SELLING TOBACCO TO “THIRD WORLD COUNTRIES”

SOCIALLY RESPONSIBLE AND ETHICAL DECISION MAKING

PRESENTED BY

ARJUNROSHINI SOMA PRASADSUPREETHVINEETH

INTRODUCTION

THIRD WORLD COUNTRIES

Refers to the economically underdeveloped countries particularly in the middle east , south asia , latin america , africa .

Considered as an entity with common characteristics such as poverty , high birth rates and economic dependency on developed countries.

EXPORTING US CIGARETTE CONSUMPTION

Sales of cigarettes have been shrinking rapidly about 5% in last 6 years .

Us surgeon general’s campaign against smoking, higher cigarette taxes, and the concerns Americans have about general health.

Also the success of the states winning lawsuits and pending federal legislation.

Tobacco companies invite journalists to participate in programs that play down the health risk of smoking especially in the third world countries

Tobacco industry is avidly promoting by using catchy slogans, obvious image campaigns

The third world is an expanding market

Us tobacco company signed joint venture with Chinese government to produce cigarettes in china.

As a result 2.5 billion cigarettes were produced annually.

80% is for domestic consumption rest is to export as china has the most consumers of cigarettes in the world

China’ s low cost labor is one of the other reasons Russia world’s 4th largest cigarette market has low

tobacco taxes and 50% people smoke Russia is a extremely profitable territory for

British American tobacco (BAT) BAT Russia was established in 1949

ADVERTISING AND PROMOTION

ADVERTISING

Gambia – cigarette box tops for contests Argentina – smoking commercials 20% Africa- smoking to good life

Baby clothes with logos

Health warnings in foreign language

Tobacco sponsored events and contests Latin America -24% over a decade and in North America – 4%

Sophisticated promotions in unsophisticated societies

Entice people to spend on luxury, a dangerous one

Throughout the smoking ads

Gold Leaf Cigarettes positioned – “ A important cigarette for very important people”

Trend involves associating tobacco with American affluence and culture

African women – symbol of freedom.

Russia- “ Total freedom or a rendezvous with America”

Third World Countries Image business and promotional slant both reasonable and common. Understandable visual image Marlboro Man – “ Symbol of the WEST”

Africa Ads include White Americans with recognizable

landmarks Children sell cigarettes

PROMOTIONS

Kenya and Gambia– Sponsored lottery for expensive gifts.

STRATEGY

Target young people

Expand market demand

SWAT

Free cigarettes to adolescents for promoting the same

Questionnaires on their exposure to cigarette ads and marketing tools

Increased exposure to tobacco advertisements

Marketing to teens and kids in the Third World

Free American cigarettes for games

Malaysian Comic “Gila- Gila” – Lucky Strike Ad.

Marlboro’s in rock concerts and disco’s - Marlboro sunglasses

Russia – Companies sponsor disco parties, admissions on purchase.

Foreign cigarettes have “STATUS IMAGE “ to encourage smoking.

Domestic to Foreign brand – “ Feel a higher social position”

Sign of luxury in Czechoslovakia, Russian and other Eastern countries.

CRITICS

Global Tobacco companies – encourage switching to foreign brands.

Same number of cigarettes are consumed with or without these brands

BAT

Tax exemption

Smuggling

Secure market share

Lure new generation of smokers

Smuggling

Black Market – 1/3 rd of them entering the international markets

TARGETING THE TEENS

Flavored cigarettes- Mint and candy

17 to 19 yrs – 20% smoked flavored cigarettes

Philip Morris ‘s international promotion – part vacation and part Marlboro marketing extravaganza – Asia, Latin America and Europe

2004 Adventure Team Event in Utah.

Higher tar and nicotine cigarettes in the Third world

Taste of the local customers

Sending cigarettes to the Third World was the export of death, disease and disability.

Increased tobacco consumption will increase the tobacco related illness and death to three folds over the next two decades.

GOVERNMENT INVOLVEMENT

The government often stands profit from the tobacco sales

Brazil collects 75% of the retail price of cigarettes in taxes . Bulgartabac tributes almost $30 million in taxes. Bulgartabac is a major exporter of cigarettes to Russia , exporting

40000 tons in 1997. National self interest is not limited to the third world countries alone Tobacco provide huge revenues of Beijing because all tobacco must

be sold through China Tobacco Company Duty on imported cigarettes is nearly 450% of their value

Consequently , tobacco is among the central governments source of funding.

China is the major exporter of tobacco, in year 2000 China exports of tobacco were over $500 million.

The State department sent a directive to all US diplomatic post in 1998 instructing them not to promote American tobacco products abroad.

In 1994 the administration promised to work towards lowering smoking around the world .

In the same time in 1994 the ambassador of Romania attended the opening of a new US cigarette company plant and declared “I m sure the splendid product will prosper in Romania

ASSESSING THE ETHICS OF STRATEGIC DECISION

Different culture, different perspective of right and wrong ,different legal requirements and different goals

The values,customs, tradition, ethics and goals of host countries which have developed their own ground rules for conducting business

They identify three ethical principles that can guide American managers in assessing the ethical implications .

Principles Questions

Utilitarian Ethics (Bentham , Smith)

Does the corporate strategy optimize the” common good” benefit s to all constituencies

Right of the parties (Kant, Locke)

Does the corporate strategy respect the right of the individuals involved

Justice of Fairness (Aristotle, Rawls)

Does the corporate strategy respects the canons of justice or fairness to all parties

ETHICAL AND SOCIAL RESPONSIBILITY IMPLICATION

BENEFITS

Business firm Society Economy Individual

ALTERNATE STRATEGIES Surrogate advertising Change the target segment to prevent societal issues. New variants of cigarettes

Smokeless and electric cigarettes

Less tar and nicotine content High tax levied

GOVERNMENT

Regulations in the exporting to the third world countries

Host Government

US and Europe Government Ethical constriction to be implemented in the host country as well. Protect the social health of the consumers in the “Third World”.

INDIVIDUAL FREEDOM/ SOCIAL HEALTH

Status class and self image American affluence and culture

MANUFACTURERS FREEDOM/ SOCIAL HEALTH

Govt. regulations to be adhered to in order to stay in the market and continue operations

Export regulations

Targeting the appropriate segments

NGO – LEGAL/ ETHICAL ISSUE

Dumping into the equivalent restricted markets in US and EUROPE

Prevent the children’s from tobacco consumption/ Below 18 years

Prevent promotion and advertising in schools

THANK YOU