Global Economic Environment

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  • Topic: Altria Group, Tobacco industry, Philip Morris USA
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MBA 6008 - Global Economic Environment
Professional Challenge – Company Analysis
Philip Morris International, Inc.
Sangbolu Tamba
November 16, 2012

Introduction

Philip Morris International, Inc. (PM) is an American tobacco company that earns most of its revenue from countries outside the United States. “It sells cigarettes around the world - with 40% of its sales coming from the European Union, 24% from EMEA (Eastern Europe, the Middle East, and Africa), 22% from Asia, and 12% from Latin America and Canada.” (Rising Star Portfolios, 2011) In the analysis, we will explore PM financial strategy of being the market leader, the microeconomic and macroeconomic environment and challenges that the company faces.

Company Background

The history of Philip Morris can be traced back as far as 1847 when the company opened its first shop, selling tobacco and cigarettes. Roughly three decades later in 1881, the once private company made a decision to go public. Four years later, the company became known as Philip Morris & Co., Ltd. In 1902, the company became incorporated in New York, by Gustav Eckmeyer. During that time the ownership of the company was divided 50-50 between the British parent and American partners. Then in 1919, they went through another transformation—an acquisition of the Philip Morris Company in the U.S. From the acquisition, Philip Morris & Co., Ltd moved to Richmond, Virginia and became incorporated…the new name Philip Morris & Co., Ltd., Inc. “By the end of the next decade, the Company had begun to manufacture cigarettes in its factory in Richmond, Virginia; in 1924, what was to become its most famous brand, Marlboro, was introduced. By the mid-1950s the company had become a part of American culture and soon after it launched Philip Morris International to manufacture and market its products around the world.” (Philip Morris, 2011). Currently, Philip Morris International (PM) is one of the world’s top leading tobacco companies with products in approximately 160 countries. In the article, Philip Morris Captures Tobacco Addicted Emerging Markets, Nicholas Pardini talked about the fundamental strength of Phillip Morris and its dominant position international smoking friendly markets. In most developing markets, the demand for cigarettes and other tobacco products are still on the increase. With the exception of China, which has its own tobacco company, Philip Morris controls roughly 28% of the world market.

Table 1: Company Management|
Louis C. Camilleri| Doug Dean| James R. Mortensen| Daniele Regorda| Chairman of the Board and| Senior Vice President,| President, Latin America| Senior Vice President,| Chief Executive Officer| Research and Development| & Canada Region| Human Resources|  |  |  |  |

David M. Bernick| Even Hurwitz| Jacek Olczak| Hermann Waldemer| Senior Vice President| Senior Vice President,| President,| Chief Financial Officer| and General Counsel| Corporate Affairs| European Union Region|  |  |  |  |  |

André Calantzopoulos| Martin King| Matteo Pellegrini| Jerry Whitson| Chief Operating Officer| Senior Vice President,| President,| Deputy General Counsel|  | Operations| Asia Region| and Corporate Secretary|

 |  |  |  |
Kevin Click| Marco Kuepfer| Joachim Psotta| Miroslaw Zielinski| Senior Vice President and| Vice President,| Vice President and| President, Eastern Europe,| Chief Information Officer| Finance and Treasurer| Controller| Middle East & Africa Region|  |  |  | and PMI Duty Free|

CEO Louis C. Camilleri has been with Philip Morris International, Inc. for 33 plus years. Before he joined the company, Camilleri was employed as a business analyst with W.R. Grace and Company located in Lausanne, Switzerland. In his past career, he was the Chairman and Chief Executive Officer of Altria Group, Inc. Camilleri has held several positions with Altria Group, Inc. and its...
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