Case Study Of British American Tobacco

Risk Management

Background of the company British American Tobacco (BAT) is a multi-national company headquartered in London, United Kingdom. Its one of the largest tobacco company traded worldwide. It was first founded in 1902 and only 1903 that it was listed. Today, the British American tobacco has been listed to be top 5 companies on the London stock exchange by Market capitalisation. British American tobacco had successfully expand their brand globally, with factories and offices in 42 countries worldwide (BAT, 2016). They had successfully sold their brands in over 200 markets and have a strong standing in all four regions. Now, British American tobacco is developing less riskier and healthier products, the next generation

The company have offices and factories in 42 countries and its continuing to grow (BAT, 2016). In this risk, the more countries that the business have been expanded to, the higher the risk. This is because inexact correlation in the action of currency and fluctuation in the international rate (CpaAustralia, 2009). It also can affect the export and/or import of their products, service or supplies (CpaAustralia, 2009). In the Asia-pacific region, profit ranges from 161 Million pound to 165 million pound but lower profit in Malaysia due to excise tax on cigarette and lower profit in Japan and New Zealand due to foreign exchange on cost of sales (BAT, 2016). Foreign exchange can affect the company in a way that, if a ratio is not adjusted, the dividend may be affected, and key ratios used by credit rating agencies may be affected by the difference in translation between earnings and net debt (BAT, 2016). Also, Fluctuation in the foreign exchange rate important currencies against sterling have shown volatility in the earnings per share report, the balance sheet and cash flow driven in the direction of through to sterlings of our financial results (BAT,

This is where the risk are not within the companies control, thus, the most that the company can do is only identifying the risk . Most of these risk are external. In the case of British American Tobacco is the excise tax on legal cigarettes and the illegal illicit trade. Both risk are not within the control of British American Tobacco as the excise tax on legal cigarettes were imposed by the government and by law, British American Tobacco have to comply with it (BATMalaysia, 2016). As for the illegal illicit trade, British American Tobacco can only raise awareness on the danger of smoking illegal cigarettes in hopes to minimise the loss of the following risk. In conclusion, only specify the risk when there is a solution to