Indian IT Industry

Indian IT Industry

Case research series 2008
Multinationals in India
XIMB-Centre for Case Research

FDI in a Developing Country: Case of
British American Tobacco

Amar K.J.R Nayak


The present case is intended to be used as the basis for class discussion to help raise relevant
questions to think and to contextualize management issues rather than to illustrate either
effective or ineffective practices. It is neither to glorify nor to criticize an individual or

© Amar K.J.R.Nayak, Ph.D., Strategic Management, Xavier Institute of Management, Bhubaneswar.
No part of this publication should be copied, stored, transmitted, reproduced or distributed in any form or medium
whatsoever without the permission of the author. For information, contact:

FDI in a Developing Country: Case of
British American Tobacco
Amar KJR Nayak

The British American Tobacco Company (BAT) owes its origin to James Buchanan
Duke (‘Buck Duke’) who was in charge of a granulated tobacco factory in the USA in 1881.
Buck Duke was the first to invest in cigarette machine in a big way when the other tobacco
manufacturers were not interested in new technology. With this introduction of new technology,
the sales of cigarettes increased to 837 million pieces per year by 1889. At this time, Buck
Duke’s Educe Sons & Company produced 38 per cent of annual production in the US. Buck
Duke also engineered the amalgamation of the other four companies with his company to form
American Tobacco Company (ATC) with a capital stock of 25 million dollars. In due course,
ATC under the leadership of Buck Duke absorbed nearly 200 small companies.
By the 1890s the British market had 13 main family businesses dealing in tobacco. Buck
Duke offered £800,000 to Ogdens of Liverpool, a major cigarette manufacturer in Britain. With
this move ATC had started a tobacco war in Britain. Taking into account this threat from ATC,
W.D & H.O Wills gathered the other players in...

Similar Essays