tobacco in third world countries
TRANSCRIPT
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