Chairman's sDeech to the International Club,
Harvard Business School br
Possible Themes
In his letter of 29th August, Mr. Schell states
that International Club
audiences enjoy hearing "what a corporate leader
thinks about affairs around
the World and ........ listening to the oersonal
Derspective of an Executive's
career". He also says that good humour is an
essential ingredient and that
the speaker is expected to be candid in his
expression of opinions.
With this in mind, it is proposed that the
Chairman should deal with two
principal themes in his talk:
(a) B.A.T Industries, style of corporate
governance;
(b) Investment in the United States by overseas
multinationals.
These two themes are sufficiently complementary to
enable the development
of a coherent overall thrust to the talk. The
following paragraphs indicate in
general terms the treatment envisaged for each.
Corporate Governance
The Chair-man has twice recently made public
statements about B.A.T Industries,
manaoement style - in the article "How much
authority should a Chief Executive
delegate?" in Chief Executive magazine and in his
lecture on the role of the
Audit Committee to the summer school of the
Institute of Chartered Accountants.
Both the article and the lecture could provide
invaluable source material for the
speech writer.
The reason for suggesting the inclusion of
corporate governance in the
Harvard talk is that B.A.T Industries has a very
different style from American
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multinational companies in this regard. it could
be argued that, because of C)
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the special circumstances surrounding the
establishment and development of
British-American Tobacoo, the B.A.T Industries
system of delegation and control
is thorouchly relevant and effective in the modern
world. (indeed, the Chairman
made precisely that point in his Chief Executive
article.) There are, for
example, few U.S. multinationals which have a lona
tradition of investment in
the Developinq World. Those which have have
sometimes made bad mistakes in
their attempts to marry profitability and local
acceptability. Whatever their
shortcominas in other recards, British
multinationzis have, by and larae,
an outstanding record in their relations with the
local communities in the
Developing World in which they operate.
The Chairman's audience would, given the current
international climate
surrounding the operations of multinational
companies,find an account of his
personal views in this area of great interest.
Investment in the United States by Overseas
multinationals
Durina the first three-quarters of the 20th
century, there was a substantial
outflow of funds from the United States,
principally in manufacturing industry,
first to Western Europe and Latin America and
thereafter to the remainder of the
Developing World. 7here are sions that, while such
investment continues at a
respectable rate, the balance is now being
redressed. That is to say, a succession
of Western European multinational companies (as
well as some from Japan) are
increasinqly turning their attention to the United
States as a target for invest-
ment.
with its acquisition of Brown and Williamson
Tobacco in 1927, British-American
Tobacco waS one of the leaders of this trend.
Subsequently, of course, the group
has been enlarged to include a significant stake
in the United States retailing
industry as well as smaller investments in paper
and cosmetics. This investment
policy qualifies the Chairman to discuss the
phenomenon of overseas investment
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in the United States economy both in general and
specific terms.
As far as B.A.T Industries specifically is
concerned, the audience will
be interested to hear an account of the
development of our stake in the United
States economy - the background to the acquisition
and development of Brown and
Williamson, our experience with cosmetics (warts
and all) and the Appleton
purchase - culminating in the establishment of the
BATUS management entity.
The problems we are currently experiencing with
the FTC over our acquisition
of Appleton will be public knowledge (and
hopefully resolved) bv the time the
Chairman speaks at Harvard. That experience,
related in a qood-humoured way,
could provide a lead into the more general section
on the attitude of the United
States Government, industry and commerce to
overseas investment in the United
States. The Chairman could, for example, point out
that there is a substantial
paradox in United States attitudes. While the
United States Government is
strenuous in its efforts to protect the commercial
interests of American companies
which have invested overseas and which trade in
the international market, them is
sometimes a pronounced hostilitv in the United
States to foreign companies, which
may be regarded as unwelcome interlopers. Equally.
the United States, which
advertises itself as the home of free enterprise
and success through personal
endeavour, is perhaps developing into one of the
most regulated of markets. Local
lecislation at the Federal and State levels is
setting dangerous precedents for
imitation by other countries. Obvious examples
include smoking and health
restrictions, product liability, unitary taxation
and the use of a subpoena to
obtain commercially sensitive material from
companies in controversial industries.
Conclusinn
The intention would be for the Chairman in
conclusion to draw together all
the threads from both halves of his talk. The
burden of the peroration might be
as follows:
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Over the past InO years, the United states has
made a Priceless contribution
to the development of the world economy. In
technology and in the development of
manacerial skills, its record has been second to
none. It remains a major world
centre technologically but there am siqns that its
period of "super domi"tion"
is over. Just as other Empires have risen and
fallen in the past, the "Age of
America" may well be nearing its end. There are
both internal and external
pressures prompting such a development
(internally, the consumerist and
environmentalist movements: externally, the
increasing influence of Communism
and the development of regional economic groups
which counter-balance the
commercial strenqth of the United States).
In our rapidly changinq world, there is only one
hope for the maintenance of
the open society which the United States cherishes
as much as other countries of
the free world. It is that we should seek to
reduce economic and commercial
barriers on the basis of mutual respect and trust
- not only within the OECD but
also in our relations with all other non-communist
countries.
It is not only governments in the free world which
have an awesome responsibility
in this recard. it is the duty of manaaers in all
companies large and small, to
support and supplement their efforts More then
that, the articulate and
influential business community around the world
should seek to persuade oovernment
and public ouinion alike of the importaLnce of
freedom and individual enterprise in
the solution of the massive economic and social
problems which the world will
encounter during the coming 50 or 100 years.
It is becomino clear that no one country in the
Western world can be the
guardian for all, just as no
internationally-organised company can prosper
under
a strongly centralist managerial structure.
Perhaps we are on the threshold of
the "Confederal Age".
(NOTE: It is worth considering '"rhe Dawn of the
Confederal Age" as a title for
the speech. It would certianly a0tract attention
in the Yankee bastion of Boston).
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