Ref: IMD-7-2180

Case study

Reference: IMD-7-2180

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PMI: Disrupting the tobacco industry

Carlos Cordon

By Professor Carlos CordonCarlos Cordon and Edwin Wellian

With its mission to “unsmoke the world” and its bold new purpose to replace cigarettes with less harmful tobacco products, Philip Morris International (PMI) was revolutionizing every part of its existing business model and, with it, the tobacco industry. Over a four-year period, PMI had established an entirely new product category for its new heated-tobacco IQOS brand and had become the global market leader in this fastest-growing group of reduced-risk products in the tobacco industry. To stay ahead of the rapidly evolving competition and to respond fast to changing market conditions, PMI fundamentally had to change its business model and the way it worked. Everyone in the organization was encouraged and empowered to participate actively in PMI’s transformation journey, and digital had become the disruptive catalyst. Digital innovations in the supply chain were challenging existing processes and unlocked other opportunities that PMI had not thought about before. PMI had a two- to four-year lead on its main competitors and was now in a position to shape its future business model. But how was the business going to develop and what type of supply chain should it create to scale up its business in a volatile market where speed was king? The executive leadership team was under pressure to make this key decision soon, as the final supply chain strategy depended on it. But for a traditional B2B consumer goods company that was transforming into a technological customer-centric organization that operated within the regulatory constraints of the tobacco industry, which business model would work best for PMI?

Learning Objective

  • To show the importance of digital innovations in the supply chain for defining new rules and expectations in an industry.
  • To illustrate the different organizational structures, models and strategic frameworks companies can apply to be successful in the digital world.
  • To show the importance of leading with purpose when an organization has to undergo a major transformation.
Keywords Agility, Customer Centricity, Digital, Digital Technology, Digital Transformation, eCigarette, Innovation, Lean Management, Mass Customization, Modular Design, Operations, Packaging, Risk Mitigation, Supply Chain Management, Sustainability, Tobacco
Settings Global
Philip Morris, Tobacco
2014–2020
Type Field Research
Copyright ©IMD 2020
Language English
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Reference: IMD-7-2180

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Reference: IMD-7-2180

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