bat plc annual report 2007 - Our strategy
Our vision is to achieve leadership of the global tobacco industry in order to create shareholder value.
Quantitatively, we seek volume leadership among our international competitors. Qualitatively, we aim to lead our industry as the preferred partner of key stakeholders and in demonstrating responsibility.
Our strategy to deliver our vision is based on Growth, Productivity, Responsibility and building a Winning Organisation.
1. Growth
To increase our volume and value share of the global tobacco market through organic growth and mergers and acquisitions (M&A).
Organic growth means increasing our market share in existing markets and through entering new markets. To achieve organic growth, we focus on key market segments that offer the best long term prospects, including Premium and International Brands.
We also aim to optimise the performance of our Global Drive Brands and seek opportunities for profitable volume growth in the Value-for-Money and Low Price segments. We see innovative products that offer consumers meaningful, value-added differentiation as key to organic growth.
Strategically important and financially attractive M&A may also provide us with growth opportunities.
2. Productivity
To effectively and efficiently deploy our global resources to increase profits and generate funds to reinvest in our business.
Our focus is on smart cost management, marketing efficiency and capital effectiveness. This includes ensuring that we use our marketing resources and capabilities in the most efficient way, reducing unnecessary complexity and using our cash and other assets effectively.
We are saving money by turning a multinational business operating in over 180 markets into an integrated global enterprise that can take advantage of its scale. Greater integration across our supply chain is helping us to reduce costs, increase speed to market and improve effectiveness. We are also reducing our overheads and indirect costs (anything other than leaf, wrapping materials, cigarette making machinery and labour).
3. Responsibility
To continue balancing our commercial objectives with the expectations of a broad range of stakeholders, thus ensuring a sustainable business.
Because we manage a product that poses real risks to health, we strongly believe that our business must demonstrate responsibility in everything it does.
Our Business Principles and our Standards of Business Conduct set out what we require of our companies and employees in terms of responsible corporate behaviour and personal integrity.
We support tobacco regulation that balances the preferences of consumers with the interests of society, establishes an open-minded approach to harm reduction as a policy, and enables our businesses to continue to compete and prosper. Harm reduction is an important element of our strategy.
4. Winning Organisation
To ensure we have the right people and the right work environment to deliver our vision.
We aim to develop leaders at all levels, who have a clear vision for the business and will energise those around them. Fostering a confident culture that embraces change and innovation is also central to our strategy, together with attracting, growing and retaining talent and ensuring continuous improvement throughout the Group.
A number of other Business Measures, financial and non-financial, are monitored and assessed frequently to ensure that all the Group’s strategies are delivered. Although these are not included in management’s incentives, we believe that these Business Measures contribute to the success of the Group, particularly over the long term.
We have therefore included, in the following pages, the performance of some of these Business Measures relating to the four elements of our strategy.