Phillip Morris: Its Environment and Stakeholders

Phillips Morris international (PMI) is an organization that deals with the manufacture and distribution of cigarettes. This organization mainly has a stronghold in Switzerland since 1957 when it ventured into production and distribution of cigarette product in Switzerland. This was initialized by the signing of production and distribution agreement with Neuchâtel-based Fabriques de Tabac Réunies that paved way for the production of the first Marlboro cigarettes outside United States. However, with time, PMI acquired full ownership of Neuchâtel-based Fabriques de Tabac Réunies.

Currently, the factory is virtually the most significant manufacturing base for Phillips Morris International in Switzerland. Indeed, the factory is responsible for the production and distribution of cigarettes in the Swiss market as well as exports across more than 40 countries around the globe. However, Phillip Morris operates in an environment under various social, economic and political challenges. For instance, there has been a provocative campaign against cigarette smoking. Indeed, this acts as a major threat in the expansion and diversification of the market by cigarette product that forms the main output of the organization. Consequently, this has resulted in rising operational costs due to heightened advertisements and other activities besides production and distributions of the organizational products.

Indeed, Phillip Morris International has been the leading producer of cigarettes in the world through integration of its internal and external stakeholders namely: the employees, customers and the suppliers. This has been distinctively marked through the production very popular brands like Marlboro as well as the L&M brands. As a matter of fact, the company holds approximately 15.6 per cent of the world’s cigarette market. Furthermore, the company has wide spread market location to more than 160 countries worldwide (Philip Mo Aula & Mantere, 2008).

In particular, the company boasts of huge tax revenue with a record of $25.7 billion in 2007. The company also acts as a major employer with more than 75,000 employees across the globe and its headquarters in New York in particular. The company under the leadership of Louis Camilleri has also established about 60 manufacturing units around the globe. This ensures huge market dominance due to a number of strengths that acts to improve the company’s image and productive capacity as illustrated in the SWOT analysis (Philip Mo Aula & Mantere, 2008).

Phillip Morris Internationals also continues to diversify its operation through research and development. In this regard, the organization’s center for research is based in Switzerland. Furthermore, the company boasts of over 535 research and development staffs that remains focused to the development of first-rate products that would reduce the prevalence of tobacco related ailments. Consequently, this is intended to beef up the diminishing consumer base owing to the increasing health campaigns against consumption of tobacco and the related products. Through the intervention of production line staffs, the sales of cigarette has tended to remain  high as the consumers’ trust for the cigarette production remains at moderately unperturbed.

In essence, the SWOT analysis of the organization can be based on both the internal and the external environments of the organization that has contributed in various ways towards the success or the failure of the organization. This dictates and analyzes the Strength, Weaknesses, Opportunities and the threats of the organization based on the environments under which it operates and the output therein. On the other hand, SLEPT analysis refers to the Social, Legal, economical, Political and Technological factors that influences the progress of the organization. This therefore dictates the level of production that a given organization may reach within a particular period of time (Cooke, 2003).

Indeed, the success of Phillip Morris Internationals can be attributed to a number of factors within and without the company. These mark the internal and the external environment respectively. In this regard, Phillip Morris International has various strengths that gives the company a competitive advantage over its immediate competitors like the Japan Tobacco; Imperial Tobacco Group PLC as well as the British American Tobacco p.l.c. The company enjoys a strong financial base. Indeed, its corporate website indicates that it was operating at an income of $10,284 million in 2008 and net earnings of 6, 038 dollars. As a matter of fact, this showed a positive rise in of both operating incomes and the earnings from the previous Year’s level at 8,894 and 6,038 million dollars respectively (Cooke, 2003).

Furthermore, the company also boasts of well established brands that are produced within the 60 units of manufacturing set across the globe. Indeed, the company is renowned for the production of famous brands like the Marlboro, Phillip Morris, Virginia Slims as well as Chesterfield all of which have gathered sufficient market momentum and has become well established worldwide. Consequently, this has led to the decline in the need for promotion other than the basics thus raising the net incomes of the company and reducing the operational costs simultaneously.

Additionally, the company has got strong manpower and body of employees. Indeed, the company has a pool of approximately 75, 000 employees worldwide and from varied cultural backgrounds and ethnicity. With the variety of the staffs, the company gathers variety of ideas that assists it in the improvement of both production and distribution to its respective clients worldwide. This at times has proved quite beneficial for the company’s survival within the global market dynamism over the unstable environment (Cooke, 2003).

In addition, the company has a strong management team under the superior leadership of Louis C Camillieri amidst a pool of able managerial figures like the vice president, Sir David Bernick, a law graduate from Chicago University. Under this management, the company’s decisions pertaining to production and distribution are made wisely with the requisite financial budget and other allocation towards improvement of service delivery through research and development. Furthermore, the company also leads the international investors within the industries by capturing 11 out of the 30 leading world’s top international markets. This translates to about 33 per cent of the global market by value of the top markets shares.

Furthermore, the company also boasts of a number of opportunities that gives it comparative advantage over its competitors below the rank. For instance, the Phillip Morris has had been expanding its sales volume in the world as a result of increment in the tobacco market. Despite the huge anti-tobacco voices in the recent past to the present with regard to the production and allotment of tobacco, the market has remained lucrative over the time thus attracting more production interventions aimed at increasing volumes of output. This has led to perpetuated production thus more revenue for both the federal governments and the producers.

In addition, the company has continued to enjoy the accruing benefits of globalization. Indeed, globalization has been offering most companies a chief advantage on cheap costs of labor and production and therefore more profit generation. Furthermore, the company has continued to enjoy immense benefits of merging and collaboration with other producers such as Altria and the recent collaboration with the Tobacco Corporation. Such collaborations and mergers have continued to offer better opportunities for the company to expand its market share. As a matter of facts the opportunities often reflect on the favorable factors within the external environment that better places the company over its competitors (Poulsen, 1981).

Despite the company’s endowment with various favorable factors, Phillip Morris also experiences some factors that tends towards limiting the expansion of the company’s productive and distribution capacity both from within (internal) and from outside (external). However, due to the well established production and distribution capacity, the company exhibits few weaknesses (mostly internal) but is faced with a number of threats (mostly external) which are factors that try to hinder its production and distribution (Wankel, 2008).

To begin with, the main weakness of the company is litigation. With respect to this, the governments take on the promotion and sales of the product and other related product hampers the company’s venture into aggressive marketing and product promotion. This acts as the outstanding weakness of the company. The company’s production capacity is therefore hindered by relatively reduced sales resulting from minimal product promotion.

On the other hand the company faces strong external as well as minor internal threats. To begin with, the company faces stiff resistance to its main product through strong anti-tobacco activism thus rendering the company as one of the most controversial in the business world. In this regard, the anti-tobacco activists have continued to criticize the company by posing the responsibility over the deaths that results from the consumption of caffeine claimed from tobacco smoking. For instance, at one time, the activists from Philippines rose up against the merging of Fortune Tobacco and Phillip Morris. Indeed, the activist expressed fear in that the combination of the two companies would lure more smokers into the country of Philippines. Indeed, the activists also feared that the resultant intensified marketing strategies of the mergers would result to more smokers in the country (Philippines) and poor health as a result. This was a heavy blow on the marketing of cigarette within the Philippines borders and therefore reduced profit generation (Wankel, 2008).

In addition, there has been some unfavorable government legislation within and without Morris’ country of production as well as the consumer base countries. Indeed, the government has with time banned the sale of tobacco with the claim on its health problem. This has also encompassed the banning of sales of tobacco related products thus tending towards reducing the total profits of the company and its counterparts. This has also been in line with the permanent banning of the sales of tobacco products to persons under certain age limits. This has further reduced the market share of the company which has been a negative implication on the company’s profit generation. For instance, according to the findings of a research based in UK, the total number of tobacco smokers has visibly reduced following the ban on public smoking habits and the age limit for the sale of tobacco products (Wankel, 2008).

Other than the increased government intervention, the civil society has intensified awareness campaigns all aimed at reducing the consumption of tobacco and other related products. This fact has led to the reduction in the use of tobacco and a rise in expenditure of Morris Company towards promotion in order to contain the ever increasing urge against tobacco use and creating awareness on the measures that the company has taken to mitigate the harmful effects of cigarette consumption. Indeed, the population has become more aware of the harmful effects of consumption of tobacco and there acutely reduced their consumption of the product. This has therefore negatively affected the production and the resultant profit margin of the company due to reduced client’s influx in most of the company’s markets across the globe. Indeed, both strengths and weaknesses are taken as the internal environments that shape up the performance of the enterprise (Campbell & Craig, 2005).

On the other hand the opportunities and threats are considered as the external environments that defines the progress of a given organization. In essence, strengths and weaknesses of an organization are often associated with people and resources besides other factors such as marketing and innovations. On the other hand, opportunities and threats are often associated with factors beyond the control of the respective organization such as the political, economic and environmental factors (Campbell & Craig, 2005).

On the other hand, PESTL analysis of the Phillip Morris International is a function of the factors contribution with respect to the various elementary combinations under scrutiny in the company’s SWOT analysis. Indeed, social factors includes peoples’ cultural believes that dictates the consumption of some products at the expense of others which alters the purchases of certain product. For instance, most religions in the world are anti-cigarette smokers. Indeed, the most denominations believe in zero tolerance to smoking from faiths. As a result, the sales of cigarette are relatively low in such regions owing to the strong religious backyards (Campbell & Craig, 2005).

On the other hand, the political and technological also affects the progress of the company. For instance, any multinational enterprise basing its targeted market globally must acclimatize itself with the local political scenario. However, by virtue of absolute reality, stability of politics is only seen in very few countries worldwide. This therefore affects the global markets of the company due to political instability that leads to hindrance to establishment of modern technology guided interventions to production.

Other than the fostered public relations discussed above, Phillip Morris International is one of the world’s special corporations that engage its stakeholders both from within and without the organization. Indeed, the company engages both the internal and the external stakeholders in the move to establish viable means solutions to the problems facing the company. To the internal stakeholders and the employees in particular, the company uses the gathered information in improving the performance of the company. For instance, the company engages its employees through regular convergence with its retailers, adult consumers, growers and the suppliers in the processes of undertaking business ventures. During these exchanges, the company is able to acquire the consumers and other stakeholders’ views and interests, the information that the company uses in the improvement of its service delivery (Cross & Cross, 2009).

Indeed, the company engages through interactions with the media, scientists and the community in general all of whom assists in the improvement of production capacity and service delivery in general. To further understand the views of the stakeholders, the company also engages its employees through attendance to certain conferences which further supplements their opinion public survey. All these are meant to create satisfactory capacity for the external stakeholders. On the other hand, the company embraces its employees and suppliers through the offer of free gifts. In particular, the company pays school fees for the children of its esteemed suppliers and outstanding employees as a way of improving cooperation and vigor respectively.

According to the findings by Michael E. Porter, the framework used in the analysis and laying of the business strategies is based on five main pillars namely: competitive rivalry, threat of new entrants; Customers’ bargaining power; Suppliers’ bargaining power and the threat of substitute commodities. In line with this analytical framework, Phillip Morris company contains a competitive rivalry in that it occupies about 15.6 per cent of the total shares of the market while the rest is left to its competitors thus the great urge for Morris to continuously promotes its product despite the huge market share in order to overcome the effects of the competition that would rather suppress its market. Indeed, the flourishing of the business world of Phillip Morris International acts as the target point for all its competitors as the company appears as a threat to the development and flourishing of other related companies (Cross & Cross, 2009).

Additionally, the company enjoys negligible threats of new substitutes and continues to maintain high standards and pricing of its products thus the retention of huge share of the market. In addition, the Morris Company has an irrefutable reputation of first-rate brands known worldwide such as the Marlboro. Due to its well established market diversification from collaborations and merging, the company has been able to outwit possible threats to its market coverage due to its dominance. Consequently, as porter imply the company experiences minimal if any threats to substitutes. This therefore gives the company a competitive advantage over its competitors, thus making it almost free form the challenge of new entrants (Cross & Cross, 2009).

Other than the employees, suppliers and clients, Morris remains responsible to other stakeholders. Indeed, the company has been on the forefront in complying with the public health with respect to cigarette and other tobacco-related products. In this regard, PMI has been engaging in support of regulations pertaining to tobacco products particularly on the bases of the principal code of harm reduction by used of evidence-based methodology to enhance effective of the related policies. In this regard, the company has remained accountable to its entire stakeholders on matters pertaining to tobacco products particularly with the ever-rising anti-tobacco campaigns. Some of these legitimate stakeholders include: public health authorities, tobacco manufacturers besides other co-partners of tobacco supply shackle.

These policies have been all set to eliminate adverse consequences including increased demand for illegal cigarette. Despite, the company’s perpetual support on the regulatory policies, the company however remains reluctant to support regulations that inhibit adults from retailing and consumption of tobacco products besides imposing unnecessary impediments to operations within the legitimate souk. These include: generic packing, ban on the point of display sales and the full ban on communications to grown-up consumers. This however does little for the company to compromise its responsibility towards its clients and the stakeholders in general (Campbell & Craig, 2005).

The company as well remains immutably unaffected by the bargaining powers of the clients since the product value of the company is visibly big due to its common promotion through the media. Consequently, the company has established a good brand image and therefore free from the customers’ bargaining power. Finally, the company just like any other company perceives the effects of the suppliers’ bargaining power. The reason behind this is that the company follows ‘immutable’ rules that appertain to the fair trade besides having launched a special suppliers’ benefit package. In particular, the company assists the children of its suppliers through educational aids among other benefits (Cross & Cross, 2009).

In conclusion, Phillip Morris Company has been able to make tremendous progress. Indeed, the company has been able to maintain a huge share of its profit even at times of economic downturn. The main reason for a strong performance index for this company is the proper knowledge of its respective strengths and weaknesses and the acknowledgement of irregularities as appertains to its external environment. Furthermore, the company’s progress can further be attributed to its readiness to comply with the legal procedures required by the legal frameworks under which its business is based. This can be seen through the introduction of chewing tobacco other than the smoking zones and the observance of environmental conservation initiatives. All these among others assist the company in maintaining a healthy external environment.