Philip Morris

A case analysis

Submitted to

Prof A. Sahay

Post-Graduate Programme in Management



Group –B03


Management Development Institute

Gurgaon 122 001

14th August, 2004


“Working to Make a Difference

The People of Philip Morris”

Recommended Mission statement

“Create quality products in the area of tobacco, beer and packaged foods. Protect our shareholders interests while being social responsible. Create an environment where our members can be challenged and grow.”

About the company

The Phillip Morris family of companies is the world’s largest manufacturer and marketer of consumer packaged goods. It has three main lines of businesses – 1) Tobacco 2) Kraft Foods Division 3) Miller Brewing. It revenues were $72 Billion in 1997. It has got 12 brands whose sales are $1 billion or more.

Competition – The US market of 1999

SWOT analysis

Diversification & Philip Morris

Philip Morris is using the portfolio diversification as its main strategy. The company started this strategy a few years after the 1964 Surgeon General's Report on the tobacco effects. Since then it acquired Miller Brewing Co., Kraft Foods and General Foods. By making several major diversification efforts, Philip Morris was able to invest a portion of its cash and diversify the risk. Analyzing the consolidated operating results for Philip Morris Companies and Subsidiaries we can question if the company is accomplishing its strategy. From 1995 to 1997 the percentage of the operating revenues from its tobacco operations increased from 48.9% to 55.3%. In the same period of time its beer and food revenues decreased from 6.5% to 5.8% and from 44% to 38.4% respectively. The company is still very dependent on the revenues from its tobacco operations.

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Corporate Social Responsibility (CSR)

Company Statement on Social Responsibility “We don't just measure our performance in terms of financial success. We also track whether we measure up to the expectations that society has of us, as a major multinational company - and as a tobacco company.” The company conducted a survey to understand its perception in the eyes of the public and got low marks on trustworthiness and social responsibility. The main areas where the public expected more action were:

  • open discussion of the health effects of our products
  • preventing youth smoking
  • the development of reduced risk ...

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