Case 1: Preparing an Effective Case Analysis Table 3 Sample General Environmenta

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Case 1: Preparing an Effective Case Analysis Table 3 Sample General Environmental Categories Technological Trends Information technology continues to become cheaper with more practical applications Database technology enables organization of complex data and distribution of information Teleco communications, and video information mmunications technology and networks increasingly provide fast transmission of all sources of data, including voice, Computer rized design and manufacturing technologies continue to facilitate quality and flexibility Demographic Trends Regional changes in population due to migration Changing ethnic composition of the population Aging of the population Aging of the"baby boom* generation Economic Trends Interest rates Inflation rates Savings rates Exchange rates Trade deficits Budget deficits Political/Legal Trends Antitrust enforcement Tax policy changes Environmental protection laws Extent of regulation/deregulation Privatizing state monopolies State-owned industries Sociocultural Trends Women in the workforce Awareness of health and fitness issues Concern for overcoming poverty Concern for customers Global Trends Currency exchange rates Free-trade agreements Trade deficits Physical Environment Trends Environmental sustainability Corporate social responsibility Renewable energy Goals of zero waste Ecosystem impact of food and energy production Competitor Analysis. Firms also need to analyze This gnalysis should probable responses. Sources that can be used information about an industry and compa

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Global Issues

Tobacco and smoking have a number of negative effects:

Tobacco smoking kills
Tobacco exacerbates poverty
Tobacco contributes to world hunger by diverting prime land away from food production
Tobacco production damages the environment
Tobacco reduces economic productivity
While the Tobacco industry may employ people, this can be considered an example of wasted labor, capital and resources.

The World Health Organization has noted that policy measures such as complete bans on tobacco advertising, promotion and its sponsorship do decrease tobacco use. However, the tobacco industry uses its enormous resources to derail or weaken laws and agreements in various countries and regions.

These issues are introduced below.

Tobacco Smoking kills

The world’s premier health organization, the World Health Organization (WHO) is quite blunt about the impacts of tobacco and smoking:

Tobacco Exacerbates Poverty

It is worth citing the WHO again for a summary of how tobacco exacerbates poverty:

Tobacco and poverty are inextricably linked. Many studies have shown that in the poorest households in some low-income countries as much as 10% of total household expenditure is on tobacco [and therefore] less money to spend on basic items such as food, education and health care. In addition to its direct health effects, tobacco leads to malnutrition, increased health care costs and premature death. It also contributes to a higher illiteracy rate, since money that could have been used for education is spent on tobacco instead. Tobacco’s role in exacerbating poverty has been largely ignored by researchers in both fields.

John Madeley also notes in his book, Big Business Poor People (Zed Books, 1999), that heavy advertising of tobacco by Transnational Corporations (TNCs) can convince the poor to smoke more, and to use money they might have spent on food or health care, to buy cigarettes instead.

Tobacco contributes to world hunger, diverting prime land from food production

Smoking also contributes to world hunger as the tobacco industry diverts huge amounts of land from producing food to producing tobacco as John Madely also notes:

Dr Judith MacKay, Director of the Asian Consultancy on Tobacco Control in Hong Kong, claims that tobacco’s minoruse of land denies 10 to 20 million people of food. Where food has to be imported because rich farmland is being diverted to tobacco production, the government will have to bear the cost of food imports,she points out.

… The bottom line for governments of developing countries is that the net economic costs of tobacco are profoundly negative—the cost of treatment, disability and death exceeds the economic benefits to producers by at least US$200 billion annually with one third of this loss being incurred by developing countries.

Tobacco production damages the environment

Madeley also describes in detail other impacts on land from tobacco use:

The land that has been destroyed or degraded to grow tobacco has affects on nearby farms. As forests, for example, are cleared to make way for tobacco plantations, then the soil protection it provides is lost and is more likely to be washed away in heavy rains. This can lead to soil degradation and failing yields.
A lot of wood is also needed to cure tobacco leaves.
Tobacco uses up more water, and has more pesticides applied to it, further affecting water supplies. These water supplies are further depleted by the tobacco industry recommending the planting of quick growing, but water-thirsty eucalyptus trees.
Child labor is often needed in tobacco farms.

Tobacco smoking damages the environment

In The Tobacco Atlas; Costs to the Economy  (last accessed July 2, 2008), the WHO noted the impact of fires caused by smoking (10% of all fire deaths, killing 300,000 people, costing $27 billion).

It also noted that 1987 saw the world’s worst forest fire caused by cigarettes happened in China in 1987, killing 300 people, making 5,000 homeless, and destroying 1.3 million hectares of land.

This hints at the side-effects of tobacco use; costly forest fires which often make for sensational headlines, especially in dry, hot conditions.

With increasing concern about climate change, the extra carbon dioxide released by such forest fires does not help.

There are also other less direct impacts to the environment. For example,

The resources required to make cigarette lighters and related products, to package and sell them
The resources required to box and package tobacco products
The resources required to employ people working in the industry, to advertise and market the products
etc.

(Many lighters are made from plastics and require a small amount of fuel. In the vast quanitities they are produced these small amounts of oil and related products that go into these can add up. As people are getting jittery about high oil prices, clean energy and so on, these kind of things add to those concerns, even if this is not seen as a priority concern.)

Given that tobacco use has no benefit for society, these costs further highlight wasted resources. While tobacco companies are somewhat held to account for the additional costs to people’s health, they are rarely held accountable for promoting products which have these additional consequences.

Tobacco Reduces Economic Productivity

Summarizing from the WHO again:

The economic costs of tobacco use are equally devastating. In addition to the high public health costs of treating tobacco-caused diseases, tobacco kills people at the height of their productivity, depriving families of breadwinners and nations of a healthy workforce. Tobacco users are also less productive while they are alive due to increased sickness. A 1994 report estimated that the use of tobacco resulted in an annual global net loss of US$ 200 thousand million, a third of this loss being in developing countries.

A report by the Campaign for Tobacco-Free Kids says that from a socioeconomic and environmental perspective, there is little benefit in tobacco growing , and that While a few large-scale tobacco growers have prospered, the vast majority of tobacco growers in the Global South barely eke out a living toiling for the companies. Furthermore, the cigarette companies continue to downplay or ignore the many serious economic and environmental costs associated with tobacco cultivation, such as chronic indebtedness among tobacco farmers (usually to the companies themselves), serious environmental destruction caused by tobacco farming, and pesticide-related health problems for farmers and their families.

The Framework Convention on Tobacco Control

The world’s first global health treaty—the Framework Convention on Tobacco Control(summary), adopted May 2003—became international law in February 2005.

Amongst other things, the treaty requires countries to

Treaty adopted despite heavy lobbying by big tobacco

This treaty was adopted despite a sustained campaign by the tobacco lobby via certain governments to dilute it—particularly the United States, Germany and Japan, as the British Medical Journal(BMJ) reported (Tobacco Lobby Threatens to Derail Global Antismoking Treaty, February 12, 2005, Volume 330, p. 325.)

Furthermore, pressure from the industry has not let up … the United States proposed a clear reference to global trade rules potentially allowing companies and governments to attack the legally binding health treaty under trade laws, even though the … treaty gives governments the right to prioritize health over trade issues.

As the BMJ also noted, poor countries are now more vulnerable to the powerful tobacco industry and need support in implementing tough anti-tobacco measures.

In recent years, in wealthy countries, attempts have been made to introduce smoke-free legislation. In California for example, smoke-free laws were introduced in July 1998. As the Californian Medical Association’s president, Dr. Robert Hertza commented, California’s lung cancer rates have fallen six times faster than in US states without smoke-free laws. (Smoke-free workplaces would hit tobacco profits, BMJ, Vol. 330, p.325) This illustrates the potential of treaties such as this global tobacco treaty to save lives of millions.

WHO MPOWERing countries with effective policies

The WHO has defined a policy approach to help implement the convention, summarized by the acronym, MPOWER, to

As their report (see previous link) argues, these measures are shown to work and have a significant effect on reducing tobacco consumption, when applied.

Advertising bans work; self-regulation does not

In its 2013 report on the global tobacco epidemic , the WHO notes that while bans on tobacco advertising, promotion and sponsorship are effective at reducing smoking, partial bans and voluntary restrictions are ineffective.

An example of how self-regulation had failed was provided by a documentary about British American Tobacco pushing tobacco to children in Africa, produced by the BBC (which aired in July 2008).

It noted how BAT’s own guidelines to stop selling to children in various ways were clearly ignored by itself in places such as Mauritius, Nigeria and Malawi. From selling single sticks (which is intended to target children), to advertising and promotions of the sort readily banned in most countries, to organizing events and popular concerts heavily branded with BAT’s logos and products, all pointed to BAT encouraging young people, as young as 8 or 10, to smoke.

(A separate BBC article also summarizes this documentary in more detail.)

Another area where children are increasingly smoking is India. A survey by the WHO found that nearly 17% of students in India aged 15 and under use some form of tobacco, most of them cigarettes. While public bans on smoking had some positive effects, this rise has been a concern, and the study urged that more be done to tackle advertising.

Plain packaging was recently introduced in Australia as evidence suggests plain packaging works. The UK government, however, decided to pause its move to plain packaging as the evidence is not 100% (most evidence rarely is).

Tobacco taxes; one of the most effective measures to reduce smoking

The reason that raising taxes on tobacco has been seen as important is because it both raises revenues for governments (which helps fund tobacco control and social/health programs to address associated problems) and it helps deter people — especially the young — from taking up smoking.

As the WHO notes in its 2013 global tobacco epidemic report , higher taxes are especially effective in reducing tobacco use among lower-income groups and preventing youth from starting to smoke. An increase in the retail price of cigarettes by 10% will reduce consumption in high-income countries by about 4% and in low- and middle-income countries by up to 8%; smoking prevalence is usually decreased by about half those rates.

The prestigious New England Journal of Medicine also noted that more than 200 million lives could be saved by the end of this century if tobacco taxes were tripled around the world.

Perhaps ironically (as raising taxes on tobacco is a publicly popular policy choice), the WHO also notes that it is the least-achieved of the MPOWER measures listed earlier. (p.80) In addition, while governments collect nearly US$ 145 billion in tobacco excise tax revenues each year, less than US$ 1 billion combined is spent on tobacco control – 96% of this is spent by high-income countries. (p.84)

Progress with more countries adopting anti-tobacco measures

In a 2008 report analyzing global tobacco use and control, the WHO found that

Since 2008, however, the progress on tobacco control has been quite positive, as the WHO reports:

But despite this progress, to achieve the globally agreed target of a 30% reduction of tobacco use by 2025, more countries have to implement comprehensive tobacco control programs.

Tobacco Industry Hitting Back

To sell a product that kills up to half of its users requires extraordinary marketing savvy, and tobacco companies are some of the most manipulative product sellers and promoters in the world.

The tobacco companies have tried various ways to minimize damage impact to their sales and reputation. They have sought to expand markets in other areas, especially the developing world as they find the industrialized nations are increasingly hostile to their industry. Attempts at regulation are fought with various public relations attempts, and corruption.

Four companies now control 75 percent of global cigarette sales, as sophisticated strategies for supply, production and sales have produced increasingly popular global brands.

The onward march of Marlboro man epitomises this globalisation, exploiting the opportunities presented by trade liberalisation, regional organisations and the communications revolution. Control efforts are undermined by the industry’s success in developing favourable relationships with many governments, the magnitude of their foreign direct investments and the scale of advertising, marketing and sponsorship campaigns. In addition, large-scale cigarette smuggling, which comprises one-third of total exports, depletes tax revenues and further jeopardises public health.

Expanding into Developing Nations Markets

In recent years, the damage caused to a person’s health by tobacco consumption has been confirmed, attracted particular scrutiny at tobacco firms because they knew this for years, but attempted to hide their research.

Some countries, such as the US have had the resources and political will to tackle the large tobacco corporations. However, combined with the resulting smaller and tougher markets in the rich countries, multinational tobacco firms have intensified their efforts in other regions of world such as Asia, to continue growing and selling cigarettes, as well as expanding advertising (to create demand, not meet). And they have been successful, too. 84% of the estimated 1.3 billion smokers live in developing and transitional economy countries as the WHO has noted.

Targeting Children, Teenagers and Women

For their 2008 World No Tobacco Day event, the WHO noted that Most people start smoking before the age of 18, and almost a quarter of these individuals begin using tobacco before the age of 10.

Almost understandably, tobacco companies are compelled to target the young and women.

Teenagers are future consumers often highly impressionable and in some societies with significant disposable income; for any company where brand and consumption of their products are important, attracting younger members of society increases the chances of longer term lock-in.

Please go through the website for more information.

http://www.globalissues.org/article/533/tobacco

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