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Letter of Transmittal
Date: 30th August, 2009
Dr. Md Khasro Miah
Faculty Member
School of Business
North South University
Dear Sir,
Hereby I would like to submit to you the report and analysis on “Effective HRM & CSR
policies and practices in gaining Sustainable Competitive Advantage at BAT
Bangladesh.” Working on this project was a very interesting experience and I tried my
best to cover all the necessary parts of the assigned project. Other than that, this project
has given me an opportunity to work with SPSS, which has given me a tremendous
outlook on certain issues and factors in organizations of this industry. I will be available
for any clarification and modification that may be required.
I would like to thank you for being helpful all the time, and welcoming me to your office
as it has given me the prospect of making this even a better project.
Sincerely yours,
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
ACKNOWLEDGEMENT
I would like to thank, my faculty advisor Dr. Md Khasro Miah, for his generous
cooperation and constant guidance that made me really confident about the desired
outcome of my internship project.
I am grateful to Nasira Mansoor, Corporate Social Responsibility Manager British
American Tobacco Bangladesh for her invaluable support and guidance that led to the
successful completion of my internship project.
Finally, thanks to the whole CORA team of British American Tobacco Bangladesh Ltd.
was very much helpful in providing me with all the necessary support that I needed
during my organizational attachment.
Research Report 1
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Abstract
The paper aims to look at the CSR & HRM practices and policies at British American
Tobacco Bangladesh and how it contributes to the quality of life of their employees, the
local community and society at large and how it has a positive effect on Sustainable
Competitive Advantage. This is accomplished by developing and testing a model which
includes (Motivation, Employee engagement, Employee retention, corporate citizenship,
and Employee commitment) as mediating variables between CSR and HRM practices
and sustainable competitive advantage. This relationship has been empirically
investigated. The data has been analyzed using SPSS. The study provides some support
between the variables and the outcomes as a mediating variable. The study provides some
result which indicates Afforestation strategy of CSR has a significant negative
relationship with sustainable competitive advantage; free primary health care also has a
negative relationship but is not significant. Community services, Training and
development, workers participation and industrial relation is positively related but does
not have a significant relationship with sustainable competitive advantage, whereas
compensation and benefits is negatively related but does not have a significant
relationship. This relationship has been discussed later in this study and provides us some
important particulars.
Research Report 2
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Executive Summary
Corporate social responsibility (CSR) means a commitment by a company to manage its
roles in a society in a responsible and sustainable manner. Like many other organizarions
BAT Bangladesh believes that sustainable business success and shareholder value cannot
be achieved solely through maximizing short-term profits, but instead through market-
oriented yet responsible behavior. BAT Bangladesh wants to pursue the goal of
sustainable development, thus their CSR activities are designed to contribute and improve
the economic, social and environmental sustainability of the country. Their HRM
policies and practices are unique which gives them a competitive advantage over others.
The Vision that motivates BATB employees and drives their operation is the desire to
extend the market leadership through world class performance across all areas of BATB
business. Their corporate culture is inimitable and is driven by their strong guiding
Principles. They are known to be the employer of choice for their HRM policies and
practices. The HR functions within BATB are Organizational Development &Change,
Reward and Employee Relations.
The paper aims to look at the CSR & HRM practices and policies at British American
Tobacco Bangladesh and how it contributes to the quality of life of their employees, the
local community and society at large and how it has a positive effect on Sustainable
Competitive Advantage. For this analysis, I have come up with survey questionnaire so to
extract information from the respondents and later I also have compared our hypothesis
which is the positive perception and also the application of the dimensions of HRM &
CSR for the betterment of the organization’s sustainable competitive advantage.
Research Report 3
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Introduction
Today’s global businesses face a daunting challenge – achieve and sustain competitive
advantage while empowering customers and communities to grow and prosper. Corporate
Social Responsibility (CSR) is an organization’s obligation to consider the interests of
their customers, employees, shareholders, communities, and the ecology and to consider
the social and environmental consequences of their business activities. (Francis, A. and P.
Tharakan1989). By integrating CSR into core business processes and stakeholder
management, organizations can achieve the ultimate goal of creating both social value
and corporate value. CSR enhances competitive advantage by improving productivity and
quality, reputation and brand image, recruiting new employees, understanding consumers
and customer loyalty, cost control and efficiency, attraction of investors, regulatory
benefits. Companies, who successfully address all areas of corporate citizenship and gain
business leverage whilst developing the potential of local communities, will ultimately
become the corporate leaders of the future.
Corporate social responsibility is a commitment to improve community well-being
through discretionary business practices and contribution of corporate resources (Kotler,
Nancy, 2005).The ongoing globalization process implicates the enterprises from
industrialized countries are paid to greater public attention. The public expects from them
to take ethical and social responsibility. The world Business Council for Sustainable
Development defines corporate responsibility as the continuing commitment by business
to behave ethically and contribute to economic development while improving the quality
of life of the workforce, their families and the local community and society at large.
(Mohammad Ataul Hoque, 2008). Corporate responsibility is achieved when a
business adapts all of its practices to ensure that it operates in ways that meet, or exceed
the ethical, legal, commercial and public expectations that society has of business. To be
considered effective, corporate responsibility must be an integrated part of day to day
business, engaging all stakeholders and including strategies to support individual
Research Report 4
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
managers to make socially responsible decisions, conform to ethical behavior and obey
the law (Welford, R. 2003).
Corporate social responsibility is a very hard to engage, but sometimes even harder to
communicate to the companies’ stakeholders. Many companies are aware they need to
operate in a socially responsible way and if they implement CSR properly it will lead to
profitability. Corporate responsibility lies at the heart of the decisions you make in
ordinary business activities. The trust that people have in you as a company is critical
(Harrington 2005). But CSR is more than using clear technology or pay some donations -
it’s more about sustainability. At the same time, as companies engage in initiatives that
support corporate social responsibility, they should communicate about these initiatives
in their marketing and public relations effort. CSR is generally associated with positive
events, and as such companies are inclined to communicate about their good deeds to
influence public opinion and enhance their corporate reputation (Morsing, 2005).
Another issue which can be linked to sustainable competitive advantage is the Strategic
Human Resource Management which is the process of linking the human resource
function with the strategic objectives of the organization in order to improve
performance. This means Strategic human resource management can be viewed similar to
the pattern of Human Resource management and activities which is used in an integrated
way along with the company’s long term business and corporate strategy to achieve its
goal. As we know that Strategic Human Resource Management is a new evolving
concept in our today’s world but it’s yet to be developed a lot because most of the
organizations are still quite backward in terms of realizing the need for strategic HRM in
their organization. According to the present condition in the context of Bangladeshi
firms, strategic human resource management is completely debut or even some
organizations are alienated to this term and its contribution to company’s competitive
advantage in the long run (Jackson, S. E. & Schuler, R. S. 2003).
Research Report 5
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
It is known that the human resource management is now a flourishing area for all the
organizations in order to focus for its long term objectives. Therefore, linking HRM
functions those are – compensation, recruitment and selection, training and development,
performance management and employee relationship, with company’s long term strategic
accomplishment is profitable indeed because if the HRM functions can be established
properly then it is possible to retain and motivate the intangible asset of the company
which is the human (employees) and it will create positive consequence in the company’s
long run sustainability (Lengnick-Hall, C.A. and Lengnick-Hall, M.L, 1988).
In this research report I have tried to determine how Corporate social responsibility and
strategic human resource management helps in gaining sustainable competitive advantage
in a firm’s long run, we have tried to show the significance of CSR practices and policies
and strategic human resource management and its consequence in the firm’s betterment
and also tried to prove my logic correct by analyzing the present HR and CSR system of
the British American Tobacco Bangladesh. For this analysis, I have come up with survey
questionnaire so extract information from the respondents which is the HR people of the
BAT and later I also have compared my hypothesis which is the positive perception and
also the application of the dimensions of strategic HRM for the betterment of the
organization’s sustainable competitive advantage. I have also searched to know whether
these firms used to apply strategic HRM to building their companies sustainable
competitive advantage.
The purpose of the report is to know the present condition of CSR policies and Practice
and strategic human resource management in BAT Bangladesh and on the basis of my
findings I will provide my recommendations on these issues and how it can be applied to
gain sustainable competitive advantage.
Research Report 6
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Chapter 1 Industry Overview
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CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
1.1 Tobacco Industry and Environment
The main cigarette manufacturers today are: British American Tobacco Bangladesh Dhaka Tobacco Industries Abul Khair Tobacco Nasir Tobacco Azizudin Industries and New Age Tobacco.
The main biri manufacturers are: Akij Biri Abul Biri Nasir Biri Karikar Biri Aziz Biri and Hundreds of local biri manufacturers.
At the moment, there are two main tobacco industry associations i.e. Bangladesh
Cigarette Manufacturers Association (BCMA) and Bangladesh Biri Manufacturers
Association (BBMA) representing the industry.
Today, the market is estimated to be 64.2 billion sticks of biri and 51.8 billion
sticks of machine manufactured cigarettes. Biri overtook cigarettes as the more popular
smoked product in 1979. However, the market for biri has been on a declining volume
trend since 2003. This reflects the switch by consumers due to social pressure,
urbanization, literacy rate, economic growth and awareness by consumers. The market
has a high International Brand share (18.2%).
Research Report 8
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
1.2 Competitive Scenario
In May 2008, Philip Morris International launched both full flavored and light
variants of Marlboro brand cigarettes in different markets of Dhaka. Dhaka Tobacco
Industries is manufacturing and distributing the brand.
BAT Bangladesh and Dhaka Tobacco Industries together hold more than 80% of
the cigarette market share.
Tobacco products are distributed either by manufacturers themselves, third party
distributors or wholesalers. The sales and distribution effort requires a large number of
field employees and agents because they have to serve about 880,000 individual retail
outlets throughout Bangladesh with a growth of 10% per annum.
The number of retail outlets is estimated to be growing by about 8% a year. The
proliferation of retail outlets is mainly due to the ease of entry and the low capital
requirement. Many of these outlets operate on limited capital and are unable to purchase
quantities beyond their immediate daily sales. The high number of retail outlets has
created a “stick market” and consequently imposed more frequent sales visits compared
to other similar businesses.
1.3 Smoking Incidence
21% of the population in Bangladesh is made up of adult males and 58% of them
consume tobacco products. Cigarette and biri are two popular smoking tobacco products
with an incidence of 23% and 21% respectively (inclusive of those who consume both
products). Daily incidence of cigarette consumption is 9 sticks.
Research Report 9
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
1.4 Tobacco Regulation
Bangladesh was the first country in South-East Asia to sign the Framework
Convention on Tobacco Control (FCTC) in June 2003 and ratified the FCTC on 14 June
2004. The Government of Bangladesh enacted the Smoking and Using of Tobacco
Products (Control) Act, 2005 on 26 March 2005 and the Smoking and Using of Tobacco
Products (Control) Rules, 2006 were published on 29 May 2006, providing guidelines on
advertisements, health warning requirements and public place smoking.
Key highlights of the current legislation include:
Package - 30% (of the total surface area of the pack) text only Health Warning
(HW) in white with black background or vice versa; to be placed on the front and
back panel of the pack. Graphic HWs are not required.
Place - Smoking is prohibited in public places and public vehicles. However, it is
allowed within designated smoking areas. Although the law allows for smoking in
HoReCas, many have voluntarily banned smoking in their premises.
Promotion - Bans on advertisement on TV, radio, print media, billboard and
cinema. All sponsorships under tobacco brands are also banned. Product sampling
and sponsorship under tobacco brands are prohibited. Restrictions apply for one to
one direct marketing and communication at point of sale.
Purchase – No person under 16 years is allowed to buy or consume cigarettes.
However age verification is not mandatory for purchasing tobacco. Automatic
vending machines are banned.
Product - There is no requirement to publish or print TAR or nicotine.
Research Report 10
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
1.5 Tobacco Taxation
Bangladesh has a tiered ad valorem tax regime for cigarette and biri. The tobacco
industry contributed approximately 30.5% of Government’s revenue in FY 2007-2008.
Cigarette taxes include Value Added Tax (VAT) and Supplementary Duty – both are
imposed on retail price printed on the packs.
Taxation rate is comparatively lower at the bottom end of cigarette and for biri,
allowing low-priced brands to maintain their prices and restricting consumer up trading to
international brands.
BAT Bangladesh contributed Taka 28.28 billion (US$ 415 million) to the
Government’s revenue in FY 2007-2008 as VAT and Supplementary Duty.
On June 2008, a new duty structure was announced by the Government following
an industry proposal as follows:
(a) Locally Manufactured Cigarettes
MRP per 10 cigarettes SD VAT TotalPremium Segment + any price outside the defined price slabsFrom BDT 41.00 above
57% 15% 72%
High SegmentFrom BDT 21.00 – 28.00 55% 15% 70%
Medium SegmentFrom BDT 13.25 – 14.25 52% 15% 67%
Low SegmentFrom BDT 6.50 – 7.50 32% 15% 47%
Research Report 11
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
(b) Imported Cigarettes
SD Import Duty TotalImport Value 350% 25% 375%
(c) Biri
MRP per 25 sticks SD VAT TotalBDT 3.1579 20% 15% 35%
1.6 Cigarette Pricing
In 2007, the cigarette industry saw its overall value eroded by the continued expansion of the market at the bottom end. The movement started in 2006 with the success of brands sold within the Low Segment that led to other manufacturers to join in the fray. Many manufacturers were forced to compete within the segment or risk losing their own volumes due to consumers trading down from Medium Segment to Low Segment brands.
The most successful brands in the Low Segment are Sheikh and Sheikh White which have followed a continuous growth path in 2008 and have captured an estimated 16.6% of the volume of the entire cigarette market, and 46.3% of the volume within the low segment itself in the Q4 2008. Due to the inherent characteristics of an ad valorem system, any reduction in the overall value of the market, such that has been brought about by the growth of the Low Segment, is detrimental to overall amount of revenue collection.
The growing volume of the Low Segment, from 22% in Q1 2006 to over 42.2% in Q4 2008, comes at the expense of the volume of the other segments. High Segment declined from 18.0% to 15.2%, Medium Segment declined from 54.6% to 36.1% and due to volume growth the Premium Segment enjoyed growth from 5.8% to 6.5%. The growth of the Low Segment is also dragging down both the volume and tax revenue contribution from Medium, High and Premium Segments. The trend is a result of the market which is highly sensitive to price. The tax rates which affect prices act as cues for consumers in their spending patterns.
Research Report 12
Brands
15.00
7.50
26.50
13.25
52.00
43.00
82.00
Pack Price (Taka)
6.50 – 7.50
13.25 – 14.25
21.00 – 28.00
41+
Price Slab (Taka)
47%
67%
70%
72%
SD + VAT
Low
Medium
High
Premium
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Research Report 13
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Chapter 2
Research Report 14
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Organizational Overview
2.1 The History of BAT
British American Tobacco has been in business for more than 100
years, trading through the turbulence of wars, revolutions and
nationalizations as well as all the controversy surrounding smoking
The business was formed in 1902, as a joint venture between the UK’s Imperial Tobacco
Company and the American Tobacco Company founded by James ‘Buck’ Duke.
Despite its name, derived from the home bases of its two founding companies, British
American Tobacco was established to trade outside both the UK and the USA, and grew
from its roots in dozens of countries across Africa, Asia, Latin America and continental
Europe.
We were ‘born international’, and have developed over a century’s expertise in operating
locally in diverse cultures around the world.
Research Report 15
British American Tobacco was
'Born International'
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
2.1.1 British American Tobacco's Global Presence
British American Tobacco Group is the world’s second largest quoted tobacco group by
global market share, with brands sold in more than 180 markets.
With over 300 brands in our portfolio, we make the cigarette chosen by one in eight of
the world’s one billion adult smokers. BAT holds robust market positions in each of our
regions and has leadership in more than 50 markets.
In 2007, subsidiaries enabled governments worldwide to gather over £17 billion a year in
taxes, including excise duty on our products, more than 7 times the Group’s profit after
tax.BAT has sustained a significant global presence for over 100 years. Their business
was founded in 1902 and by 1912 had become one of the world’s top dozen companies
by market capitalization.
Subsidiary companies produce some 684 billion cigarettes through 47 cigarette factories
in 40 countries. Four of these and two separate plants also make cigars, roll-your-own
and pipe tobacco.
BAT employ over 53,000 people worldwide. Their workforce is strongly multi-cultural
and has a devolved structure, with each local company having wide freedom of action
and responsibility for its operations. Decisions are made as close as possible to the local
stakeholders of each business, within a framework of principles, standards, policies,
strategies and delegated authorities.
BAT believes that because our products pose risks to health, it is all the more important
that dialogue with our stakeholders, they are working to pursue our commercial
objectives in ways consistent with changing expectations of a modern tobacco business.
BAT is the only international tobacco group with a significant interest in tobacco leaf
growing, working with thousands of farmers internationally. Their companies run leaf
programmes providing direct agronomy support to farmers if it is not otherwise available,
Research Report 16
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
covering all aspects of crop production and environmental best practice - in 2007 our
companies ran these in 19 countries. Our companies purchased 460,000 tonnes of leaf in
2007, grown by some 280,000 farmers.
2.1.2 Regional Operation of BAT
2.1.3 Regional Operation of Asia-Pacific
Research Report 17
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
2.1.4 British American Tobacco Group
The British American Tobacco Group is one of the world’s leading international
manufacturers of cigarettes, marketing its products in almost every country worldwide. It
is clear leader in a competitive and fast moving business.
2.1.5 British American Tobacco Co. Ltd.
British American Tobacco, the second largest Tobacco Company in the world is also the
world’s most global tobacco company. Based in London, UK, it operates in more than 50
countries with 85,000 employees selling more than 300 brands in more than 180 markets
worldwide. Tracing its heritage back to a joint venture formed by the Imperial Tobacco
Company of the United Kingdom and The American Tobacco Company of the United
States in 1902, today's British American Tobacco Company was born on the world stage.
Extent of operation of British American Tobacco Company is given below:
America-Pacific (USA, Japan, South Korea)
Asia-Pacific (China, Indo-China, Taiwan, South-East Asia, Australasia)
Research Report 18
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Europe (50 countries including Russia)
Latin America (Central & South America, Mexico, Caribbean)
Africa (More than 50 countries)
MESCA (Middle East, South & Central Asia)
British American Tobacco, better known as BAT, is the mother-company of, at present,
around 56 companies worldwide. British American Tobacco (BAT) is the world’s most
international tobacco group. With a market share of 15 per cent, they make the cigarette
chosen by one in seven of the world’s one billion adult smokers and make nearly two
billion cigarette world wide everyday. BAT holds strong market positions in each of its
regions and has a leadership in more than 50 markets of the 180 markets where they have
an active business presence. In total BAT employs nearly 90,000 people world wide and
has over 80 factories in 64 countries.
Gross revenue £18,143.9 million
Net revenue £1,454.5 million
Operating profit pre exceptional £2,575 million
Pretax profit £1,522 million
Adjusted EPS 57.87p
Dividends per share 29.00p
Group volumes 807 billion
Global market share 16 per cent
Assets 25,076.4 million
Stockholders’ equity 6,918.9 million
Table 1: A Brief Overview of BAT’s Operation allover the world
In order to support the company's business goals, the merger of British American
Tobacco with Rothmans International had been announced on 11 January 1999. This
global merger was completed on 7th June 1999. This brought together the number 2 and
Research Report 19
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
4 players which together will boost a combined volume exceeding 900 billion cigarettes
around the world with some 120,000 employees and a worldwide market share of 16
percent (Phillip Morris has a 17 percent share). The merger is a major step forward in
British American Tobacco’s vision of becoming the world’s leading International
Tobacco Company.
2.2 British American Tobacco Bangladesh
British American Tobacco Bangladesh is one of the oldest and largest blue chip
multinational companies operating in Bangladesh. The British American Group holds
65.91% share in the company. The Government owns 26.57% through several of its
agencies, while 7.52% is owned by other stakeholders. They are a leading business
organization in the industrial sector employing more than 1,300 employees directly and a
further 40,000 indirectly as farmers, distributors and suppliers. We have business
contracts directly with around 32,500 registered farmers who produce high quality
tobacco leaf.British American Tobacco Bangladesh (BATB) Company Limited is the
recognized leader in Bangladesh cigarette market, with a long established reputation for
providing its consumers with consistently high quality brands. The journey of this
company started long back.
BATB was established back in 1910 as Imperial Tobacco Company Ltd. with
head office in Calcutta. In the very beginning Imperial Tobacco Company (ITC)
launched a branch office at Moulivibazar Dhaka in 1926. Cigarettes were made in
Research Report 20
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Carreras Ltd. Calcutta. Imperial and Carreras merged into a single company in 1943.
After the partition in 1947, cigarettes were coming freely from Calcutta, but introduction
of customs barriers in 1948 between India and Pakistan interrupted the smooth flow of
cigarettes from Calcutta to East Pakistan. In March 01, 1949 Pakistan Tobacco Company
(PTC) came into existence with the assets. And liabilities of ITC Limited held in Pakistan
and a head office in Karachi. The then East Pakistan Office was situated in Alico
Building, Motijheel. In order to meet the increasing demand, the first factory was
established in Chittagong in 1952, in the then East Pakistan. From this time onwards
requirements for cigarettes for East Pakistan markets were met from products
manufactured in Karachi. In 1954 PTC established its first cigarette factory, although
high-grade cigarettes still flowed in from West Pakistan. The Dhaka factory of PTC went
into production in 1965.
Later in 1966, BAT set up a new factory in Dhaka, called the Dhaka Factory
(DF). After the Liberation War, Bangladesh Tobacco Company, more widely recognized
as BTC, was formed on 02 February 1972 under the Companies Act 1913. Shareholding
position for GOB and BAT was 1:2. BTC (Pvt.) was converted into a public limited
company on 03 September 1973. British American Tobacco played a pivotal role in
BTC's creation in 1972 and since then has been involved in the development of BTC in
every step. It is a policy of BAT that when a daughter company, as BTC was, achieves a
certain standard of performance and exhibits at certain level of profitability, its
nomenclature is upgraded to represent the original company, BAT. When BTC was
successful in producing high quality cigarettes that achieved international standards in
mid 1998, it came to be known as British American Tobacco Bangladesh, more
commonly BATB.
March 1949 Formation of PTC
1954 PTC opened its first factory in Fouzdarhat, Chittagong
1962 Opened a branch in Moulavibazar, Dhaka
1965 Building of a factory in Mohakhali, Dhaka
Research Report 21
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
February 1972 Incorporation of BTC with a paid up capital of Tk. 400 million
March 22, 1998Changed its identity from BTC to British American Tobacco
Bangladesh Company Limited (BATB)
Table 2: Brief History of BATB (Source: BATB)
2.3 Product Profile
2.3.1Premium
Launched in 1997, Benson & Hedges (B&H) maintains our dominance in Premium
segment and drives the growth of Premium price segment in Bangladesh market. Within
a short time Bangladesh became a leading B&H market across the British American
Tobacco world. Although the price of B&H was unilaterally increased in 2004, B&H
remains a successful brand in our portfolio. BAT Bangladesh was the first market to
launch the new pack of B&H at the beginning of September 2005.
1.3.2 High
Launched in 1980, John Player Gold Leaf is one of the highest selling brands of our
Company - dominating the High price segment. In 2005, we launched three flavored
Limited Edition Product and Packs under the ‘Taste the World’ campaign, which were
extremely well received by consumers. In July 2006, three Limited Edition Product and
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CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Pack (LEPP) were launched under the campaign ‘Blender’s Choice’. BAT Bangladesh
launched John Player Gold Leaf Smooth on December 2008. The new cigarette with its
enhanced filtration and perforated long filter is geared to offer smokers a smoother
smoking experience with a full bodied flavor.
Pall Mall is the first Global Drive Brand launched in Bangladesh on 19 March 2006. Pall
Mall Lights was the first brand to unleash a mainstream Lights segment, while Pall Mall
Menthol tapped into a latent Menthol segment. As the first brand to offer a range of
product choices, stylish beveled edge packs and designer sticks, Pall Mall was able to
create particular appeal to the ASU30.
2.3.2 Medium
Star, launched 40 years ago, is still a dominant brand in this segment. Currently it is the
highest volume generating brand for the Company. At the same time, the cigarette stick
carried a new look with brighter paper and bi-color dye.
2.3.3 Low
Although BAT Bangladesh has very strong brands in the other segments, we did not have
any offer in this sub-value segment. In order to meet the demand of the smokers of this
increasing Low segment, we launched this GDB+2 brand ‘Viceroy Smooth Taste’ in
August 2007. Subsequently, we launched ‘Viceroy Rich Taste’ in March 2008. In August
2008 we have launched Viceroy Rich Taste 10s pack.
Research Report 23
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
2.4 HR Profile
Source: BATB
Figure1: Board of Directors
BATB is a public limited company. The Managing Director is the operational
head and appointed by the British American Tobacco. Head of every department carries
out their functions with the help of line managers. Different departments have different
structure according to their function and responsibility.
Research Report 24
Chairman
Managing Director
Deputy Managing Director
Finance Director
Rep. of ICB Rep. of Ministry of
Finance
Rep of Ministry of Industry and Commerce
Rep. of BAT
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
The “Board of Directors” and the Executive Committee (EXCO) govern the
overall activities of the company. The "Board of Directors" is composed of 10 members
who are called Directors. The Chairman heads the “Board of Directors”. The Chief
Executive of British American Tobacco Bangladesh is called the "Managing Director",
who is normally appointed by "BAT Holdings". The Managing Director of the company
is the chairman of the Executive Committee. This committee includes the head of all the
functional departments.
2.4.1 Corporate Culture
The Vision that motivates BATB employees and drives their operation is the desire to
extend the market leadership through world class performance across all areas of BATB
business. The company is a British company and it is guided by their principles. Their
corporate culture and organizational behavior reflects the British culture and they
embraced their home country culture in their Bangladeshi subsidiary as well. A key part
of their work is helping nurture an open, confident and winning culture, where they are
all aligned in delivering consumer satisfaction. It’s their job to ensure that people have
the opportunity to release their energies in a constructive and focused way. They want
their employees to have a clear vision for the business and to foster enthusiasm to drive
superior performance. Furthermore, they expect their leaders to engage with their teams
and to develop their people.
Their culture also encourages ongoing development, so their role includes optimizing
personal and organizational learning in order to leverage the capability of both the
business and the individual to establish the company vision. They strive to match the
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CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
needs of the organization and individual aspirations and encourage personal fulfillment.
Therefore, success is recognized in ways which are relevant to the individual.
2.4.2 Four Guiding Principles of BATB
1. Strength from Diversity
Actively utilizing diversity - of people, cultures, viewpoints, brands, markets and ideas -
to create opportunities and strengthen performance.
2. Open Minded
Being an active listener, genuinely considering others' viewpoints and not pre-judging.
3. Freedom through Responsibility
The freedom to take decisions and act on them obliges BATB to accept personal
responsibility for the way they affect BATB’s stakeholders.
4. Enterprising Spirit
The confidence to seek out opportunities for success, to strive for innovation, and to
accept the considered risk-taking that comes with it.
2.5 Demonstrating CSR
Over the years British American Tobacco Bangladesh has made significant
contributions to the socio-economic development of the country. BATB is one of the
highest taxpayers in the country, contributing more than Tk 1,778 crore to the
government exchequer annually in 2003. In 2004, the amount increased to 1,850 crore.
Through various projects and initiatives, BATB is involved in improving the
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environment, supporting philanthropic organizations and promoting arts and culture and
assisting with disaster relief.
The following are a few demonstrations of BATB corporate social responsibility:
A longstanding afforestation program, planting and distributing more than 39 million
trees across the country since 1980.
A one of a kind bio-filter installed in BATB’s factory to reduce odor emissions is
now used as an example for emulation by other industries.
Support for programs like Shandhani's posthumus eye donation, polio vaccination and
blood donations.
Involvement in a vegetable seed multiplication program.
Assistance to tobacco farmers in crop cycle planning and optimum utilization of land.
Run programs to promote farmers' literacy, health, hygiene, education, family
planning awareness and bank accounts.
Provide prompt relief and generous support to affected communities in cases of
natural disaster.
Commitment to the principles of sustainable development through high international
standards of environmental, health and safety practice.
Dishari – a basic IT education centre was born in Chechua, Kushtia in 2002 to spread
IT education among the youth of the country. In May 2003, the second centre of
Dishari kicked off in Moulvibazar, Sylhet. So far more than 170 students have passed
out from these two centres. We have taken this initiative to contribute to the
promising IT education sector in the country, which is a thrust sector of the
Government.
For these extraordinary achievements British American Tobacco Bangladesh has
been the proud recipient of a number of awards, including the National Export Trophy
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(2000), the Prime Minister's 1st Prize for Tree Plantation in 1999 and 2002; the Food &
Agriculture Organization (FAO); award for pioneering the development of the vegetable
seed industry. The company received the Prime Minister’s 3rd prize in 1993 and 1st prize
in 1999 and 2003 for its afforestation initiatives.
2.6 International Marketing Standards (IMS)
As a responsible market leader in a controversial industry British American
Tobacco Bangladesh has proactively introduced a Code of Conduct regarding the
marketing of tobacco products. BATB has always conducted its business responsibly and
is committed to demonstrating sensible self-regulation for BATB’s products, which carry
health risks and should be consumed by adults only.
The Code of Conduct is a set of provisions and principles, which clarifies
BATB’s position and guides all aspects of BATB’s marketing activities. BATB wants to
establish itself as a standard for responsible and reasonable tobacco marketing activities
in Bangladesh. Key features of BATB’s Code of Conduct are as follows:
The following definitions are provided to assist in the interpretation of these Standards.
Adult
A person who is at least 18 years old, except where legal
requirements or voluntary undertakings entered into by the
Participants specify a higher minimum age for the lawful sale,
purchase, possession or consumption of tobacco products, in
which case the term "adult" means a person of at least that
minimum age.
Advertisement
Any communication by or on behalf of a Participant to
consumers, which has the aim of encouraging them to select one
brand of tobacco products over another.
Promotional An event or activity organized by or on behalf of a Participant
with the aim of promoting a brand of tobacco product, which
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eventevent or activity would not occur but for the support given to it by
or on behalf of the Participant.
Sponsorship
Any public or private contribution to a third party in relation to an
event, team or activity made with the aim of promoting a brand of
tobacco product, which event, team or activity would still exist or
occur without such contribution.
Tobacco
Products
Manufactured cigarettes, cigars, cigarillos, pipe tobacco, fine cut
tobacco, and pre-formed tobacco rolls.
Youth Any person who is not an adult. The term also includes the plural.
Table 3: Guideline for Interpretation of Standards Source: BATB
2.7 Distribution Network
The infrastructure of the company has a broader field where the company plays its
important role. BATB has 6 Regional Trade Marketing Offices (RTMOs), 12 Regional
Sales Depots, 1 Factory, 1 Green Leaf Threshing Plant, 7 Leaf Depots and a Head office
consisting of Corporate Head office and Production Head office. The Company’s Head
office and Cigarette factory are located in Dhaka. A Green Leaf Threshing (GLT) Plant
has been set up in Kushtia and it has started operation from April 1995. The company’s
products are manufactured in the factory at Mohakhali, Dhaka. The Plant Manager who
reports to the Production Director at the Head Office heads Dhaka factory. The company’
procures tobacco leaf maintaining the international standard and it imports processed
tobacco leaf for its international brands. It procures green tobacco from the registered
farmers of the leaf area mainly for its local brands.
The company’s authorized leaf areas are located in Kushtia, Chittagong and Manikganj.
But bulk of tobacco leafs comes from Kushtia region. The Chittagong area is under
development process and it now covers Rangunia and Lama. The company operates 7
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leaf depots in the leaf area. Four of them are located in Kushtia region, 2 of them are
located in Chittagong and other 1 is in Manikganj, The Company provides all sorts of
supports to the registered growers through its depot personnel. This includes technical
know how, agricultural inputs and financial assistance. The company performs its sales
and distribution operation all over the country through its five regional sales offices. They
are located in Dhaka, Khulna, Chittagong, Sylhet and Rajshahi. Each of the regions is
again divided into operational areas, each of which in turn is divided into territories. To
perform its sales and distribution smoothly, the company operates 10 sales depots in
different locations of the country and it has 63 authorized distributors.
2.8 Growth & Development Profile
2 .8 .1 Growth in Sales Volume
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With a very efficient and aggressive sales force and a good backup from every
other department, BATB has achieved almost a linear rate of increase in sales through
1999 to 2002. From 2003 to 2004 the rate of growth has declined (Chart 1.1).
Chart 1: Trends in Sales of BATB (2003 – 2008
2.8.2 Number of Products
After liberation, BATB, then BTC, started its journey with a few prominent
brands of the contemporary time. Among the brands: Pilot, Capstan, Gold Flake,
Embassy and King Stock were the most prominent. Along with that BTC also produced
pipe tobacco with the brand Gold Flake. Around the times, BATB has added and
subtracted many brands for the demanding situations. In 1999 and 2000, BATB had B&H
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10
11
12
13
14
15
16
17
18
19
20
1999 2000 2001 2002 2003 2004
Year
Sal
es in
Bill
ion
Stic
ks
Sales
Source: BATB
2003 2004 2005 2006 2007 2008
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
(imported), SE 555, JPGL (John Player Gold Leaf), JPGL Lights, Star (filter and plain),
and Scissors (filter and plain) under it portfolio of marketed brands. In 2001, BATB
added the name of B&H Lights, Star Classic and London into its armory. Along with that
they also started to produce the brand B&H locally.
In 2002, BATB discontinued Star Classic and Scissors Plain as they failed to gain
the market as expected. BATB also launched a massive campaign to rejuvenate JPGL
Lights to deeply penetrate through the market. In 2003, BATB temporarily discontinued
the production of JPGL Lights to look for better blends. The company has also launched
a new Campaign to re-energize Star Filters with the new packaging from 14 th June, 2003.
This new packaging and the new campaign are expected to put a significant impact on the
ongoing battle for market share between Star of BATB and Navy of Dhaka Tobacco. In
the beginning of 2005, it has launched Dunhill Cigar in a selected outlet, the Pan Pacific
Sonargaon Hotel.
2.9 Departments
BATB has been operating its business under the following major functional areas:
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Source: BATB Intranet
Historical background of the dimensions
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Afforestation is the process of converting open land into a forest by planting trees or
their seeds. The term may also be applied to the legal conversion of land into the status of
royal forest (Sternak A., 1983) Since the industrial revolution many countries have
experienced centuries of deforestation, and governments and Non-governmental
organisations (NGO's) directly engage in programs of reafforestation (the restocking of
existing forests and woodlands which have been depleted, with native tree stock) and also
in supporting private and semi-private enterprise in programs of afforestation (the
planting of renewable tree stocks for harvesting as lumber or firewood).Aside from
commercial purposes, afforestation is also undertaken by government and other
authorities to create recreational woodland. Gil W., Gorzelak A. 1999
The conversion of bare or cultivated land into forest is essential. As industrial and
economic activities expand, global environmental problems grow ever more serious.
Environmental issues will be as urgent a task for mankind in the 21st century as with
overcoming population, food, resources and energy issues. Afforestation will help
establish a forest on land that is not a forest, or has not been a forest for a long time by
planting trees or their seeds. The afforestation activities of the industrial region not only
serve as foreground and background landscape features but also contribute to the overall
improvement in the environment ( Bulfin, M. 1987).
Free Primary Health Care Primary health care is essential health care based on
practical, scientifically sound and socially acceptable methods and technology made
universally accessible to individuals and families in the community through their full
participation and at a cost that the community and country can afford to maintain at every
stage of their development in the spirit of self-reliance and self-determination. (Starfield
1992, 1998; Pincus et al 1998; Malcolm 1999).). It forms an integral part both of the
country's health system, of which it is the central function and main focus, and of the
overall social and economic development of the community. It is the first level of contact
of individuals, the family and community with the national health system bringing health
care as close as possible to where people live and work, and constitutes the first element
of a continuing health care process (Shi L. 1997)."Primary health care services focus on
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better health for a population, and actively work to reduce health inequalities between
different groups. The ultimate goal of primary health care is better health for all. WHO
has identified five key elements to achieving that goal: reducing reducing exclusion and
social disparities in health (universal coverage reforms); organizing health services
around people's needs and expectations (service delivery reforms) integrating health into
all sectors (public policy reforms); pursuing collaborative models of policy dialogue
(leadership reforms), (Baum F, Kahssay H. 1999).
Reducing the barriers, particularly financial barriers, for the groups with the greatest
health need, both in terms of additional services to improve health, and to improve access
to first-contact services is essential. (Barnett J, Coyle P. 1998)
Community Support is an act that benefits the local community. People become
involved in community service for many reasons: for some, serving community is an
altruistic act, addresses the well-being of women, men, seniors, children, youths and
minority and disadvantaged people.
It is now widely accepted that meaningful community involvement is absolutely central
to the development of healthy, strong and sustainable communities. Organizations which
serve such communities are doomed to fail unless they are willing to involve citizens in
decision making processes. These enable to directly allow citizens to share their
experiences with each other. All however have the primary aims of realizing the right of
citizens to participate in decision making processes that directly affect their lives. Today,
corporate philanthropy has evolved into a new form with the business-like description of
“corporate community involvement. Firms view community needs as opportunities to
develop ideas and demonstrate business technologies, to find and serve new markets, and
to solve long-standing business problems (R. Kanter, 1999 and C. Wild, 1993).
Training and development is the field concerned with organizational activity aimed
at bettering the performance of individuals and groups in organizational settings. It has
been known by several names, including employee development, human resource
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development, and learning and development. In the field of human resource management,
training and development is the field concerned with organizational activity aimed at
bettering the performance of individuals and groups in organizational settings. It has been
known by several names, including employee development, human resource
development, and learning and development. The principal objective of training and
development division is to make sure the availability of a skilled and willing workforce to
an organization. Through training and development there can be an increased employee
motivation, an increased job satisfaction and morale among employees. It can increase
innovation in strategies and product and reduce employee turnover (Rosemary Harrison,
2005 and Patrick J. Montana, 2000 et al).
Compensation is a systematic approach to providing monetary value to employees in
exchange for work performed. Compensation may achieve several purposes assisting in
recruitment, job performance, and job satisfaction. Compensation is a tool used by
management for a variety of purposes to further the existence of the company.
Compensation may be adjusted according the business needs, goals, and available
resources. The best practices in the management of human resources are the ones which
optimize a workforce so that it can not only get more done, but also ensure a greater level
of efficiency, timeliness and quality as it accomplishes increases productivity overall
(Joseph J. Martocchio 2001). The important areas in which the best human resources
practices must be applied include the creation of viable and attractive benefits and
compensation packages, managing the performance of employees, making sure that
business practices and worker conditions stay well within the law, creating a positive,
enjoyable work environment, talent recruitment and mapping out the best human
resources strategy for the future. Compensation can increase or maintain
morale/satisfaction and thus retain qualified employees. It can reward and encourage
peak performance and achieve internal and external equity. Well designed compensation
package can be used to reduce turnover and encourage company loyalty (Susan Peterson
1999).
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Workers Participation The thought that the participation of workers in management
is inevitable in the process of decision making for higher productivity in micro and macro
level and for the smooth functioning of industrial democracy has gained much strength
today. It is because of the realization that labor is not only the factor of production; it is
also a sensitive human element. Worker participation implies arrangements designed to
involve workers in the enterprises decision making process. This allows for workers’
involvement in the initiation, formulation and implementation of decisions within the
enterprise. The concept can also be understood in terms of a new approach to industry
and society in which people want to be interested with the taking of decisions which have
direct bearing on them. (Mankidy, 1984: Yesufu, 1984, et al)
MacGregor (1960) contend that worker participation consists basically in creating
opportunity under suitable conditions for people to influence decisions which affect them.
It is a special case of delegation in which the subordinate gain greater control, greater
freedom of choice with respect to bridging the communication gap between the
management and the workers. This serves to create a sense of belonging among the
workers as well as a conductive environment in which both the workers would
voluntarily contribute to healthy industrial relations.
The concept of workers' participation in management and decision-making processes is
not a new concept. Provisions like works committee, joint management council, and
nomination of workers' representatives in managing committee have been included in
labor laws of various countries. The demand for participation in management is to be
raised in order to bring about transparency in managerial activities and decision-making
process, which will enhance a fair sharing of gains. It will strengthen workers'
psychology as labor investors of equal status and will produce positive results in terms of
higher and higher productivity (Kester, G. 1999).
Industrial relations Industrial relations are defined by way of the exchange relations
between wage labor and capital, the structural inequality that this implies, and the power
relations in the workplace enforced through labor capital exchange. The field of industrial
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relations looks at the relationship between management and workers, particularly groups
of workers represented by a union. (Olson, 1971; Offe and Wiesenthal, 1985).
Industrial relations are basically the interactions between employers, employees and the
government, and the institutions and associations through which such interactions are
mediated. The term industrial relations have a broad as well as a narrow outlook.
Originally, industrial relations were broadly defined to include the relationships and
interactions between employers and employees. From this perspective, industrial
relations cover all aspects of the employment relationship, including human resource
management, employee relations, and union-management (or labor) relations.
Accordingly, industrial relations pertains to the study and practice of collective
bargaining, trade unionism, and labor-management relations, while human resource
management is a separate, largely distinct field that deals with nonunion employment
relationships and the personnel practices and policies of employers (Kaufman, 2003).
Sustainable competitive advantage Sustainable competitive advantage is the
unique position that an organization develops in relation to competitors that allows it to
outperform them consistently (Hofer and Schendel, 1978). As this definition suggests,
advantage can only be achieved by establishing a clear and favorable differentiation from
competitors. This difference must be tangible and measurable, and it must be preservable
over time (South, 1981). SCA allows the maintenance and improvement of the
enterprise's competitive position in the market. It is an advantage that enables business to
survive against its competition over a long period of time. Many forms of competitive
advantage cannot be sustained indefinitely because the promise of economic rents invites
competitors to duplicate the competitive advantage held by any one firm. A firm
possesses a sustainable competitive advantage when its value-creating processes and
position have not been able to be duplicated or imitated by other firms. Sustainable
competitive advantage results, according to the Resource-based View theory, in the
creation of above-normal (or supranormal) rents in the long run. (Porter, M.E, 1985:
Barney, J.B, 1991)
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Importance of the dimensions
Afforestation
As industrial and economic activities expand, global environmental problems grow
ever more serious. Organizations have come forward to minimize the impact on the
environment as forests provide industrial timber and fuel, they are also increasingly
critical in the preservation of national lands, the conservation of water resources, and
human health, culture and education. Bangladesh is one of the most vulnerable
countries to the impact of climate change. Conservation of wood and natural forest is
very essential for the sustainability of the country. In Bangladesh wood is a primary
source of fuel and this method is adopted throughout the country. Wood fuel is not
only required for tobacco curing but also for other functions which is causing natural
forest to deplete at a high rate. This initiative will favorably affect BAT to gain
sustainable competitive advantage. This will create goodwill for the overall
organization and as afforestation directly effects the environment this will give the
company an image of eco friendliness and will help the company to sustain in the
longer run.
Primary Health Care
A strong primary health care system is central to improving the health of Primary
health care services will focus on better health for a population; access to free primary
health care improves the living standard and has an effect on sustainable development.
Bangladesh is in great need of primary health care support. There are a huge number of
disadvantaged people who suffer due to the lack of primary health care services. The
health care services provided by the government are not sufficient and also it is hard
for them to avail the services due to many barriers. For an organization to identify such
a need of the country is commendable. Organization over the world is coming forward
to help their nation and its people through such initiative. Bangladeshi organization
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being able to include such initiative in their CSR program can easily sustain in the long
run.
Community Services
Meaningful community involvement is absolutely central to the development of
healthy, strong and sustainable communities. In Bangladesh there are many problems
of the rural masses are interrelated, such as illiteracy, poverty, disease, and civic
inertia. Organizations are coming forward to find solutions and this will require
development or strengthening of community-level organizations, which in turn will
require active participation of the community in planning, implementing, and
evaluating projects. Private organizations and multinationals are coming forward in
developing techniques and methods for development in collaboration with the
community. This bring sustainability to the community as a whole and also enables the
organization to function and sustain in the communities in which they operate.Thus
this dimension is important as it might bring sustainability to the organization as well.
Training and Development
This dimension is important as it analyses the importance of the training sector, which
is also related to a countries’ overall literacy rate. Companies wanting to build a
sustained competitive advantage should invest in their people. They are the
competitive advantage that can’t be copied. Training can ensure you are on top of best
practices, regulatory changes, the latest research and development, and new trends in
environmental and social responsibility. Training can also help you to engage and
retain your employees. This is particularly important in light of the skilled labor
shortage. The benefits of a highly trained workforce are obvious to both the employer
and the employee. For the employer, it is far more cost-effective to train existing
employees to learn new skills than it is to hire new employees. For employees, job
training helps them to acquire new skills, maintain job security and increase their
earning potential. Thus this advantage will help them run smoothly in the long run.
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Compensation Strategy
This strategy is given importance in this study as compensation is one of the most
important ways to motivate today’s’ workforce, and is thus an issue that needs to be
taken into consideration. For a business to achieve the results associated with a
competitive advantage it needs the right people consistently doing the right things in
the right way and for the right reasons. As a result, any rewards system that is built
must, at its core, encourage a focus on the right performance factors and reward their
execution. In Bangladesh the compensation packages do not function well.
Organizations are following the prehistoric compensation systems which were
designed in a manner of one size fits all. A well designed compensation strategy
unique and motivating will have a positive impact on the organizational sustainability
Workers Participation
This strategy is given importance in this study as it can improve workers’ efficiency
and productivity; and overall morally and ethically it satisfies human needs for
creativity, achievement, social approval, social justice, and freedom. Workers’
participation in management means giving scope for workers to influence the
managerial decision making process at different levels by various forms in the
organization. In Bangladesh this sort of strategies will surely have a positive impact.
Bangladeshi organizations follow a closed door technique and thus employees lose the
trust from the company. The demand for participation in management is to be raised in
order to bring about transparency in managerial activities and decision-making
process, and thus give an organization a unique competitive advantage.
Industrial Relations
This is of particular importance as the overall industry; with the unionized employees
is a major dimension of the whole industry. Good industrial relations can enhance a
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firm’s efficiency and gain a competitive advantage over others. As industrial relations
cover all aspects of the employment relationship, including human resource
management, employee relations, and union-management (or labor) relations it can be
a source of sustainable competitive advantage. Organizations having sound industrial
relations will be more efficient compared to other not having it.
Age of Employees
This dimension is particularly important for this study as it can be seen that a younger
and more educated workforce can be of better competitive advantage than a more
senior workforce can.
Size of the Companies with Sustainable Competitive Advantage
The size of the company depicts a part of the overall industry and is of particular
importance regarding the topic of efficiency. Size of the company can have an
influence on the company’s productivity and efficiency.
Academic Qualifications with Sustainable Competitive Advantage
Academic Qualifications are definitely a very important dimension, as the more
qualified a person is, the better he would contribute to the field that he or she is
working in. Qualified people are still less in number in Bangladesh and the more the
qualified the more can be his or her efficiency.
Marital Status with Sustainable Competitive Advantage
In the context of Bangladesh, marital status is an important factor that would have a
significant relationship with the output of an employee. Marital status is important
aspect as it can has a direct impact on people’s life and eventually on the company.
Gender with Sustainable Competitive Advantage
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Gender in Bangladesh is an important factor as the perspective and productivity might
vary with it. Gender of an individual can be important for sustainability at least in
Bangladeshi context.
Instrument Development
For carrying out this research I have prepared a set of questionnaire which worked as an
important instrument to undertake the research properly. Survey questionnaires are
typically used for feedback research to determine the current status or "situation," or to
estimate the distribution of characteristics in a population. Writing a survey questionnaire
is one of the most critical stages in the survey development process. It is common sense
to require that the concepts be clearly defined and questions unambiguously phrased;
otherwise, the resulting data are apt to be seriously misleading. Questionnaire
development is the most crucial part of survey design process. Starting from a theoretical
question of ‘how we bring abstracts into feasible questions’ to more practical inquiries in
implementation as ‘what are the ways to maximize response rate and rewards for
respondents,’ and ‘how I can minimize survey costs while achieving the goal,’
questionnaire development requires a high level of sophistication of well-rounded
knowledge of overall survey process.
A Likert scale type questionnaire is constructed for data collection. This is the most
widely used scale in survey research. When responding to a Likert questionnaire item,
respondents specify their level of agreement/disagreement to a statement. A Likert item is
simply a statement which the respondent is asked to evaluate according to any kind of
subjective or objective criteria; generally the level of agreement or disagreement is
measured and often five ordered response levels are used. The format of my five-level
Likert item questionnaire is:
1. Strongly disagree
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2. Disagree
3. Neither agree nor disagree
4. Agree
5. Strongly Agree
In order to design the questions I came up with 7 Independent variables and 1
Dependent variable. I had to design my questionnaire by using these variables in
mind. The research is based on these issues and these are the areas I wanted the inputs
from. The seven Independent variables include:
1. Afforestation Strategy of CSR
2. Free primary Health Care Strategy of CSR
3. Community Support Strategy of CSR
4. Training and Development Strategy of Hrm
5. Compensation Strategy of Hrm
6. Workers Participation
7. Industrial Relation Strategy of Hrm
Dependent variable includes:
8. Sustainable Competitive Advantage
I had to design the questions in such a manner such that a significant relationship can be
determined between the dependent and independent variables. Each of these variables is
very important and I had to study a lot to come up with the related questions from each
area.
I also went through articles, journal and text book which each of these areas were
explained in detail. I picked out topics from these reading materials and prepared the
question relating to the subjects. As I was designing the questionnaires for Bangladeshi
respondents I had to keep the language of the questions very simple yet related to the
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theories of course. I made sure that the questions were based on the Bangladeshi
perspective and also reflecting the Bangladeshi HRM and CSR systems and policies. As I
decided to conduct the research on British American Tobacco I highlighted the issues
related to the company.
Collection of Appropriate Data
I collected data through surveying individuals using the designed questionnaire. I relied
mostly on the primary data collection system. I tried to reach a large number of
respondents about 120 respondents from my selected company. I collected my data from
employees of BAT Bangladesh. I surveyed respondents mainly from the HR Department
and the Cora Department of the organizations. I have tried o generate standardized,
quantifiable, empirical data - as well as some qualitative data. I knew that the data
collection methods had pros and cons, yet I tried my level best to outweigh the cons.
I have tried my level best to designing the survey instruments capable of generating
credible and reliable data. Collection of data was a tiresome job some of the employees of
the organizations were not that cooperative, also I faced with the problem of incomplete
questionnaires.
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Statement of the problem
Maintaining sustainable competitive advantage at British American Tobacco Bangladesh
BAT Bangladesh aims to gain competitive advantage by enhancing the consumer tobacco
experience in everything they do and to build a sustainable business, one of profitable
growth which will be strengthened by each generation. The challenges faced by tobacco
companies today are immense. Criticism and allegation against tobacco companies are
making them week. The company has faced a number of significant challenges in the past
several years, including:
Market competition first from regional, and then illegal local alternatives and
illegal (duty-not-paid) imported supplies;
Continued tax increases in the face of declining market demand;
The effects of the international controversy over the harmful effects of smoking;
Their corporate culture and organizational behavior reflects the British culture and they
embraced their home country culture in their Bangladeshi subsidiary as well. We can a
see a mixture of both the culture in BAT Bangladesh’s strategies. A key part of their
work is helping nurture an open, confident and winning culture, where they are all
aligned in delivering consumer satisfaction. The Vision that motivates BATB employees
and drives their operation is the desire to extend the market leadership through world
class performance across all areas of BATB business. The company is a British company
and it is guided by their principles.
The company clearly identified that a strategic approach to human resource management,
development and administration was the primary requirement for dealing with the critical
issues that it faced, and has been following such an approach since 1996. Under this
approach, it has set out to achieve the following objectives:
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BAT Bangladesh
Create an environment within which all parties could engage each other, build
trust and produce satisfactory results.
Ensure a stable working environment in which the unions and the workers would
become partners in achieving the company’s overall objectives.
Develop leadership among workers and create an innovative environment;
Ensure the virtual absence of disruptive industrial relations issues;
Upgrade the base level of education and skill of all employees;
Achieve significant increases in productivity even while there has been a
reduction in employment levels;
Create the cultural change from a manufacturing orientation to a service
orientation;
Develop and maintain a reputation as an employer of choice.
BAT also focuses on CSR to minimize the impact in the community they operate. All
large listed companies today, particularly those engaged in controversial industries, need
to develop effective CSR programmes in order to deal with the pressures brought to bear
by, and the expectations of, governments, NGOs, consumers and other stakeholders. BAT
appears to have realized this ahead of many peer consumer companies. The company's
motives are open to being interpreted as cynical – as another lobbying effort intended to
disguise the impact of its business conduct and protect itself against unwanted regulation.
But, from a financial analyst's perspective, BAT's CSR programme has an important role
to play in the debate about the long-term future of the company. Unless companies like
BAT can convince stakeholders that they have a right to exist, they face the risk of being
shut down, nationalized, or litigated into bankruptcy – with obvious significant
implications for the values shareholders are likely to place on those companies. Scrutiny
by governments, media, NGOs and health campaigners is today so intense that if BAT
treats its CSR programme as a mere ‘smokescreen' – as opposed to an integrated part of
the company's strategy and conduct - it faces severe reputation risk and a potential
regulatory backlash, which could have a bad negative impact on the market's valuation of
the company. (BAT About Us 2007)
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Gaining a competitive advantage today is a race against time. Competitive advantage,
however, no longer depends on the technologies used for drug discovery, such as
chromatographs or gene libraries. Any company with enough capital and the right
training can deploy these technologies. A sustainable competitive advantage is derived
from a firm's resources or capabilities that are unique to the firm cannot be easily
duplicated by competitors, and offer customers special value (Barney 1991; Hitt, Ireland,
and Hoskisson 1995).
CSR has emerged as an inescapable priority for business leaders in every country. Many
companies have already done much to improve the social and environmental
consequences of their activities. Some companies use CSR methodologies as a strategic
tactic to gain public support for their presence in global markets, helping them sustain a
competitive advantage by using their social contributions to provide a subconscious level
of advertising. (Pohle, G. and J. Hittner , 2008). The link between competitiveness and
CSR at firm level has long been an important topic for both CSR researchers and
practitioners, often under the banner of “the business case for CSR”. CSR can contribute
to a number of social, environmental and economic policy objectives. The aim of this
report is to provide an up-to-date overview of how CSR can contribute to
competitiveness. (Porter, M. and M. Kramer (2006)
Careful and painstaking nurturing of the human resources also adds value to the
organization in the long run. An effective Human Resource HR management framework
is instrumental in sustaining competitive advantage in the market. Strategic human
resource management has been linked to competitive advantage and in turn to
organizational performance. This linkage has been viewed from a universal, a contextual
or a configurationally perspective. Sustainable competitive advantages are fundamental to
a firm's long-run success. Strategic HRM practices can enhance the competitive
advantage of businesses results of the practices are reflected in real financial gains for the
business (Lengnick-Hall, C.A. and Lengnick-Hall, M.L, 1988).
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Michael Porter (1985), in his popular value chain approach to competitive advantage,
describes human resource management as a support activity, that along with technology
development and procurement, serves to sustain higher priority primary activities.
Sustainable competitive advantage is the unique position that an organization develops in
relation to competitors that allows it to outperform them consistently. As this definition
suggests, advantage can only be achieved by establishing a clear and favorable
differentiation from competitors. This difference must be tangible and measurable, and it
must be preservable over time (Hofer and Schendel, 1978).
According to Coyne (1986), competitive advantage is meaningful only if it is felt in the
marketplace; that is, the differentiation must be perceived as an important buying
criterion to a substantial customer base. Such an advantage will be sustainable, only if it
cannot be imitated (Barney, 1991). In essence, a gap in the capability underlying the
differentiation must distinguish the producer from its competitors; otherwise, competitors
can erase the differentiation at will (Coyne, 1086).
In order to create such a gap, the organization must deploy its unique combination of
skills and resources to exploit environmental opportunities and neutralize threats.
According to Barney (1991), three categories of firm-specific resources are available for
sustainable competitive advantage: (1) Physical resources are those tangible elements
used in a firm's production process, ranging from its plant and equipment to its access to
raw materials; (2) Organizational resources include the firm's structure and processes,
from strategic planning systems to reward and control processes; and (3) Human
resources include the training, experience, judgment, relationships, and insight of
individual managers and workers in a firm (Barney, p. 101).
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Afforestation
Free Primary
Health Care
Community Support
Training & Development
Compensation
Workers Participation
Outcomes: Motivation, Retention,
Commitment,
Engagement, Corporate Citizenship
Industrial Relations
Sustainable Competitiv
e Advantage
CSR and HRM Practices and Policies in Gaining Sustainable Competitive Advantage at
BAT Bangladesh
Objective of the study
The objective of the study is to determine the ways that BAT Bangladesh demonstrated
commitment to their corporate social responsibility and Strategic Human Resource
Management, their outcomes or success achieved as a result, and how they are gaining
Sustainable Competitive Advantage through these. Also this paper will determine the
significance and importance of strategic human resource management and CSR practices
in gaining sustainable competitive advantage in the long run.
Conceptual Model
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Fig 1 : Effects of CSR and HRM Strategies and its outcomes in gaining Sustainable
Competitive Advantage.
In this model it has been assumed that CSR and HRM practices and policies have a effect
on sustainable competitive advantage. The CSR strategies include a) Afforestation, b)
Free primary health care support, c) Community services and the HRM strategies include
a) Training and development, b) Compensation, c) Workers Participation, d) Industrial
Relations. These dimensions on the left are presumed to have an impact on Motivation,
Retention, Commitment, Engagement, and Corporate Citizenship.
It is proposed that the CSR and HRM outcomes Motivation, Retention, Commitment,
Engagement, and Corporate Citizenship will be influenced by the CSR and HRM
practices and policies of a firm. Additionally there may be a direct effect of HRM and
CSR practices and policies on sustainable competitive advantage. In total there are seven
dimensions on the left and their outcomes in the middle and the ultimate outcome of the
chain is Sustainable Competitive Advantage. The following sections will develop
hypothesis concerning the relationship between CSR and HRM practices and its
outcomes as well as sustainable competitive advantage. The next part will discuss on how
corporate social responsibility (CSR) and sustainable development is gaining increasing
prominence in the global business culture, as many businesses attempt to accommodate
the CSR agenda. It also appears that many CSR initiatives reflect the essence of human
resource management activities. Also there is a growing overlap between human
resource management and CSR and it is becoming increasingly important for HR
professionals to take a leading role in both planning and implementing CSR strategies
and in turn using CSR to deliver their own HRM objectives. To sum up, I propose that
the HRM and CSR policies and practices and their outcomes retention, employee morale,
motivation, commitment, employee engagement has a positive impact on sustainable
competitive advantage. \
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Literature Review
The Dependent Variable: Sustainable Competitive Advantage
The Independent Variable:
1. Afforestation Strategy of CSR
2. Free primary Health Care Strategy of CSR
3. Community Support Strategy of CSR
4. Training and Development Strategy of Hrm
5. Compensation Strategy of Hrm
6. Workers Participation
7. Industrial Relation Strategy of Hrm
Afforestation Strategy of CSR:
Bangladesh is one of the most vulnerable countries to the impact of climate change.
Afforestation contributes to the maintenance or improves the provision of ecosystem
goods and services at the landscape level. This strategy is promoted to benefit climate
change mitigation, biomass production, biodiversity conservation, soil and water
protection, and erosion and desertification control. This also help mitigate against natural
hazards, (wind, storms, landslides, etc.) and the impacts of these hazards on human
settlements and infrastructure (Global Environment Facility, 2008).
Afforestation programmes support and enhance the economic and social well-being of
indigenous and local communities, including landowners, operators, contractors and
workers should be promoted. Appropriate mechanisms, including legislation, should be
provided for so that afforestation can follow sustainable management practices and take
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into account income generation, rural livelihoods and poverty alleviation (Gil W.,
Zachara T., Michalak R., 1999)
Organization like BAT believes in sustainable development and is the pioneer in
establishing afforestation program in Bangladesh. British American Tobacco Bangladesh
began its afforestation program in 1980 to compensate for wood burning in tobacco
curing. The pressure on land for farming meant that farmers were at first reluctant to
allocate land to trees, especially as they might not be able to harvest them for some years.
The company’s solution was to plant fast-growing trees on canal banks, roadsides and
railway embankments. Most saplings planted are still Ipil Ipil, along with Neem and
fruit-bearing species. Neem is valued as timber and wood fuel, and its leaves can be
harvested and made into a biologically-friendly pest control agent. The company is
encouraging its use to help reduce farmers' need for chemical pesticides BAT is the
pioneer in such initittive wheres now Standard Chartered and GP came to such initiative
of making a greener Bangladesh. (BAT Afforestation Factsheet, 2008)
H1: Afforesatation programs will be able to gain sustainable competitive advantage for BAT Bangladesh.
Free Primary Health Care Strategy of CSR:
It has become a necessity to provide accessible, affordable, and sustainable primary
health care for all but it has been implemented only partially in developing countries.
A strong funding mechanism is required for strengthening primary health care in
developing countries. People all over the world people is becoming more and more
frustrated at the inability of today's health systems and services to meet their needs,
demand for a renewal of primary health care - and health for all - is increasing. Ensuring
sufficient supply of medicines and services; removing financial barriers to access and
ensuring social health protection is vital for the developing nations. Traditional healthcare
delivery models needs to be transformed (specialist, procedure or hospital-based) into
people-centered primary care networks (WHO, 2006).
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For sustainable development it is necessary to ensure that all relevant sectors (e.g. labor,
environment, education) factor health into their agendas. Maternal mortality is also a
major challenge for which concrete and efficient responses must be found. Around
500,000 women die each year from complications linked to pregnancy, labor or post
partum. Unfortunately one cannot but notice that the obligation to pay to access health
care has had and still has important negative consequences on the health situation
and the standard of living of populations, especially in countries with a low income (C.
James S. Morris, R. Keith et al. 2005)
People of Bangladesh are known as hardworking, with proven capability to preserve
mental strength in the event of unexpected extensive loss due to natural calamities, such
as floods, cyclones, epidemics, etc. But, their basic needs have remained unfulfilled.
Health is a basic requirement to improve the quality of life. National economic and social
development depends on the status of a country’s health facilities. A health care system
reflects the socio-economic and technological development of a country and is also a
measure of the responsibilities a community or government assumes for its people’s
health care. The effectiveness of a health system depends on the availability and
accessibility of services in a form which the people are able to understand, accept and
utilize. With the development of modern science and technology, health services
emphasize primitive and preventive rather than curative health care. Yet, a large number
of people of Bangladesh, particularly in rural areas, remain with no or little access to
health care facilities. It would be critical for making progress in Bangladesh’s health
services to improve the people’s participation in the health sector. The Government
therefore seeks to create conditions whereby the people of Bangladesh have the
opportunity to reach and maintain the highest attainable level of health. Bangladesh has a
good infrastructure for delivering primary health care, but the full potential of this
infrastructure has due to lack of adequate logistics never been utilized. (M. Shafiqul and
M.Woli, 2009)
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Health is one of the key focus areas where Grameenphone has consolidated its social
investments. They have undertaken a number of healthcare projects. Through USAID's
network of 318 Smiling Sun Clinics in 61 districts, we launched the "Grameenphone Safe
Motherhood and Infant Care Project," giving free and comprehensive safe motherhood
and infant care services essentially to all economically disadvantaged mothers and their
infants nationwide. Like GP Dutch Bangla Bank has also included various health care
support to the disadvantaged and invested heavily in this. They have also been
conducting free eye-care camps in rural areas where people have little or no access to
quality healthcare; carried out mass-media campaigns on National Immunization Days
and to raise awareness and advocate for necessary policy reforms on HIV/AIDS in
Bangladesh. (GP and Dutch Bangla Bank website)
Like most of the developing countries, Bangladesh’s economy is still predominantly
agriculture based and for any sort of sustainable development to take place, the farmer
base will be critically important. Primary Health Support is the major initiative
undertaken by BAT to complement the development effort made by the Government. To
provide free primary health support to the farmers’ families (farmer, his wife, his children
and his dependent parents) in the rural communities the services have been commissioned
by the selected reputed NGO health network called Smiling Sun. This support includes
free prescription and consultation from an MBBS Doctor, free consultation on maternal
health, free consultation on child health, free consultation on family planning, free
vaccination and medicines at subsidized price round-the-year for the farmers’ families.
(BAT Primary Health Support Fact Sheet, 2008)
H2: Primary Health Care Services will be able to gain sustainable competitive advantage at BAT Bangladesh.
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Community Support Strategy of CSR:
Corporate community involvement is essential in maintaining good relationships with a
variety of stakeholders, from employees, to customers, to shareholders and local
communities. Dealing with larger social welfare issues, or support for arts and culture,
were historically the responsibility of governments but now the organizations have come
forward to share the responsibility. Community involvement particular appears to have
increased in recent years but studies detect more change in the promotion of policy on
community involvement than in practice.
Community involvement increases co-operation, communication and contact between
participants and others, which fosters trust and further communication in future; It gives a
greater sense of identification with the local area and a greater mutual tolerance of the
constraints faced by the others involved; and thus a sense of partnership arises.
Organizations are using their strengths in connecting and communicating and to help
make a difference. They are getting involved with youth and education issues around the
world, preparing young people for their future. McGregor et al. (1992)
Grameen Phone and Dutch Bangla Bank and standard chartered Bank acknowledge that
development and poverty reduction depend on holistic economic prosperity. Therefore,
their aim is to increase development opportunities, enhance development outcomes and
contribute towards improvement of the quality of life of the people through their CSR
initiatives and innovative services. They are committed to facilitate empowerment
opportunities to the vulnerable people of Bangladesh, so that it enables them to better
influence the course of their lives and live a life of their own choice. (GP and DBBL,
SCB website)
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BATB has undertaken a varied Community Services program with a number of
interventions to promote sustainable development within the rural village community.
Continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce, their families and the
local community and society at large. More than goodwill, corporate community
involvement or strategic corporate philanthropy, corporate responsibility is a genuine
attempt by a company to build meaningful relationships between the corporate sector and
the rest of the society. corporate community involvement activities should be based on
respect for the individual, continuous learning, achievement and customer satisfaction
(BAT Community Support Factsheet, 2008)
H3: Community Support will be able to gain sustainable competitive advantage at BAT Bangladesh.
Training and Development strategy of HRM
Skill development may not enhance the competitive advantage of a firm directly as
because it is visualized as a short-run development process. But the significance of skill
development can be realized if the process is based not only on filling gaps in current
skill levels but also assuring the necessary skill levels to motivate employees towards
more organizational learning and teamwork. However, it should be also seen as a long
term iterative process which can contribute towards the core competencies of a firm and
can help building in rare and valuable resources by which organizations can gain
competitive advantage (Fuente de la, 2003).
Training and Development (T & D) can be the most important HRM function to treat
people well and increase the competitive power of the organizations. Training refers to
improving competencies needed today or very soon. In comparison, development refers
to activities intended to improve competencies over a long period of time (Jackson &
Schuler, 2003). The skills of the workforce and their ability to adapt to the rapidly
changing economic environment are a key source of competitive advantage. Training of
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the employed is the key to achieving a flexible work force. In-work training has been
defined as, “the range of activities that are provided by agreement between employers
and employees, either at the workplace or financed by or through the workplace”.
Training would be an important undertaking for HR, particularly in developing
economies where it is seen as a major source of sustainable competitive advantage (Hatch
& Dyer, 2004).
In Bangladesh all aspects of strategic HRM/D, training management, HR planning,
personnel development and performance management require a committed and sustained
public sector reform process to become a reality at the organizational level. A project
located within a single department can not do this. The lengthy process of strategy
development is a productive learning process for concerned personnel, the legacy of
which, may be future initiatives once junior and middle ranking staff become promoted to
senior decision and policy-making ranks. Reform in training management was
successfully demonstrated within the boundaries of Rural Livelihoods Programme project
log frames but was never successfully institutionalised. Too many barriers exist to
coordinate projects and the organisations knowledge and skill development under one
training management system (Brooks, A.C. & Brown, D.W. 2003)
Bangladeshi organizations specially BAT Bangladesh are taking more initiatives in
people development through various training and development programs such as on the
job training, of the job training, cross cultural training program, vocational training, job
rotation etc. Their main target is to make their employees more compatible to gain
maximum outcome. (BAT About us,2007)
H4: Training and development programs will be able to gain sustainable competitive advantage at BAT Bangladesh.
Compensation Strategy of HRM:
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Compensation is the approach to provide monetary value to employees in exchange for
work performed. Standard or formal compensation mainly consists of Base pay,
Commissions, Overtime Pay, Bonuses, profit sharing, Merit pay, Stock options,
Travel/meal/housing allowance, Benefits may include: dental, insurance, medical,
vacation, paid leave, retirement pay etc. In case of monetary incentives Top executives
usually receive 50-100% of their base salary, VPs & Directors get 30-50% of base,
Midlevel managers receive 20-30% of base, Supervisors 10-20% of base, and others
usually get 0-10% share of the basic. Other than that Top executives are also
entitled to stock options, Mid and lower level employees are entitled to base pay,
overtime, bonus, merit pay, allowances, and benefits. (Schwainsteiger, 2006).
Strategic compensation is a significant contributor to different forms of competitive
advantage - better business results, more effective performance, stronger capability,
higher staff attraction and retention levels, heightened motivation and employee
satisfaction (Ehrenberg R.G. and G.T. Milkovich1987). Drucker, Deming, Juran, Lawler,
1999 and others have challenged the thinking about management styles, performance
appraisals, merit pay, team and individual reward systems, and the general way that we
do business. In doing so, they have changed the problem from just selecting a
compensation plan that "feels right", to first developing relevant, sound management and
compensation philosophies. Benefits are often directed toward the male with a
nonworking wife and children (Baker, 1991). Thus, basic benefits address family income
security for a single wage earner family, and include benefits such as disability insurance,
health insurance, retirement funding, and life insurance. However, employers are
increasingly adopting non-basic benefits, such as flexible work arrangements,
telecommuting, portable retirement plans, and corporate sponsored day care centers
(Elswick, 2000). While non-basic benefits are more likely to be offered by large
organizations, such benefits are also found in smaller firms. For example, flexible work
arrangements are relatively common in small businesses, and a significant number of
small businesses also offer day care (Henneman & Berkely, 1999).
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In Bangladesh most employers want to develop a compensation & benefits structure with
only three basic objectives: to attract, retain and motivate the best employees. But then
they realize how hard it is to match employee expectations and market competitor’s
salary structure with their own company’s affordability. Employers and their HR
Managers do not know how to balance all three and develop a structure which is both
internally and externally equitable. So, in most cases, compensation management focuses
on fire fighting and keeping tabs on what competitors are doing. In Bangladesh paying
people becomes a necessity of business rather than a means to achieve an objective.
Bangladeshi employees also use compensation & benefits that they receive, as an
indicator for who they are in an organization and what is their value in the organization.
It is sometimes far removed from how much contributions they are making to the bottom
line - more linked with the labor market supply and demand factors for their technical
skills. In reality, while management of marketing sales, finance and production has
undergone massive changes in the past decade, many companies continue to use
traditional, out-of-date systems for compensation. But compensation & benefits structure
can become a vital tool that allows employers to equitably and consistently implement
their programs in order to achieve the organizations objectives. Organizations that will
emerge winners from the current economic development instability are those that are now
focusing on best practices for compensation management. (I.A. Chowdhury, 2008)
H5: Compensation strategy will be able to gain sustainable competitive advantage at BAT Bangladesh.
Workers Participation Strategy of HRM:
The concept of workers’ participation at the workplace historically evolved with the
emergence of industrializing capitalist societies as early as the Industrial Revolution, as
workers struggled to gain control of the labor process and to democratize workplace
management. Since then, workers have participated in decisions affecting their working
conditions at various times in countries with capitalist systems, and later, in those with
socialist systems. There is a vast volume of scholarly literature on workers’ participation
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at the workplace. Arguments in favor of workers’ participation can be briefly
summarized as follows: 1) it can improve workers’ efficiency and productivity; 2)
morally and ethically it satisfies human needs for creativity, achievement, social
approval, social justice, and freedom from domination; and 3) it can extend democratic
principles from the political sphere to industry ( Verma, R.K. and Syha P.R.(1991).
The thought that the participation of workers in management is inevitable in the process
of decision making for higher productivity in micro and macro level and for the smooth
functioning of industrial democracy has gained much strength today. It is because of the
realization that labor is not only the factor of production; it is also a sensitive human
element. Workers' participation in decision making will, if implemented sincerely,
honestly and effectively with a welcome approach by the employer, certainly produce
two immediate effects - one in productivity and the other in industrial relations. The
increasing productivity and sound industrial relations will work hand in hand to ensure
smooth functioning of economy and industrial democracy (Gardell B. 1982).
Increases in workers participation in the managerial decision and their empowerment, as
an outcome of economic self-sufficiency, are possible to achieve in the future within the
expected change in the export structure and growth. If Bangladesh is successful in
making necessary adjustments in the garments sector and expands its export in new areas
it may create opportunities for workers and can achieve peaceful environment in the
organization.
Worker perceptions in Bangladesh revealed that they should be more informed about the
internal and external performance of companies. More and more consultation should be
held with workers to address their concerns. This would enhance employee confidence
and improve company image. Labor issues should be given greater priority to improve
livelihood of the workers (Rahman, Mustafizur 2002)
H6: Workers participation strategy will be able to gain sustainable competitive
advantage at BAT Bangladesh.
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Industrial Relation Strategy of HRM:
Industrial relations are the relationships between employees and employers within the
organizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union.
Industrial relations are basically the interactions between employers, employees and the
government, and the institutions and associations through which such interactions are
mediated (Hirst and Thompson, 1996). IR will require, in a new organization of work, to
be built on a basis of co-operation and new forms of IR have to be developed, including
greater participation by employees, since efficient production requires enhanced levels of
both trust and commitment in firms (Batt, R. 1999).The term industrial relations have a
broad as well as a narrow outlook. Originally, industrial relations were broadly defined to
include the relationships and interactions between employers and employees. From this
perspective, industrial relations cover all aspects of the employment relationship,
including human resource management, employee relations, and union-management (or
labor) relations. Accordingly, industrial relations pertains to the study and practice of
collective bargaining, trade unionism, and labor-management relations, while human
resource management is a separate, largely distinct field that deals with nonunion
employment relationships and the personnel practices and policies of employers
(Grimshaw, D. and Rubery, J. 2003).
Industrial Relations Ordinance, 1969 deals with trade union in Bangladesh. In any
industrial and commercial establishment, a trade union may be formed with 30% of the
total number of workers employed. If there is more than one union in any establishment,
Collective Bargaining Agent is determined by the Registrar of Trade Union through
sector ballot for a term of two years. Only the Collective Bargaining Agent is authorized
to raise industrial disputes and negotiate with the management. The Director of Labor of
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the government acts as the Registrar of Trade Union in Bangladesh. Till December 1996;
4955 trade unions (worker's union - 4104 & employers association- 851) exits in
Bangladesh having 17, 30, 927 members. Industrial Relations Ordinance, 1969 provides
that any worker or employer/ has the right to form a union/association without previous
authorization. But such a union/association can not function as a trade union without
being registered under the law. The constitution of Bangladesh has recognized
fundamental rights of the workers at work places including necessary social protection.
Globalization and changing economic condition influencing traditional workplace
values, nature of employment, working condition, welfare facilities, industrial relations
and contemporary social protection system. (Mondal, Abdul Hye, 2000).
H7: Industrial relation strategies will be able to gain sustainable competitive advantage at BAT Bangladesh.
Methodology
The data were obtained from British American Tobacco Bangladesh, which is a
multinational operating in Bangladesh. The study’s main variables are CSR, HRM and
Sustainable competitive advantage. From these variables 8 dimensions were created. This
research is essentially exploratory in nature based on a review of the existing knowledge.
A total of 115 randomly chosen respondents from inside the organization were surveyed.
An online version of the questionnaire would be sent to their lotus notes. I will try my
level best to designing the survey instruments capable of generating credible and reliable
data. Primary sources were the biggest source of information in the research. The analysis
is based on the primary source which is, the questionnaire was based on seven
dimensions of strategic HRM & CSR and one dependent dimension which is the
consequence of applying these variables in the organization is the sustainable competitive
advantage. Also I would be using different reliable and applicable data analysis
techniques which would help me to test the hypothesis.
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After the completion of collecting data from the BAT Bangladesh, the main task was the
data analysis part of the report, which was a massive task in order to find the result
whether our hypothesis about strategic HRM was correct or not. For the accomplishment
of the statistical data analysis procedure SPSS (Statistical Package for the Social Science)
was used which is a popular statistical software used by commercial, government and
academic organizations to solve business and research problems.
Independent Variables:
For the purpose of analyzing data in the questions were divided on the basis of
independent variables which are –Afforestation, Free Primary Health Care, Community
Services, Training and Development, Compensation, Workers Participation and
Industrial Relations. Through these independent variables the dependent variable was
created. Organizations can gain sustainable competitive advantage through the HRM and
CSR strategies. Previous researches covered in the literature review part have evidences
that how these variables have an impact on SCA. As part of this empirical research
survey was done on the employees of British American Tobacco Bangladesh.
Respondents were asked to give their perception on a likert scale type questionnaire.
Similar perceptual scales have been commonly used in studies of HRM practices and
organizational performance (e.g. Delaney; Huselid et al., 1996). The list of items in (see
Table 1) were also used in previous studies to determine the relation between the
variables with sustainable competitive advantage.
Dependent Variables:
In this research the dependent variable is sustainable competitive advantage. The
independent variables are constructed to determine if they have a positive effect on
gaining sustainable competitive advantage. This measure is desirable since these
strategies have gained utmost importance in the recent times. Additionally, prior research
has shown that Corporate Social Responsibility and HRM correlate well with objective
sustainable competitive advantage ((Porter, M. and M. Kramer (2006). Sustainable
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competitive advantage is the unique position that an organization develops in relation to
competitors that allows it to outperform them consistently (Hofer and Schendel, 1978).
BAT Bangladesh also has uniquely positioned itself which enables them to outperform
and also may be to gain sustainable competitive advantage. Respondents were asked
through the designed questions about what and how the strategies used contributes to
sustainable competitive advantage.
ResultsThe first step that was carried out was the factor analysis; with varimax rotation on the
individual CSR and HRM items (see Table 1). Datas were reduced, compiled, and
extracted into principal components, where the individual questions of each variable were
sorted by size. This helped in data reduction to identify a small number of factors that
explain most of the variance observed in a much larger number of manifest variables. The
factor once reduced then we used a factor weight of 0.40 as minimum cut off and were
then tested for reliability. From the first factor afforestation has a Cronbach’s Alphas (α =
0.64) which is above the reliability level 0.40. Through principle component analysis we
found each of the questions alpha values were determined and used to explain most of the
variance observed as a result certain items were disregarded named as residual items. The
second factor Primary Health Care Support has a Cronbach’s Alphas (α = 0.81). This
means that this variable has a high reliability since the coefficient of reliability is high
also this value is much higher than the suggested reliability level. Community Services
has a Cronbach’s Alphas (α = 0.69). This means that the data obtained for this variable
has a high reliability level. The 4th Factor Training and Development has a Cronbach’s
Alphas (α = 0.75) which is reliable can be used to determine the impact of T& D on
Sustainable competitive advantage. From this dimension 7 items were regarded each
having its own alpha value above the factor weight and can be used for other tests and 3
items were disregarded. The 5th factor Compensation has a Cronbach’s Alphas (α = 0.64)
which is relatively high. From this dimension only 3 items having alpha value above the
factor weight were regarded and rest of the items was disregarded as their values were
beyond the minimum cut off point. The 6th factor Workers Participation has a Cronbach’s
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Alphas (α = 0.92). The coefficient of reliability is very high comparatively and can be
very well used to determine the impact of this variable on the dependent variable. From
this dimension 9 items were regarded and 1 was being disregarded as its value was below
the cutoff point of alpha value 0.40. The 7th factor Industrial Relations has a Cronbach’s
Alphas (α = 0.82) which is means that the reliability coefficient is high, and this variable
can be used to obtain sustainable competitive advantage. Finally comes the last factor
which is the Dependent variable of the study Sustainable Competitive Advantage. This
variable has a Cronbach’s Alphas (α = 0.70) higher than the suggested reliability level.
From this dimension 9 items were regarded and 1 item was sent to the residual item as its
alpha value was less than the cutoff point. Together these independent variables provide a
broad assessment of perceptions of Sustainable competitive advantage.
Table 2 provides the means, standard deviations, and bivariate Pearson correlations for
the main variables. Consistent with much prior research on the relationship between CSR
and HRM practices effect Sustainable competitive advantage some of the independent
variables have significant positive correlations on SCA while others do not have
significant relationship or is not correlated. 2 of the CSR and 1 HRM strategies are
positively and significantly correlated. These are Primary Health care support which is
positively and significantly correlated with a value of 0.71(**) Community Services with
significance level of 0.84(**) and Training and Development with a significance level of
0.51(**). This provides us with some support for our hypothesis. Other variables such as
Compensation and Industrial Relations are positively correlated and afforestation and
worker participation negatively correlated but these variables do not have a significant
relationship with sustainable competitive advantage. Also Department which is a control
variable is negatively correlated with SCA (at p<.05).
Table 3 shows the results of the regression analysis for the independent variable on
sustainable competitive advantage. Regression analysis was used determine the
relationship of the variables with sustainable competitive advantage to test our specific
hypotheses. From the independent variable 3 out of 7 has a significant relationship with
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sustainable competitive advantage. The standardized beta coefficient is negative for
afforestation and it is negatively but significantly related with SCA. This means that with
the increase in afforestation the effect on SCA decreases. Primary Health Care and
Community Services are positively and significantly related which means that the effect
on SCA is increased as these initiatives increases. It can also be seen that the control
variables, firm size was negatively but significantly related with Sustainable competitive
advantage indicating that smaller firms slightly outperform the larger firms in our sample.
The model 1 was highly significant, with an R2 of .823 and an adjusted R2 of .800. This
indicates a high ability of the explanatory power of the predictor variables in explaining
the variations in the dependent variable (sustainable competitive advantage)
In conclusion, consistent support was obtained for our hypothesis H2 ( Primary Health
Care Support) , H3 (Community Support), H4 (Training and Development). Like much
previous research, our results provide mixed support for the importance of HRM and
CSR strategies in gaining sustainable competitive advantage.
In table 4 the Eigenvalues has been explained. The (Eigenvalue) above, we find the
variance on the new factors that were successively extracted. As we can see, factor 1
accounts for 29 percent of the variance, factor 2 for 36 percent, and so on. The scree plot
of each of the variables are provided in table 5 which illustrate a simple line segment plot
that shows the fraction of total variance in the data this also shows the sorted eigenvalues,
from large to small, as a function of the eigenvalue index.
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Discussion and ConclusionThe results of this study provide moderately strong support for the existence of a
positive relationship between CSR and HRM practices and policies with sustainable
competitive advantage at BAT Bangladesh. The value creation capability of HR practices
within a firm is vital to firms’ performance. The source of sustained competitive
advantage lies in the human resources practices used to attract, utilize, and retain them
(Boxall, 1996; Wright et al., 1994). HR practices can be a source of sustained competitive
advantage, but for that HR practices has to be rare, inimitable, and non substitutable
(Barney, 1991). Michael Porter and Mark Kramer state in Harvard Business Review that
if “corporations were to analyze their prospects for social responsibility using the same
frameworks that guide their core business choices, they would discover that CSR can be
much more than a cost, a constraint, or a charitable deed—it can be a sources of
opportunity, innovation, and competitive advantage. From this study it has been found
that some of BAT Bangladesh’s CSR and HRM Practices contribute positively towards
Sustainable Competitive Advantage while others have little potential for being a source
of sustained competitive advantage. Consistent with much prior research on the
relationship between CSR and HRM practices effect Sustainable competitive advantage
some of the independent variables have significant positive correlations on SCA while
others do not have significant relationship or is not correlated. Primary Health care
support Community Services and Training and Development is positively and
significantly related other variables such as Compensation and Industrial Relations are
positively correlated and afforestation and worker participation negatively correlated but
these variables do not have a significant relationship with sustainable competitive
advantage.
It is determined from the study that a positive and significant relation exits between Free
Primary Health Care Support and sustainable competitive advantage. The finding provide
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preliminary support for Hypothesis 2 and suggest that, other things being equal, a CSR
system focused on enhancing primary health care support in Bangladesh is a valuable
approach for attaining sustainable competitive advantage. Health care is inaccessible for
many Bangladeshis. Almost half of the country’s population lives below the poverty line,
often in makeshift shelters with inadequate sanitation. Flood- prone areas are subject to
waterborne diseases. In Bangladesh, the status of healthcare is similar to the one of many
developing countries: medical practitioners in Bangladesh often operate in relative
isolation, dealing with diverse health care needs. Worldwide there is difficulty in
retaining specialists in non-urban areas. The distribution of specialists in Bangladesh is
indeed uneven. Tertiary care hospitals are also concentrated within the capital and few
other major cities with large segments of the population having no access. (Khan, Naila,
2008) It is noted that the highest number of problems (22%) in health sector are related to
inadequate number of physicians, wrong treatment, negligence towards patients, and
absence from duty and unwillingness of doctors to stay at rural areas and small towns.
The other problems are related to supplies, equipment, beds etc (21%). Some other major
problems often discussed also include lack of ambulance services as well as proper
referral services (Prince, MR, 2001). BAT has identified the right need of the people of
Bangladesh and this will enhance the company’s reputation and goodwill and will
position the company into a responsible company. Organizations all around are coming
forward to engage themselves in providing heath care services to the deprived in order to
gain sustainability. According to CSR center in Bangladesh multinationals like Unilever,
Standard chartered Bank, Grameen Phone, Dutch Bangla Bank has all kept primary
health care support in the top list of their CSR initiative. Also there needs to be a balance
between the CSR activities in order to maintain a positive impact on sustainable
competitive advantage (M Alimullah Miyan, 2006). For sustainable development it is
necessary to ensure that all relevant sectors (e.g. labor, environment, education) factor
health support into their agendas. (C. James S. Morris, R. Keith et al. 2005) Primary
Health Support is the major initiative undertaken by BAT to complement the
development effort made by the Government. This initiative by BAT Bangladesh will
significantly contribute in achieving Sustainable competitive advantage.
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The ultimate success of an organization depends on its contribution towards the
development of the country, which ensures better economy and thus greater opportunity
for business. The result obtained from the study also supports hypothesis 3, it can be
determined from the study that community services have a positive and significant
relationship with sustainable competitive advantage. This means that if a company has
other things being equal a company if has community services included in their CSR
initiative and the more they get involved in providing such services they will be able to
gain sustainable competitive advantage. BAT Bangladesh’s CSR in can also contribute a
lot to community development. Many corporate houses are coming forward such as
DBBL, Unilever with their variety of community services. They can develop the
community by creating employment, providing primary education, contribution to
infrastructure development like road and high-ways and addressing environmental
concerns. This is more relevant for a country like Bangladesh where the government
interventions in these fields being augmented by corporate alliance can go a long way in
developing the economy, society and environment. Community involvement increases
co-operation, communication and contact between participants and others, which fosters
trust and further communication in future; It gives a greater sense of identification with
the local area and a greater mutual tolerance of the constraints faced by the others
involved; and thus a sense of partnership arises(McGregor et al. 1992). BAT Bangladesh
has undertaken a varied Community Services program with a number of interventions to
promote sustainable development within the rural village community. They doing a wide
array of community services but is not gaining even a minimum amount of visibility.
Community involvement is very vital for a company’s goodwill and many organizations
are coming forward with such initiative (BATB Fact sheet, 2007).This initiative if
implemented properly will have a huge positive impact on gaining sustainable
competitive advantage.
Training and development is a field that has a positive correlation in attaining a
competitive edge. Training and development has a positive significant relationship with
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sustainable competitive advantage. The finding is a support for Hypothesis 4 which
suggest that, other things being equal, an HR system focused on enhancing human capital
by providing training and development can attain sustainable competitive advantage.
Without training the people of a country and thereby an industry, it would be impossible
to attain what is wanted. Training would be an important undertaking for HR, particularly
in developing economies where it is seen as a major source of sustainable competitive
advantage (Hatch & Dyer, 2004). BAT Bangladesh is reputed as the employer of choice
and this is because they recognize that getting the right start is crucial to building a
successful career. This is how they approach their early training and career development
program. Their training has a series of phases which starts with Induction, Functional
Development, Managerial Development, Business Awareness and ends with Performance
Appraisal. Investments in employee training may also be important for BAT striving to
achieve a competitive advantage through high-quality products and services, in a
developing country like Bangladesh. (BAT about us, 2007)
Our results are in line with most previous research (Ehrenberg R.G. and G.T. Milkovich
1987) that compensation is a contributor of competitive advantage. This study supports the
hypothesis 5 partially as the result indicates that there exist a positive relationship between
compensation and sustainable competitive advantage but does not affect it significantly.
Organizations are challenged with attracting, retaining and engaging employees;
organizations are pursuing a long-term approach to employee development. BAT
Bangladesh is more concerned in these issues to retain their talent pool and make them
more motivated towards the organization. It is evident that if there is a better
compensation for the employees and workers of an industry, then there will definitely be
a competitive edge, compared to the neighboring countries. However, in Bangladesh
there still lacks proper compensation practices and skills, for which reason it can be
interpreted that there is a negative relationship between these two variables. BAT
Bangladesh is still following a uniform and prehistoric compensation system and they
have not evolved their compensation package compared to other BAT’s around the globe.
This is why the employees or the workers are not satisfied with the overall compensation
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package and which is why it does not have a significant relationship. In many instances,
declining performance and turnover problems are related to weaknesses in the
organization's compensation and benefits package. Those weaknesses, primarily the lack
of individual rewards and the ineffectiveness of system rewards, may be addressed by the
organization through a reevaluation and redesign of the organization's pay and benefits
package. The expected results of such a redesign include improved morale, increased
productivity and a higher retention of satisfactory employees (White, William L. and
Becker, James W, 1980). A Proper and well designed compensation package will
contribute positively towards attaining sustainable competitive advantage.
Industrial relations do have a strong and a positive relationship in BAT Bangladesh. It is
evident that proper industrial relations would cause a sector and an industry to flourish.
However, in the context of Bangladesh, these Industrial relations are not yet as strong as
they are in other countries. This could be seen from our study as well as , even though
there is a strong and very positive relationship and understanding of this among the
people, there is still les significance of this in the context of Bangladesh.
Industrial relations do have a positive relationship with competitive advantage which is in
line with previous research of (Hirst and Thompson, 1996). The result only partially
supports the hypothesis 7. It is evident that proper industrial relations would cause a
sector and an industry to flourish. However, in the context of Bangladesh, these Industrial
relations are not yet as strong as they are in other countries. This could be seen from our
study as well as , even though there is a strong and very positive relationship and
understanding of this among the people, there is still les significance of this in the context
of Bangladesh. As a result new forms of IR have to be developed, including greater
participation by employees, since efficient production requires enhanced levels of both
trust and commitment in firms (Batt, R. 1999. The positive relationship does indicate that
BAT Bangladesh’s Industrial relation is strong and has the capability to have a positive
impact on sustainable competitive advantage.
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It is determined from the study that a negative relation exits between afforestation and
sustainable competitive advantage. This result is contradictory and rejects hypothesis 1
and also the theory of the conceptual model developed. The significance level says that
there is a strong negative correlation between the variables. This is because people are
not that much aware of BAT Bangladesh’s CSR initiatives. People have a notion that
BAT Bangladesh being a tobacco producing company is harming the environment and
cutting down trees in order to burn them and treat their tobacco leaves. Also they are
harming the farmers’ community by making them cultivate tobacco. People are not aware
that BAT Bangladesh's afforestaion initiative is benefiting the whole country and the
farmers’ community both environmentally and economically. BAT believes in
sustainable development and is the pioneer in establishing afforestation programme.
Bangladesh began its afforestation programme to compensate for wood burning in
tobacco curing. They are aim is to make a greener Bangladesh. Not many people are
aware of their intention and also inside the organization employees from other
department other than CSR have very little knowledge about company’s CSR initiatives.
Due to lack of knowledge of what afforestation is and how it is benefiting the country as
a whole the result is such bizarre. Through the literature review it can be understood that
afforestation brings in sustainability and organizations who is the pioneer of taking such a
noble step for the country will gain competitive advantage. This keeps BAT Bangladesh
in the upper hand from other company’s involved in CSR activities. If BAT Bangladesh
properly publicizes their afforestation initiative then the company can gain SCA by
investing more on afforestation program as part of their CSR activities. But other
initiatives will also have to be there in their CSR activities for the company to sustain in
the long run.
From the results it can be determined that Workers Participation has a negative
relationship with Sustainable Competitive Advantage. This result is also contradictory
and rejects hypothesis 6 and the conceptual model developed. Workers' participation in
decision making will, if implemented sincerely, honestly and effectively with a welcome
approach by the employer, certainly have a positive impact on SCA. Most industrial
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relations scholars (especially in the US) seem to stress the degree to which workers
participate in decisions related to their own work, thus increasing workers involvement
and responsibility and as a result competitive advantage in the longer run. Individual
specialized work has been progressively substituted by collective work team and
worker’s involvement groups functions (Batt, 1999; Ichinowsky et al., 1997; Osterman,
1994 and 2000). Workers participation will increase their loyalty and dedication towards
the organization which in turn will benefit it in the longer run. In BAT Bangladesh there
is workers participation but not to an extent that it would contribute to sustainable
competitive advantage. But this may have to go a long way and needs to be implemented
properly and effectively to have the utmost results.
From the analysis of the data collected during the survey and the evidences from the
dialogue sessions of the social report, it can be said that British American Tobacco is
doing a praiseworthy job in the Corporate Social Responsibility sector but is lacking the
effectiveness and visibility due to limited communication (stated based on the responses
of the stakeholders at the dialogue session of Social Reporting Cycle 2). The company
wants to establish itself as a benchmark company in CSR activity. To gain this the
company needs to focus more on the communication of the brilliant Corporate Social
Responsibility initiatives that the company is undertaking. The company should be more
vocal about its achievements and in turn gain effectiveness, visibility and hence
appreciation.
British American Tobacco is one of the reputed multinational companies in Bangladesh.
They have continued their business with good reputation. As a leading company they
always try to maintain the highest quality of their products. Their human resource
department is strong & treats their employees as an asset. BAT has already earned
reputation as a very potential Multinational Company of the country. This has been
possible due to skilled manpower, which has been developed by taking proper
recruitment and selection strategies and giving sufficient training and development
opportunities and also retaining their employee through providing adequate compensation
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and benefit .We write in no uncertain term that BAT is functioning very well and we
hope that it will continue its operations and will become the trendsetter of the Human
Resource Management practices of Bangladesh.
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Recommendation & Implementation
From the analysis it can be determined that BAT Bangladesh is needs to design and
modify some aspects of their HRM and CSR strategies so that it can help BAT
Bangladesh gain sustainable competitive advantage. In this study I came up with certain
recommendations which might be helpful for the chosen organization. However, the
chosen organization, British American Tobacco Bangladesh is one of the biggest
multinationals in Bangladesh. It is always considered that the multinational
organization’s business practices would be better and efficient comparing to the local
organizations. BATB, as a multinational has a standard business practices for its own.
Following are some of the few recommendations given to BATB:
Afforestation
BATB should strengthen the afforestation program outside its growing region and
publicize it more.
British American Tobacco Bangladesh is doing a praiseworthy job in the afforestation
of the country. But British American Tobacco Bangladesh can expand the
afforestation program to other areas apart from the growing region. This is advised as
engaging in afforestation only in the growing regions might give the general people
an idea that BATB is doing it only for their business need (woods was a major source
of fuel used in tobacco curing, though BATB is now encouraging the use of other
alternatives like hush or hay). If the afforestation is done beyond the growing region,
the effort will gain visibility as a social contribution. They should also create
awareness inside the company between their employees. Also design the program in
such a way so that the employees from different departments can participate in their
CSR activities. Hence BATB will be able to achieve its goal and can be recognized as
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a responsible company With the enactment of the new law and the other laws
prevalent for the company many doors of communication is being shut down for
BATB. However the company should not hold back the communication of the good
that it is doing for the society. Recently BATB has made its presence felt through
TVCs on Afforestation and Dishari. The company has many success stories to tell and
thus can introduce documercials in the electronic media. Brining out the success
stories and revealing them to the general mass will help BATB gain more
effectiveness and visibility of the CSR activities that the company is undertaking.
Free Primary Health Care Support
Increase investment in the health sector and extend their services to more
underprivileged people.
As it has been observed from the research that health sector is one of the sectors in
which stakeholders expects a company to invest most in. Through the social reporting
process and the dialogue sessions BATB has come to know that it stake holders
expects the company to invest a lot in the health sector. One issue is that as BATB is
operating in the end market that sells a risky product the company should thus be
present more strongly in the health sector, as per the expectation of the stakeholders
of the company. At present BATB is providing health assistance to its growers and
has recently increased the span to bring the farmer’s family under the umbrella of the
“Surjer Hashi” services. They should also extend their services to other deprived
community hence not only providing services to their farmer community. This will
create goodwill and BAT will get better visibility.
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Community Services
BATB should increase investment in providing a wide array of services under their
community services program.
British American Tobacco Bangladesh is doing a wide array of community services
but is not gaining even a minimum amount of visibility. One reason is that the
company is spending too much on other initiatives and too little on this. This
discrepancy can pull the average performance down. Thus the company should invest
in all the initiatives with equal importance and urgency. Other multinational
companies in Bangladesh are spending a huge amount on their CSR activities and
focusing more on Community services. BAT Bangladesh has a very narrow focus on
the community services and that is why it is the least visible compared to other
initiatives.
Training & Development
BAT Bangladesh should modify their training facility and focus more on Off-the-
Job Training.
This type of training gets employees away from their work environment to a place
where their frustrations and bustle of work are eliminated. This more relaxed
environment can help employees to absorb more information as they feel less under
pressure to perform.
This type of training can be a source to supply the latest information, current trends,
skills and techniques for example current employment legislation or other company
law and regulations, current computer software or computerized technologies or
improved/innovative administrative procedures. These new skills can be brought back
and utilised within the company. On the job training is always preferable but HR
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managers also have to think about the feasibility and cost minimization thing. Off-
the-job training like classroom lectures, workshops, presentations, and other
simulated situations can be arranged for training of the employees to keep the cost
minimal. BATB has expensive member of training, which is very useful for their
employee’s skill development. But training should be given in a regular basis and to
save time, only needed training should be given to the employees.
Nonetheless there is no alternative for continuous training and development to protect
the employee competence from becoming obsolete, and for that performance-based
training can also be a handy option.
Compensation Strategy of HRM
BAT Bangladesh should wrap up their old compensation system and come up with
a new Cafeteria Style compensation system.
A very important aspect to keep employees satisfied and motivated towards work is
compensation. There is no alternative to keep your employees happy other than a
complete compensation package. From the survey I found out that the base pay is
more or less satisfactory with the majority, but the discrepancy arose mainly with the
benefits and other fringe benefits. So for that case our group suggests a policy which
is called “Cafeteria Style” system. In this system, the employees are allowed to
choose from a ‘menu’ of benefits, i.e. health benefits, insurance, dental, which is
custom made for each and every individual employee according to their choice.
Cafeteria style benefits provide employees the opportunity to choose among a variety
of benefits that best fit their personal and family needs. Employers get the most value
for the money spent if employees choose only those benefits that they need. Benefit
dollars are wasted when everyone gets the same package whether they need it or not.
By implementing this system, the employees will be happy as they are getting what
exactly they need and the company also does not have to incur losses by pushing the
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benefits which are not wanted thus leading the pathway towards sustainable
competitive advantage.
Industrial Relations
BAT Bangladesh’s Industrial Relations should be based on mutual recognition,
trust and good faith.
Industrial Relations is a crucial issue for the sustainable competitive advantage of the
organization or the organization as a whole. HR managers must be very careful in
portraying and establishing the environment within the organization. Employee
suggestions, grievances and complaints must be given utmost importance to and
should be made sure that it is delivered to where it was intended. Two way
communications must be ensured.
Workers Participation
An attitude of mutual co-operation, confidence, and respect for each other should
be fostered, and Management, in particular, should be genuinely receptive to the
labor’s ideas.
Participation provides education to workers in the management of industry. It fosters
initiative and creativity among them. It develops a sense of responsibility. Informal
leaders get an opportunity to reinforce their position and status by playing an active
role in decision-making and by inducing the members of the group to abide by them.
Workers’ participation in management means giving scope for workers to influence
the managerial decision making process at different levels by various forms in the
organization.
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Sustainable Competitive Advantage
BAT Bangladesh should design and implement their HRM and CSR strategies in a
way that increases their chances of gaining sustainable competitive advantage.
BAT Bangladesh is a company with unique skills and resources and they are working
to implement strategies that competitors cannot implement as effectively. BAT
Bangladesh should understand their competitive advantage which is critical. If they
do best in this then it will draws customers towards and not towards competitor's.
Extremely successful companies deliberately make choices to be unique and different
in activities that they are really, really good at and they focus all of their energy in
these areas. BAT Bangladesh’s CSR and HRM Strategies can make them gain
sustainability. CSR contributes to competitiveness by enhancing the long-term
sustainability of business. It fosters relationships between companies, trade unions
and non-governmental organizations as well as with those directly involved in the
company, customers and the public in general. Strategic HRM practices can enhance
the competitive advantage of businesses. An integrated Human Resources strategy
should be set which will combine from top to bottom, from left to right, and will take
into account all the small and petty details in to consideration. The HRM system
should promote real advantage, then HRM should be fully integrated into both the
formulation and implementation stages of the strategic management process so that it
can have a direct impact on Sustainable competitive advantage.
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