CVS Pharmacy Company Analysis

Internal environmental analysis CVS

            CVS Pharmacy is rated as the biggest pharmacy health care provider in the United States of America. CVS pharmacy provide various service in different parts of the United States which include claims processing, formulary management, plan design and administration, specialty pharmacy, mail order pharmacy service and pharmacy benefit management (Calia, 2014). It is approximated that CVS pharmacy runs 7,000 stores and operates in 49 states of the United States and in the District of Columbia. CVS delivers services and products to their customers through their own stores, third party organization and subsidiaries. In addition, the company allows the customers to place their orders online by login onto CVS.com. Recently, the company expanded its operations by acquiring Caremark Corporation in 2007, thus allowing the company to take over the operations of Caremark’s pharmacy stores.

Core competencies

            CVS pharmacy is one of the leading corporation in terms of market share in the retail drug industry. The company has managed to put together its capabilities and resources and utilize them to create a core competencies that make the CVS pharmacy to maintain its position as competitive in the drug industry. The core competencies of CVS pharmacy is the unique ability of innovation and production of new products and services that makes its competitors very difficult to mimic, thus enjoying its competitive advantage in the market over its rivals (Ryder, 2010). The CVS has been in the forefront introducing innovative services and products into the market. According to Rekers (2010), CVS pharmacy had 4,300 CVS brand products that ranged from beauty products, general merchandise and vitamins. Further analysis indicated that CVS pharmacy’s outstanding customer service propels the company to be the leading drug store in the United States.

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The excellent customer service, eager and capable workforce have been identified with CVS pharmacy and many customers who directly or indirectly consumes products and services of the company have recognized the outstanding customer service offered by the company. Another core competency associated with CVS pharmacy is unique marketing capability which is always driven by innovation (Dinesh, 2011). So far, CVS pharmacy is the only corporation in the retail drug industry that is implementing ExtraCare Loyalty program. This program does not only helps the company to attract new customers but also helps to retain the largest base of the existing customers. Analysis indicated that CVS pharmacy has tailored its marketing mix in order to serve and attract customers from different demographics such as all income groups, gender, racial and age.

Capabilities

            CVS pharmacy’s capabilities are founded on the impressive knowledge resource deeply rooted in the company. The company has branded itself as the leading innovator in the retail drug industry in the United States due to its advance technology and techniques it utilizes to transfer and exchange of knowledge. Some of the current techniques and technology that CVS pharmacy have implemented include the use of RX connect, which facilitates secure and quick pharmacists communication hence enhancing accuracy on the prescriptions fill (Van, 2014). Other knowledge resources that CVS pharmacy uses include CVS Rapid Refill and automatic prescription refill system. These systems facilitate and allows the customers to place an order for prescription refills 24 hours a day through a touch-tone telephone. Another capability that CVS pharmacy have demonstrated in the retail drug industry is the strong market.

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The strong market is derived from the innovative marketing techniques which continuously develop unique and new service and products. The capability of the CVS pharmacy to adjust market mix of product and services to match the preference and needs of wide range of customers drawn from all demographic has helped the company to achieve customer satisfaction. This strong innovative thinking capability witnessed in CVS pharmacy is credited to dedicated, motivated and strong human resources (Calia, 2014). The combination of marketing resources and innovative resources makes CVS pharmacy one of the companies with strong capabilities in the retail drug industry. For example, some of the CVS pharmacy’s strong marketing capabilities include: big discount marts, direct access path that leads directly from the front door to the pharmacy, preferred products categories of baby boomers and innovative and creative store design that changes the shopping experiences for the customers.

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Strong financial resource is another aspect that make CVS pharmacy to create strong brands and acquisition of companies that helps CVS to expand its product line. Financial resources also enables the company to acquire patents and reorganize its brands to conform to strategic merger with competing companies (Van, 2014). For instance, CVS pharmacy was able to acquire Accendo insurance and SilverScript insurance, hence becoming eligible to be national provider of drug benefit to beneficiaries meeting the criteria of the Federal government’s Medicare Part D program. Following the merger of CVS and Caremark Company, CVS pharmacy is currently the largest retail drug store in the United States.

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Lastly, innovative and creative technology, effective marketing strategies, result-oriented, enthusiastic and energetic human resources enables CVS pharmacy to have proficient operation capabilities. For example, CVS pharmacy implemented Visible Improvement in Profit, Execution and Results (VIPER) system and cutting down the expenses of inventory, which is clear indication of efficient operations (Dinesh, 2011). VIPER system improves monitoring of compensation, treasury, bank reconciliation, sales/audit, merchandising, marketing, operations, pharmacy and store operations hence increasing efficiency of the operations. in addition, VIPER system enhance accountability of the transactions carried out through point-of-sale systems hence reducing the cases of losses associated with fraudulent and processes of deficiencies.

SWOT analysis

Strengths–          Quality service and fully integrated pharmacy

–          Pharmacy benefit managers

–          Prices charged

–          Over 7,600 retail locations

Weak–          Stopping these sale equals profit loss

–          Selling tobacco and alcohol which does not align with company mission

Opportunities–          Possibly implemented an all-natural line to the brand

–          Socio-cultural trend towards health conscious

Threats–          Government regulations such as legal and regulatory proceedings, government inquiries, audits, investigations, litigation matters, restrictions and FDA

–          Saturated market

Resource-based view

Tangible resources

            Analysis indicated that CVS is the household name since most health care providers prefer their brand in the United States and District of Columbia. For many years, CVS pharmacy has remained the leader in the market for health care provider in the United States. Current statistics indicated that 91 of the top 100 drugstore market have their operations controlled by CVS pharmacy. Further analysis indicated that CVS pharmacy is the majority or second largest shareholder in 68 stores in the present market (Ryder, 2010). During the year 2009 the net sales of CVS pharmacy brand increased by $11,257 to $98,729 which is an increase of 12.87 % as compared to the previous year 2008. The growth in customers base and general acceptance by customers of the CVS pharmacy’s new and existing product and services are attributed to the increase in revenue. Within the same period of time, gross profit increased by $2.204 million which is a growth of 11.27 % from the previous year.

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Currently, CVS pharmacy has a long-term debt in terms of bond with a maturity period ranging from 5 to 10 years. Similarly the CVS pharmacy has cash and cash equivalent of $1086 million by the end of year 2013. CVS pharmacy operations are divided into three segments: corporate segment, retail pharmacy segment and pharmacy services segment. The pharmacy services segment runs over 49 retail specialty pharmacy stores, six mail service pharmacies and eighteen specialty mail order pharmacies all distributed across 25 states, District of Columbia and Puerto Rico (Dinesh, 2011). CVS pharmacy operates 7,025 retail drugstore falling under retail pharmacy segment. Of this 6,964 are operated as a pharmacy online website (CVS.com). In addition, CVS pharmacy and its subsidiaries have a workforce of approximately 211,000 employees. This include about 26,000 physician assistant, nurse practitioners and pharmacist. Of the total employees, it is approximated that 84,000 work as a part-time employees, which means that they work for less than 30 hours per week.

Intangible resources

            It is important to understand that it is not only tangible resource that make CVS pharmacy to be the most competitive, but also intangible resources contributes immensely. For example, the very talented employees always strive to improve operations in the corporate segment, pharmacy segment and front store. Fortune 500 magazine ranked CVS pharmacy at position 19th making it the nations’ largest drug chain standing (Dinesh, 2011). These achievement are attributed to the integrated efforts of the management and employees. Another important intangible assets that make CVS pharmacy is exceptional customer service. For example, the use of ExtraCare card loyalty program.

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Analysis indicated that CVS pharmacy has the most resourceful, well-organized, competent and efficient customer service employees as compared to its competitors. The customer service employees are always ready to assist the customers meet their demands. In order to ensure that CVS pharmacy’s knowledge is passed on from the mentors to the newly recruited employees, the company promotes a team-oriented atmosphere. The company also use various information system platforms to facilitate its pharmacy service segment. The incorporation of information technology enable the organization to centralize the storage of data generated from fulfilling other PBM clients’ service contracts, adjudicating retail pharmacy claims and filling mail service prescriptions.

Value chain analysis

            Value chain analysis indicated that CVS pharmacy remains competitive advantage over its rivals by preparing and selling medicine/drugs in prices that other companies finds it difficult to mimic since they risk being squeezed out of the market (Ryder, 2010). also, CVS pharmacy engages in retailing basic consumable good other than medicine/drugs, something that its rivals finds risks to engage in. during the deliveries of supplies and orders, CVS advice customers on the use of prescription and over-the-counter drugs hence enhancing the trust of consumers. Additionally, CVS pharmacy provide its consumers with miscellaneous items such as light refreshments, magazines, cosmetics and candy

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