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Strategy Execution with Balanced Scorecard

Professor Kyriakos Kyriakopoulos

ALBA Part Time MBA

April 29, 2014

Konstantinou Phoebos

Moschofidou Sotiria

Sfykti Dimitra

Floros Evangelos

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Introduction: Company Profile & History

Papastratos AVES, Philip Morris International’s affiliate in Greece, is the largest tobacco company in the country, producing and distributing the world’s best-selling cigarette brand Marlboro, well-known global brands such as L&M and Philip Morris, as well as established local brands, Assos and Zante. Papastratos became an affiliate of Philip Morris back in 2003, which initiated a period of great market share growth for the company but also the introduction of a new factory in Aspropyrgos, an investment of 100 million euros. Papastratos uses three main types of tobacco; oriental, virginia and burley. Given the Greek climate, virginia and burley tobaccos are imported from Asia and other EU countries whereas a large proportion of oriental tobacco is bought locally. Presently, Papastratos absorbs 50% of the Greek tobacco production through an official agreement that took place between PMI Global CEO and the Greek president. More than 75% of the portfolio’s SKUs currently in the Greek market are produced locally while the site has a production capacity of more than 18 billion cigarettes. On the other hand, exports constitute less than 5% of total production, mainly due to the high costs of production in comparison to sites in Poland or Lithuania. Currently, the company employs approximately 800 people in manufacturing and administrative positions. The Greek tobacco industry is a 15 billion cigarette sticks market with 4 international players – PMI, BAT, JTI and Imperial Tobacco – and two local players, Karelias and SEKAP. PMI is currently the market leader, with a market share of more than 40% with JTI and BAT following. Over the last few years, the Greek tobacco industry has seen a great decline in terms of consumption (sales volume), profitability (due to taxation structure) and a great increase of illicit trade, which has grown from approximately 4-5% (2006) to approximately 20% (2013), based on Papastratos internal estimations. As it can be easily assumed, the market leader has been mostly affected by these circumstances. In 2009, Papastratos had an annual turnover of 222 million € with a profit of 89 million €. Within four years of crisis, while the annual turnover has slightly increased (244 mil. €), 2012 was the third year in a row where the company had losses of more than 6 million €. In 2012 Papastratos attempted to revitalize the whole tobacco industry by decreasing the price of the top selling brand in the market, Marlboro, 0.50€ lower. The aim of this effort was to readjust the whole industry, since most players would have to follow the lead of Marlboro but also, worked as a safety net for consumers trading to illicit tobacco products. At the same time, all major competitors showed – declining versus previous years- profits. BAT repositioned its leading brand, Stuyvesant, in the below premium segment earning within few months a market share of 4%. Imperial tobacco showed profits due to the continuous growth of rolling tobacco and the small decline of its mega premium brand, Davidoff. JTI took advantage of the huge growth of rolling tobacco, where the heritage of established brands such as Old Holborn increased their volume enormously. Finally, Karelias mostly depends on exports, which account for ~85% of its total production volume. Overall, since early 2013, a new taxation scheme took over in tobacco products that resulted to extreme decline of profits and even losses for all companies apart from Karelias. These results will become more evident in the 2013 income statements. As far as the value chain of tobacco industry in Greece is concerned, there is a great similarity to foreign ones. Companies with factories based in Greece (PMI, Karelias and SEKAP) receive raw material and distribute the final product, through outsourced storage houses to wholesalers. On the other hand, the rest companies import their final product and again through storage houses deliver the products to wholesalers. In 2013, PMI was the first tobacco company to introduce an exclusive distribution network of wholesalers with the ambition to serve the company in a better manner. Up until then, each tobacco company was distributing its products via a large network of wholesalers, who based their revenues on a mark-up charge of ~3%. Under this context, each wholesaler was not focusing on companies or brands but rather on the total market, as this was what affected

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their business income and profitability. This network had remained unchanged for half a century, since there were high barriers for new players to enter. PMI initiated in June 2013 an exclusive zonified distribution system, where in each sub-territory there is a unique wholesaler distributing the company’s products. Some months later, the rest tobacco companies followed this example, under a different scheme this time, as they have created a unified distribution system for the rest five companies. For the purpose of this project, our Key Success Factors, Balanced Scorecard and Strategy map will be focusing on the Marketing department for Philip Morris Greece.

Mission, Vision & Values, Culture

Philip Morris International is driven by four key goals that guide the company as they grow the business in a responsible manner. Those goals are:

to meet the expectations of adult smokers by offering innovative tobacco products of the highest quality available in their preferred price category;

to generate superior returns to stockholders through revenue, volume, income, and cash flow growth and a balanced program of dividends and share repurchases;

to reduce the harm caused by tobacco products by supporting comprehensive regulation and by developing products with the potential to reduce the risk of tobacco-related diseases; and

to be responsible corporate citizens and to conduct business with the highest degree of integrity.

The successful history and leadership of the company offers a series of great opportunities to further grow the company’s business in Greece, enhance its competitiveness and provide further development opportunities to its employees. One of the major factors that lead to the company’s success is the coherent culture among its employees within a cooperative and friendly environment. There is also a shared understanding of the organization’s mission; to offer the best smoking experience to each adult smoker in the world, both today and in the future. Papastratos’ culture and philosophy encourage freedom, bottom up initiatives, open and honest feedback, and efficient teamwork through communication, processes and tools provided. In this context, the majority of people feel secure within a fair working environment, confident that their efforts are recognized, proud of their contribution, committed to the company’s mission and vision, motivated to continue for the best business results and happy around others with whom they can efficiently communicate and cooperate with. Some facts that support the above is the 3rd position of the company in the current years’ results of Best Work Places survey as well as the high and increasing percentage Employee Engagement rates of the Global PMI Employee Opinion survey taking place every two years in each country affiliate.

Culture at Papastratos is strong with differentiated characteristics that spread across all levels in order to constantly encourage constructive communication, open and honest two-way feedback and efficient teamwork. Alignment and innovation in the way people think, behave and act is considered as one important opportunity route for learning and improvement. Compensation policies, recognition awards, promotion opportunities, open routes for continuous development and performance processes are the official organizational structures that reflect the importance the company provides to its people considering them as one of its asset. Business updates and alignment to the organization by the Managing Director, circulation of the achievements per function and new programs for young talented people for fast track career progress are some of the initiatives promoting the

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people centric direction. Friendly environment is supported through various initiatives, such as open door policy and team bonding activities within and among departments.

PMI’s employees share the common values that guide decision-making and activity at all levels in the organization. Specifically:

Safety – the physical safety of staff and the public

Security – the protection of information and other assets

Integrity – the reputation of the organization for honesty, high ethical standards, reliable outputs, and impeccable methodologies, integrity in the way of doing business

Continuous improvement – with mistakes seen as learning opportunities

Continuous learning – the creation of rich opportunities for employees to gain new knowledge and skills Employees think highly of their relationships with management, one-another, partner organizations, and clients. Relationships are collegial and mutually supportive. In its day-to-day business, the company follows effective routine processes; decisions are made based on dialogue and cooperation with huge responsibilities being funneled each layer of the organizational culture. Moreover, an indication of the culture is the existence of an appraisal system in order to set goals, develop criteria for successful performance, and create metrics for evaluating performance. In that way an environment of trust and fairness is established and all the employees feel that they are all evaluated on the same basis.

External Industry analysis

Value Chain

The Industry The tobacco industry is one of the most controversial industries, and one that has recognized many changes over the recent years. As a mature industry, facing many regulatory pressures, growth prospects are limited. Therefore, this market has only a few key players, which actually turned the industry into an oligopoly. Pricing power helps to offset declining volume. Sales and earnings are fairly stable throughout the economic cycle.

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Porter’s Five Forces

Industry Rivalry: The overall rivalry in the tobacco industry in Greece is characterized as high and is considered an oligopoly. The major players and their main brands, who dominate the market, are the following:

Philip Morris International (Papastratos) (Marlboro, Assos, Philip Morris, L&M, Muratti, Zante)

Japan Tobacco International (Camel, Winston, Old Holborn)

British American Tobacco (Pall Mall, Lucky Strike, Prince)

Imperial Tobacco (Davidoff, Gauloise, Golden Virginia)

Sekap (GR & BF)

Suppliers: The suppliers of the tobacco industry are usually relatively small in size and in power when compared to the tobacco companies they supply. Therefore, they have very low bargaining power. This is also due to government involvement in the most cases (tobacco farmers, laws, prices etc.) Substitutes: In today’s tobacco industry in Greece, the main substitutes that exist are electronic cigarettes, bulk tobacco and nicotine alternatives. Despite the fact that most of these substitutes have received increased popularity among consumers, the addictive nature of the product, makes the overall threat of substitutes low. Buyers: Buyers in the tobacco industry have strong bargaining power as there is an addiction and strong bonding with the product involved. Buyers are extremely price sensitive and are affected by the economy and their level of disposable income. When their disposable income declines, switching costs are very low, and buyers are likely to buy a cheaper brand of cigarettes. Threat of entry: The barriers to entry in the tobacco industry are very high. The economies of scales the big players recognize in manufacturing, distribution and marketing costs render it very difficult for new players to enter and compete. Furthermore, the capital requirements for cigarette manufacturing facilities are extremely high. Finally, brand identity poses a significant threat for new entry. With the heavy restrictions on advertising and promotional activities imposed by the government, it is extremely difficult for new players to gain the brand

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awareness that they need in the market. For example, PMI’s Marlboro is a brand with great awareness and loyalty. It is very difficult to a new brand to compete with the established and successful Marlboro.

PESTEL analysis

The Greek tobacco industry has always been a major contributor to the country both in terms of tax deriving from sales (government revenues) but also in terms of field employment. In recent years, with the economic recession affecting peoples’ disposable income, tobacco legal consumption has seen a vast decline and competition amongst tobacco companies has become fierce. Cigarette pack prices have risen to levels that Greeks are not able or willing to pay, the government continues to seek for income through continuous tax increases and illicit trade is becoming more and more popular. From a political point of view, the government sees the tobacco industry as a mean to increase its revenues in a quick and guaranteed fashion, since tax is already imposed during production via on-pack stickers. Tobacco contributes to the Greek government a great 4% of the annual GDP, which highlights the economic importance of the industry. On the other hand, the ministry of health has put into action a smoking ban to all public spaces such as nightclubs, restaurants and government facilities, aligned with the Eurozone standards. Greek tobacco culture has always been very strong since the early 20th century and people associate smoking with their night out entertainment. These issues, coupled with the economic difficulties, have created a strong trend for youngsters towards home entertainment via gatherings. In addition, it further affects the government’s income as people spend less money in entertainment, increasing unemployment rates and generally shrinks the market. The tobacco industry has also seen strict regulatory restrictions over the past decade through various forms of bans such as the aforementioned smoking ban but also advertising bans on TV, cinemas and outdoors. Furthermore, promotional activities have been restricted within the point of sale (e.g. promoters have to be inside kiosks), which makes the various products even less identifiable to the audience of adult smokers, making it tough for a company to promote their legal products. Finally, distribution of tobacco products has continually been controlled since the 1950’s through a specified network of wholesalers, making it almost impossible for new entrants to access the value chain of tobacco. Finally, a recent voting that took place in the EU has launched a new tobacco product directive which adds more restrictions that have to do with types of cigarettes such as slims and flavored cigarette propositions, cigarette packaging and generally the directive introduces an even stricter environment where the companies will compete. Technology has also invaded the tobacco industry as consumers are becoming more and more prone to global markets and insights, looking for differentiation. From this point of view, tobacco companies had to serve this need through innovative propositions and developments such as bio-filter tips, flavor capsules and new packaging that subsequently increase R&D costs. In addition, tobacco companies are lately finalizing a new product

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proposition which will minimize the harm effect of tobacco consumption, introducing new products such as electronic cigarettes using heat rather than burning of tobacco products. Finally, what is important to highlight as mentioned before, is the very high smoking incidence in the Greek population. Around 30% of Greeks are believed to be habitual smokers, with a consumption of minimum 3 cigarette sticks per day. This strong smoking culture has led the Greek market to be of great importance for local and international players, while at the same time there is a great decline of smoking incidence evident in the rest of the European countries. As in any other European country, selling tobacco products to persons under the age of 18 years old is prohibited in an attempt to forbid children getting addicted to smoking. In this context, tobacco companies also seek for ways to reduce the harm done by tobacco consumption, introducing electronic cigarettes and other innovations which reduce health risks. Concluding, the emerging markets of the eastern world such as India and China are increasing their demand for tobacco consumption, in their attempt to copy the western civilization trend. This trend will increase demand of raw tobacco products and eventually will generate issues for tobacco farmers. Tobacco companies such as Philip Morris and British American Tobacco have already raised their concerns towards environmental protection and have initiated processes for certified alliances that will ensure the smooth farming of tobacco, while helping authenticated farmers as well. Based on the P.E.S.T.E.L. analysis above, it is evident that the tobacco industry is highly influenced by many factors which have changed the industry over the years and will continue to dramatically change it in the future. Therefore, based on the above, in the coming years, we expect that the survival and profitability in the tobacco industry will become increasing more challenging for the companies operating in it. Key trends that we foresee include:

- EU Tobacco Products Directive: The directive which will be implemented in Greece in 2016, will limit the types of products the companies can sell (ex. Flavors etc.)

- Illicit trade: If not controlled, illicit trade could continue to grow and hurt the tobacco companies’ bottom lines but also affect the government as their income from taxes from tobacco products will reduce as well. However, the aforementioned EU directive will introduce EU-wide tracking and tracing to combat illicit trade of tobacco products which if successful, will help solve this industry-wide issue.

- Taxation: Increasing taxation with not only continue to increase the price of cigarettes but if it continues to increase, consumers will be unable to afford the products and it is possible that the threat of substitutes will increase and become a more substantial threat for the industry.

- Increased Restrictions: The EU directive requires requires that health warnings appear on packages of tobacco and related products. Combined (picture and text) health warnings must cover 65% of the front and back of cigarette and roll-your-own tobacco packages and sets minimum dimensions for warnings and eliminates small packages for certain tobacco products. All of this means additional costs for the tobacco companies which is some case are already struggling to survive.

Internal Analysis: Resources & Capabilities

The most important resources of the company are briefly described below along with the importance the company provides and the relative strength to competition;

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RESOURCES & DESCRIPTION

IMPORTANCE/

RELATIVE STRENGTH

R1. Strong equity Brands

Brands with strong equity, balanced portfolio includes both brands with international presence and brands connected with local pride

Top quality products & smoking experience, consumer loyalty

9/10

R2. Experienced, committed, and motivated People with strong customer focus

Recruitment structures

Interim & annual appraisal system that;

- encourages the structural and constructive discussion of subordinates with managers, fairness’ cultivation since the 2nd level manager should approve the qualitative & quantitative evaluation of the employer

- ensures common language and understanding of the core competencies’ required based on the level (manage self, manage others, manage managers) across organization

Talent Pool – Cross functional structural discussion on talents, development plan & career path, reporting to HQ

Open feedback & cooperation cultural set

Continuous opportunities for learning and development, cross functional moves, Short-term assignments to PMI HQ or other market affiliates

Employee Satisfaction, loyalty and low turnover rate

10/8

R3. Local Factory

Quality assurance standards

Geographical proximity to customer and consumer in the value chain, meet fast market needs, better alignment of the needs

7/6

R4. Technology & Infrastructure

Technology and systems facilitate the realization of better information flow, significant and complex business projects’ implementation, efficient physical resources’ allocation and flexibility, sharing among departments and affiliates, systems’ introduction to Operations to optimize the critical KPIs

8/7

R5. Company reputation

Long history with strong credentials of Papastratos founders (employee sponsorships and

7/5

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caring, local ceremonies), local pride

Enhanced and credible relationships with suppliers & customers, PMI multi-national ‘guarantee’

R6. Financial resources

PMI HQ internal funding to Papastratos to allow the recovery and smooth business continuation

*Low rating of relative strength since the same situation applies (if needed) with the key players apart from Karelias whose main profitability is based on exports.

7/4*

The constructive and efficient ‘gluing’ of the key resources create strong capabilities for the company that contribute to the differentiation from the competition.

CAPABILITIES & DESCRIPTIONS

IMPORTANCE/

RELATIVE STRENGTH

C1. New Product development & innovation

R&D investment through technologies in order to meet the customer needs/challenges ahead, cross functional efficient communication based on market current & forthcoming dynamics, secure relevant & fast introduction of high quality and innovative product offerings

9/9

C2.Commercial approach - Marketing & Sales

Marketing & Sales efficient collaboration, integrate work between brands and territories, field force empowerment, consumer & customer centricity through brands’ activation toolbox

Strong company asset and global reputation within PMI affiliates due to flexibility, critical thinking, quick respond to external environment fluctuations and open to radical internal changes

9/9

C3.Succession of Talented managers

Systems, processes and communication that allow the talents’ identification, retention and development in order to be prepared for tomorrow

9/8

C4. Corporate Social responsibility

A company that responds to societal concerns and acts in ethical manner | funding and network because of PMI international presence & revenues

5/6

C5.Exclusive Distribution Network

Recent change of distribution network due to leadership company position and strong brands’ portfolio | wholesales contribute to the company & brands’ image building and increasing sales

7/9

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volume

C6. Extended investment in Consumer Engagement Sales force

Priority focus and investment of the company to an expanded network of promotional teams comparing to competition that communicate the brands with the aim to increase consumer reach and brand image improvement

8/9

C7.Cross-functional quick and efficient communication and coordination, alignment

Efficient processes and structures that encourage efficient communication among departments and understanding of interdepartmental requirements, eg. Marketing timely alignment with Operations, Procurement, Product development, and Sales Forecast team for efficient production project management and sales volumes

Opportunities or threats’ identification and response, alignment with corporate mission, vision and strategy, leverage on multi-tasking employees, initiative encouragement

Honest and direct communication | Timely & constructive flow of information

8/7

C8.Speed-to-market

Local factory contributes to better alignment and understanding of the needs offering speed to market & flexibility

8/9

C9.Learning Management

Learning opportunities through similarities & patterns’ identification across regions (eg. EU region), best practices’ sharing through networking

Adaptive culture and learnings’ actionability; e.g. the difficult economic situation demonstrated that consumers within such an environment are not open to experimentation and ‘complex’ product offerings. A price banding option with multiple new functional attributes failed while MARLBORO Pocket Pack was a highly successful launch due to clear product proposition (“The

MARLBORO taste you know in a Pocket dimension and better price”)

Celebrate failure & act upon

7/6

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Key Success Factors

As a leader in the market, PMI Greece is focused on maintaining that position for years to come. As illustrated in

the figure below, understanding customer and market needs and how the company should be positioned to

survive competition are prerequisites for success. Therefore, by analyzing customer demand, it becomes evident,

that Key Success Factors for the Marketing department of PMI Greece are the following:

Strong & balanced portfolio competing in all segments

Champion innovation for the future in the context of legal restrictions

Develop leadership & managerial effectiveness

Competitive advantage

In this very difficult and demanding environment, establishing strong competitive advantages are the only way in

which tobacco companies can not only survive but lead the market and capture major shares of the market. To

this effect, Philip Morris demonstrates three areas in which they are stronger than the competition.

Customer Value

As we have highlighted, Philip Morris has a strong brand portfolio which allows it to meet customer demands in

different consumer target segments. Different customers have different demands, and the breadth of Philip

Morris guarantees that there will be a product to meet each consumer’s individual needs and desires. They

capitalize on this strength by offering products within brand families that respond to the both and emotional

needs that they have identified for their customers. This demonstrates company’s flexibility; they are able to

adapt themselves and learn quickly, even in difficult and demanding situations and are able to respond with

meaningful and substantial innovation which is delivered to the market in a speedy manner. Finally, all of this

would not be possible if Philip Morris had not cultivated strong and mutual beneficial relationships with their

trade partners.

Resources

At the core of the company’s competitive advantage are its brands and its people. Philip Morris has the world’s

top selling cigarette brand, Marlboro, with a total of seven brands in the top fifteen selling brands globally. Apart

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from their strong brand equity, they also offer high quality products. The success of the brands however is not

limited to the product they offer, as the success would not be possible without talented, committed and

passionate Philip Morris employees to promote and support them.

Value Chain activities

Philip Morris was able to capitalize on the strong relationships that they had developed in the market. To this

extent, they were the first company in Greece to radically change the distribution network environment for

tobacco companies. The distribution network of the past was well established and present for almost 50 years.

Philip Morris’ initiative allowed for fewer distributors that would have a stronger focus on their products and

would also realize greater margin by selling Philip Morris’ products as opposed to competitive brands. Therefore

distributors were given additional incentives to become brand ambassadors. Through this network, Philip Morris

was able to build on trade engagement. The distributors would be educated and engaged by the company and

would be properly positioned to effectively speak about the company, promoting it to customers. Once again,

Philip Morris demonstrates their ability to identify opportunities, act in a flexible and quick manner. They

successfully applied their capabilities of interdepartmental communication and operations and factory close to

the customer and end consumers in order to sustain and strengthen their competitive advantage.

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Strategy Map

Analyzing the strategy map from the bottom up, we can see that the main objective of the marketing department

is to have the right people onboard in the right position in order to build strong brands for a long term

sustainability. Therefore the company focuses on retaining and attracting high performance and high potential

employees. They invest heavily in their human capital with a variety of personal and professional development

initiatives and training courses. Philip Morris is confident that in this way they will enable the shaping of their

organizational culture.

Philip Morris’ talent will allow the company to effectively carry out internal activities such as defining appropriate

pricing, selecting effective promotion channels, focusing on targeted marketing activities and building a strong

portfolio. In order for these activities to be effective, it is critical that the utmost attention is focused on ensuring

cross-functional alignment is maximized and guidelines are followed strictly.

Careful and meticulous execution of the above activities will properly position the company to improve their

brand image and strengthen brand equity, identify consumer needs, drive product innovation and ultimately

retain attract more consumers.

Finally, success will be realized by maximizing the department’s return on investment through increased market

share and revenue generation.

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Balanced Scorecard

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Strategic Recommendations for PMI Greece

Today To survive in today’s environment and exit the crisis as a powerful and resilient company, it is critical that Philip Morris continues to build on its action-oriented philosophy by empowering middle levels to make decisions and reducing level and group approvals. Additionally, the company should focus on their continued investment in systems and processes that enable sharing and best practices’ exchange that will lead to increased flexibility and work de-duplication. Finally, the business should expect further communication channels’ restrictions and be prepared to invest in other communication channels (trade, direct marketing communication).

Tomorrow In the immediate future, Philip Morris will need to emerge as a leader in Product & Processes Innovation. This means investing in infrastructure and capabilities to be properly positioned to respond to future challenges and achieve long term targets for customers and internal processes.

Ahead Philip Morris has all the potential to competitively lead the business into the new regulatory framework which is in the immediate future. It is also critical for the company to identify and seize competitive opportunities that will arise from new regulation. Furthermore, secure supply chain readiness, proper management of LOGDs (loss of goods diminished), CAPEX and smooth implementation of initiatives will inarguably place Philip Morris is a highly competitive position in the market.

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Appendices:

The most important resources of the company are briefly described below; Brands Papastratos owns brands with strong equity addressing to different adult smokers’ target segments. Marlboro is the leading tobacco brand in the world and by far the number one smoking brand in Greece. The brand history goes decades back while the logo recognition scores among the top 20 in the brands’ history. L&M is a brand with high popularity across the world and the last years is being built in Greece in the below premium price segment as a brand offering high value for money. Among the main brands, Papastratos supports is ASSOS local brand and Philip Morris; the first one is the number one local tobacco brand in the Greek market while the second one currently positions itself in the medium price segment, ‘carrying’ however strong brand equity and respect among ‘niche’ loyal customer base. PMI Headquarters sets the brand framework in terms of brand values, character and brand promise in universal language across the markets. As such, Papastratos leverages on ready-made communication campaigns and product innovation which are offered by PMI ‘parent’ company. Each country affiliate based on the market business and dynamics decides on the target audience, competition, positioning and communication channel investment per brand. People Papastratos strongly communicates the idea that results and business success is derived from its people. The company culture and actions cultivate the continuous development of people through trainings, cross-functional moves, opportunities for mobility to other markets in order to expose to different dynamics and encourage a broader and deeper business perspective. The majority of people in the company feel that Papastratos is a fair working environment that offers equal opportunities due to the appraisal system based on a common language ‘dictionary’ of the core competencies required depending on the level of management as well as the remedies and training sources for their development. There are also structured and periodical reviews for the pool of people have been identified as talents within company for alignment among the top managers and reassurance that the managers provide to them all required opportunities for quick career opportunities based on their skills and aspirations. Local Factory Another critical resource that should be recognized for Papastratos is the factory ‘in house’ which is the key determinant for the speed to market factor. Although the last year losses in the Operating Company Income, top management prioritizes the smooth continuation of Papastratos factory as key priority in order to further allow flexibility and better understanding of the needs in order to provide top quality products and smoking experience to the adult smokers. The above resources lead to key capabilities that Papastratos leverages on in order to continuously be competitive and response to the business challenges lying ahead. The culture of Papastratos and the values shared among its employees on the one hand and the competencies required along with the importance for continuous development create a philosophy of open, direct and efficient communication among the employees.

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87,68

-7,87 -17,86

-6,3

-40

-20

0

20

40

60

80

100

2009 2010 2011 2012

PAPASTRATOS Profitabil ity

222,28

316,89

186,82

244,9

0

50

100

150

200

250

300

350

2009 2010 2011 2012

PAPASTRATOS Turnover Million €

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-6,3

58,7

22,5

2,9

47,7

-10

0

10

20

30

40

50

60

70

PMI JTI BAT Imperial Karelias

Greek Tobacco Industry

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References:

http://www.pmi.com/grc/pages/homepage.aspx

2013 Philip Morris International Inc. Annual Report http://investors.pmi.com/phoenix.zhtml?c=146476&p=irol-

reportsannual

http://technorati.com/business/article/future-of-tobacco-industry-depends-on/

http://ec.europa.eu/health/tobacco/products/revision/index_en.htm

http://ec.europa.eu/health/tobacco/eurobarometers/index_en.htm