Philip Morris Company

During 1993, tobacco, food and brewing contributed 42 percent, 50 percent and 7 percent to revenue, respectively, while contributing 56 percent, 38 percent and four percent to profit, also respectively. The remaining revenue and profit came from the company's financial and real estate activities. International operations, which are becoming increasingly important to the company, accounted for approximately 41 percent of sales and 37 percent of operating profits during that year.

The 1993 performance of the tobacco segment is in stark contrast to the 1992 performance of the same segment when it contributed 43 percent of the company's revenue (a similar level), but 69 percent of the company's operating profit. This decrease in profitability can be traced to the company's decision to decrease the price of its flagship cigarette brand, Marlboro, which resulted in steady revenues by attracting additional customers, but which decreased the margin on the

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989 to a high of 64 percent in 1993. In the beer industry, Philip Morris lags significantly behind the country's largest brewer, Anheuser-Busch, which dominates the domestic beer market in a manner similar to the domination of the cigarette market by Philip Morris. The company's market share of this industry segment is approximately 8 percent, built in part on strong advertising campaigns in support of its product line. Philip Morris only recently became the largest domestic food processor, and it attained that status through its acquisitions. This market segment remains characterized by a large number of companies with no single company dominating the market as Philip Morris does with cigarettes. However, the strong financial position of Philip Morris and its chief competitor's (RJR Nabisco) continuing financial woes put Philip Morris in a good position to gain market share in this area. The similarities between RJR Nabisco and Philip Morris are striking: both are active and strong participants in both the tobacco and the food processing industries. Philip Morris sought to purchase RJR Nabisco during the late 1980s, but the company was instead purchased by Kohlberg Kravis Roberts and Company in 1989. Unlike Philip Morr
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Approximate Word count = 1312
Approximate Pages = 5 (250 words per page)

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