Task 1: Business sustainability, ethics and corporate governance
Big Business Tobacco (BBT) is a large Australian producer of tobacco products
including a market-leader brand of cigarettes. With the continuing development of
Asian countries such as China and its move to a market-based economy, the company
has made the decision to sell its cigarettes in this larger market from the beginning of
next month. The cigarettes will be sold in packs of 40.
Mary Bender, marketing manager, is discussing the design of the cigarette packet for
the Asian market with Randall Hedges, the company’s public relations manager.
Having agreed on the basic design of the pack, Hedges raised the issue of whether to
include the normal health warning on the pack, which has to be displayed under
Australian law. He emphasised recent medical findings which predicted many
hundreds of thousands of deaths from cigarette smoking in the next few years,
particularly in the developing countries.
Mary Bender was strongly opposed to including a ‘health hazard’ warning on the packs
destined for parts of the Asian market. She explained: ‘In this business it is the bottom
line (i.e. profits) which matters — we have to think of our shareholders. BBT stands to
lose a considerable market share to competitors if it includes such a warning. Besides,
it is not a legal requirement in many Asian countries to display a health warning on
cigarette packs. If Asian law is subsequently amended then we will be one of the first
to comply. Besides, the managing director supports me on this one.’
Hedges expressed a final opinion: ‘The Company could be better off in the long term
by being seen to be acting with corporate responsibility, and demonstrating some
concern for its consumers. Besides, such warnings have not been detrimental to the
company’s performance in Australia, where health warnings have been common for
many years.’
Required
1. Who are the major stakeholders in the debate on the health warnings on
cigarette packs? (3 marks)
2. What are the main ethical issues involved in the debate? (4 marks)
3. If you were Randall Hedges, what would you do?

Read less