Tobacco Industry Essay Example for Free

Tobacco constancy EssayPhilipMorris Pakistan is beginning to feel a financial pinch, and is already reducing the scale and scope of some of its manufacturing operations inside the country. In a statement released to the inspire on Saturday, the go with announced that it will be reducing the operations in its smallest factory, located in Mandra, near Rawalpindi. The company cited difficult economic conditions including high taxes and low consumer purchasing power as a primary reason for the decision. The decision was described by Philip Morris as difficult, but necessary. Among the key factors that specifically touch on Mandra was a goernment regulation known as SRO 863(I), a 2010 law that effectively bans the market placeing and gross revenue of the smaller 10-cig atomic number 18tte packs, which were the mainstay of the companys operations near Rawalpindi. Given the fact that Mandra is the companys smallest factory, and that its main product is now illegal, the operational costs per cigarette at the plant would effectively effect too high to be sustainable. The main activity of the factory has become obsolete, said the company in its statement. It, however, declined to say whether the factory would be completely shut down.Philip Morris did not disclose how many of its 2,363 employees in Pakistan shit in Mandra and how many of them would be laid take out. The company did, however, state that it would be paying the laid off workers a severance package that would exceed the legal minimum requirements. We are committed to ensuring that all retrenched employees are treated fairly and with dignity, and genuinely appreciate the contributions that each and every employee has made over the years, said Arpad Konye, the managing theatre director at Philip Morris Pakistan, in the statement released to the press.The troubles at the Mandra facility are the latest in Philip Morris woes in Pakistan. The company had been operating as a joint venture with the Laks on Group (the parent company of Century Publications, the publishing company of The Express Tribune) until 2007. In that year, the global company bought out its local partners share to observe well over 97% of the Pakistani subsidiary. (The remainder is listed on the Karachi Stock Exchange). The acquisition, however, does not appear to vex turned out well. Profits have gone from Rs1. billion in 2007 to Rs573 million in 2010, a nearly 62% drop. The year 2011 appears to have gone even worse, with the company earning a net disadvantage of Rs284 million for the first three quarters of the year, ending September 30, 2011.Philip Morris Pakistan has perennially been the number two fake in the Pakistani tobacco industry, outshone by the Pakistan Tobacco Company, the local subsidiary of British American Tobacco. Industry insiders say that Pakistan Tobacco has better market penetration with its higher-end brands than Philip Morris. Philip Morris got into a cut-through price war with Paki stan Tobacco over the lower-end brands, said one person familiar with the matter. And Pakistan Tobacco has an unassailable advantage on the higher-end segment of the market because of their Benson amp Hedges and Gold Leaf brands. Philip Morris appears to have come out the worst of that price war, with revenues declining by 3. 9% to Rs24. 7 billion during the first nine months of 2011. By contrast, Pakistan Tobaccos revenues went up by 12. 3% to Rs49. 9 billion during the same period.