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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 76

Owing to smoking bans - tobacco industry is shrinking

by Manjari Peiris

A study led by Professor Driffield of Warwick Business School, Jo Crotty of Aberystwyth University and Chris Jones of Aston Business School with 141 companies across 20 countries over a 10 year period has found smoking bans in a country where the firm was based, reduced the likelihood of them investing abroad.

According to this new research, smoking bans are not only shrinking tobacco firm’s market at home but limiting their ability to invest in markets abroad.

More than 170 countries have now introduced various bans on smoking in public places and buildings, which has naturally led to a decline in smoking in those countries.

• Smoking bans are forcing tobacco industry to become better corporate citizens
• The bans are dampening industry's investment in new markets abroad
• Tobacco industry in countries without bans are predicted to take over
• National bans on public smoking hasten the industry's demise

It was thought when the bans were introduced that tobacco companies would instead target those countries without bans, usually those in the developing world, but this research has found this has not happened.

Professor Driffield says, not only did bans affect the tobacco firm’s cash flow, and therefore reduce their funds for international expansion, there is also evidence that they are sensitive to home public opinion when investing abroad.

"It seems that tobacco companies are sensitive to their public profiles and as they seek new working relationships with governments and battle over issues such as plain packaging and intellectual property, do not want to be seen to be exploiting the poorest countries, who are often the ones without smoking bans.

Smoking bans often reflect a negative political mood within their home country towards tobacco and so investing in poorer countries to make up for dwindling sales at home may seem exploitative and would be bad for their PR."

Source of information : British Journal of Management

- Asian Tribune -

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