Case Analysis on Philip Morris - Business Administration Essay Sample

Philip Morris and CompaniesLimited was established in 1847 by Philip Morris notably the son of the immigrants who came from Germany who had purportedly taken into account the name Bernard Morris(Hast andCengage Learning, 2007). It is a company concerned with the production of cigarettes.Currently, it stands in the first position in cigarettes production in the United States. Its headquarters is based in Richmond, Va. Apart from production of cigarettes, it produces other well-known consumer industrial brands products such as Virginia Slims, Parliament, and L& M. The quality of the goods they produce are of high quality, and the company also provides thousands of employment opportunities to American citizens. In this paper, I will address and give an exhaustive case analysis on this endeavor Philip Morris Company Limited including its general functionality.

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The company displays a monopolistic kind of market competition(Brakman and Heijdra, 2004). In the US the company is the sole producer of almost every cigarettes brand which has over-flooded the whole market. It makes the company outstanding in the USA and the second in the world. As a result of this type of market competition, the company makes quite huge profits on a daily basis.

Price elasticity demand,Ruhm and National Bureau of Economic Research (2011) say that it is a measure ofthe relationship change of price and the change in the market regarding a particular asset. Based on the company the type of price elasticity demand that exists is an elastic demand. It is because there are no significant changes ascertained or produced with the change in the price of the products that are produced. The company experiences a Unitary Income Elasticity of demand(Haque, 2005). In this case, the operating income of elasticity of the demand is unitary since the proportionate change for the quantity is equivalent to the proportionate change in the revenue of the customers that consume the company's products. That is, when the income of the users increases the demand growth and when income decreases the demand again decreases.

Most competitors of Philip Morris Company are; Japan Tobacco INC, Imperial Brands PLC, and British American PLC.Regarding the substitutes or complements, the company has employed an adage that in the near futures they would wish to have a smokeless nation. They transparently claim that indeed they know that what they produce is harmful to the health of their consumers. That said, they have come up with alternatives such as Premier which are less toxic products. Other compliments include; Marlboro, Merit, Saratoga and commander.

The demand for PhilipMorrisCompany is growing drastically. It is as a result of the increased population. Moreover, more people are getting into the use of the products due to peer influence and the provision of quality products from the company. The labor force can still get trained so as to reduce the cost of production and in the process increase productivity at large. For PhilipMorrisCompany limited to maximize production and lessen the cost of production, it should invest adequately in training. The training can get done by use of various methods that range from workshops, seminars and also overwork training where the workers are trained while they are working. It is the bitter truth that training workers alone do not give adequate returns as expected. The training should go in hand with motivation. Motivating the employees in different capacities will increase their incentives to work and provide quality and efficient workforce. They will do perfect work as required when they are well motivated, and there are good environmental working conditions not forgetting the existence of a good rapport with the employer.

As Philip Morris Company, they key element that sustains it serves to be the profit that gets generated from the venture. Without profits, then the company would not be in a position to be at among the top places as it is currently. Due to the monopolistic competition market, very high profits are realized, and this is what sustains the company to meet its considerable massive expenditures. For instance, the payment of the workers and sports competition that gets undertaken within specified periods. The future of the company still looks bright regarding profitability. As a result of the growing population, the demand is increasingly becoming high on a daily basis. The growth of the economy has also made more people venture into the affair of utilizing the products in conjunction with the creation of more manual work jobs which facilitates the usage of the goods at higher doses thus enormous selling which translates to higher profits.

The following principles that have got incorporated in Philip Morris Company Limited are certainly a projection to higher profits realization. The company has ensured that it is producing high-quality products. It ensures that their customers are retained, and thus they don't stand at a result of customer fluctuations. Secondly, they have made assured that they have lowered the cost of production in the following ways; producing their raw material for the productions of their commodities; have reduced the transportation cost or raw material by centralizing the areas where they obtain the raw materials. They have also ensured that they use the limited resources available effectively such as electricity and water so as to avoid wastages. They also own their vehicles for transportation of their products to the markets and the raw materials from the fields. With this at hand, profit maximization has been the order of the day(Griffiths and Andrew, 2006).

To sum up, Philip Morris Company Limited happens to be one of the most prolific companies that produce cigarette products of various brands. It is ranked second largest in the world and first in the USA. Just as any other company if faces, many constrain. The various outstanding characteristics that make the company be in such a position include; the quality of the products that it produces, the monopolistic type of market competition that exists within it. The kind of price and product elasticity demands that lives and last but not least, its reputation and image to the public. Also, the proper management and a well-equipped staff that is highly trained and compensated effectively surpasses, and implies a right trajectory in the future of the companys business.

References

Brakman, S., & Heijdra, B. J. (2004). The monopolistic competition revolution in retrospect. Cambridge, UK: Cambridge University Press.

Griffiths, & Andrew. (2006). 101 Ways to Market Your Business: Building a Successful Business with Creative Marketing. Allen & Unwin.

Haque, M. O. (2005). Income elasticity and economic development: Methods and applications. Dordrecht: Springer.

Hast, A., & Cengage Learning (Firm). (2007). International directory of company histories: Volume 5. Chicago: St. James Press.

Ruhm, C. J., & National Bureau of Economic Research. (2011). What U.S. data should be used to measure the price elasticity of demand for alcohol? Cambridge, MA: National Bureau of Economic Research.