Philip Morris Companies, Inc. is a leading consumer products company with three major segments: tobacco, food and beer. Each of these strategic business units (SBUs) is a significant force in its respective market; the company is the largest cigarette company in the United States and the largest American food processor. The company is also the second largest brewer of beer (Shea, 1993, p. 1822). In addition to these significant SBUs, the company also has a smaller concern in the financial services market, which has contributed slightly to activities in recent years. This research examines the current status of Philip Morris with particular regard to the company's position in its industry as it enters the future.
In 1992, Philip Morris dominated the domestic cigarette market with approximately a 45 percent market share. Tobacco products accounted for 43 percent of 1992 revenue and 69 percent of the company's operating profit (Barrett, 1993, p. 317). That dependence on a single business unit makes the company especially vulnerable to legislation and litigation arising from the sale of tobacco products. In recent years, Americans have become increasingly concerned with public health and with the sale and regulation of cigarettes and other tobacco products. Many public facilities now prohibit smoking indoors, and designated smoking areas have become commonplace at restaurants and other private establishments throughout the country. Announcements by the Environmental Protection Agency in early 1993 that second hand smoke can be a significant contributor to lung cancer has been met with vehement and expensive rebuttals by the tobacco industry led by Philip Morris (Bishop, 1993, p. B1).
As a result of increased education efforts since the 1960s, increased societal and peer pressure to not smoke and the increased difficulty of finding places to smoke, the American cigarette market is considered by industry analysts and tobacco ...