Philip Morris USA: Life after the Master Settlement Agreement (a)

Abstract

When Philip Morris USA (PMUSA) president and CEO Michael Symanczyk took office in 1997, he began to re-envision how to take his company forward in the midst of public outrage over the negative health consequences related to smoking, especially among youth. The case reviews the social and economic history of tobacco and smoking in the United States and provides context surrounding the crisis related to the Master Settlement Agreement (MSA) between four major tobacco companies, including PMUSA, and 46 states. The A-case concludes with Symanczyk contemplating how he will draft a new mission, values and strategy statement for the company. Excerpt UVA-S-0157 March 25, 2010 PHILIP MORRIS USA: LIFE AFTER THE MASTER SETTLEMENT AGREEMENT (A) As 1999 drew to a close, Michael Szymanczyk took stock of the remarkable rise and dramatic decline of cigarette smoking over the past century. Szymanczyk had joined Philip Morris USA (PMUSA) in 1990 as senior vice president of sales; recognized for his ability to command as well as his commanding presence, Szymanczyk had been promoted to president and CEO in 1997, becoming the unit's fifth CEO in 10 years. One of his first actions when he took the new position in December 1997 was to re-envision PMUSA's mission, values, and strategy. Szymanczyk was promoted amid a sea change in U.S. public opinion and policy prior to the 1998 Master Settlement Agreement (MSA), whereby PMUSA and three other tobacco companies paid $ 206 billion to 46 states to cover the public health costs of tobacco use and to put an end to state class-action lawsuits being brought against their companies. With U.S. cigarette sales smoldering and pressure from public health advocates increasing, Szymanczyk had to steer the company into the next millennium. How could PMUSA, the kingpin of U.S. tobacco, survive in such an antitobacco atmosphere? How could he rally employees embittered from years of battling the backlash? Should the company get out of tobacco altogether or simply change the way it did business? . . .