Hostname: page-component-8448b6f56d-xtgtn Total loading time: 0 Render date: 2024-04-24T11:32:43.843Z Has data issue: false hasContentIssue false
  • English
  • Français

The Impact of Regional Trade Integration on Firm Organization and Strategy: British American Tobacco in the Andean Pact

Published online by Cambridge University Press:  20 January 2017

Chris Holden ,
Kelley Lee ,
Gary Jonas Fooks  and
Nathaniel Wander
Chris Holden
Affiliation:
University of York
Kelley Lee
Affiliation:
London School of Hygiene and Tropical Medicine
Gary Jonas Fooks
Affiliation:
University of Bath
Nathaniel Wander
Affiliation:
University of Edinburgh
Get access Rights & Permissions [Opens in a new window]

Abstract

Processes of regional trade integration may have an important impact on firms' strategies and forms of organization. This article provides an empirical case study of the impact of regional trade integration in the Andean Pact in the 1990s on the strategies and organization of British American Tobacco (BAT), using internal tobacco industry documents. BAT conducted an integrated strategy by lobbying on tax and tariff rates and intellectual property regulations, whilst simultaneously adapting its market strategies and attempting to modify its internal organization. The company incorporated substantial sales in illicit markets into its strategy, and launched new legal export operations within the region, in part to assert ownership over contested trademarks. It attempted to significantly modify its internal organization by better integrating its national operating companies on a regional basis, but was only partially successful in this due to resistance from its powerful Brazilian subsidiary. Changes in intellectual property rules also intensified competition between BAT and its main competitor, Philip Morris, culminating in a legal dispute between the two firms and leading BAT to develop a more coherent strategy on trademark ownership. These findings raise implications for understanding, and regulating, tobacco industry activities worldwide.

Keywords

regional trade integrationtransnational tobacco companiesintegrated strategy
Type
Research Article
Information
Business and Politics , Volume 12 , Issue 4 , December 2010 , pp. 1 - 30
Copyright
Copyright © V.K. Aggarwal 2010 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anon. 1994a. Presentation at Senior Manager's Conference − 10 February 1994. Bates 502610994-502610999 http://legacy.library.ucsf.edu/tid/rmq08a99. (Accessed 8 July 2010)Google Scholar
Anon. 1994b. Big Boys Fighting over Trademarks. Bates 500028373 http://legacy.library.ucsf.edu/tid/qov56a99. (Accessed 8 July 2010)Google Scholar
ASH (Action on Smoking and Health). 2000a. British American Tobacco. http://www.ash.org.uk/ash_y4c7hti5.htm. (Accessed 29 June 2010)Google Scholar
ASH (Action on Smoking and Health). 2000b. Tobacco Smuggling. Bates 325053839-325053857 http://legacy.library.ucsf.edu/tid/tnc14a99. (Accessed 30 June 2010)Google Scholar
ASH (Action on Smoking and Health). 2002. Racketeering Legal Action (RICO) Against Tobacco Companies for Smuggling. http://www.ash.org.uk/files/documents/ASH_578.pdf. (Accessed 29 June 2010)Google Scholar
Aggarwal, Vinod K. 2001. “Corporate Market and Nonmarket Strategies in Asia: A Conceptual Framework.” Business and Politics 3 (2): 89–108.CrossRefGoogle Scholar
Balbach, E. 2002. “Tobacco Industry Documents: Comparing the Minnesota Depository and Internet Access.” Tobacco Control 11 (1): 68–72.Google Scholar
Baron, David P. 1995. “Integrated Strategy: Market and Nonmarket Components.” California Management Review 37 (2): 47–65.Google Scholar
Barton, H.C. 1993a. Project Stem. Bates 202230631-202230645 http://legacy.library.ucsf.edu/tid/btm51a99. (Accessed 1 July 2010)Google Scholar
Barton, H.C. 1993b. Project Stem. Bates 202230606-202230620 http://legacy.library.ucsf.edu/tid/zsm51a99. (Accessed 1 July 2010)Google Scholar
BAT. 1991. South American Benchmarking Pilot: May 1991. Bates 201809577-201809624 http://legacy.library.ucsf.edu/tid/dhb10a99. (Accessed 29 June 2010)Google Scholar
BAT. 1992a. Venezuelan Market Definitions and Assumptions. Bates 500025647-500025648 http://legacy.library.ucsf.edu/tid/rqm87a99. (Accessed 30 June 2010)Google Scholar
BAT. 1992b. Souza Cruz Group: Colombia Market. Bates 201817054-201817057 http://legacy.library.ucsf.edu/tid/tdl96a99. (Accessed 30 June 2010)Google Scholar
BAT. 1992c. Latin American Business Plan 1992-1996. Bates 300023341-300023374 http://legacy.library.ucsf.edu/tid/ozc08a99. (Accessed 1 July 2010)Google Scholar
BAT. 1992d. Project Rubicon - Prepared Speech. Bates 301632943-301632966 http://legacy.library.ucsf.edu/tid/bav08a99. (Accessed 1 July 2010)Google Scholar
BAT. 1992e. Opportunities for BAT Industries in the Andean Pact Territories: Executive Summary. Bates 202241352-202241368 http://legacy.library.ucsf.edu/tid/heb52a99. (Accessed 1 July 2010)Google Scholar
BAT. 1992f. Joint Approach to Management of Andean Pact Export Markets. Bates 502590021-502590024 http://legacy.library.ucsf.edu/tid/vwa18a99. (Accessed 1 July 2010)Google Scholar
BAT. 1992g. Latin America: Regional Business Review. Bates 502638734-502638778 http://legacy.library.ucsf.edu/tid/fih30a99. (Accessed 1 July 2010)Google Scholar
BAT. 1993a. Andean Pact: BAT Single Export Structure Proposal. Bates 202241603-202241641 http://legacy.library.ucsf.edu/tid/vow40a99. (Accessed 29 June 2010)Google Scholar
BAT. 1993b. BATCo Exports: Company Plan 1994-1998. Bates 301563924-301563972 http://legacy.library.ucsf.edu/tid/dut08a99. (Accessed 1 July 2010)Google Scholar
BAT. 1993c. Minutes of Louisville Meeting: Joint Approach Proposal to Management of Andean Pact Exports Markets. Bates 321931335-321931337 http://legacy.library.ucsf.edu/tid/bln53a99. (Accessed 1 July 2010)Google Scholar
BAT. 1993d. Project Stem. Bates 800485903-800485934 http://legacy.library.ucsf.edu/tid/cec70a99. (Accessed 1 July 2010)Google Scholar
BAT. 1993e. Key Area - Legal Affairs: Smoking and Health Issues. Bates 502622846-502622851 http://legacy.library.ucsf.edu/tid/bll08a99. (Accessed 8 July 2010)Google Scholar
BAT. 1994a. Note for the BATCo Executive Committee. Bates 202718395-202718401 http://legacy.library.ucsf.edu/tid/eva26a99. (Accessed 1 July 2010)Google Scholar
BAT. 1994b. International Filter Brands, March 1994, Summary of BATCo Sales - Key Brands. Bates 502596221-502596260 http://legacy.library.ucsf.edu/tid/ema08a99. (Accessed 8 July 2010)Google Scholar
BAT. 1994c. Extract from Minutes of the BATCo Executive Committee Meeting Held on 17th January 1994. Bates 322247890-322247891 http://legacy.library.ucsf.edu/tid/gfm55a99. (Accessed 8 July 2010)Google Scholar
BAT. 1999. Answers to 10 November 1998 HM Customs and Excise Letter: 4th February 1999. Bates 325072098-325072104 http://legacy.library.ucsf.edu/tid/kdp14a99. (Accessed 8 July 2010)Google Scholar
BATMark Limited. 1997. Summary of Significant Achievements, Major Activities and Trends. Bates 700802730-700802741 http://legacy.library.ucsf.edu/tid/ivl60a99. (Accessed 8 July 2010)Google Scholar
Beelman, Maud S. 2000. Philip Morris Accused of Smuggling, Money-Laundering Conspiracy in Racketeering Lawsuit. International Consortium of Investigative Journalists, Center for Public Integrity. http://projects.publicintegrity.org/report.aspx?aid=510. (Accessed 19 November 2010)Google Scholar
Bero, L. 2003. “Implications of the Tobacco Industry Documents for Public Health and Policy.” Annual Review of Public Health 24: 267–88.Google Scholar
Bigott. 1991. Venezuela: Cigarrera Bigott Company Plan 1992-1996. Bates 304017077-304017092 http://legacy.library.ucsf.edu/tid/mqp08a99. (Accessed 1 July 2010)Google Scholar
Bigott. 1992a. Proposal for the Development of Group in Colombia. Bates 503891645-503891647 http://legacy.library.ucsf.edu/tid/ovl80a99. (Accessed 30 June 2010)Google Scholar
Bigott. 1992b. Andean Pact and Other Latin American Integration Movements. Bates 500058801-500058839 http://legacy.library.ucsf.edu/tid/eqx90a99. (Accessed 1 July 2010)Google Scholar
Bingham, P.M. 1992. Letter from PM Bingham to K Dunt Enclosing Venezuela Report. Bates 500058782-500058787 http://legacy.library.ucsf.edu/tid/bqx90a99. (Accessed 1 July 2010)Google Scholar
Burgess, G.J. 1993a. BATCo Performance Objectives 1993 Second-Quarter Review: 26th July 1993. Bates 502598454-502598469 http://legacy.library.ucsf.edu/tid/smb38a99. (Accessed 8 July 2010)Google Scholar
Burgess, G.J. 1993b. BMB 4th November 1993: Agenda Item 3 BATCo Performance vs 1993 Objectives. Bates 502598788-502598808 http://legacy.library.ucsf.edu/tid/syy38a99. (Accessed 8 July 2010)Google Scholar
Burgess, G.J. 1994. BMB 4th May 1994: RBU Guidelines (Agenda Item3). Bates 501575150-501575168 http://legacy.library.ucsf.edu/tid/ekz75a99. (Accessed 1 July 2010)Google Scholar
Burton, C.J. 1994. Belmont Launch in Colombia and Ecuador. Bates 202364291-202364293 http://legacy.library.ucsf.edu/tid/wum56a99. (Accessed 8 July 2010)Google Scholar
Calvert, P.A.R. 1996. “Integration in Latin America.” In South America, Central America and the Caribbean 1997. London: Europa Publications Limited.Google Scholar
Center for Public Integrity. 2008. Tobacco Companies Linked to Criminal Organizations in Cigarette Smuggling. http://projects.publicintegrity.org/Report.aspx?aid=355. (Accessed 29 June 2010)Google Scholar
Collin, J., LeGresley, E., MacKenzie, R., Lawrence, S. and Lee, K. 2004. “Complicity in Contraband: British American Tobacco and Cigarette Smuggling in Asia” Tobacco Control 13 (Supplement II): ii104–ii111.Google Scholar
Cox, H. 2000. The Global Cigarette: Origins and Evolution of British American Tobacco 1880-1945. Oxford: Oxford University Press.Google Scholar
Dunt, Keith S. 1992a. KSD Talk at Staff Presentation (30 Mins): Royal Berkshire Hotel: 17 February 1992. Bates 502637499-502637537 http://legacy.library.ucsf.edu/tid/ioo08a99. (Accessed 30 June 2010)Google Scholar
Dunt, Keith S. 1992b. Andean Pact Task Force. Bates 502557257-502557275 http://legacy.library.ucsf.edu/tid/iuz08a99. (Accessed 30 June 2010)Google Scholar
Dunt, Keith S. 1992c. Letter from Keith S Dunt to EG Grant Regarding DNP Market. Bates 301674939-301674940 http://legacy.library.ucsf.edu/tid/bgd21a99;jsessionid=8AA82359EFFD3F8FEBCBC669BE075FB3. (Accessed 1 July 2010)Google Scholar
Dunt, Keith S. 1992d. Letter from Keith S Dunt to DO Laux Regarding Project Lean Strategy. Bates 500025874-500025875 http://legacy.library.ucsf.edu/tid/bum87a99. (Accessed 1 July 2010)Google Scholar
Dunt, Keith S. 1993a. Colombia – Industry/Competition Analysis. Bates 202700278-202700283 http://legacy.library.ucsf.edu/tid/vbt77a99. (Accessed 29 June 2010)Google Scholar
Dunt, Keith S. 1993b. Potential Purchase of Colombian Operation – Protabaco. Bates 502589559-502589560 http://legacy.library.ucsf.edu/tid/wcz18a99. (Accessed 1 July 2010)Google Scholar
Dunt, Keith S. 1993c. RBU Latin American and Caribbean - A Better Approach. Bates 500028625-500028628 http://legacy.library.ucsf.edu/tid/xqz86a99. (Accessed 1 July 2010)Google Scholar
Dunt, Keith S. 1993d. Note from KS Dunt to Graham Burgess Regarding 1992 Achievements. Bates 301673702-301673703 http://legacy.library.ucsf.edu/tid/zya48a99. Accessed 8 July 2010)Google Scholar
Dunt, Keith S. 1993e. Letter from Keith S Dunt to Antonio de Castro. Bates 301673681-301673682 http://legacy.library.ucsf.edu/tid/jya48a99. (Accessed 8 July 2010)Google Scholar
Dunt, Keith S. 1994. Latin America: ‘New Domestic Markets’. Bates 202702415-202702420 http://legacy.library.ucsf.edu/tid/ukk41a99. (Accessed 1 July 2010)Google Scholar
Etchells, D. 1992. Project CP - Status Report: Strategy Paper and Outline Action Plan. Bates 500025852-500025858 http://legacy.library.ucsf.edu/tid/xtm87a99. (Accessed 1 July 2010)Google Scholar
Euromonitor. 1993. Tobacco Markets in Latin America. London: Euromonitor plc.Google Scholar
Europa. 1996. “Andean Community.” In South America, Central America and the Caribbean 1997. London: Europa Publications Limited.Google Scholar
Forster, Nick. 1997. “The Analysis of Company Documentation.” In Qualitative Methods in Organizational Research, edited by Cassell, Catherine and Symon, Gillian. London: Sage.Google Scholar
George-Perutz, A. 1989. Transit Study. Bates 302000019-302000022 http://legacy.library.ucsf.edu/tid/qhm97a99. (Accesssed 30 June 2010)Google Scholar
Gillespie, Kate. 2003. “Smuggling and the Global Firm.” Journal of International Management 9: 317–333.Google Scholar
Green, Duncan. 2003. Silent Revolution: The Rise and Crisis of Market Economics in Latin America. New York: Monthly Review Press.Google Scholar
Hill, M.R. 1993. “Archival Strategies and Techniques.” Qualitative Research Methods Vol. 31.Google Scholar
Holden, Chris and Lee, Kelley. 2009. “Corporate Power and Social Policy: The Political Economy of the Transnational Tobacco Companies.” Global Social Policy 9 (3): 328–354.Google Scholar
Hurt, R.D., Ebbert, J.O., Muggli, M.E., Lockhart, N.J. and Robertson, C.R. 2009. “Open Doorway to Truth: Legacy of the Minnesota Tobacco Trial.” Mayo Clinic Proceedings 84 (5): 446–456.Google Scholar
Hylton, Forrest. 2006. Evil Hour in Colombia. London: Verso.Google Scholar
Kluger, Richard. 1997. Ashes to Ashes: America's Hundred Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris. New York: Vintage Books.Google Scholar
Lander, Edgardo. 1996. “The Impact of Neoliberal Adjustment in Venezuela, 1989-1993.” Latin American Perspectives 23 (3): 50–73.Google Scholar
Laux, Delcio O. 1991a. Andean Pact. Bates 500026735-500026768 http://legacy.library.ucsf.edu/tid/rkc41a99. (Accessed 1 July 2010)Google Scholar
Laux, Delcio O. 1991b. Andean Pact. Bates 503860205-503860214 http://legacy.library.ucsf.edu/tid/alg90a99. (Accessed 8 July 2010)Google Scholar
Laux, Delcio O. 1992a. Letter from Delcio O Laux to TM Wilson Regarding BATCo's Competitor's in Venezuela. Bates 301570855-301570892 http://legacy.library.ucsf.edu/tid/tpg40a99. (Accessed 29 June 2010)Google Scholar
Laux, Delcio O. 1992b. Venezuelan Export Strategy. Bates 500025780-500025786 http://legacy.library.ucsf.edu/tid/ssm87a99. (Accessed 1 July 2010)Google Scholar
Lee, Kelley, Gilmore, Anna, and Collin, Jeff. 2004. “Looking Inside the Tobacco Industry: Revealing Insights from the Guildford Depository.” Addiction 99: 394–397.Google Scholar
LeGresley, E., Muggli, M. and Hurt, R. 2005. “Playing Hide-and-Seek with the Tobacco Industry” Nicotine & Tobacco Research 7 (1): 27–40.Google Scholar
Lewis, L.R. 1991. Colombian Group Meeting Minutes. Bates 500058765-500058773 http://legacy.library.ucsf.edu/tid/xpx90a99. (Accessed 1 July 2010)Google Scholar
MacKenzie, Ross, Collin, Jeff, and Lee, Kelley. 2003. The Tobacco Industry Documents: An Introductory Handbook and Resource Guide for Researchers. London: London School of Hygiene and Tropical Medicine (http://www.lshtm.ac.uk/cgch/tobacco/Handbook%2008.07.03.pdf. Accessed 8 July 2010)Google Scholar
Malone, R.E. and Balbach, E.D. 2000. “Tobacco Industry Documents: Treasure Trove or Quagmire?” Tobacco Control 9: 334–338.Google Scholar
McDaniel, P.A., Intinarelli, G. and Malone, R.E. 2008. “Tobacco Industry Issues Management Organizations: Creating a Global Corporate Network to Undermine Public Health.” Globalization and Health 4 (2).Google Scholar
Ocampo, Jose Antonio and Esguerra, Pilar. 1994. “The Andean Group and Latin American integration.” In Economic Integration in the Western Hemisphere, edited by Bouzas, Roberto and Ros, Jaime.Google Scholar
Niedermann, Hans. 1992. Visit Notes: CA Cigarrera Bigott Sucs 4th-9th June 1992. Bates 301674901-301674914 http://legacy.library.ucsf.edu/tid/tfd21a99. (Accessed 1 July 2010)Google Scholar
Penaherrera, Germanico Salgado. 1985. “The Andean Pact: Problems and Perspectives.” In Regional Integration: The Latin American Experience, edited by Gauhar, Altaf. London: Third World Foundation for Social and Economic Studies.Google Scholar
Roberts, Kenneth M. 2003. “Party System Collapse Amid Market Restructuring in Venezuela.” In Post-Stabilization Politics in Latin America: Competition, Transition, Collapse, edited by Wise, Carol and Roett, Riordan. Washington D.C.: Brookings Institution Press.Google Scholar
Shaffer, B. 1995. “Firm-Level Responses to Government Regulation: Theoretical and Research Approaches.” Journal of Management 21 (3): 495–514.Google Scholar
Shepherd, Philip. 1985. “Transnational Corporations and the International Cigarette Industry.” In Profits, Progress and Poverty: Case Studies of International Industries in Latin America, edited by Newfarmer, Richard S. Notre Dame: University of Notre Dame Press.Google Scholar
Shepherd, Philip. 1989. “Transnational Corporations and the Denationalisation of the Latin American Cigarette Industry.” In Historical Studies in International Corporate Business, edited by Teichova, Alice, Levy-Leboyer, Maurice, and Nussbaum, Helga. Cambridge: Cambridge University Press.Google Scholar
Stebbins, Rainer Kenyon. 2001. “Going Like Gangbusters: Transnational Tobacco Companies ‘Making a Killing’ in South America.” Medical Anthropology Quarterly 15 (2): 147–170.Google Scholar
Stynes, Tess. 2010. “Philip Morris May Not Complete Colombia Acquisition”. The Wall Street Journal, 8th October 2010.Google Scholar
Wakefield, M.A., Germain, D. and Durkin, S.J. 2008. “How Does Increasingly Plainer Cigarette Packaging Influence Adult Smokers’ Perceptions about Brand Image? An Experimental Study”. Tobacco Control 17: 416–421.Google Scholar
WHO (World Health Organization). 2010a. Intergovernmental Negotiating Body on a Protocol on Illicit Trade in Tobacco Products. http://www.who.int/fctc/inb/en/. (Accessed 12 July 2010)Google Scholar
WHO (World Health Organization). 2010b. Tobacco Free Initiative: Monitoring the Tobacco Industry. http://www.who.int/tobacco/surveillance/ti_monitoring/en/index.html. (Accessed 12 July 2010)Google Scholar