Philip Morris International tobacco company

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Міністерство освіти і науки України

Харківський національний економічний університет імені Семена Кузнеця

Кафедра іноземних мов

Philip Morris International tobacco company

Виконала: Лутай Е.С.

група 6.03.35.13.02

Керівник: Бабій Ю.Н.

Харків - 2014



Ministry of education and science of Ukraine

Kharkiv national university of economics

Department of foreign languages

Management and Marketing

Philip Morris International tobacco company

Lutay E.S. Faculty(35-2)

Supervisor: Babiy U.N.

Kharkiv - 2014



Contents

Introduction

Part 1. Description

1.1 History

1.2 Overview Company

1.3 How they operate

Part 2. Inside the company

2.1 Charitable Giving Program

2.2 Corporate Contributions and Governance

2.3 Management

Part 3. Research & Development

3.1 R&D at PMI

3.2 Understanding Disease Mechanisms

3.3 Animal Testing

Conclusion

Annotation

Анотація

References



Introduction

The purpose of this article is to have an overview of Philip Morris Company, from the history of creating company and ending with information about the company`s position in the world today.

Is it true, that this company is one of the largest and one of the most profitable in the world?

How people can earn so much money on causing harm to human health? Answers to these and other questions can be found in this article. That is why this article has the following objectives:

1. To find out the secret of success this company.

2. To know more about inside the company.

3. To tell about researches and developments.

The importance of information in this paper can be useful for people who want to know about Philip Morris Company and about its success.

The practical usage of the paper is to acquaint the auditory with new information.

The work consists of the introduction, the first part called “Description”, the second part called “Inside the company”, the third part called “Research&Development”, conclusion and references.



Part 1. Description

1.1 History

The history of what is now a global company can be traced back to Mr. Philip Morris's 1847 opening of a single shop on London's Bond Street, selling tobacco and ready-made cigarettes.

On Mr. Morris's death, the business was taken over by his wife Margaret and his brother Leopold. In 1881 the Company went public, Leopold Morris joining Joseph Grunebaum to establish Philip Morris & Company and Grunebaum, Ltd. This partnership was dissolved in 1885 and the Company became known as Philip Morris & Co., Ltd.

The Company finally left the founding family's control in 1894, when it was taken over by William Curtis Thomson and his family. Under Thomson, the Company was appointed tobacconist to King Edward VII and, in 1902, was incorporated in New York, by Gustav Eckmeyer. Ownership was split 50-50 between the British parent and American partners. Eckmeyer had been sole agent for Philip Morris in the U.S. since 1872, importing and selling English-made cigarettes.

1919 was a crucial year for the Company. It saw the introduction of the Philip Morris coronet logo, the acquisition of the Philip Morris Company in the U.S. by a new firm owned by American shareholders, and its incorporation in Virginia under the name of Philip Morris & Co., Ltd., Inc. By the end of the next decade, the Company had begun to manufacture cigarettes in its factory in Richmond, Virginia; in 1924, what was to become its most famous brand, Marlboro, was introduced.

By the mid-1950s the Company had become a part of American culture, and soon after it launched Philip Morris International (PMI) to manufacture and market its products around the world.



1954

Philip Morris (Australia) becomes the first affiliate of Philip Morris Companies Inc. outside of the U.S.

1957

The first Marlboro cigarettes manufactured outside the U.S. are produced following an agreement with Fabriques de TabacRйunies in Switzerland

This manufacturing facility is subsequently acquired by Philip Morris in 1963

1967

Philip Morris Incorporated establishes Philip Morris Domestic, Philip Morris International (PMI), and Philip Morris Industrial, each responsible for three identifiable operations of its business

1972

Marlboro becomes the world's number one selling cigarette

Volume reaches 113 billion units as international expansion accelerates

License agreement with Japan Tobacco to begin manufacture of Marlboro in Japan

1973

International cigarette sales reach 124 billion units, versus 123 billion in the U.S.

1980

PMI opens its largest factory outside the U.S., in Bergen op Zoom in the Netherlands--today this factory is still PMI's largest

1987

PMI is incorporated as an operating company of Philip Morris Companies Inc.

1989

PMI operating income tops USD 1 billion for the first time

1990

PMI moves from Park Avenue in New York City to Rye Brook, N.Y., U.S.

1991

PMI volume tops 400 billion cigarettes

1992

PMI acquires a majority holding in state-owned Czech Republic Tabak AS for USD 420 million in the largest single investment by a U.S. company in central Europe at the time

In the early 1990's PMI participates in other state factory privatizations including in Kazakhstan, Lithuania, and Hungary

1995

PMI opens first factory in Asia in Seremban, Malaysia

2000- 2005

PMI calls for regulation of the tobacco industry at the World Health Organization's public hearings on the Framework Convention for Tobacco Control in Geneva, Switzerland.

PMI operations center transfers from Rye Brook, N.Y., U.S., to Lausanne, Switzerland.

PMI opens a factory in the Philippines, the Company's largest investment in Asia at the time

PMI's product sales represent almost 14% of the global cigarette market outside of the U.S.

2006

Year-end volume stands at 831.4 billion, operating income at USD 8.4 billion, and global market share at 15.4%

2007

PMI acquires an additional 50.2% stake in Lakson Tobacco Company, Pakistan, bringing its total holding to approximately 98%

Year-end volume stands at 850 billion, operating income at USD 8.9 billion, and an estimated global market share at 15.6%

2011

In June 2011, PMI completed the acquisition of a cigarette business in Jordan, consisting primarily of cigarette manufacturing assets and inventories, for USD 42 million. In January 2011, PMI acquired a cigar business, consisting primarily of trademarks in the Australian and New Zealand markets, for USD 20 million.

Effective January 1, 2011, PMI established a new business structure with Vietnam National Tobacco Corporation (“Vinataba”) in Vietnam, further developing its existing joint venture with Vinataba through the licensing of Marlboro and establishing a PMI-controlled branch for the building of its brands.

1.2 Overview Company

Philip Morris International Inc. (PMI) is the leading international tobacco company, with seven of the world's top 15 international brands, including Marlboro, the world's best-selling cigarette brand.

Goals are to provide high quality and innovative products to adult smokers, generate superior returns for shareholders, and reduce the harm caused by smoking while operating business sustainably and with integrity.

Brands

International and local brands are sold in more than 180 markets. They have the industry's strongest and most diverse brand portfolio, led by Marlboro, the world's number one selling brand, and L&M, the third most popular brand. Overall, seven of the top 15 brands in the world are ours.

PMI's other leading international brands include Merit, Parliament, Virginia Slims, Chesterfield and Philip Morris.

Performance

In 2012, PMI held an estimated 16.3% share of the total international cigarette market outside of the United States, or 28.8% excluding the People's Republic of China and the United States. 2012 was the fifth consecutive year that saw them meet or exceed their mid- to long-term (annual currency-neutral adjusted) diluted earnings per share (EPS) growth target of 10-12%. This consistent level of double-digit EPS growth puts them at the forefront of all major global consumer products companies. People Employees are one of their greatest strengths and the key to their success as a company. Diverse global workforce of more than 91,000 employees speaks more than 80 languages and hails from all corners of the globe. They aim to attract, motivate and retain the best global talent. They support employees through individual development and career management programs that recognize potential and reward achievement.

1.3 How they operate

They are a global company employing more than 87,000 people in manufacturing and sales facilities throughout the world.

Wherever they manufacture, they apply the same exacting standards to ensure the premium quality that smokers of their brands have come to expect.

Their day-to-day operations, however, involve more than just making cigarettes; they are also about the way we do business and interact with the world outside offices, both locally and globally.

One of their principal goals is to be a socially responsible company, at both a local and global level. In every country where their products are sold, they are guided by the same basic principles:

· They communicate about the serious health effects of smoking.

· They advocate for effective, evidenced-based tobacco regulation founded on the principle of harm reduction.

· They support the enactment and strict enforcement of laws that set a minimum age to purchase tobacco products. They also work closely with retailers and other partners to implement youth smoking prevention programs.

· They work with regulators, law enforcement agencies, and retailers to combat the illicit trade in counterfeit and contraband cigarettes.

· They have adopted policies and implemented programs to operate sustainability, including using fewer natural resources, reducing carbon emissions, recycling and producing less waste.

· They work with growers and suppliers to promote sustainable tobacco farming.

· Through their Agricultural Labor Practices (ALP) program, they work with suppliers and growers, interest groups, and governments to address the problems of child labor and other abuses in labor markets related to their supply chain.

· They contribute to improving the local communities in which they do business and source tobacco through charitable giving, volunteer activities, and support of a wide network of non-profit organizations.

philip morris tobacco brand quality



Part 2. Inside the company

2.1 Charitable Giving Program

Philip Morris International (PMI) supports charitable giving programs that improve living conditions in places their employees reside and work, as well as in the farming communities where they source their tobacco.

They have identified five areas of giving that they focus on: hunger and extreme poverty,education, rural living conditions, domestic violence, and disaster relief. These areas parallel many of the UN Millennium Development Goals, and they have chosen to focus on them because they are among the most critical issues affecting the countries where they operate.

Culture of Giving

More than 40 years ago, long before corporate social responsibility became a catchphrase, their predecessors at Philip Morris Companies were granting money to causes they held dear. They have given hundreds of millions of dollars to the arts, including building space for the Whitney Museum in New York headquarters, the first time a corporation ever included a museum in its offices. As company started to expand internationally, their giving became increasingly global. They were also in the front lines of the battle against domestic violence when they organized the first U.S. corporate conference on partner abuse in 1996.

PMI has continued to maintain this dedication to philanthropy since becoming an independent entity in 2008. They created a dedicated contributions department and selected focus areas that they believe address the most pressing needs of people around the globe. Of course, they have critics. They cannot do much about those who accuse them of trading philanthropy for goodwill. And they can do is to keep on working to improve people's lives, trusting that their actions and history speak for themselves.

Today, PMI provides over $30 million annually to support charitable causes around the world. In 2011 company supported 274 charitable projects across 58 countries. In total more than 3.5 million people were impacted globally by PMI charitable giving, including: meals and medical assistance to nearly 1,1 million people; educational programs for approx. 200,000 students and teachers; requalification, new jobs and entrepreneurship opportunities created for nearly 145,000 people; support to more than 200,000 people with disabilities; counseling and shelter for around 26,000 victims of domestic violence; 22 million trees planted and support provided to over 700,000 people through our forestry and rural living programs; clean water and sanitation provided to more than 300,000 people, and new homes, shelters, and community centers provided for more than 850,000 people.

Getting Involved on the Ground

They select and manage their programs ourselves, working directly with local NGOs. The process starts with the recommendations of employees, who they feel are best placed to recognize their communities' needs. Of course, it would be easier to write a check and let an international charity take care of the details. They prefer to know where the money is going, and to follow the results on the ground.

This hands-on involvement has other benefits. They expect our partner NGOs to meet strict international standards for grant requests and project evaluation, thereby building their capacity to obtain funds from other sources. Also, their employees often volunteer on projects and help improve the state of their communities.

Our direct engagement in every project we fund makes it particularly satisfying when they receive positive feedback from beneficiaries such as Marina Firsova, an educational director in Moscow who took part in a PMI funded teacher training program. “It is truly exciting that there are people in our business community who understand their responsibility for the future of this country,” she says.

How Does it Work?

They manage their philanthropy efforts like a business, practically and effectively. They have an in-house department that is dedicated solely to handling their charitable giving. Each year they establish an overall budget, which allocate to countries around the globe based on their focus giving areas and requests from in-country organizations. Local charities and not-for-profit organizations apply for funding through their in-country teams.

They oversee each project and measure its results. One advantage of being a global corporation is that they can apply the lessons of one country to another. For example, when members of contributions department learned of an organic method for increasing rice yields during a visit to Indonesia, they introduced it to partners in the Philippines, who subsequently adopted it.

As part of their grant request form, each applicant must provide a line-by-line breakdown of a project's budget. They want to know the rationale for each project and how many people will benefit. They also require a sustainability plan, as they want to ensure that a project will live on once our funding stops.

2.2 Corporate Contributions and Governance

They contribute to various organizations around the world. Their internal principles and practices strictly govern the types of organizations to which they can donate, the approval processes prior to payment being made and the requirements for reporting of payments.

Below you can find annual reports outlining monetary contributions made by PMI and its affiliates to various organizations.

Philip Morris International Inc. (PMI) believes good corporate governance is a cornerstone of strong business performance. They strive to be transparent in their governance practices and policies and responsive to their shareholders, while managing the Company for long-term success.

2.3 Management

Philip Morris International Inc.'s management team has extensive experience, providing the collective depth and business knowledge to successfully manage their business and world-class portfolio of brands.

Philip Morris International Global Management Team

Andrй Calantzopoulos Mr. Calantzopoulos was appointed Chief Executive Officer in May 2013.

DragoAzinovic Mr. Azinovic was appointed President of Philip Morris International's European Union Region in August 2012.

Bertrand Bonvin Mr. Bonvin was appointed Senior Vice President, Research & Development in December 2011.

Patrick Brunel Mr. Brunel was appointed Senior Vice President and Chief Information Officer in October 2011.

Louis C. Camilleri Mr. Camilleri is our Chairman.

Frederic de Wilde Mr. de Wilde was appointed Senior Vice President, Marketing & Sales in July 2011.

Marc S. Firestone Mr. Firestone was appointed Senior Vice President and General Counsel in April 2012.

Martin King Mr. King was appointed President, Latin America and Canada Region in February 2014.

Peter J. Luongo Mr. Luongo was appointed Vice President of Treasury and Planning in June 2013.

Antonio Marques Mr. Marques was appointed Senior Vice President, Operations in February 2014.

James R. Mortensen Mr. Mortensen was appointed Senior Vice President, Human Resources in March 2014.



Part 3. Research & Development

3.1 R&D at PMI

Developing products which may have the potential to reduce the risks of smoking-related diseases is one of their top priorities. To address this multifaceted challenge, their Research and Development Department includes a team of scientists with expertise across a range of disciplines including biology, chemistry, engineering, mathematics and computing.

Their research efforts are directed toward understanding the underlying mechanisms of the diseases caused by smoking and the complex role of tobacco smoke constituents in the development of these diseases.

An important aspect of their research is the development of methods to assess a product's risk reduction potential. This is a very complex task, given the fact that most smoking-related diseases take years, if not decades, to develop.

These research efforts complement their support of regulation in the area of risk assessment. Reduced risk products should require manufacturers to provide regulators with scientific data to substantiate any claims.

Their aim is to provide consumers with the option of reduced risk products. However, smokers should understand that these products are not an alternative to quitting, and that the best way to reduce the risk of smoking-related diseases is to give up smoking.

Smoke and Smoke Constituents

A key focus area of their research and development program is on preventing the formation or reducing the levels of toxic chemical compounds produced during the burning of tobacco in a cigarette. More than 5,000 smoke constituents (or emissions) have been identified in tobacco smoke to date. Approximately 100 smoke constituents have been identified as likely causes of smoking-related diseases by public health authorities. They agree with many scientists, including public health experts, that selective reduction of smoke compounds in conventional lit-end cigarettes is unlikely to reduce risk. Therefore, they have focused on the development of new, next generation products (NGP's) that either substantially reduce or completely eliminate many harmful smoke constituents.

The Tobacco Plant

The tobacco plant is a complex biological system. The properties of the plant are the results of the interaction of the plant with the external environment (e.g., soil, climate, agricultural practices, and the leaf-curing process). Although many of the harmful substances in smoke are produced by the burning process and are not present in the leaf, tobacco plants can contain harmful substances such as tobacco-specific nitrosamines (TSNA's) or the heavy metal cadmium that can transfer to smoke when tobacco is burned. We are focused on preventing the formation of these harmful compounds in tobacco plants through various plant breeding and agronomic practices.

3.2 Understanding Disease Mechanisms

Smoking causes serious, fatal diseases such as lung cancer, cardiovascular disease (heart disease), chronic obstructive lung diseases (emphysema and bronchitis).  Over the past half-century, classical scientific methods, including non-clinical, clinical, and epidemiological studies, have yielded data and information about smoking and disease. Yet, the precise mechanisms by which smoking triggers disease in human systems remain poorly understood.

Recent breakthroughs in biological and medical research have dramatically changed the understanding of the human body. The human body is a highly complex system of delicately balanced networks. Exposure to cigarette smoke can alter the chemistry or biology of individual molecules, causing a malfunction within one or more of these networks, which ultimately leads to disease.

Today, advanced technologies may allow us to use existing data to explore this question from an entirely new angle--that of how individual tissues, cells, or even particular proteins respond to smoke exposure. These technologies may also help us to identify gaps in knowledge, and design new research projects to address such gaps.

3.3 Animal Testing

PMI is well aware of the public concerns about animal research and takes them very seriously.

This is why they restrict animal studies to those occasions where there are no alternatives available. They constantly review our requirements for animal studies and hope that in time they will be able to replace much or all animal testing with alternative (non-animal) methods. The majority of activities that involve the use of laboratory animals are focused on the development and assessment of new products that may have the potential to reduce the risk of smoking related diseases. Products of this kind have been defined by the US FDA as modified risk tobacco products (MRTPs).

All of their activities are performed in accordance with applicable laws and regulations as well as internationally established best practices in laboratory animal care, to ensure that the animals are treated humanely and responsibly. Their work falls into two categories:

Disease research:

They conduct research to better understand the mechanisms by which tobacco related diseases develop. This understanding is important for the assessment of new potential MRTPs.

Product assessment:

An improved understanding of disease mechanisms may also help them to assess whether the new products they are developing can reduce the risk of smoking related diseases when compared to cigarettes.

They assess their potential to reduce the disease risk when a consumer switches from a cigarette to an MRTP.

In very rare cases, they may also conduct animal testing of cigarettes if they make significant product modifications. They would only do this when absolutely necessary, for example in response to new regulations that may require significant design changes to our conventional products.

They will continue to seek ways to use alternatives to animal testing where possible. If they could do research without animal studies, they would. At present it is impossible.

They always follow the widely-recognized principles known as the “3Rs” of animal research: Replace, Reduce, and Refine.



Conclusion

So, Philip Morris International is one of the most popular companies in the world. The secret of success is very simple. Half the battle is amount of people who are interested in this business` area and a great Philip Morris International Global Management Team. This company supports charitable giving programs that improve living conditions in places their employees reside and work, as well as in the farming communities where they source their tobacco.

Thus, I want to say that this company is very profitable and people who founded it have a big knowledge in economy, marketing and in the international trade.

And in fact that all people know that smoking has an awful influence on health, they don`t stop smoking and Philip Morris International earns lots of money. This company becomes famous around the world.



Annotation

This article is about Philip Morris International. There you can find something about history, discover about brands, performance. Also there is many interesting facts about how this company operate.

It is interesting to know that they have charitable giving programs and you have a chance to learn how they work. It is possible to have knowledge about fantastic Philip Morris International Team.

Moreover this article has a part about research and development. For example, Part 3 contains information about animal testing.



Анотація

Ця стаття присвячена компанії Philip Morris International. Ви можете знайти цікаві факти з історії цієї компанії, дізнатися більше про бренди, а також про продуктивність фірми. Також є багато цікавих фактів про саму працю цієї компанії і пізнати нові деталі з внутрішнього боку.

Цікаво знати, що у них є благодійні програми, і за допомогою цієї статті можна пізнати їхні наміри та концепції дії. Цілком можливо, отримати уявлення про фантастичну команду компанії Philip Morris International.

Крім того, ця стаття має частину, яка включає в себе інформацію про дослідження і нові розробки. Наприклад, частина 3 містить інформацію про випробування на тваринах.

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