British American Tobacco, 1906–2004

Abstract

BAT is a case of FDI in the tobacco and cigarette industry. This case is the oldest multinational enterprises among the three in terms of undertaking direct investment in India as early as 1907. This chapter discusses the process by which BAT developed a market for cigarettes in India from nothing. The analysis involves the study of nature and timing of investments of the company in its main business and complementary market functions, the manner in which it aligned itself to the requirements of the Government of India (GOI), the issues of localization of management and ownership and its financial performance in India. Most importantly, this case reveals how a foreign company invested across the value chain of its business and took full control of the cigarette industry in India even before 1970. Its strategy to localization of equity was so far sighted that today people in India perceive it to be an Indian company. The detailed confirmatory statistical analysis of the case, however, is provided in Chapter 7.