British American Tobacco in South Korea

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Case Details:

Case Code : BSTR254
Case Length : 22 Pages
Period : 1998-2006
Pub Date : 2007
Teaching Note : Not Available
Organization : British American Tobacco
Industry : Tobacco
Countries : South Korea

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

BAT in South Korea

BAT began its operations in South Korea way back in the year 1904. The company continued operating in Korea for a decade and left the country in 1914 due to the new tax imposed by the Korean authorities on tobacco products. In July 1998, BAT Korea was incorporated as a wholly-owned subsidiary of the BAT Group. BAT Korea consisted of three corporate entities - British American Tobacco Korea Limited, British American Tobacco Korea Manufacturing Limited, and the Korea branch office of Rothmans Fareast BV. Kent, one of the most popular brands from the BAT stable, and Kool, a leading brand in the menthol segment, were introduced in the Korean market in 1998...

The Growth Strategies

From the beginning, BAT considered South Korea as one of its most important markets. Though the company was doing well in the country in the year 2001, its plans to build a factory there were driven by the fact that South Korean customers preferred the brands being manufactured locally.

According to Taylor, "The key to growth in South Korea is local manufacture. We already sell Dunhill and have been in the market since 1988 but market research shows that there is rising demand for international brands made locally."

PRODUCTS
BAT had launched some of its best known international brands in South Korea. BAT Korea was of the view that a single brand or product was not suitable for all consumers, and a portfolio of brands was introduced in the Korean market to cater to the different needs and preferences of consumers and different market sectors (Refer to Exhibit IV for BAT's brands in South Korea)...

Employee Policies

All employees of BAT in South Korea were required to abide by the Internal Standards of Business Conduct (Refer to Exhibit VI for the Internal Standards of Business Conduct). From time to time, BAT conducted dialogue sessions with employees in order to understand their expectations...

The Road Ahead

BAT considered South Korea as one of its most important markets. The company also planned to increase the capacity of its plant to cater to the needs of the local as well as the export market. According to Naughton, "Korea is a dynamic market with fast changing trends and we aim to be innovative in satisfying consumers with our world class brands. It will be both challenging and rewarding to continue to build on this great success."...

Exhibits

Exhibit I: Top Tobacco Companies (2005)
Exhibit II: British American Tobacco - International Operations
Exhibit III: Tobacco Industry in South Korea
Exhibit IV: BAT's Brands in South Korea
Exhibit V: Advertisement of Finesse
Exhibit VI: BAT Korea - Standards of Business Conduct
Exhibit VII: British American Tobacco Korea - Market Share


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