Case Study

PMI’s vision of a smoke-free future: Can a tobacco company be sustainable?

25 pages
November 2019
Reference: IMD-7-2118

Philip Morris International (PMI) CEO André Calantzopoulos announced in 2016 a radical pivot in the Marlboro cigarette manufacturer’s strategy: the company would shift to “smoke-free” products in more than 180 countries around the world. One of these products was IQOS, a new “heat-not-burn” (HNB) device aimed at providing the world’s over 1 billion “adult smokers with better options.” The innovation of the products which, PMI claimed, were less harmful than cigarettes was welcomed by many investors and PMI. Calantzopoulos and PMI’s Board of Directors believed that its sustainability strategy was critical to the company’s long-term success. Nevertheless, convincing important stakeholders that a tobacco company could be part of the solution to rid the world of cigarettes by offering better alternatives was a different matter. The United Nations, World Health Organization (WHO), regulators, public health advocates, and some sustainable investors said that there was no safe level of use and no opportunity for effective engagement with tobacco companies. After a two-year wait, the US FDA issued an order authorizing the sale of IQOS in the US market of 40 million smokers. The FDA found that IQOS was “appropriate for the protection of health.” PMI organized the 2020 Stakeholder Engagement Meeting in Lausanne, Switzerland to convene key stakeholders to engage with PMI’s smoke-free business transformation.

Learning Objective
  • Recognize the role of sustainability in mitigating negative impact and the potential of positive impact.
  • Identify the implications of exclusion and engagement for sustainable investors.
  • Identify stakeholders and recognize which enable a sustainability strategy.
  • Analyze a company that must address negative health impacts of its own business.
  • Examine the strategy of sustainable investors trying to achieve short-term financial success and implement a long-term sustainability vision.
Keywords
Purpose, Vision, Responsible Leadership, Change, Stakeholder Engagement, Social Innovation, Sustainable Investment, Ethical Investment
Settings
Global
Philip Morris International, Consumer Goods, Tobacco
Type
Field Research
Copyright
© 2019
Available Languages
English
Related material
Teaching note
Case clearing houses
IMD case studies are distributed through case clearing houses. In order to browse the collection and purchase copies please visit the links below.

The Case Centre

Cranfield University

Wharley End Beds MK43 0JR, UK
Tel +44 (0)1234 750903
Email [email protected]

Harvard Business School Publishing

60 Harvard Way, Boston MA 02163, USA
Tel (800) 545-7685 Tel (617)-783-7600
Fax (617) 783-7666
Email [email protected]

Asia Pacific Case Center

NUCB Business School

1-3-1 Nishiki Naka
Nagoya Aichi, Japan 460-0003
Tel +81 52 20 38 111
Email [email protected]

Contact

Research Information & Knowledge Hub for additional information on IMD publications

2019 EFMD CASE WRITING COMPETITION AWARD WINNER (1st prize) - Responsible Leadership category
Discover our latest research
IMD's faculty and research teams publish articles, case studies, books and reports on a wide range of topics