Philip Morris (Pakistan) Limited Business Strategy Submitted To Dr. Zahid Riaz Submitted by Abdul Rehman Sohail Ayesha Majid Donia Ismail Eleena Naz Minal Zafar Rimsha Malik Sharmeen Abbas Date 10-June-2020 Table of Contents 1 INTRODUCTION ............................................................................................................................................. 3 1.1 BUSINESS MODEL ............................................................................................................................................. 3 1.2 STRATEGIC FOCUS ............................................................................................................................................. 3 1.3 PRODUCT RANGE .............................................................................................................................................. 4 1.4 FINANCIAL OVERVIEW ........................................................................................................................................ 5 1.5 MARKET SHARE ................................................................................................................................................ 7 1.6 MANUFACTURING ............................................................................................................................................. 7 1.6.1 Tobacco Curing ........................................................................................................................................ 7 1.6.2 Cigarette manufacturing process: ........................................................................................................... 8 1.7 TRADE MARKETING AND DISTRIBUTION ................................................................................................................. 8 2 PHILIP MORRIS OVERVIEW .......................................................................................................................... 10 2.1 MISSION ....................................................................................................................................................... 10 2.2 VISION .......................................................................................................................................................... 10 2.3 COMPANY GOALS............................................................................................................................................ 10 2.4 STRATEGIC OBJECTIVE ...................................................................................................................................... 11 2.5 PHILIP MORRIS GUIDED PRINCIPLE ..................................................................................................................... 11 2.5.1 Employment Stability ............................................................................................................................. 11 2.5.2 Financial Stability ................................................................................................................................... 11 2.5.3 Special Recognition Awards ................................................................................................................... 11 2.6 BUSINESS CHALLENGES ..................................................................................................................................... 12 3 INTERNAL ANALYSIS .................................................................................................................................... 14 3.1 REVENUE ....................................................................................................................................................... 14 3.2 INDUSTRY GROWTH ......................................................................................................................................... 15 3.3 PROFITABILITY RATIOS ...................................................................................................................................... 16 3.4 LIQUIDITY RATIOS ............................................................................................................................................ 17 3.5 IFE MATRIX ................................................................................................................................................... 18 3.6 PORTER’S FIVE GENERIC STRATEGIES .................................................................................................................. 19 3.7 SUPPLY CHAIN MODEL ..................................................................................................................................... 19 3.7.1 Value Chain ............................................................................................................................................ 19 3.7.2 Supply Flow ............................................................................................................................................ 20 3.8 MARKETING STRATEGY ..................................................................................................................................... 25 3.9 SALES FORCE STRUCTURE .................................................................................................................................. 25 3.10 SALES STRATEGY ............................................................................................................................................. 26 3.11 TRADE MARKETING ......................................................................................................................................... 27 3.12 SUMMARY ..................................................................................................................................................... 28 4 DISTRIBUTION AND INCENTIVES MODELS ................................................................................................... 29 4.1 MARGIN/COST PLUS/HYBRID COST PLUS 2.0 ...................................................................................................... 29 4.2 POLICY ON DUMPING ....................................................................................................................................... 30 5 GENERAL ENVIRONMENT ............................................................................................................................ 30 1 5.1 MAIN COMPETITORS ....................................................................................................................................... 32 6 TAXATION ................................................................................................................................................... 33 6.1 SOCIAL CULTURE & DEMOGRAPHIC TRENDS ......................................................................................................... 34 6.1.1 Social Trends Globally and in Pakistan................................................................................................... 34 6.1.2 Culture Trends Globally and in Pakistan ................................................................................................ 35 6.1.3 Demographic Trends Globally and in Pakistan ...................................................................................... 37 7 INDUSTRY ANALYSIS .................................................................................................................................... 38 7.1 PORTER’S FIVER FORCES MODEL ANALYSIS .......................................................................................................... 40 7.1.1 Threats of New Entrants ........................................................................................................................ 40 7.1.2 Bargaining Power of Suppliers ............................................................................................................... 41 7.1.3 Bargaining Power of Buyers ................................................................................................................... 42 7.1.4 Threats of Substitute Products or Services ............................................................................................. 42 7.1.5 Rivalry among the Existing Competitors ................................................................................................ 42 8 NON-PRICING COMPETITION ....................................................................................................................... 43 8.1 COMPETITOR ANALYSIS .................................................................................................................................... 44 9 COMPETITIVE PROFILE MATRIX ................................................................................................................... 46 9.1 MAJOR OPPORTUNITIES & THREATS TO TOBACCO INDUSTRY ................................................................................... 46 9.1.1 Opportunities ......................................................................................................................................... 46 9.1.2 Threats ................................................................................................................................................... 47 10 EXTERNAL FACTOR EVALUATION MATRIX ................................................................................................... 48 11 OBJECTIVES ................................................................................................................................................