Altria Group: Overview Level of Thesis

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S. operations. "The joint venture, now known as MillerCoors is designed to create cost savings in the U.S., where SAB is the second biggest brewer and Molson the third behind Anheuser Busch" (Herman 2007). Thus, the SABMiller arm of Altria is also falling into line with the general acknowledgement for the need to cut costs in terms of business operations in the U.S. This is good news for Altria as well because it ensures that the product lines in which it still possesses an interest extend beyond the realm of tobacco are likely to cut costs and may improve their market showing in upcoming months. Given that beer is less expensive than many other alcoholic beverages, even during a recession it is more likely that people will consume beer than more expensive wine or spirits, and alcohol is more socially acceptable from a health standpoint than cigarette smoking in the U.S.

What is the business logic and rationale behind Altria Group's corporate strategy?

Although the U.S. tobacco market is shrinking, Altria hopes that through cost management, the financial drain of doing business can be reduced at a rate that exceeds the declines in cigarette consumption in the United States ("Strategy for financial growth," 2008, Altria). Altria manufactures some of the most famous cigarette brands in the world, including Marlboro, Basic, Black & Mild, L&M, Parliament and Virginia Slims ("About Altria overview," 3008, Altria). Through streamlining its operations and maximizing its distribution and supply chain, Altria hopes to cut back its operating costs, continue to make a profit from its core consumer base, and draw further revenue from SABMiller and the Phillip Morris Capital corporation.

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How well do Altria Groups' decisions about formulating and implementing corporate strategy fit with that logic and rationale?

Even though its relative lack of diversification may trouble some analysts, Altria's decisions are rational and coherent with its desire to focus on its domestic operations and to cut costs by focusing rather than expanding its outreach.

What recommendations would you make to Altria Group's top management team with respect to decisions made in executing the corporate strategy?

Given the increased pressure upon the tobacco industry to stop expanding its base of smokers, Altria must continue to focus on cost-cutting measures. Also, expanding its financial power through the SABMiller and the Phillip Morris Capital Corporation and other aspects of the company not directly affiliated with the tobacco industry would be a sound idea. Over all, because of economic and political pressures, cigarettes consumption in the U.S. is likely to decrease, and Altria must be prepared for this eventuality. True, Altria can address some aspects of the recessionary economy in a more effective fashion, such as by marketing a cheaper cigarette. But focusing on beer and other investments in areas beyond to that of the tobacco industry, Altria can hedge its bets as to what tobacco consumption will be in the U.S., in ten years. This would be a wise long-term strategy to pursue, when striving to maintain Altria's health as a company, if not the health of the consumer.

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