Response of Tobacco Manufacturing Firms in Kenya to Changes in the Industry: the Case of British American Tobacco (K) Ltd

Abstract

This study sought to identify the perception of tobacco manufacturing firms In Kenya to changes in industry forces. It also sought to identify the responses of these firms to the changes. The study used Porter's modified 5-force model to define the changes in the tobacco industry in Kenya. The researcher felt that this framework would be more comprehensive for analysis of the changes in the tobacco sector. The rationale for the study arose out of the dynamic nature of the Kenyan and the international business environment. The changes in the industry forces affecting the tobacco industry were known. However, the perception of these forces and the responses to these changes by the firms specifically British American Tobacco (K) Ltd was unknown. It is a case study of British American Tobacco (K) Ltd the leading tobacco manufacturer in Kenya. The study used primary data that was collected through personal interviews conducted using an interview guide (Appendix 1). The data was analyzed using content analysis. Findings from this study revealed British American Tobacco (K) Ltd perceives the nature of competition in the industry as moderate since the government has created a leveled playing field for players. The firm is now using a variety of operational and strategic responses to manage the changes in the industry forces. The company is restructuring its internal processes to achieve efficiencies throughout its' value chain. The firm has taken a proactive management posture and has strategies to cope with the consequences of the passing of the pending tobacco bill in Kenya. They will coritinue to support the enactment of a realistic, workable and enforceable regulation that addresses the health concerns whilst taking into account Kenya's socio-economic realities. They believe that an all-inclusive approach would result in the collective ownership of what will ultimately be good legislation. The firm is actively involved in social responsibility activities like afforestation, rural health development, informal sector programmes for example the jua kali sector as well as contributing to infrastructure development like rural road repair and education programmes geared to educate the public on risks associated with smoking. British American Tobacco (K) Ltd in 2004 became the first firm in Kenya to publish a corporate social report. The aim of this strategy is to provide a platform for direct dialogue with stakeholders on various issues. Management of various stakeholders seems to be a key challenge for the firm to sustain its' successful performance and achieve excellence.