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Philip Morris International SWOT Analysis

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Company Description

Philip Morris is an American multinational company, and it manufactures cigarettes and tobacco. The company is the market leader, and it has its presence in more than 180 countries in the world. Marlboro is the company’s well-known product worldwide. It was once part of the company Altria, and it fell apart from Altria in 2008. Tobacco is considered an addictive drug and is also considered one of the causes of death (WHO, 2008). Therefore, the government has applied litigation and restrictions on the company. The company is a point of controversy around the world because of health issues. In response to this, the company has come up with a solution, i.e., smoke-free products. The company was at a rank of 108 in revenue in 2018, according to fortune 500 (Fortune, 2018). The company is a public company listed on the New York stock exchange, S&P 100, S&P 500, and SIX. The company was founded in 1847, and its headquarters are in Switzerland.

The company has a worldwide presence except for America. The main products of the company are cigarettes, cigars, Codentify, fine-cut rolling tobacco, snuff, rolling papers, and tubes. The net income of the company was $7.91 billion in 2018. The company has around 77,400 employees worldwide. The company has six multi-billion dollar brands, and this includes Dji Sam Soe, Longbeach, Marlboro, ST Dupont Paris, and U Mild. The research center of Philip Morris is in Neuchatel, Switzerland. The company spends a lot of money on research and development. As of 2018, the company spent $4.5 billion on four of its products. Two of these were of tobacco products, while the other two were of nicotine. The company is spending a lot of money on the research of making this world smoke free by 2035. They are running campaigns to make the world smoke free by 2035.  

Philip Morris International SWOT Analysis

Company Mission and Goals

The mission of the company is described as follows.

The company states that its mission is to become the best employer and a corporate citizen. They try to be socially and environmentally responsible too. They fight against the illegal cigarette trade. They try to provide a good environment for their employees. They work for the best of their employees (Comparably, 2018).

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The company believes in integrity, trust, and collaboration. They follow these values in their organization. One of the main goals of the company is to make this world smoke free. The company is working towards the transition from smoke to smoke-free products. They are implementing such rules and regulations which help in creating smoke-free products. The company works for its employees, and they hire the best people and give them the best environment. The company believes in transparency and growth, and they keep people in the loop while making major decisions for the company. The company’s agenda for 2030 is to build an environment for fair globalization (Yearbook, 2018). The company has decided to take a step with regard to this.

The company supports spreading awareness about educating people, as it is the tool to send good life, empowering people, and get better jobs. The company talks about climate change, and the company states that there is a need for the industrial revolution to bring climate change in the world, as the most thing that is affecting the climate is industries and factories. The company supports all the international communities which are fighting against illicit activities like money laundering, the illegal flow of cash flow, and tax evasion. The company supports the idea of access to technology for all. Technology should not separate humanity into a different sector, and it should facilitate humans only. It should not be the way to discriminate against people.  The company supports transparency, accountability, equality and justice, and effectiveness. These are the steps company is taking to make build fair globalization by 2030.

SWOT Analysis of Philip Morris International

The company’s SWOT is described as below

Strengths

1. Distribution and reach

2. Cost Structure

3. Dealer Community

4. Financial position

5. Return on Capital Expenditure

6. Skilled labor force

7. Social media

8. Entering new markets

9. Website

10. Product Portfolio

11. Partnerships

Weaknesses:

1. Research and development

2. High Day sales inventory

3. Rented property

4. Low current ratio

5. Cash flow problems

6. Integration

7. Diversification in workforce

8. High employee turnover rates

9. Quality Control

 

 

Opportunities

1. E-commerce

2. Technological Developments

3. Inflation

4. Green Government drive

5. Tax policy

Threats

1. Technological developments by competitors

2. Suppliers

3. Political uncertainties

4. Substitute products

 Company’s SWOT Description

The above table has been discussed in detail below:

Strengths
  1. The company has a very extensive distribution network in almost every state. They have made sure that their customers get the products easily and timely. They have a very strong distribution network which has a lot of reach.
  2. The system of the company is in such a way that they have a low-cost structure. The company manufactures its products at a very low price and sells at a low price too. It is economical for users.
  3. The company has strong relationships with dealers; these dealers provide them with the supplies. These dealers also promote their products.
  4. The company has a very strong financial position. The company is making profits for the past five years. They have capital available in reserve too. They can use it anytime for their capital expenditures. They have a strong asset base too. It gives the company better solvency.
  5. The company was able to get high returns on its investments. They have proved it from their performance. They are getting good returns for the past many years.
  6. The company invests a lot in its labor training. This is the reason they have a large number of trained and skillful employees in the company. They keep their employees motivated by giving them good returns on their performances.
  7. The research team has made it possible for the company to come up with new products, and hence this way, the company was able to enter the new market too.
  8. The company has a very strong presence on social media. The company has millions of followers on Facebook, Instagram, and Twitter. They engage customers well on these platforms, and they have a low response rate.
  9. The company has a very well-designed company website. This brings in a lot of customers for the company.
  10. The company has a very large product portfolio. They have a large number of unique offerings for the customers, which are not offered by their competitors. This gives the company a competitive edge.
  11. The company has strong partnerships with the dealers, suppliers’ retailers, and stakeholders.
Weaknesses
  1. The company is investing a lot of money in R&D, but there are many players in the industry who are spending even more than Philip Morris on R&D. This gives other companies an advantage over Philip Morris international. So, the company needs to work more on its R&D. It has been reported that the company has not done the research for the past two years. The company is using previous data. This has led to many wrong decisions, too, as the tastes and choices of the customers are ever-evolving.
  2. The time between the purchase of the product to the selling of the product is high. This adds up to the extra cost of the company.
  3. The company pays a lot of rents on a monthly basis. As most of the property on which they do business are rented, not purchased
  4. The current ratio of the company is low as compared to the industry average. This means that the company will face problems in the future while liquidating its products.
  5. There is a lack of financial planning in the company. This is why the company has faced many problems regarding financials.
  6. Philip Morris’s current structure and culture have led to the failure of many mergers and integrations. The company has to work on its culture and structure in order to have successful integrations.
  7. The company has very little diversified staff. It makes it difficult for employees with various backgrounds to adjust to that environment, which leads to losing talents.
  8. There is a very high turnover rate in the company because this company bears extra costs for the training and development of the employees.
  9. The company spends less amount on its quality control department. This has led to more damage and inconsistency in their products.
Opportunities
  1. There has been a shift from traditional shopping to online shopping. The buyer prefers to buy online now. The company can make a lot of profits by setting up online stores.
  2. The company can use technologies to further reduce their costs and make more profits. The company can make more profits by making good decisions based on data extracted used by new technologies.
  3. The inflation is expected to be low for the next two years. It is a very good chance for the company to make good profits as the cost of manufacturing will be low.
  4. The green government drive will help the company to sell its products to the government’s contractors and workers.
  5. The tax policy is in favor of the company as the company will give away a lesser amount as tax. There will be fewer costs for the company.
Threats
  1. The competitors always pose a threat to any company. The same goes for Philip Morris International. There are many existing and new players in the market that pose a threat to the company. Their technological advancements more than Philip Morris are a big threat.
  2. The bargaining power of suppliers has increased over the years as the number of suppliers has decreased over the years. So, the suppliers can ask for more money.
  3. Political instability in any country can happen at any time. This poses a big threat to companies.
  4. There are many substitute products available in the market like Sheesha, cigar, this all is a threat to the company.
Bibliography
  • Comparably. (2018). Philip Morris International Mission, Vision & Values.
  • Fortune. (2018). WHO Report on the Global Tobacco Epidemic, 2008: the MPOWER package.
  • WHO. (2008). WHO Report on the Global Tobacco Epidemic, 2008: the MPOWER package.
  • Yearbook, G. G. (2018). Partnerships for the Goals.

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