Strategic Management – Philip Morris International (PMI)
Phillip Morris International Inc. (PMI) is a multinational company dealing with tobacco and cigarette. Its headquarters are based in New York, United States with the distribution of its products spanning to over two hundred nations (PMI, 2013). PMI has gained more than fifteen point six percent of the market share reflecting on other nations other than United States.
The brands sold by the PMI are owned by Altria, which was the previous owner of the products. PMI operates from United Kingdom although headquarters are in America. It has been noted that tobacco is the main product of trade, a product associated with the preventable deaths; basing on the side effects of consuming tobacco (PMI, 2013). Tobacco is very addictive, a move that has resulted to controversial debates on the products and the target nations of operations.
PMI is a public company, it has been noted that the main products are cigars, snuff, tubes, cigarettes, fine cut, rolling tobacco and rolling papers. The chairman and the Chief Executive Officer is known as Louis Camilleri, with an employee base of more than seventy eight thousand people, PMI strategizes on meeting the needs of the tobacco users and initiating new users to the product, a model under controversies (PMI, 2013).
PMI strategy is propelled by the top management teams characterized with the CEO and GM mindsets among others, which is developed in meeting the needs of the tobacco users in the competitive environment; critical in developing value chain, business system and the desired activity system map. PMI operates under diverse brands depending on the jurisdictions. Revenues made by PMI as at 2011 were valued at $76.34 billion, operating under the subsidiaries of PMFTC Inc, Bentoel Group, Benson and Hedges and Sampoerna (PMI, 2013).
PMI is under the influence of megatrends and PESTER. Megatrends involving global foresight and diagnostic information have the power of influencing the purchasing pattern of the tobacco consumers, which in return will shape the sustenance of PMI in the market. PESTER powers are critical in attracting and retaining the tobacco consumers. PESTER analysis involved considerations of political aspects, economic aspects, social aspects, technological aspects, environmental aspects and the regulatory analysis. Key success factors (KSF) identified with people, purpose, processes, customers and the physical resources.
Tobacco industry is competitive; PMI has managed to develop sustainable brands that are accepted by the consumers. The competition varies with jurisdictions depending on direct competitors, indirect competitors, market differentiation and the technology (PMI, 2013). Competitor analysis is applied by PMI in developing strategic marketing decisions.
PMI is effectively managed, considering that it has developed a competitive edge over its rivals; it is argued that PMI has managed to overcome diverse challenges originating from the anti-tobacco consumers, singling out that tobacco is almost similar to death sentence. Judging from the tobacco consumption carried out by the youths, it is evident that PMI is in the market to stay (PMI, 2013).
Young people consider consumption of tobacco as classy and highly desirable, ignoring the negative attributes of tobacco. PMI made a net income of $8.59 billion, which is part of the profit pool. PMI knows the power within marketing, hence applies diverse marketing tools in attracting and retaining tobacco consumers.
Financial performance of PMI is considered exemplarily with the operating capital as at 2011 being $13.3 billion. Total equity as at 2011 was placed at $229 million. It can be argued that the financial performance of PMI is reliable and sustainable (PMI, 2013). Comparing with the competitors in the tobacco industry, it has been noted that PMI is strategically positioned in the market.
Direct competitors of PMI are Reynolds American Inc, Lorillard, Inc, Swedish Match AB, British American Tobacco plc, Altadis and Imperial Tobacco Group plc among others. Although some of the competitors have some shared business interests with PMI; PMI is one of the major dealers of the tobacco products. PMI has managed to produce successful tobacco brands depending on the jurisdictions. It is argued that PMI is smart in brand positioning in the target market, which is part of the brand portfolio in the competitive market (PMI, 2013). Brand positioning by PMI was relied on CVP, Generics, SNAP, Spider, PIMs, Disciplines, strategy Canvas, Value map, Zigzag attributes and Spider attributes.
Ansoff options for PMI in the medium term, shows that the organization applies the model in solving problems and in comprehending the risks involved in market and product expansion grid. Business ansoff in PMI focuses on the product development, market segmentation, diversification and the market penetration. Ansoff matrix is critical for PMI in making strategic decisions on the target population.
The long term vision of PMI is to develop high standards of research and design in making tobacco less harmful to the human health, at this juncture; PMI will have eliminated the controversies involved with the health care providers. PMI’s capability and resource is enormous compared to Reynolds American Inc. as one of the major competitors in the tobacco industry.
It has been noted that PMI’s capabilities and resources has been in place basing on charitable giving back to the community, experienced board of directors, diverse brands, diversification in different nations, organizing Phillip Morris events, organizing Phillip Morris Sports and offering sponsorships (PMI, 2013). PMI has been influential basing on the diverse models of giving back to the community.
Building leverage on the PMI’s capabilities and resources constitutes multiplying the profits; there are many untapped markets in the world. PMI would attain leverage through buying fixed assets, borrowing money and using derivatives in financing its operations and spreading to untapped nations. PMI is a public company, an indication that it has access to hedge funds and equity upon approval by the relevant authorities.
Developed countries have competitive markets, an indication that PMI also experiences the same challenges. It has been noted that competition at PMI encourages creativity, high production, self-achievement and encourages team work in gaining a competitive edge in the market (PMI, 2013).
Considering Marlboro in the United States; Marlboro is strategically positioned in the competitive tobacco market. It has been noted that business strategies are developed in gaining a competitive edge over the competitor companies. Competitive business strategies must be flexible depending on the target market. PMI’s business strategies are pegged on the cost leadership, differentiation and the price strategy.
PMI has been sensitive in market positioning of its brands, marketing position is a concept commonly used in the twenty first century. PMI has created an identity and an image of its brands in the eyes and minds of the target consumers, in regards to the brand, product and the organization (PMI, 2013).
Managing change is critical in the sustenance of the PMI, change is there to remain, it is an unstoppable external force. The world is facing socialization and globalization, adopting change in PMI is more of transitioning the organization to the future state, which is desired. Balanced score card (BSC) is used by PMI in defining the strategy performance of the organization basing on the financial aspects, growth, learning, target customers and the internal business processes among other aspects. 7s is used by PMI in defining the structure, systems, strategies, shared values, style, skills and the staff (PMI, 2013); which is critical in the positioin of PMI in the target market. PMI has a significant market share in the global tobacco industry. Geographic and product brand portfolio evaluation shows that PMI is strategically positioned in the market, an indicator of better performance as compared to the competitors dealing with tobacco products benchmarking on Reynolds American Inc.
PMI. (2013). Phillip Morris International (PMI). Retrieved June 01, 2013, from Pmi.com: http://www.pmi.com/eng/pages/homepage.aspx