Effective marketing strategy is one of the main factors that would determine the sucess of a certain business. A strategic cost management also leads to a bigger revenue. These are just some of the vital business approaches that has been employed by Mighty Corp. since 1940s, which makes the company as one of the most successful multibillion-peso enterprises in the Philippine economy. However, Mighty Corp. is facing problems when its multinational competitor Philip Morris and Lucio Tan's Fortune Tobacco Corp. (PMFTC) accused them of tax evasion, technical smuggling, and other fraud cases.
It's a fact that Mighty Corp. is just a minor player in the cigarette business but with the unfailing efforts and hard work of its executives and employees, Mighty Corp. now owns 20 percent of the market share from 3 percent in 2012. The consumers of Mighty cigarettes drastically increased in 2013 despite the implementation of the new sin tax law. This status quo of Mighty Corp. draws its competitors to scrutinize every detail of its operation.
Response to controversies
In a press conference, Mighty Corp. Vice President and spokesperson Oscar Barrientos boldly addressed all the allegations of PMFTC. The spokesman said there are variety of factors which contribute their success in the cigarette industry. One of those is their hard work to sell a very reasonable price within reach of its target market, smokers in the poorer sector of Filipino society. Barrientos stressed that Mighty Corp. achieved its success through honest and fair competition.
Barrientos also said that Mighty Corp. is deliberately used by its competitors, who struggle in maintaining its monopolistic business strategy in the Philippines. Barrientos was probably hinting the market share of PMFTC which dropped to 73 percent from its previous record of 94 percent in 2012.
A certain news article might give us a better understanding on how Mighty Corp. achieved its successful state. It said the Neo-classical economics doctrine explains how a company benefits the increase in productivity while cost is minimized. According to Barrientos, Mighty Corp. bought low-grade tobacco leaves from the local farmers in Ilocos Region and Cagayan Valley which helps the company to increase the volume of their production without sacrificing the company's financial expenditures.
Mighty Corp. Fires back to PMFTC
With the unacceptable list of allegations, Barrientos also challenged PMFTC to reveal the truth behind the partnership of PMI and FTC back in 2010. Barrientos argued that Lucio Tan defied a common logic. He asked, why Tan allowed to be dominated by Philip Morris when his own company had a market share of 64 percent compared to PMI's 30 percent. The Mighty spokesman mentioned that the merger is of public interest because it involves taxation. Hence, he urged the legislators to take a close investigation on the merger.
Barrientos is also puzzled with the letter of PMFTC sent to BIR asking permission to sell one-peso-per stick of cigarettes though it previously claimed that low-priced cigarettes would not generate ample revenue to cover its business operation.
For us, we think PMFTC failed to market its premium brands that's why it accused Mighty Corp. so as to face out the Filipino-owned company and to leverage on their monopolistic business in the country.