Philip Morris case

Csr session 2

20 April 2011
1) Who was Philip Morris? Name some of his contemporaries who have historical significance
and the economic sectors in which they worked.

Philip Morris was a British tobacconist and a cigarette importer whose name was later used for Philip
Morris Inc. Ltd. established in New York in 1902.

In 1847, Philip Morris opened a shop on Bond Street in London. By 1854, he started making his own
cigarettes. In 1870, Morris began to produce Philip Morris Cambridge and Philip Morris Oxford Blues
(later called Oxford Ovals and Philip Morris Blues). Morris died in 1873 while his widow Margaret and
brother Leopold Morris carried on his cigarette trade.

Contemporaries:

- Abraham Lincoln, United States President

- Napoleon I, First Consul and Emperor of the French
- Queen Victoria, Queen of the United Kingdom
- Karl Marx wrote The Communist Manifesto, promoted change in the labor system of Europe
- Meyer Guggenheim Family patriarch, mining
- J.P. Morgan, Banker, art collector
- John D. Rockefeller, Oil, Business tycoon, philanthropist
- Levi Strauss, clothing manufacturer
- Cornelius Vanderbilt, Shipping, Railroad

2) What conclusions can you draw about the Western society of that time period? What if
anything has changed in Western society today? What was the role of CSR in changing the
overall mentality?

The 19th century (1801–1900) was a period in history marked by the collapse of the Spanish,
Portuguese, Chinese, Holy Roman and Mughal empires. This paved the way for the growing influence
of the British Empire, the German Empire and the United States, spurring military conflicts but also
advances in science and exploration.

The 19th century was remarkable in the widespread formation of new settlement foundations which
were particularly prevalent across North America and Australasia, with a significant proportion of the
two continents' largest cities being founded at some point in the century. In the 19th century
approximately 70 million people left Europe.

It seems that this century was really important because it the time when people was discovering new
way to do business and were really following the idea of a free market. If you look at the famous
companies at these times, there were managed by really liberal policies and new economic theories.
It seems that this idea didn’t really changed and that western countries are more and more attracted
by free markets and liberalism. They think that the money and profits are the most important and
that the value is the only thing which creates value and profits.

But if we look at this century, it is also the century of liberalism and end of slavery, it seems that
people at this time was aware about ethics problems. And it seems that the evolution of this problem
was in fact premises of the idea of CSR. In fact they had to apply these concepts to the la before
applying them in the corporate life. It seems that finally Csr was a cause of the change in mentality,
now people are more able to think that social responsibility can create value for the company.
Nevertheless, it seems that the overall mentality doesn’t change a lot; we just have to look at U.S to
see it. But it seems that little by little mentally are changing.

3) The tobacco industry is an elite business. Bring 3 arguments to class to support this point of
view

Historically:

In the early years, tobacco smoking was considered a habit for only the elite. It gave the smoker a
certain social status that non-smokers could not achieve. The health risks were not as prevalent as
they are today and nobody really thought it would harm them in any way.

Business cost:

In order to deal in this market you have to spend a lot of money in advertising and lawyer. It seems
that people who don’t have the habit to deal with this kind of production and problems are going to
be unable to perform their business. It seems that in order to manage such a business you need to
have a certain understanding of marketing, financial and economic theories and problems. In order
to do that you need to have a high level of education.

Political reason:

If you deal in this market, you know that products are unhealthy and you have to advertise a lot in
order to change your image but in the same time you have to deal with potential law suit and federal
states. In order to keep your business, you have to do a lot of lobbying and this will cost you a lot but
also you will need strong relashionship with politicians which are more “” to deal with elite and
educated people.

4) The tobacco industry is for the derelict. Bring 3 arguments to class to support this point of
view

Research and state:

Some research shows that cigarette are unhealthy, and because of that people doesn’t want to
smoke or are trying to stop (we can see the number of products against smoking). In the same time,
the state is trying to reduce smoking because they don’t want to spend too much money in health
security system. It seems that al these laws are pushing down the market business and that
companies which are unable to afford big advertising campaign are going to die.
Lawsuits effects:

All the lawsuit of the 90’s cost a lot to tobacco industries and investors are less “” to invest in this
industry.It seems that the costs of potential lawsuits are really high and by this way potential growth
and profit are reduced. In this case people will not invest or enter in this market.

Developpement of CSR:

It not seems possible that an industry such as tobacco can became a CSR company; the main purpose
of the business is going against the value of CSR. If we look at the growth and importance of CSR
now in states and company policies it seems that a business like tobacco is going to decline and die
slowly. The best example is to take for example the policy of CSR funds, which choose to exclude
tobacco industries companies in their portfolio.