Strategic decisions move a company toward its stated goals and perceived success. Strategic decisions also reflect the firm’s social responsibility and the ethical values on which such decisions are made. They reflect what is considered important and what a com- pany wants to achieve.

Mark Pastin, writing on the function of ethics in business deci- sions, observes:

There are fundamental principles, or ground rules, by which organizations act. Like the ground rules of individuals, organizational ground rules determine which actions are possible for the organization and what the actions mean. Buried beneath the charts of organizational responsibility, the arcane strategies, the crunched numbers, and the politi- cal intrigue of every firm are sound rules by which the game unfolds.

The following situations reflect different decisions made by multi- national firms and governments and also reflect the social respon- sibility and ethical values underpinning the decisions. Study the following situations in the global cigarette marketplace carefully and assess the ground rules that guided the decisions of firms and governments.

EXPORTING U.S. CIGARETTE CONSUMPTION In the United States, 480,000 deaths, about one in five, are related to smoking each year. About 250 billion cigarettes were sold in the U.S. in 2017, but sales are shrinking rapidly. Unit sales have been drop- ping about 1 to 2 percent a year, and sales have been down by almost 5 percent in the last 10 years. The U.S. Surgeon General’s campaign against smoking, higher cigarette taxes, nonsmoking rules in public areas, and the concern Americans have about general health have led to the decline in tobacco consumption. Faced with various class- action lawsuits, the success of states in winning lawsuits, and pend- ing federal legislation, tobacco companies have stepped up their international marketing activities to maintain profits.

Even though companies have agreed to sweeping restrictions in the United States on cigarette marketing and secondhand smoke and to bolder cancer-warning labels, they are fighting as hard as ever in the Third World to convince the media, the public, and policymakers that similar changes are not needed. In seminars at luxury resorts worldwide, tobacco companies invite journalists, all expenses paid, to participate in programs that play down the health risks of smoking. It is hard to gauge the influence of such semi- nars, but in the Philippines, a government plan to reduce smoking by children was “neutralized” by a public relations campaign from cigarette companies to remove “cancer awareness and prevention” as a “key concern.” A slant in favor of the tobacco industry’s point of view seemed to prevail.

At a time when most industrialized countries are discourag- ing smoking, the tobacco industry is avidly courting consumers

throughout the developing world using catchy slogans, obvious image campaigns, and single-cigarette sales that fit a hard-pressed customer’s budget. The reason is clear: The Third World is an expanding market. As an example, Indonesia’s per capita ciga- rette consumption quadrupled in less than 10 years. Increasingly, cigarette advertising on radio and television is being restricted in some countries, but other means of promotion, especially to young people, are not controlled.

China, with more than 300 million smokers, produces and con- sumes about 1.4 trillion cigarettes per year, more than any other country in the world. Estimates are that China has more smokers than the United States has people. Just 1 percent of that 1.4 tril- lion cigarette market would increase a tobacco company’s overseas sales by 15 percent and would be worth as much as $300 million in added revenue.

American cigarette companies have received a warm welcome in Russia, where at least 50 percent of the people smoke. Consum- ers are hungry for most things Western, and tobacco taxes are low. Unlike in the United States and other countries that limit or ban cigarette advertising, there are few effective controls on tobacco products in Russia. Russia, the world’s fourth largest cigarette mar- ket, has proved to be an extremely profitable territory for British American Tobacco (BAT). BAT Russia, established in 1949, sold 65 billion cigarettes in Russia in 2005, giving it alm