Philip Morris International Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by Philip Morris International Inc. managers to do a situational analysis of the organization . It is an important technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Philip Morris International Inc. is facing in its current business environment.

The Philip Morris International Inc. is one of the leading companies in its industry. Philip Morris International Inc. maintains its dominant position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis a highly interactive process and requires effective coordination among various departments within the organization such as – marketing, finance, operations, management information systems and strategic planning.

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The SWOT Analysis framework facilitates an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Philip Morris International Inc. to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

Philip Morris International Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Philip Morris International Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Philip Morris International Inc. SWOT Analysis

Strengths of Philip Morris International Inc. – Internal Strategic Factors

As one of the leading companies in its industry, Philip Morris International Inc. has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Philip Morris International Inc. are –

Read - Philip Morris International Inc. Porter 5 Forces Analysis & Industry Analysis
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Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.
Superb Performance in New Markets – Philip Morris International Inc. has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
Highly successful at Go To Market strategies for its products.
Strong distribution network – Over the years Philip Morris International Inc. has built a reliable distribution network that can reach majority of its potential market.
Automation of activities brought consistency of quality to Philip Morris International Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Strong Brand Portfolio – Over the years Philip Morris International Inc. has invested in building a strong brand portfolio. The SWOT analysis of Philip Morris International Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Highly skilled workforce through successful training and learning programs. Philip Morris International Inc. is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.

Weakness of Philip Morris International Inc. – Internal Strategic Factors

Weakness are the areas where Philip Morris International Inc. can improve upon. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Philip Morris International Inc. needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
Investment in Research and Development is below the fastest growing players in the industry. Even though Philip Morris International Inc. is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
The profitability ratio and Net Contribution % of Philip Morris International Inc. are below the industry average.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Philip Morris International Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
Limited success outside core business – Even though Philip Morris International Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

Opportunities for Philip Morris International Inc. – External Strategic Factors

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The market development will lead to dilution of competitor’s advantage and enable Philip Morris International Inc. to increase its competitiveness compare to the other competitors.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Philip Morris International Inc. an opportunity to enter a new emerging market.
Government green drive also opens an opportunity for procurement of Philip Morris International Inc. products by the state as well as federal government contractors.
New trends in the consumer behavior can open up new market for the Philip Morris International Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Philip Morris International Inc. to drive home its advantage in new technology and gain market share in the new product category.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Philip Morris International Inc.’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.
New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Philip Morris International Inc.. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Philip Morris International Inc..

Threats Philip Morris International Inc. Facing - External Strategic Factors

Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Philip Morris International Inc.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
Imitation of the counterfeit and low quality product is also a threat to Philip Morris International Inc.’s product especially in the emerging markets and low income markets.
Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.

Limitations of SWOT Analysis for Philip Morris International Inc.

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Philip Morris International Inc.
SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

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Weighted SWOT Analysis of Philip Morris International Inc.

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Philip Morris International Inc. managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Philip Morris International Inc.

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

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SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)