Philip Morris Csr

Topics: Tobacco, Cigarette, Altria Group Pages: 16 (5412 words) Published: October 8, 2008
1. Introduction

Corporate social responsibility (CSR, also called corporate responsibility, corporate citizenship, and responsible business) is an idea of considering the interests of society by corporations. Companies take responsibility for the impact of their actions on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large1. Nowadays, CSR becomes more and more popular among big companies because it makes them able to be perceived in better light, by their customers. In current dense market, firms have to fight for the customer by offering something new or unique. They use CSR in order to create customers’ loyalty based on distinctive ethical values. On the other hand, many critics claim that the only reason why companies implement social projects is the benefit which they may generate by being perceived as socially aware entities. Corporate social responsibility is very often put into place by firms operating on the markets that generate the biggest harms to the society. Such corporations want to increase their brand image in order not to lose their customers. A great example of such a market is tobacco industry, which is generally known as causing many problems to its customers. 1.1 U.S. Tobacco Industry2

In 1990s, tobacco was a business which generated one of the biggest profits, however, it was a business which aroused a great deal of contraventions. Five companies dominated American tobacco market. The leader of the market was Philip Morris Companies, Inc., which was also the largest cigarettes maker in the world, controlled almost the half of U.S tobacco market. It was also the owner of Marlboro, which was the world’s second-most-valuable-brand. Almost 107 billion dollars, it was the market value of the company in 1996. The second biggest player, with 28 percent of shares of American market was RJR Nabisco whose subsidiary RJ Reynolds produced cigarettes. It produced such brands as Camel, Winston, and Salem. Three other companies BAT Industries, owning Brown & Williamson, Loews Corp, controlling Lorillard, and Brooke Group, the owner of Liggett had together 27 percent of American tobacco market. In 1997 in the USA, 26 percent of the adult population were regular smokers. It was not much in comparison to 1950s, when almost half of American adults smoked cigarettes; this percentage was almost halved in 40 years. That was the reason why all major companies had started aggressive expansion overseas, especially in developing foreign markets of Asia, Eastern Europe, South America, Africa, and the Middle East. This expansion was a great success, generating 296 billion dollars in 1996. The tobacco industry had also the biggest contribution to American economy. It employed about 700,000 people what made it the major employer in some states, especially in the southern states. Tobacco industry also added over 55 billion dollars annually to the gross domestic product. However, it also generated big economic costs to the economy. Centers of Disease Control counted that the treatment of smoking-related illnesses absorbed around 50 billion dollars. Moreover, smoking of cigarettes reduced productivity of employees. 1.2 Philip Morris

The Altria Group Inc. which was known before as the Philip Morris Companies, is the biggest seller of tobacco products in the world. Although on 27th January 2003 they changed the name, Altria still owns 100% of Philip Morris USA. Some people claim the change of the name was made to de-emphasize historical association of Philip Morries Companies Inc. with tobacco products. In March 2008 Philip Morris International spinned-off from Altria Group Inc. Philip Morris USA sells...

Bibliography: Books:
Business and Society, Anne T. Lawrence, James Weber, James E. Post, McGraw-Hill Irwin, 2005, New York, Edition 11
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