Bus2500

BUS 2500

Strategic Business Environment

Individual Essay

How does Gallaher Group Plc fulfil its obligation to their stakeholders in terms of Ethical Business Practice and Socially Responsible Corporate Behaviour?

Introduction

In order to complete this assignment successfully, I am going to research my assigned company Gallaher Group Plc and find how the company fulfils it obligation to its stakeholders in terms of its ethical practice, corporate objectives, charters, etc. I will be using various different sources to find information on the company, such as the internet, newspapers for example the Financial and Sunday Times and also other secondary resources such as textbooks and journals. I will firstly have a brief introduction of the company and their current activities; secondly I will identify the major stakeholders within Gallaher and their influence on the company's activities. In this section, I will use the power and interest matrix diagram to show the level of interest of the different stakeholders within Gallaher. Thirdly I will explain how Gallaher meets its stated objectives in terms of its social responsibility, business ethics and its corporate behaviour. Finally, I will carry out a conclusion to show my findings. In this paragraph, I will be finding whether Gallaher has fulfilled its obligation to its stakeholders.

Brief overview of Gallaher and its activities

Gallaher Group Plc is one of the most successful tobacco company's in the world, providing a wide range of different choices to consumers in terms of the tobacco related products they provide. Gallaher employs over 11,000 employees around the world, which shows how large the organisation is. Gallaher is the fifth largest international tobacco company in the world and the fourth largest in Europe. Gallaher activities include manufacturing, marketing, and distributing tobacco and its related products. (1) (http://www.telegraph.co.uk).

Major Stakeholders at Gallaher Group Plc

A stakeholder could be anyone that is affected in the actions and decisions of a company. Stakeholders can be both internal and external to the organisations. According to Gallaher website, the main stakeholders of the company range from consumers and commercial partners to employees, investors, suppliers, local communities, non-governmental organisations, government, regulators, scientists, public health communities and any other parts of the society that have an interest in Gallaher. Each one of the stakeholders stated above will have a different interest in the company, and it is important for Gallaher to keep these stakeholders pleased.

Furthermore according to their 2005 corporate responsibility report which is the latest one available, Gallaher have stated this comment about the importance of its stakeholders (2) (http://www.gallaher-group.com)

"We consider the relationship between business and society as a Ð''social contract' which brings obligations, opportunities, and mutual advantages". Stakeholders are an important factor for Gallaher because they are vital to the success of the business and they will respond to different areas within the business. According to (3) (Ahmad et al 2006, P14) stakeholders who are disappointed with the company might withdraw their stake or sell their share and move and invest into a different company. For Gallaher keeping stakeholders satisfied is a fundamental issue and that is why they have seven vital steps in there (CSR) corporate responsibility approach which include; identifying relevant stakeholders, identifying the corporate principles and values which stakeholders expect, defining the major issues that engage our stakeholders, benchmarking our performance internally and externally, defining programmes and appropriate measures, taking effective and efficient action and finally reviewing and assessing our performance. (4) (http://www.gallaher-group.com)

Furthermore, Gallaher also has an investor relations department that deals with any enquires a potential shareholder might have. It provides many different facilities such as Capita Share portal which is a 24 hour access site, where shareholders can easily access their shareholding information online. This reduces the need for paperwork and is much more convenient. Also there is free SMS alert service, which enables subscribers to receive the latest LSE and NYSE share prices directly to their mobile phone.

Major players in Gallaher

Nigel Northridge (Chief Executive) Ð'-. His current main role is that he chairs the management and business development committees. John Gildersleeve (Non-Executive Chairman) Ð'- John Gildersleeve was first appointed by Gallaher as a non-executive director back in may 1997, he then was appointed none- executive chairman. Sir Graham Hearne (Non-Executive Deputy Chairman) Ð'- Sir Graham is the senior independent director of Gallaher, he also chairs the remuneration committee and is also a member of the nomination committee. Ronnie Bell (Non-Executive Director) Ð'- his responsibilities within Gallaher are that he chairs the corporate responsibility committee and is also a member of the audit and remuneration committees.

Nigel Dunlop (Group Operations Director) Ð'- Nigel Dunlop joined Gallaher as a management trainee in 1980, from then he has managed to work his way up the hierarchy and is now a member of management committee and the chairs the operations and continuous improvement committees. Neil England (Group Commercial Director) Ð'- he is currently a member of the management committee and also the chairman of the supervisory board of Austria Tabak. Mark Rolfe (Finance Director) Ð'- He is a member of the management committee and chairs the finance and information systems committees.

The Power and Matrix Diagram for Gallaher

Below is the Ð''power and interest matrix' diagram (5) (Ahmad et al P16) to show the different stakeholders at Gallaher.

The power and interest matrix for Gallaher

Interest

Low High

Category A( minimal effort)

Category B( keep informed)

Ð'* Gallaher Employees (i.e.) department managers, supervisors,