STRATEGY ANALYSIS: PHILIP MORRIS COMPANIES INC.
This research presents a strategic analysis of Philip Morris Companies, Inc. The findings of this analysis are presented in the context of (1) a history and current status of the company, (2) a SWOT analysis, (3) recommended strategy, (4) a five-year projection of the recommended strategy, and (5) probable competitive and market reaction to the proposed strategy.
The Philip Morris Companies Inc. is the twelfth largest corporation in the United States. The company was founded in 1847 as a tobacco business (Moskowitz, Katz, and Levering, 1986, p. 784). Tobacco remains an important segment of the firm's business in the 1993 (Barrett, 1993, p. 317). In 1993, the company actively participates in three industries--tobacco (43 percent of revenues), processed foods (49 percent of revenues), and beer (eight-percent of revenues).
When the handwriting began to appear on the wall for cigarette manufacturing industry in the United States, Philip Morris adopted and implemented a series of aggressive diversification strategies. The first major diversification strategy was into the beer industry, where they acquired the Miller Brewing Company. Relatively soon thereafter, the company acquired the Seven-Up Company. Seven-Up was divested, however, and the company no longer participates in the softdrink industry. In 1985, Philip Morris acquired General Foods, which by 1987 was contributing 40 percent of total company revenues at Philip Morris. In 1988, Philip Morris acquired Kraft Foods. Since that time, Philip Morris has acquired Jacobs Suchard AG in 1990, and Freia Marabou in 1993 (Barrett, 1993, p. 317).
The company's diversification strategy is designed to insure that Philip Morris will remain a large and powerful corporation long after the tobacco industry has gone into eclipse. In the 1993, however, Philip Morris remains the largest competitor in the American tobacco industry...