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Strategic Management: Concepts and Cases Essay

Introduction

Business around the globe takes different forms with varying products and target market. Some enterprises become successful than others depending on their management criteria and achieved sales volume.  Some will even close down for failing to thrive in the market occasionally by competition from other firms which deals with similar products or close substitutes.

This paper gives an analysis of a business article relating to Altria Group, a company that is known in the manufacturing of Marlboro – the world’s most popular cigarette and how it will split its Kraft foods division to shareholders. The analysis will give vivid discussion outlining noted relationships on business ideas and strategies as well as the differences. Despite increased pressure from Government agencies and other organizations, Altria Group has continued to excel in the market with even higher prospects of attractive future mainly in the developing countries where market for cigarettes is expanding day by day. The review seeks to know the reasons as to why Altria Group is thriving in the market considering its external forces which acts as threats to its overall operations.

Discussion

Altria Group appears to be applying SWOT analysis strategy to ensure its survival as the company’s management team evaluates strengthen, weaknesses, opportunities and threats that are involved in the business operations. By monitoring the external and internal marketing environment Atria Group has managed to realize huge profits through raising prices, a case that is seen even in the United States with over forty five million people as smokers.

The Company’s executive team has been treating weaknesses in the right manner, for example, after realizing that Phillip Morris had developed a negative image in the public arena associated with the cigarettes harmful effects, the executive team decided to change the company’s to Altria Group. The move successfully countered that weakness and firm’s image was guarded. [1]

The company adopts the expansion strategy and this it done through the sale of its shares thereby giving it a stable financial base. Altria Group banking of its strengths as well, unlike most consumer products cigarettes manufacturing cost is very low, this has enabled the company to remain in business its manufacturing budget is never constrained with profits that are almost certain, cigarettes are very addictive and once a person forms a habit of smoking he becomes an addict thus a potential consumer of that product.

Addiction will therefore ensure that the company retains old customers with new consumers joining it. Besides, the company regularly increases the prices of cigarettes a thing that does not necessarily affect its marketability, this advantage is fully utilized by the company more importantly whenever the government increase taxes on cigarettes (with an aim discouraging its citizens from smoking). [2]

Altria Group increases its retail recommended prices.  This ensures that it is the customer who bares the tax burden and thus the company stands not to lose. Cigarettes global market is almost certain with the products demand increasing and penetrating in all regions of the world. Another advantage to be classified among the strengths is that the product does not require any technological innovation thus at one time will cigarettes be obsolete.  Altria on the other hand continues to come up with new brands of tobacco products, some of which includes pouches with a shape of a tea bag small in size and smoke free.

The company enjoys competitive advantage with improved management staff, punctual distribution and improved quality since they are manufacturing quality cigarettes that are less harmful to the smoker and the entire environment.  By spinning off Kraft Foods, Altria group want to concentrate on manufacturing tobacco products only.  Specialization will be a greater advantage since the company will be in a position of marketing its product in every corner of the world and most importantly it will in a position of meeting the increased demand.

The company grabs opportunities that come on its way thereby helping it to extend its markets and increase profits, for example, in the year 2005, the company signed a trade deal with China allowing it not only to sell cigarettes to over 350 million people in China but also manufacture Marlboro in China.

Threats like legal measures are well dealt with, and the company has been parting with billion of dollars as legal settlement to the injured individuals and organizations.   Most of these fines are however used by the Government in campaigning against cigarette smoking.  This is done by use of posters and adverts. [3]

The Company also implies the posters five forces in tits operations, these forces includes the bargaining power of customers where the buyer volume is increased with the buyers being insensitive with the prices of cigarettes, the bargaining power of suppliers which centers the suppliers importance attached to volumes the threat of new entrants although it is clearly noted that severally the customers are turning from brands loyalty and instead are more attracted to those products that are natural in form.

This has forced the company to come up with other tobacco products that are natural for example, the spit free pouch that resembles a tea bag.  It also goes in line with the government policies on issues relating their business. Africa also considers threats from substitute products though the buyers’ prosperity to substitute is very low thus lowering the level of company’s product differentiation, the intensity competitive rivalry is well countered since the company has a well established brand focuses on developing those cigarettes with minimal effects to both primarily and secondary smokers. [4]

Conclusion

The article features some business strategies as they are well applied. However, issues like product marketing though promotion and advertisement are not featured.  The article is therefore assuming that tobacco products must sell whether advertised or not.  This is an issue that I totally disagree with. The article portrays splitting off as the best strategy which is contrary with the idea of merger and acquisition. While companies are gaining strength through integration in form of mergers and acquisition Altria is also emphasizing on splitting off.

An insight gained from his piece of writing is that to some products upwards fluctuations in prices have almost no effect on its marketability a good example being cigarettes.

References

Need essay sample on "Strategic Management: Concepts and Cases"? We will write a custom essay sample specifically for you for only $ 13.90/page

David, F. (2006): Strategic Management: Concepts and Cases, Prentice Hall

Ohmae, K. (1999): The Mind of the Strategist, New York, McGraw Hill

Porter, M. (2000): Competitive Strategy, New York, Free Press

[1] David, F. (2006): Strategic Management: Concepts and Cases, Prentice Hall

[2] Ohmae, K. (1999): The Mind of the Strategist, New York, McGraw Hill

[3] Ohmae, K. (1999): The Mind of the Strategist, New York, McGraw Hill

[4] Porter, M. (2000): Competitive Strategy, New York, Free Press

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