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.
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...
Although Altria is a large corporate conglomerate, within its alcoholic subsidiaries it cannot sell at volume like Anheuser-Busch, to maximize value, cut costs, and to keep the beverage's price point low for commercial beer drinkers (the target market). Altria's division SABMiller and Canadian brewer Molson- Coors thus combined their U.S. brewing operations into a joint venture called MillerCoors in 2007. "The joint venture will be 58% owned by SABMiller
The primary reason to own Altria is its dividend. The current dividend, $1.28 per year, results in a dividend yield of 8.34%. Given that Altria's EPS is only $1.54 per year, it is evident that the company pays out most of its profits to its shareholders. Despite the declining business, the company is well-positioned to maintain relatively stable revenue streams that will enable it to maintain this dividend. As a
Alcoholic Beverage Industry Throughout the world, in all industries it is now a period of consolidation and this process is now taking place for a large number of companies from different continents and different countries, and the only reason for consolidation is the fact that they come from a common industry. The undisputed largest economy in the world is now the United States and this also contains the largest companies in
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