1.

Alignment with company goals: One challenge repeatedly seen in organizations everywhere is the synchronization, particularly the lack of it, between goals of the board and executive suite and the goals of managers and supervisors ultimately charged with the daily work of the organization. Goal alignment starts in the board room and the C-suite. Proceeding deeper into each organizational layer, the goals of each individual should align with and be additive to the goals of the layer above them. Individuals in any layer may identify additional goals unique to their position or function. In each layer, some individuals may have specific projects which they can personally drive to help achieve specific goals.If goals are truly worthwhile in moving the organization forward, each goal should imply or direct specific, even if unknown, changes. Each change implies one or more projects. Each project should have a senior level champion and a team assigned to complete the project according to a definite project plan and within a aggressively realistic time frame. Project progress should be reported up through the organization with detail appropriate to the project and organizational level. 2. Market Share and Retail Volumes: Cigarette consumption makes up a small portion of the tobacco market in India, only 14% of tobacco products sold are cigarettes. Retail volume sales have decreased by 9% in the last ten years from 99.6 billion sticks in 1999 to 90.3 billion sticks in 2009. Recent declines in cigarette volumes are mainly due to a 2008 increase in the tax on unfiltered cigarettes. The tax increase has also led to many unfiltered brands being removed from the market. ITC Ltd stopped unfiltered cigarette production entirely and some companies have launched filter versions of their most popular unfiltered brands to maintain their customers. Despite recent declines in sales, it is expected that cigarette use will increase overtime as disposable incomes increase in India. Euromonitor International predicted in 2008 that if the smokers who currently smoke bidis switched to factory made cigarettes, then India s cigarette consumption would increase to around 640 billion sticks. This increase would make India the second largest volume cigarette consumer in the world behind China. Historic India Cigarette Market Size- Retail Volume (billion sticks): 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 99.6 98.7 89.3 91.9 94.5 96.5 100 101.1 99.8 91.2 90.3 Cigarette Company Shares - Retail Volume (%): 2001 2002 2003 2004 2005 ITC 63.9 65.3 66 66.1 67.5 Godfrey 9.8 10.7 10.9 11.9 11.1 Philips VST 12.2 10 9.4 8.9 8.7 Golden Tobacco GTC 9.9 9.7 9.4 9.41 9.2 Japan Tobacco Gallaher 2 2 2 1.5 1.4 Group others 2.3 2.4 2.2 2.2 2.2

2006 67.8 11.5 8.4 9 1.3 1.9

2007 67.9 11.9 8.5 8.6 1.3 1.8

2008 71.8 12.9 8.5 3.6 1.4 1.9

2009 72.9 13.8 8.7 1.5 1.3 1.7

The cigarette market in India is controlled by four locally established companies, but most companies also have close ties to international tobacco companies. The leading transnational tobacco companies (TTC) have recently attempted to increase their shares of the Indian cigarette market but have had little success. The ability of TTCs to increase their presence in India has in part been limited because of restrictions on foreign direct investment (FDI) in cigarette manufacturing.

Manufacturing Process Of Cigarette:

Tobacco product manufacturing is usually a large-scale operation that makes use of the best technology to produce products of optimum and consistent quality. All the processes involved in producing a pipe or cigarette tobacco, snuff, chewing or smokeless tobacco is aimed at providing the end users with the best taste, aroma and optimum smoke yield. And this quality standard should be maintained at all times by the manufacturer. Tobacco Product Technology: Currently, the technology used in making tobacco products is almost fully automated. Computers are used to keep track of production to ensure each product is made with the correct specification and in the standard manner. First, the tobacco leaf that has been treated to contain just the right amount of moisture is blended with its designated ingredients. Then, it is fed to a cigarette making machine which does the wrapping of the tobacco product composition into a continuous rod, cutting the rod, and joining each tobacco cut to a filter. There is a separate machine for making filters. The characteristics that define a tobacco s quality are sensitive even to the design of the filter, that is, the number of its perforations and lengths, its material and density, among others. It is also affected by the paper in the tobacco rod and filtration zone. A strict quality check is done to ensure the tobacco product meet its specification. The finished products are then feed into packing machines for bundling, labeling, sealing with a protective film, and grouping into cartons. During the packaging, tests are also performed to make sure the products are properly sealed and protected before final distribution. That is, because of the sensitivity of tobacco products to ventilation. Cost incurred in manufacturing a cigarette: Notice taxes taking $42.89 out of the proposed $53.01 wholesale price. This is a Canadian site and dollar amounts are Canadian. US and Canadian exchange rates at time of article (2002) are apporximately $1 Canadian =$.63 US. Canadian taxes have typically been higher than US rates on tobacco products. Production costs in US are believed by many to be less due to superior automation and local tobacco farming. "To analyse the impact of an ignition propensity standard on cigarette manufacturing costs, a baseline model of the cost structure of a representative cigarette manufacturer was developed. Exhibit 2-9 presents this model. The figures in Exhibit 2-9 show that total manufacturing costs (i.e., before operating profits and taxes) for a representative cigarette manufacturer are approximately $5.70 per carton. Of this amount, materials comprise the major cost factor, while labour constitutes a relatively small portion of costs, reflecting

the largely automated nature of cigarette production. Purchased leaf tobacco is the largest single cost input at $1.15 per carton, or more than 20 percent of total costs. Handling, transport and storage costs for tobacco at the early stage of production are also significant, at approximately 17 percent of total costs. Subsequent steps in the production process - tobacco processing, plug making, and cigarette making - together account for approximately 19 percent of total costs. Packaging and shipping costs represent 14 percent of the total, while general business expenses (which include building depreciation and overhead) account for the remaining 30 percent. The model estimates operating profits of $4.43 per carton. Thus, operating profits represent approximately 44 percent of the before-tax wholesale price of a carton of cigarettes. When taxes are taken into account, however, the price charged by manufacturers - an estimated $10.12 per carton - represents only 19 percent of the estimated wholesale price of $53.01 per carton.Exhibit 2-9 - Cost Structure of a Representative Cigarette Manufacturer (2002 Canadian Dollars per Carton of 200 Cigarettes) LabourEnergyMaterialsDepreciation Total PurchasedLeafTobacco $1.152 $1.15 Handling,TransportandStorage $0.98 TobaccoProcessing $0.00 $0 .032 $0.22 PlugMaking(1) $0.081 $0.007 $0.326 $0.004 $0.42 CigaretteMaking(2) $0.148 $0.014 $0.253 $0.036 $0.45 Packaging/Shipping(3) $0.220 $0.020 $0.511 $0.015 $0.77 BusinessExpenses $1.71 OperatingProfits $4.43 Taxes (4) $42.89 TotalWholesalePrice = $53.01 (1) Materials cost includes filter materials, adhesives, paper wraps and flavourings. (2) Materials cost includes paper, tipping materials, starch, adhesives and ink. (3) Materials cost includes packets, foil, plastic wrap, tear tape, adhesives, cartons and cases. (4) Includes Provincial Tobacco Tax, Federal Excise Tax and Federal Excise Duty. Technological advancements: The Reconstituted tobacco process was developed more than 50 years ago for economic reason as a way to salvage these byproducts or part thereof by transforming them into a tobacco sheet that is more adaptable to blending, processing and cigarette making. Because of its added value and other positive contributions, Recon now plays an important role in processing quality products. Since it was originated bout 50 years ago, there have been several important developments in the Reconstituted tobacco processes. Major Benefits : The use of Recon sheet, especially the one made by paper technology, has been growing because of its many positive contributions to product development, as related to:

Physical properties: increases filling value and improves processing ability Smoke chemistry: reduces tar and nicotine deliveries Smoking qualities: maintains the overall flavor (taste, smell and feel) Recon Processes Today the slurry and the papermaking are the two major processes, but the papermaking has been more in demand because of its better contributions to the physical properties, sensory qualities and smoke chemistry of a good cigarette, particularly ABC. Advances in tobacco technology have produced a new generation Recon made by the papermaking process. Recon is now considered an integral part of any quality American blended cigarette Advances in tobacco technology have produced a new generation Recon made by the papermaking process. Greater efforts are now directed toward producing Recon sheets that is close to the natural tobacco and has the ideal smoking qualities. Because of recent advances in industrial engineering and product development, the new papermaking process now enables manufacturers to develop a wide range of tailor-made Recon products. Each made for specific product in terms of physical, chemical and sensory properties, that can fit different cigarette types and cigars.