brand portfolio comprises of Number 7, Accord, Mark Ten and the Canadian Classic whereas its value portfolio. Alongside the cigarette products the company also offers diverse roll-your-own and fine cut products (Paschalidou, Tsatiris, and Kitikidou, 2016).
The chart below is an overview of the firm’s supply chain through to end consumer
(Yakovleva, Sarkis, and Sloan, 2012)
Task 2: Sustainable Marketing in Rothmans, Benson & Hedges Inc.
Sustainable marketing is a term a term used to refer to an aspect of the extensive field of sustainable community development which is defined by Brundtland commission of the world’s commissions as a development that ensures that the needs of the present generations are met without compromising the needs of the future consumers. It is essential that a marketer in the twenty-first century must concentrate on the social and environmental issues alongside the commercial aspect. Thus, the concept of sustainability entails the maintenance of a balanced approach to human health, environment and better business management, meaning that a marketer must ensure that renewable resources are used instead of depleting resources enabling reduction of hazardous and polluting wastes. It is the moral duty of the corporate world to make sure those natural resources is used and that new resources are innovatively explored with sustainable options.
Firms like Rothmans, Benson & Hedges Inc. are facing emerging competitive business environment from its rivals due to globalization and technological advancement demanding that new and innovative marketing concepts, new types of corporation and new business models. As firms focus on establishing new marketing strategies for its products they tend to ignore environmental and social factors which can be used to gain a competitive advantage. Thus, the concept of sustainable marketing is critical in the success of twenty-first-century organizations and is linked to the ability to interpret the consumers’ social expectations entailing an integrated system including the social, economic and environmental factors. Nonetheless, many organizations fail to implement environmental management with utmost diligence highlighted by their failure to include environmental factors in their strategic plans. For example, the firm’s financial manager may argue that integration of the firm’s investment into the sustainable factors may be costly and tend to give less priority to them while prioritizing on the commercial and profit matters.
The concept of sustainable marketing is critical in firms like Rothmans, Benson & Hedges Inc. particularly considering that it operates in the tobacco industry which is largely perceived to negatively impact on the environment. There are diverse negative impacts linked to all aspects of cigarette right from the products first phase of the life cycle to the final stage. For example, in the raw material stage clearing of land as well as deforestation often takes place to create land for tobacco plantations. About thirty percent of the greenhouse gases get into the atmosphere annually as a result of the effects of deforestation. For example, in Tanzania, about sixty thousand hectares are cleared each year to create space for growing and curing of tobacco (Lii, Wu & Ding, 2013).
In addition, use of fertilizes and Agrochemicals in tobacco plantations is linked to long-lasting damage to land. Also, a large amount of water is used when growing tobacco despite that it’s a precious commodity in African countries that mainly engage in the tobacco growing. The manufacturing and processing phases cause pollution, which is the bi-product of the machines used. The use of seed flax essential in the creation of paper and wood pulp to produce the filter adds to the negative impact to the environment (Legrand, Chen, and Sloan, 2013).
It is critical that sustainable marketing is implemented by Rothmans, Benson & Hedges Inc. because cigarette production is linked to many environmental issues that require that it makes vital changes in its corporate behaviour including advocating for responsible actions from the consumers, government and all the stakeholders involved. There is a need for the organization to concentrate on issues relating to environmental damage and depletion of resources as opposed to increasing its production, innovation, and consumption. According to the three line theories of sustainability, the economic perspective requires that the main objective of sustainable development must be targeted at achieving an equitable and reasonable distribution of economic well-being through many generations (Karakowsky and Guriel, 2015). The environmental perspective requires that an organization must take into consideration of environmental issues when making its decisions and must incorporate them into its strategic plan to ensure minimal depletion of resources, generation of waste and population growth, ensuring that there is no threat to the biospheric, geospheric and atmospheric processes vital in supporting human life (Jun-ping, 2008).
Sustainable marketing is critical for Rothmans, Benson & Hedges Inc. because cigarettes are associated with many ecological impacts throughout the stages of product use as well as at the end of the lifecycle phase of the product lifecycle. For example, studies have shown that pest of frequent smokers has higher chances of getting cancer due to the negative effects of the second-hand smoke which is considered as a deadly air pollutant (Martin and Schouten, 2012). Also, sustainable marketing is suitable for the organization because cigarettes are responsible for huge amounts of littering negatively impacting on the environment as exemplified by the increased mortality rates of the marine life as a result of swallowing cigarette remnants. In addition, due to the poor disposal evident at the end of life of the life cycle of the product poses serious threats to the environment, particularly due to the increased fire risk exemplified by nearly five thousand cases of fire reported in Australia each year as a result of cigarette butts that are recklessly thrown away (Isalm, 2017).
Task 3: Impacts of Sustainability
Rothmans, Benson & Hedges Inc. has set out needs for each of its leaf suppliers and it comprises of the need for suppliers to participate in the sustainable Tobacco program which is an initiative for the entire industry and it is critical in driving standards in environmental management, agricultural practices and in the human rights and social areas. Furthermore, the manual is essential in the management of sustainability because it addresses issues relating to the use of fertilizers and Agrochemicals such as the list of approved insecticides to be used by farmers. The firm expects its suppliers to provide their risk assessment which is essential in the identification of the levels and the type of agro-chemicals used, ensuring that the leaves supplied are not contaminated by the genetically modified organism. The procedure enables the organization to ascertain the risk level as well as in the determination of the rate by which the supplier must be reviewed to promote compliance (Armstrong, et al., 2014).
Sustainability marketing yields positive results both to the organization and the society at large. For example, despite the fact that cigarette use remains as a contentious issue across the globe attempts by the firm to utilize the web to communicate to its consumers and the public play a vital role in enabling the public to comprehend diverse issues popular in the tobacco industry. For example, it can use its website to communicate to the public regarding its position on various topics of causation, environment, tobacco smoke, addition as well as the disclosure of the ingredient information about its products for public scrutiny and approval. Thus, using the web as the main communication platform ensures that the firm’s position is received by global audience, hence has worldwide ramification (Almas, 2016)
Implementation of sustainability programs such as the use of the web as a communication benefits the global society because the public is able to understand of the impacts of using tobacco, particularly as it relates to addiction; causation and ingredient hence are capable of making wise decisions about tobacco use. Also, the initiative is vital in enabling the organization to develop a company policy that is global relating to prevention of smoking by the youth, advertising and marketing, reduced risk products and product regulation. Thus, such sustainable programs ensure that the society at large benefits by getting informed about the various products offered by the tobacco firms. Furthermore, sustainability programs implemented are beneficial to both the firm and the society because it leads to the development of social responsibility and strategy which is beyond the issues relating to tobacco use, including human rights, child labour and the need to formulate a corporate code of ethics vital in stamping out anti-corporate attacks.
Sustainability efforts benefit the firm through the elimination of costs incurred in litigations against the firm from the perpetration of legislation and regulation stipulated by the countries of operation. Some of the issues that ascertain a responsible corporation include of matters on biotechnology, labour standards, waste management as well as responsible marketing that must not allow double standards (McDaniel, Cadman and Malone, 2016). For example, perpetration of human rights by employing children in tobacco firms amounts to child labour punishable by the law while at the same time damaging the firm’s corporate image and reputation. Some of the corporations issues that are addressed by the implementation of sustainable marketing comprise of trade and commerce, labour standards, environment and agriculture and politics, including campaign finance reforms and healthcare all of which are subject to regulations and legislation. Thus, iterative and systematic sustainability programs are essential in ensuring that the firm does not get reputational or financial harm (Ahmed, 2015)
The strategy of putting sustainability at the core of the firm’s operations exemplified by replacing cigarettes with products that are less risk to smoking means that the social benefits because the negative impacts caused by cigarette smoking are minimized. The efforts benefit the society, considering that it touches on each part of the firm value chain right from the framers to the consumers who use the company’s products across the globe. For example, one of the sustainable initiatives employed by tobacco firms is the promotion of sustainable farming, which is essential in determining the firm’s environmental, economic and social footprint and it is vital in improving the lives of the farmers who depend on farming. Their programs lead to the improved livelihood of the society, creating a reputation for the firm enabling it to reap profits from the positive image that results to satisfied customers and stakeholders.
Task 4: Managing Sustainability
Considering that the organization operates as an affiliate of Philip Morris International which is a global player implies that it must have a worldwide footprint, thus, the need to ensure that reduction of environmental factors is given a priority and it must involve every consumer and stakeholder as well as the entire organization (Hoek, 2015). Philip Morris is the firm’s parent company and it is responsible for the commercialization and development of all the reduced risk products referring to the firm’s products targeted at reducing individual risks and the harm of the population as it regards to consumption of cigarettes. One of the means by which the firm manages its sustainability is the existence of an environmental, health and safety management system which has been implemented for many years (Gilmore, et al., 2015).
One of the ways of ensuring sustainable management is the designing of a Smoke-free future, which is marked as one of the Philip Morris international contributions to the society and this is evidenced by its concerted efforts to ensure that less harmful alternatives are available to its consumers. The firm has achieved this as exemplified by its transformation from a just being a cigarette maker to a leader in the use of smoke free technology and this is attributed to the groundbreaking research that has enabled the development and commercialization of smoke free tobacco products that can be enjoyed by adult smokers and are a preferred choice compared to cigarette smoking. An example is the firm’s flagship product heat-not -burn, IQOS (Fooks and Gilmore, 2013)
Also, the organization manages its sustainability through the introduction and commercialization of the reduced risk product. The journey to replace its cigarettes with reduced risks products was mostly successful in 2017 when a substantial momentum was evident in the product commercialization, development and scientific validation of the various product platforms. Greater success in managing the company sustainability is evident by the ongoing process entailing commercialization of IQOS which has ensured that the product is available in major cities in thirty-eight markets. It is estimated that more than five million adult customers across the globe have opted to stop smoking and choose to use IQOS. The substantial success of the product was evident in Korea and Japan, where data during the fourth quarter reveals that the national share reached 5.5% and 13.9%, respectively regardless of the capacity driven challenges particularly on device sales and heated tobacco consumables (Fo-lin, 2008)
Efforts by Philip Morris International on the management of its sustainability have yielded impressive performance in other countries, evident by the launching of the heated tobacco products in countries like Portugal, Czech Republic, Greece, and Romania. The firm is actively engaged in ensuring the adoption of sustainable adult consumer despite the initial lower levels of awareness coupled with increased limitations on consumer involvement. In order to counter the problem, the firm has put in place strategies aimed at building consumer awareness of the heated tobacco products as well as by raising the commitment by adult consumers to the utilization of the IQOS product as well as enhancement of consumer conversion support (Emery, 2012)
The organization has put in place sustainable initiatives targeted at ensuring that farm workers who are vulnerable to labour rights abuse are protected. Often, the transactional, seasonal and informal nature of the tobacco farming means that farm workers are continuously exposed to various environmental and occupational risks. The organization has continued to formulate programs targeting at addressing the main issues faced by the farmers through gaining an in-depth understanding of the workers, their hiring procedure, working conditions, and compensation. For example, the company has set up an agricultural Labour Practice initiative aimed at improving various labour practices while at the same time continually ensuring that child labour is eliminated in all tobacco farms the firm sources its tobacco leaves. Furthermore, one of the firm’s sustainable programs is by maintaining constant communication with all the farmers entailing their expectations and standards while also setting up the vital resources required for the monitoring of the farming conditions yielding rational solutions to diverse challenging practices. The firm implements its sustainability programs by partnering with the leading nongovernmental organizations in ensuring sustainable supply chain through design, implementation, monitoring, and evaluation of the effectiveness of the sustainability programs (Casswell, 2013)
The firm depends on a complex yet vital supply chain that must be applied in the future and this explains why there are strategies that have been formulated to ensure that sustainability is promoted right from the crop to the consumer. The nature of the tobacco industry implies that two major supply chains exist and they include the tobacco leaf agricultural and the nonagricultural goods, materials, and services. In both supply chains, the concept of sustainability has been integrated into the strategies aimed at managing the firm’s supply chain through the implementation of risk assessments and detailed supplier initiatives including the environmental criteria. Also, they include other social matters like labour practices and human rights as well as governance issues, including suppliers’ policies, management systems, and procedures.
Tobacco leaf is critical to the success of the firm, thus ensuring there is a sustainable and secure supply chain is a long-term priority. Sustainability is fostered by having traceability that goes on to the farmer and by the existence of a centralized management of the tobacco leaf supply chain. The strategy is vital in enabling there is an efficient, agile and reliable tobacco leaf supply chain capable of meeting the consumer’s demands while at the same time promoting the suitability of the agriculture and rural community (Belz and Peattie, 2012)
The organization expects that the impacts of climate change are going to be felt strongly in the future and it means that the changes in the environment will create problems for the firm as it relates to sourcing of tobacco as well as in the distribution of its products negatively impacting on the landscape and the communities it operates. Thus, the firm recognizes the significance of environmental management which is an ethical thing to do and crucial for sound business, particularly considering the high dependency on natural resources for the products. Thus, the sustainability of the business is dependent on securing access to the natural resources and by being prepared for any changes in the future. The firm will target at addressing both the urgent environmental effects as well as the potential pressures on the corporation in the future and it entail performance management, conducting risk assessments and by increasing the efficient levels of its operations. Environmental challenges require a collaborative approach and flexibility, meaning that the firm seeks to address its sustainability issues on the environment by engaging international organizations and local communities in the areas of their operations (Shelley, Ogedegbe, and Elbel, 2014).
Ahmed, S.S.T., 2015. Overall work experience employee growth & at British American Tobacco. http://dspace.bracu.ac.bd/xmlui/bitstream/handle/10361/4860/Syed%20Shah%20Tayef%20Ahmed_%20Internship%20Report.pdf?sequence=1&isAllowed=y
Almas, A., 2016. Measuring consumer preference of Benson & Hedges British American Tobacco Bangladesh. BRAC University press
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.
Belz, F.M. and Peattie, K., 2012. Sustainability marketing: A global perspective. Wiley
Casswell, S., 2013. Vested interests in addiction research and policy. Why do we not see the corporate interests of the alcohol industry as clearly as we see those of the tobacco industry?. Addiction, 108(4), pp.680-685.
Emery, B., 2012. Sustainable marketing. Harlow, UK: Pearson.
Fo-lin, L.I., 2008. SWOT Analysis of Establishing Modern Tobacco Agriculture Systems [J]. Journal of Anhui Agricultural Sciences, 33, p.186.
Fooks, G. and Gilmore, A.B., 2013. International trade law, plain packaging and tobacco industry political activity: the Trans-Pacific Partnership. Tobacco control, pp.tobaccocontrol-2012.
Gilmore, A.B., Fooks, G., Drope, J., Bialous, S.A. and Jackson, R.R., 2015. Exposing and addressing tobacco industry conduct in low-income and middle-income countries. The Lancet, 385(9972), pp.1029-1043.
Hoek, J., 2015. Informed choice and the nanny state: learning from the tobacco industry. Public Health, 129(8), pp.1038-1045.
Isalm, K., 2017. Competitive marketing strategy of Japan Tobacco International. BRAC University press
Jun-ping, L.I., 2008. Consideration on the Modern Tobacco Agriculture Development [J]. Journal of Hebei Agricultural Sciences, 9, p.047.
Karakowsky, L. and Guriel, N., 2015. The context of business: Understanding the Canadian business environment. W. Ross MacDonald School Resource Services Library.
Legrand, W., Chen, J.S. and Sloan, P., 2013. Sustainability in the Hospitality Industry 2nd Ed: Principles of Sustainable Operations. Routledge.
Lii, Y.S., Wu, K.W. and Ding, M.C., 2013. Doing good does good? Sustainable marketing of CSR and consumer evaluations. Corporate social responsibility and environmental management, 20(1), pp.15-28.
Martin, D. and Schouten, J., 2012. Sustainable marketing (Vol. 1). Boston: Prentice Hall.
McDaniel, P.A., Cadman, B. and Malone, R.E., 2016. Shared vision, shared vulnerability: A content analysis of corporate social responsibility information on tobacco industry websites. Preventive medicine, 89, pp.337-344.
Paschalidou, A., Tsatiris, M. and Kitikidou, K., 2016. Energy crops for biofuel production or for food?-SWOT analysis (case study: Greece). Renewable Energy, 93, pp.636-647.
Shelley, D., Ogedegbe, G. and Elbel, B., 2014. Same strategy different industry: corporate influence on public policy. American journal of public health, 104(4), pp.e9-e11.
Yakovleva, N., Sarkis, J. and Sloan, T., 2012. Sustainable benchmarking of supply chains: the case of the food industry. International journal of production research, 50(5), pp.1297-1317.