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CVS

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by

Michelle Van

on 8 May 2014

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Transcript of CVS

CVS Background
Mission: to “
reinvent
” the pharmacy by “offer[ing]
innovative
solutions that help people on their path to
better health
"

Dedication their mission
Innovation
Strategic Groups
Image by Tom Mooring
External Environment
Porter's Five Forces
CVS Today
Porter's Five Forces
Technological factors
Online shopping

Economic factors
Shopping for deals, sales

Sociocultural factors
Health trends

Geographic factors
Location

Strengths & Core Competencies
CVS - Consumer Value Stores
1963 - Opened in Lowell, MA
Sidney and Stanley Goldstein and Ralph Hoagland
17 Stores in one year
1967 - Began to incorporate pharmacies
Threat of New Entrants
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent of Scale
Bargaining Power of Buyers
Little product differentiation amongst competitors
Low switching costs
Many competitors to choose from

Bargaining Power of Suppliers
Many suppliers
Little differentiation
Exception to this is Pharmaceuticals
Porter's Five Forces
Threat of Substitute Products and Services
Many substitutes available
CVS offers convenience

Intensity of Rivalry Amongst Industry Competitors
Many competitors/rivals = more options
Low switching costs
Slow industry growth
Strategy Formation
Criteria
Create, enhance, or maintain competitive advantage
Feasible given resources and competencies
Alternative Strategies
1. Continue to grow retail and mail order
2. Vertical integration
3. Partner to improve purchasing power (domestic)
4. Partner with complimentary firms
5. Expand Internationally
6. Focus on Health and Wellness
7. Go Green
8. Increase store product offering
9. Enhance Customer Loyalty Program
10. Increase Generic Drug Options
11. Increase Number of MinuteClinics, and Physicians on staff
12. 24-Hour Pharmacy Support
Tangible Resources
- 7,600 retail pharmacies

- 800 MinuteClinic locations

- 85 Coram branch locations

- Significant free cash flow

- Cardinal Health Generic Drug Manufacturing
Intangible Resources
- Retention rate of new client business

- ExtraCare Card loyalty program

-Alliance with Aetna, Cigna, Florida Blue, Humana and 50+ regional health plans

-MinuteClinic Program

-Pharmacy Adviso r Program

-Maintenance Choice Program
Key Categories
Geographic Scope - Special Delivery Options
Price - Breadth of Product
Breadth of Product
Price/Quality
Geographic Scope
Specialty Delivery Availability
Store Hours
MinuteClinic
ExtraCare
CVSCaremark
Celebrated their
7000th
CVS/pharmacy in 2009
Value = Attributes / Price
Does the strategy;
Fit CVS’s mission statement to “... provide expert care and innovative solutions in pharmacy and health care that are effective and easy for our customers”.
Leverage or enhance CVS’s competencies and resources while creating long term value.
Differentiate or create superior value for customers.

Implementation Strategy Criteria
Continue to grow retail and mail order
Vertical integration
Partner to improve purchasing power (domestic)
Partner with complimentary firms
Expand Internationally
Refocus non-pharmecutical products towards healthier
Strategies to Implement
Competitive Advantage
Trajectories of Industry Change
Full transcript