- Philip Morris is an tobacco company. It has be proven that smoking causes health issues. Lung cancer is the #2 most common cancer, and smoking increases this cancer. Many people has file suit against Philip Morris. It has paid a lot of money for the lawsuit already. It is likely that Philip Morris has to pay huge amount of money to settle these lawsuit that keeps on coming.
2) Outmoded, fully depreciated technology - Technology has been an important factor in determining productivity. Since technology is getting better day by day, it is important to keep up the pace with the new technological machines. If one company has a new machine, it will do better than other company that has a outmoded machine, holding everything else constant. So an outmoded machine will make a company lose its competitiveness in the industry.
- United States once dominated the steel industry. It was the leading producer and export the most steel in the world. But recently US steel industry has been losing the market share to countries like Korea and China. The machine that US steel uses is built long time ago. Korea and China just recently built the machines. These machine are more modern. These machines are more technological advanced than the machines that US steel companies use. They are much more productive than the outmoded US steel machines.
3 comments:
The over all is great, but it would be even better if you had discussed the strategies that the company failed to adress properly. You just point the symptoms that the company had. The assignment requested that you discuss a bit of the strategies in which they fail.
Too many legal suits pending can serve as a catalyst for several other issues which can be indicators of strategic problems. I agree that profits may be reduced as well as the possibility of going bankrupt. But other issues like customer complaints, deteriorating company and brand name, loss of market share and even being viewed as a company distributing substandard products or services may all arise as a result of an excessive amount of litigation. I'll give you a hypothetical situation. For example, Philip Morris may be losing even more customers due to their perception that this particular company must be serving substandard products since there are so many lawsuits against them. Many smokers do not believe that they are at risk of lung cancer from smoking, so when they learn about lawsuits involving cigarette companies, they may believe that that particular company must be selling a more dangerous cigarette. This destroys the company's image and results in loss of market share because consumers will purchase cigarettes elsewhere.
I'm glad you used Philip Morris as an example for a company with too many legal suits pending. A company in an industry that is harmful to ones health is definitely a hotspot for legal suits. Not only does paying huge settlements reduce profits, it also weakens the reputation of the firm greatly.
Your analysis on fully depreciated equipment is quite interesting. I did not realize the US has been lagging in the steel industry. Do you think the US will take steps to advance their technology or will we continue to import from other countries?
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