final draft

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


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.

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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.

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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

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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).

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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


BAT Bangladesh

Chapter 1 Industry Overview

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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%).

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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.

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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.

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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%

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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.

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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


BAT Bangladesh

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BAT Bangladesh

Chapter 2

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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.

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British American Tobacco was

'Born International'


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,

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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

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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)

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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

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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

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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

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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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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.

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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.

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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


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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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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BAT Bangladesh

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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BAT Bangladesh

(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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BAT Bangladesh

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


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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BAT Bangladesh

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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BAT Bangladesh

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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BAT Bangladesh

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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BAT Bangladesh

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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BAT Bangladesh

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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BAT Bangladesh

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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BAT Bangladesh

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


Outcomes: Motivation, Retention,

Commitment,

Engagement, Corporate Citizenship


Sustainable Competitiv

e Advantage


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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http://en.wikipedia.org/wiki/Core_competency

http://en.wikipedia.org/wiki/Teamwork

http://www.sfb504.uni-mannheim.de/glossary/orglearn.htm

http://docs.google.com/Doc?id=dgxchnv6_1gpfjt9


BAT Bangladesh

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


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



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.


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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Research Report 93

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http://www.csreurope.org/


BAT Bangladesh

Appendix

Research Report 94

final draft

Documents

csr hrm practices

hrm policies

effective hrm csr policies

dimensions of hrm csr

sustainable manner

csr activities

organizarions bat bangladesh

sustainable business