This study will start by exploring risks within the manufacturing industry, and the chosen company is Philip Morris Inc. Philip Morris is a key player in this industry and occupies a leading position among its competitors. Over the past few years, the organization has experienced tremendous growth because they supply quality products. The main objective of Philip Morris is to limit the harmful impacts of smoke on the environment and people. Innovation in this industry has offered various useful tools for manufacturers. However, it has subsequently ushered in new forms of competition. This study will take a closer look at Philip’s competition to explore any potential risks for the organization. Additionally, the paper will focus on collaboration endeavors in this industry to develop opportunities for Philip Morris. Over the past decades, tobacco use has declined in several developed countries due to its detrimental effects and strict policies. The action plan will lay emphasis on this risk and offer solutions for Philip Morris.
Analysis
Risk
Studies have concluded that tobacco use causes various diseases and has been linked to multiple deaths all over the globe. Tobacco smoking has been linked to lung diseases, multiple cancers, and heart disease, among others. According to CDC, secondhand smoke exposure can result in asthma attacks, ear infections, and stroke. Studies indicate that cigarette smoking imposes a huge financial burden on society, with over $133 billion lost in direct expenses, $170 billion in productivity, and resulting in 480,000 premature deaths every year in the United States (CDC, 2020). Due to its harmful effects, the government has imposed strict policies against tobacco production. For that reason, this has posed a significant threat to tobacco manufacturers.
According to World Health Organization, tobacco trends report that there are currently 1.30 billion tobacco consumers worldwide compared to 1.32 billion in 2015. The World Health Organization expects this number to decline to about 1.37 billion by 2025 (WHO, 2021). According to the WHO (2021) tobacco trends report, the rate of tobacco use has declined to 16% compared to 21% in 2010. Studies indicate that tobacco sales have declined by approximately 20m a month after tougher taxes and plain packaging rules were introduced (Davies, 2020). According to Davies 2020, the number of cigarettes sold in the United Kingdom was declining by approximately 12 a month. Tobacco sales started falling much more steeply after the legislation took effect. In May 2015, monthly sales of tobacco were about 3.29bn. However, the sales declined in April 2018 to 3.16bn due to the implemented measures (Davies, 2020).
In addition, the government has implemented a number of local, state, and federal anti-smoking regulations and laws. These policies include the ACA of 2010, the Tobacco Control Act of 2009, and the Family Smoking Prevention. Philip Morris has recently experienced tremendous growth because it acts according to these policies. The organization has transitioned from cigarettes to tobacco-free devices, which are less harmless to individuals. Philip Morris has greatly benefited from technological innovation in the tobacco industry. The net revenue of this company exceeded 77 billion U.S. dollars in 2019.
Competition
Imperial Brands Plc. is a worldwide consumer company, and it is among the largest tobacco organization in the globe. Imperial Brands Plc. operates across about 120 markets in the world; hence it is a major competitor of Philip Morris Inc. The net revenue of the company in 2021 was approximately 32.8 billion British pounds (Our Strategy, n.d.). Imperial Brands covers markets including Poland, Italy, France, Germany, and United Kingdom. The company provides a range of cigarettes to its consumers, for instance, smokeless and fine-cut tobaccos. Imperial Brands is committed to maintaining high standards of governance and eliminating their environmental effect. The company comprehends the concerns of society concerning smoking risks. Similar to Philip Morris, Imperial Brands understands its role in assisting in eliminating the harm resulting from tobacco merchandise.
Imperial Brands Plc. generated about two-thirds of its worldwide net revenues in 2020 from the sale of its main brands such as Davidoff, John Player Special, and Winston (Our Strategy, n.d.). This company poses a great threat as a competitor because it as well operates in the logistics industry. This organization has changed how they operate to promote its culture and embrace new ways of working. Imperial Brands Plc. has embedded a performance-based culture to promote collaboration, teamwork, and accountability (Our Strategy, n.d.). Therefore, these strategic actions assist the organization in maintaining its position in the market.
Japan Tobacco Inc. is among the main competitors in the tobacco industry. The company engages in the sale and manufacture of processed food, pharmaceuticals, and tobacco (“About Us,” n.d.). Japan Tobacco Inc. operates through various segments such as International Tobacco and Japanese Domestic Tobacco. The Japanese Domestic is a segment that deals with the marketing and production of tobacco merchandise in domestic regions. On the other hand, the International Tobacco segment produces and sells tobacco merchandise globally. The organization controls about 60% of Japan’s tobacco market. Its main brand includes Seven Stars, Winston, and MEVIUS (“About Us,” n.d.). Furthermore, the company operates in more than 70 countries; hence it has a larger market for its products.
Japan Tobacco Inc. is a company that focuses on sustainability and innovation when developing its products. Its main innovations include vape systems designed to minimize risk and harm to the environment. Its main objective is to meet consumer expectations, and most of its application is focused on combustibles. E-cigarettes are among the company’s recent innovations. This is a significant indicator of the effective implementation of innovations in the tobacco industry. The company has developed a technology partnership with Sauber Engineering, which is a prominent player in innovations. Japan Tobacco Inc. partnered with plug-and-play, which is a California-based leader in technology innovations. The reason behind the partnership is to bring data experts and innovators together to explore and create customer-relevant features.
British America Tobacco and Philip Morris have been rivals for several years. British America is regarded as one of Philip’s top competitors. British American Tobacco focuses mainly on creating a better tomorrow by minimizing the health effect of its business by offering less risky and enjoyable products for its customers (“Assessing risk reduction,” 2019). The company operates across six continents, and its regions include the Middle East and Asia-Pacific, Sub-Saharan Africa, and the United States. Another main advantage of this business is that it operates in R&D centers, tech hubs, factories, and offices. The company spend most of its time on the road, guiding and assisting tobacco farmers, including retailer who distributes their merchandise. The main objective of the company is to have 50 million customers of their non-combustible products by 2030. In 2021, the organization had already made good progress, and it had attained 18.3 million customers of non-combustible brands.
Alongside their traditional cigarette merchandise, the company’s broad portfolio of non-combustible products comprises reduced-risk alternatives like modern oral nicotine pouches and tobacco heating products, including vapor products. The objective of the company is to deliver sustainable returns to its shareholders and to develop a purposeful and dynamic place for its employees to work. A significant role in growing a business is responsible marketing. British American Tobacco directs its marketing at adult customers only. Another key objective of this business is making agriculture more sustainable. The company is assisting contracted farmers and leaf suppliers with matters like the use of agrochemicals, including soil and water management. The company works with more than 75,000 farmers and invests millions of pounds in leaf R&D each year. As such, it assists the company in creating innovative and new farming techniques and technologies.
Collaboration
Philip Morris Inc. and Wiredelta have partnered to develop new forms of innovation to meet the World Health Organization guidelines. In today’s fast-paced world, organizations have to take opportunities to adopt partnership as the optimum measure by thinking outside the box to come up with better solutions to the predominant problems experienced earlier. For instance, the merger and partnership between Philip Morris Inc. and Wiredelta have enabled tapping into the previously untapped business elements (Wiredelta, 2022). Firstly, the collaborative approach has enabled companies to actively incorporate the customer’s desire by adopting highly competitive products. As a result of collaboration, the partnership has highly focused on product improvement it the desire to satisfy the needs of the customers. This collaborative approach has initiated the mechanism of customer reviews on the products. Collaboration has actively driven the formulation of a conclusive board of the organization tasked with the role of implementing review and implementation of desired quality. Further, collaboration has driven a customer-focused business strategy. Arguably, the partnership has engaged in customer satisfaction as a tool to attain optimum profit. As a result of collaboration, the focus has mainly been on the value delivered. The desire to attain desirable customer relationships has stimulated the adoption of customer-centered strategies.
Furthermore, the company boasts an opportunity for customer-centric processes and adoption. The success of the business is mainly associated with the internal operations, which are part of the business deliverables. A focus on the customer plays an instrumental role which is the major determinant often profitability. Additionally, the partnership has provided the company with an opportunity for quality improvement, particularly on the improved technical process due to collaboration. As a result of collaboration, the two companies merge their processing mechanism hence developing the most competitive product development strategy such catapults the production process resulting in highly competitive products. As an opportunity, the highly integrated business processes result in the production of highly competitive and better-quality products, which further stimulate the business profitability to extreme levels.
Additionally, the company’s partnership has resulted in the merging of expertise from both Philip Morris Inc. and Wiredelta companies. Arguably, expertise due to partnership provides the business with adequate human expertise, which acts as a major factor of production in both improving the quality of product and the production processes within the business. The excellent team enhances decision-making as a result providing the business with an opportunity for highly competitive production-related decisions. Such contribute to a variety of internal process improvements.
Moreover, collaboration has resulted in growth opportunities for the business. Before the collaboration, each company engaged in a different line of production processes and quality products. However, the collaboration results in a direct improvement in the business’s ability to exploit a wider range of the company’s strengths and abilities. As a result of the collaboration, the business is now able to actively engage in unilateral research, which has a positive implication for the environment. For instance, collaboration has highly improved the business’s capability to engage in diverging lines of production to meet environmental needs. Further, collaboration has improved the ability of the company to channel its strengths into innovation as a mechanism of product improvement. Due to innovation, the growth opportunities have rapidly increased forth the company.
Secondly, direct opportunities, particularly in cost reduction, have erupted as a result of collaboration. The partners enjoy a comparative ability to formulate cost-effective business storage. Collaborative strategy development is a major benefit for the company. For instance, through collaboration, the company is now able to develop highly effective cost decisions. Such decisions play an instrumental role in pivoting the growth of the business to global leadership levels. Moreover, highly cost-effective decision enables the business to rapidly improve their production efficiency as a result of enjoying a wider profit.
Nevertheless, the business enjoys enhancement of the employee’s morale as an opportunity due to collaboration. In this, the partnership offers the employees ability to work together in the new environment. Arguably, the employees were previously working differently, but due to patronship, the employees stand a chance to work together. This acts as a major boost to their morale. For instance, numerous employees interacting in a highly competitive environment directly improves their ability to deliver high-quality services. As a result, the partnership stands to gain on high production as a major opportunity.
The pantherid between Philip Morris Inc. and Wiredelta plays a major role in increasing the reputation of the business, which directly provides the merger with an opportunity to attain global recognition. The merger has been instrumental in enabling the companies to be recognized globally. The companies operate a relatively large scope of the market, and the collaboration has further accounted for 186 markets globally (Wiredelta, 2022). As a result of its global reputation, the collaboration has resulted in Philip Morris being ranked at position six among the global top 15 brands. Global rankings play an important role in driving investors and customers. As a result, the partnership further enjoys the opportunities to develop and increase its market globally due to potential investors and customers.
The collaboration was majorly driven by the desire to have development partners since Wiredelata was a probable solution. The collaboration closed the gap that was a major threat to the successful operation of Phillip Company. The result was a highly competitive and reliable solution for the customers. The merger decision stimulated Philip’s ability to optimize their area of weakness. As an opportunity, Philip Morris positively improved its operation, thus directly expanding its market capabilities.
KT&G is a South Korean tobacco company, and it partnered with Philip Morris Inc. in January 2020. The two companies collaborated to market a range of ‘smoke-free” merchandise worldwide. KT&G is an organization that distributes electronic cigarettes that comprise hybrids and e-vapor products. The deal between the two organizations covered KT&G’s HTPs, including e-cigarettes. In 2020, Philips Morris made clear the significance of having KT&G’s merchandise in its product portfolio when stating its financial results. In October 2020, Philip Morris launched KT&G’s device in Japan. The equipment launched can be utilized by the consumers as a form of e-liquid and tobacco leaf. Philip Morris referred to these products as nicotine-free liquid cartridges and mixed consumables.
Philip Morris believed that the partnership could benefit adult smokers by offering greater choice and enhancing the adoption of smoke-free merchandise globally. The partnership could enable adult smokers to abandon traditional cigarettes and switch to better alternatives. The deal between the two companies allows Philip Morris to market the products of its partner on an exclusive basis. Under the agreement, the products distributed will be subjected to strict evaluation to ensure they meet the World Health Organization guidelines. KT&G and Philip Morris agreed to seek any needed regulatory approvals that may be needed.
E2open is an organization that has partnered with Philip Morris to establish the digital supply chain for smoke-free products. E2open is an organization that provides its products across a variety of industries such as consumer electronics, telecommunications, and industrial manufacturing. It focuses on developing a digital supply chain application. The digital application can sense and respond to supply constraints and real-time demand. The digital supply chain application created by the company has the ability to collect data from partners, contract manufacturers, suppliers, channels, and consumers. As such, Philip Morris has the advantage of utilizing this data to enhance its business.
Philip Morris is dedicated to attaining its supply chain objective by controlling the power of data, artificial intelligence, and machine learning to promote its trade. Moreover, the company is committed to its shareholders, personnel, and to the world to develop products that are harmless to the environment. PMI is thrilled to expand its corporation with E2open to bring best-in-class digital services and innovation to the market. The collaboration will play a crucial role in transforming the supply chain further in order to enhance the efficient and timely delivery of the best products worldwide. E2open provides a suite of trusted and secure cloud solutions in supply chain incorporation that enable organizations to minimize IT complexity and their cost of proprietorship. In addition, the application allows booth partners to engage in deal-based incentives, request exclusivity, and register sales opportunities. This practice minimizes conflict, increases partner trust, and enhances pipeline visibility. Additionally, the digital application provided by E2open has the ability to detect and correct errors in the obtained data. AI-powered algorithms eradicate the need for manual efforts. Sophisticated APIs provided offer brands access to merchant data easily for use in their business intelligence tools and downstream applications. The collaboration has greatly assisted Philip Morris in promoting its business.
Action Plan
Inquiring about the data from the analysis offered helpful opportunities that would assist Philip Morris’s objective of enhancing innovation, creativity, and value. Upon examining the data in the assessment, the plan focused deeply on the impacts the policies are having on Philips occupancy and growth rate since it is currently a major risk. The aims included examining how government and health policies have greatly affected the financial growth of the company. The study as well aimed to examine the reason for sales decline and the preferences of consumers.
Understanding the Challenge
In this paper, the action plan will start by comprehending the difficulties, and selecting input data was the first step. Three main tasks were selected, and they were a mix of potential opportunities and risks: strict policies, sales growth decline, competitors, and collaboration opportunities.
Processing the inputs was the second step when creating the action plan. WIBNI technique was utilized to construct opportunities in this action plan. When starting to examine the data, the 5WH tool was utilized to induce various types of data and show gaps that were inhibiting the business from achieving a resolution. Who? Consumers, Competitors, Philips leadership. What? Consumers do not feel safe consuming traditional tobacco. Where? Research and analysis of what makes consumers feel unsafe. When? While the policies still have operational restrictions for Philip. Why? Product consumption is low, and sales growth is reducing. How? Consulting with experts and Company staff.
Creating output data was the third step in order to frame the difficulties which could be utilized during the generating ideas stage. In the third step, the queries were framed, linked directly to opportunities, and provided the questions to consider. How can partnership help the company? How can the company gain a competitive advantage? How can the company satisfy consumers? How can leadership assist the business? During the processing phase, focusing on how the opportunities could be fulfilled offered the business a clearer path to comprehending the real challenge.
Generating Ideas
Since solving the challenge was the main concern, the generating ideas phase was integrated by entering the final problem statement: Competition and strict policies have impacted tobacco consumption rates and reduced the sales growth for Philip Morris. The company will need to offer solutions to make customers feel safe when consuming tobacco products. In addition, the SCAMPER tool was utilized to evoke the flow of concepts. Several interesting goals were considered during this phase, for instance, Reverse? Rather than Philips offering cheap products, they will provide quality products that are safe for consumers and the environment. Eliminate? The aim of elimination is to enhance overall growth for Philips rather than establish a competitive advantage. Modify? The company should consider changing their merchandises to smoke-free products. Collaborate? The business should associate with professional services to implement measures that are safe. Adapt? The organization should identify what is working well for rivals.
The problem statement was referred to in order to finalize the generating ideas stage. The scamper options were re-evaluated to identify those that would bring the company close to resolving the challenge. The final ideas in this phase included: Associating with professional services to ensure safety measures are followed and Modifying existing productions to meet the needs of consumers.
Preparing for Action
Placing the ideas into actionable items was the next step in this plan. In this stage, the two ideas were utilized that were output from the generating phase. The ALUo tool was utilized to create and strengthen the concepts since the generating phase provided only two ideas. The advantages identified included: increased product quality, customer loyalty, and sales growth. The questions asked in this phase included: will the venture be safe? Is it possible to meet consumer needs?
Visual Representation Action Plan
References
About us. (n.d.). JTI. Web.
Assessing risk reduction. (2019). Philip Morris International. Web.
CDC. Tobacco control interventions. (2020). Centers for Disease Control and Prevention. Web.
Davies. (2020).UK tobacco sales fell faster after plain packaging rules came into force. The Guardian. Web.
Our Strategy. (n.d.). Imperial Brands. Web.
Philip Morris International competitors. (n.d.). Craft. Web.
WHO. (2021). Tobacco use falling: WHO urges countries to invest in helping more people to quit tobacco. WHO | World Health Organization. Web.
Wiredelta. (2022). Wiredelta & Philip Morris – From collaboration to an exclusive partnership – Wiredelta. Web.