Question

Phillip Morris USA is concerned about its declining consumer base. Every year more Americans quit smoking cigarettes and fewer and fewer are taking up the habit. They are considering buying a smokeless tobacco company and a cigar manufacturing company so that they are not entirely dependent on cigarette smokers for revenue. Furthermore, there is a slight increase in the number of people using smokeless tobacco products. If Phillip Morris does decide to acquire these companies, what type of corporate level business strategy will they be engaging in? 1. Cost-leadership 2. Focused differentiation 3. Related diversification 4. Vertical integration 5. Competitive tactics

Answer 1

2. Focused differentiation

Step-by-step explanation:

The business strategy of focused differentiation consists in increasing the amount of business sectors that a company operates.

In this example, Phillip Morris is using focused differentiation because it is adding 2 new business sectors to its operation, with the goal of increasing revenue. The first expansion is in the smokeless tobacco sector, and the second expansion is in the cigar manufacturing sector.

In other words, Phillip morris is trying to make smokeless tobacco products, and cigar products, focusing its differentiation strategy on the sectors it believes will produce the greatest amount of revenue.