Strategic Analysis for Philip Morris

Mehmet Burkay 251311001 STRATEGIC ANALYSIS FOR PHILIP MORRIS *PEST ANALYSIS – Political and Legal Forces †¢ The laws regulated by the governments against the cigarette companies and cigarette advertisements, since early 90s. †¢ Increasing tax rates on cigarettes especially in U. S. and Western Europe †¢ The barriers against outside producers in china, korea, taiwan, japan – Economic Forces †¢ Increasing buying power of the consumers in developing countries †¢ Incremental costs of alternative marketing strategies †¢ Compensation expenditures †¢ Shrinking old markets in developed countries Growing new markets in developing countries – Social Forces †¢ Developing social awereness against harm of cigarette †¢ Campaigns against cigarette – Technological Forces †¢ Researches on cure for cancer †¢ Decreasing costs due to the developments of new Technologies †¢ Comprising new advertisement methods through internet * SWOT ANALYIS – Strengths †¢ Company’s strong financial budget †¢ Well known brands in cigarette market †¢ Prestigious image of Marlboro †¢ Successful partners in foreign markets †¢ Strong distribution channels †¢ Essential corporate culture – Weaknesses †¢ Inadequate comunication with public Opportunities †¢ Growing new markets in developing countries †¢ Chance to use brands in different sectors †¢ Merging or forming strategic alliances with local corporations in foreign markets – Threats †¢ Aggressive marketing campaigns of competitors †¢ Social campaigns against cigarette †¢ Legal barriers against cigarette consumption and advertisements †¢ Increasing prices in agricultural products †¢ Deaths due to cigarette †¢ Probable compensations * Industry and Competitor Analysis †¢ Potential Entrants: low First investment costs are quite high and markets are quite dom inated by existing firms Bargaining Power of Suppliers: medium In many countries state is the supplier of tobacco and prices are defined by states †¢ Bargaining Power of Buyers: low Cigarette consumers have no chance to bargain on prices †¢ Other Stakeholders’ Power: high Governments have very strong power to apply sanction on cigarette firms and cigarette market. †¢ Threats of Substitute Products: low Cigarette is easy to reach and use. There is also no serious product that can substitute cigarette †¢ Competition in Industry: high There are many firms activating in industry