Industry Overview

follow the below directions of the Case Study Report Outline and Grading Guide. Some of the work needs to be proofread and made report ready. The responses in red italictext are of my own. Make this assignment into a research paper with the information provided. Please proof read all of the responses. Please go over the work and add/edit the paragraphs to each of the responses as requested.

COMPANY NAME/WEBSITE/INDUSTRY
Industry Overview
In the pharmacy services industry has historically been viewed as a safe haven for investors seeking steady growth and preservation of capital. However, things have changed a bit in recent times, owing to the aging of the American population and an altered industry landscape. These stocks now have more of a growth profile than they had in the past. There is much opportunity for expansion, with billions of dollars in business up for grabs. But there is also greater competition, coming from every direction, as even non-traditional channels are looking to get in on the act. Below, we discuss an evolving industry and provide a guide as to what to consider before committing funds here.
The transformation of which traditionally, this industry has been divided into two main categories: pharmacy services, which consists of pharmacy benefits managers, or PBMs, along with clinical services providers, and large drug chains. Although both groups distribute prescription drugs to consumers, they differ in that PBMs are mail-order operations and chains sell from storefronts. The numerical arrays on the Value Line pages of companies in these groups are largely similar. However, the pages of PBMs, which are somewhat more capital intensive, list capital spending per share and depreciation, and the pages of drug chains include the number of stores and gross margin.
Within the business description on the Value Line page, investors will find a company’s mix of pharmacy and general merchandise sales. A heavy weighting of wide-margined pharmacy business is vital to a company’s wellbeing. Pharmacy business is less sensitive to economic cycles, and a sales slowdown here could indicate a serious problem. The prescription growth rate is another noteworthy figure in measuring the health of a company, and it is gaining prominence. Demographics point to a rise in the number of Americans aged 65 and older over the next two decades. Increasingly, Baby Boomers will require medical care and pharmaceuticals, auguring well for the industry’s sales and earnings prospects. The largest pharmacy services providers are best positioned to reap the coming rewards at the company name, website address and industry. (Walgreen and CVS)

BACKGROUND/HISTORY
Briefly describe the company in the case study. What is their primary business, who were the officers or key players described in the case study? If the case study company is currently in business, list the company’s current CEO, total sales and profit or loss for the last year where data is available. Identify key events or phases in the company’s history. Describe the performance of this company in the industry. Visit the company’s website and use http://finance.yahoo.com and or some other financial search engine to find this data. (25 points)
Background/History: CVS
CVS Caremark Corporation, together with its associates, provides unified pharmacy health care services in the United States. The company’s Pharmacy Services division offers pharmacy benefit management services, including plan design and administration, formulary management, discounted drug purchase provisions, Medicare Part D services, mail order and specialty pharmacy services, retail pharmacy network management amenities, prescription management systems, quantifiable services, and disease controlling services (Yahoo finance, 2013).
This division sells its products through retail drugstores; online retail pharmacy website CVS.com; onsite pharmacy stores; and retail health care clinics. As of December 31, 2012, the company operated 7,458 retail drugstores, 640 Minute Clinic locations, 31 retail specialty pharmacy stores, 12 specialty mail order pharmacies, and 5 mail order pharmacies. CVS Caremark Corporation was founded in 1892 and is based in Woonsocket, Rhode Island (Yahoo Finance, 2013).

• (2013)Yahoo Finance, Business Summary,
http://finance.yahoo.com/q/pr?s=CVS

Background/History: Walgreen
Walgreen is an innovated and intuitive organization that brings shopping experience to another level. Its organization is devoted their time to their consumers to be helpful and provides shopping to be as convenient as possible. With its divisions it operates a network of drugstores in the United States. It provides consumer goods and services, pharmacy, and health and wellness services through drugstores, as well as through mail, and by telephone and online. The company sells prescription and non-prescription drugs; and general merchandise, including household products, convenience and fresh foods, personal care, beauty care, photofinishing, and candy products, as well as home medical equipment, contact lenses, vitamins and supplements, and other health and wellness solutions (Yahoo finance, 2013).

Walgreens was founded by Mr. Charles R Walgreens in 1901, in a town called Dixon, Illinois. Walgreens is one of the largest drugstore chains with fiscal 2012 sales of $72 billion; Walgreens envisioned becoming one of America’s best first choices for health and daily living (Yahoo Finance, 2013). As time goes by Walgreens provides more than 6 million customers the most convenient, multichannel access to consumer goods and services and trusted, cost-effective pharmacy, health and wellness services and advice in communities across America (Yahoo Finance, 2013) Walgreens serves their customers at upmost dedicated service to their consumers giving them a sense of security and trust to shop at Americas finest convenient services for personal use and everyday household necessities.

Reference:
(2013) Yahoo Finance, Walgreens Balance® Rewards Program Expands Opportunities to Earn Points for Healthy Behavior, Press Release: Walgreens, Retrieved from, http://finance.yahoo.com/news/walgreens-balance-rewards-program-expands-163400694.html
NOTE: Make sure to use APA citations throughout the paper.

SWOT ANALYSIS
Using the information in the case study, perform a SWOT analysis on this company. Remember Strengths and Weaknesses are internal to the company. Opportunities and threats lie outside of the company and are in the external environment. Summarize your key points in a SWOT matrix. (25 points)
SWOT Analysis

CVS

Strengths
• Loyalty card program (Extra Care)
• Loyal shopper base
• Innovative stores
• Convenient stores that is easy to shop
• Diversified – retail stores & healthcare portfolio (Caremark, MinuteClinic)
• Strong brand equity
• Lower product cost
• Limited Competition
Weakness
• Inconsistent store experiences & execution
• Real estate (especially compared to Walgreens)
• Sales mix focuses on lower margin (pharmacy vs. front end)
• Leveraged from acquisitions
• High turn around in employment rates
• Acquisition Integration
• Low receivables turnover.

Opportunities
• Private label expansion
• Turn around acquired stores (Eckerd, Osco, Savon)
• Universal Healthcare
• Aging U.S. population

Threats
• Traditional (Walgreens, etc) and non-traditional (Wal-Mart, supermarkets, specialty beauty) competitors
• Integration of acquired operations
• Pharmacists shortages
what the hell
• Mail Order Pharmacies
• Government Intervention
• Online Counterfeiting
• Drug Imports from Canada
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
Analyze the competitive environment by listing the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and the intensity of rivalry among competitors in the industry (Chapter 2). Summarize your key points in a Figure. (25 points)
Porters Five Forces Analysis
Force Strength
Threat of new entrants
Barriers to entry are relatively low and as a company in the drug industry they are subjected to federal and state laws, as well as other regulations that govern the purchase of prescription drugs and other services in relation to the industry. Moderate
Bargaining power of buyers
In this industry they’re a large number of potential buyers and the drug retail sector is experiencing increasing consolidation, which is boosting rivalry. Governmental assisted plans also assist for 10% of a player’s total revenue; however buyers face negligible switching costs. Moderate
Bargaining power of suppliers
Suppliers are under increasing pressure as brand loyalty is weakened and companies in the industry are displaying instances of backward integration. Low
Threat of substitute products and services
Threat of substitute products for the industry come from general merchandise stores, supermarkets and hypermarkets. Example, Wal-Mart & Target. These retailers offer the convenience of selling the product in one location which may seem appealing to consumers. Generic products, which is an imitation of the branded products but comes at a significantly discounted price have and has become more common and accessible. Another threat is that counterfeit products are easily available. High
Intensity of rivalry among competitors
The competition is coming from rival drugs chains, independent drug stores, and mail order prescription providers, retailers such as supermarkets, convenience stores and mass merchants. Competitors have tried to diversify into selling other products easing up rivalry in the sector. Moderate
STRATEGY USED
How does this company create and sustain a competitive advantage? What strategy was undertaken by this company? Were they successful? Can all companies use this strategy? How is the strategy affected by the life cycle in the industry? Remember to reference Porter’s generic strategies identified in Chapter 5 of the textbook. (20 points)
• Walgreen Company was formed long ago and has grown to become America’s top drug seller ahead of close competitors such as Rite Aid and CVS, serving over four million customers on a daily basis (Walgreens Co, 2013).
• CVS (Caremark Corporation) is among the primary retail drugstores in the US operating over 6200 retail shops and specialty pharmacies. On the basis of competitive advantage, both companies have the following similarities: both have taken technology as a means to gain competitive edge in the market. As a market leader, Walgreen Company has shown great drive through innovation by being the first to develop prescription containers which are child resistant. It was also among the initial drugstores to employ the use of satellite based technology in connecting pharmacy related systems. Brand equity has been enabled by the use of technology and currently it is among the finest drugstore chains in terms of convenience and quality to its customers. Innovation practices of Walgreen Company have had an impact on its sales over the past few years and it has remained to be the leader in the drugs and food industries. Convenience is the most sought attribute by many customers and this has been portrayed by the company as compared to their close rivals CVS. As a result, it has proved to be the leader in the drugs business based on its growth in earnings, sales and market share among others. All this have been brought a result of technology innovation that allows the customers to order the drugs online and they obtain them in convenient stores in the countries that they operate (Dietz, 2012).
• On the other hand, CVS has also utilized Information technology in its attainment of the competitive advantage among its rivals. Being in a market where Walgreen Company is the market leader in the provisions of quality and convenient drugs, it had to invent ways and techniques to stay in the market. In all its 6200 outlets, the company improved its customer relationships that were achieved through technology innovation. A survey was carried in 2002 and it was realized that customer’s prescription refills were being delayed as a result of delays in insurance processing. The management then employed information technology that will enable customer’s concerns to be sorted there and then before the customer left. After few years there was recorded an improved customer satisfaction. This was achieved through the customer relationship management system by use of cloud computing as all the locations and outlets shared patient’s data and information could be assessed from any outlet (NetStandard, 2012).
• Walgreen Company also is at the top of its competitors due to its locality. They are known for their superior locations due to the organic strategy that has given the company the opportunity to choose good locations to initiate more stores. Walgreen stores stand in certain locations alone, and this has enabled the drug store to expand into a 24-hr operated company in the recent financial years. The locations are beneficial to the drug store because more profits have been realized through profits as compared to the traditional strip centers. It is more advantageous since it is easy to copy competitive strategies for other companies and location is not easily copied by competitors (Walgreens Co, 2013).
• On the other hand, CVS has also its competitive advantages through the ability to serve and offer additional services to their customers. They have a Maintenance Choice Program that enables its customers to save some cash and receive a 90day supply of drugs that they use for their maintenance at all the CVS retail outlets other than from the Care mail service pharmacy. This has enabled most of the customers to reduce the duration between receiving the drugs that they want. CVS also offers benefits to its customers. Through the Extra Care loyalty card program customers receive discounts and other offers which are usually printed on the consumer’s store receipts throughout the year. This has enabled many customers to be loyal and it has increased their sales significantly (Eldring, 2009).
• Both companies utilized the Cost leadership strategy t be where they are in business today. Competition has been on the increase, which has made many businesses in such an industry to devise ways that they can be ahead of the rest. A strategy for cost leadership is depended on management and organization of a business so as for it to incur the least amount of costs in its production within the industries. This has been evidently demonstrated by both the companies as they expand their businesses and increase their profits making them to reduce their costs, innovation advantages and economies of scale have been successfully employed. This results to increased loyalty of customers to their brands. This creates an entry barrier for other businesses to penetrate the industry (Porter, 2008).
• All companies cannot be in a position to use the strategy due to its demands on the management. The company must be financially stable in order to fulfill the conditions of the strategies which many companies lack. Location and technological advancements are the most identifiable attributes to this strategy (Thompson & Martin, 2010).
• The strategy affects the life cycle of the industry more so during the growth stage where companies are not able to expand and attain their goals due to the fear of other competitors. They invest most of their funds in trying to manufacture more quality products so that they can stay in the market (Thompson & Martin, 2010).
References
Dietz, S. (2012).CVS Caremark Competitive Advantage. Retrieved March 28, 2013, from Storify: http://storify.com/seandietz17/cvs-caremark-competitive-advantage
Eldring, J. (2009). Porter ´s (1980) Generic Strategies, Performance and Risk.Harbug: DiplomicaVerlag.
NetStandard. (2012). Investing in IT for Competitive Advantage. Retrieved March 28, 2013, from NetStandard, Inc: http://www.netstandard.com/it-competitive-advantage/
Porter, M. E. (2008). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon and Schuster.
Thompson, J., & Martin, F. (2010). Strategic Management: Awareness & Change. New York: Cengage Learning EMEA.
Walgreens Co. (2013). Walgreens. Retrieved March 28, 2013, from
Walgreen Co: http://www.walgreens.com/
Cross Case Analysis: Please complete this cross case analysis according to the suggested weblink. You add more information to this Cross Case analysis using other references.http://recomparison.com/comparisons/101120/walgreens-vs-cvs-pharmacy/
Success: Company X Failures: Company Y Critical Success Factors
Similarities: •
•
• • •
•
• • •
•
•
•
Differences: •
•
• • •
•
•
• •
•
•
•
THE ISSUES AND CHALLENGES FACING THIS COMPANY
Can the company’s competitive advantage be sustained? How will that be accomplished? Where are they in the product life cycle? What is the company culture like? Do they need to change it? What problems is this company having and why? (20 points)

The issues and challenges for Walgreens

Analyst are saying that Walgreens needs to start on improving its store fronts, reduce their expenses and ta tackling competitive pressures from mail order prescriptions, and ensuring timely reimbursements in order to make a successful transition from a growth strategy to a productivity-enhancing strategy. These are the major issues and challenges that Walgreens is facing at the moment.
Walgreens have over 8000 stores nationwide and historically has relied on the strategy of expanding by opening new stores to increase foot traffic giving them a competitive advantage. But they’ve opened various locations nationwide and have reached a saturation point. Their focus should now be less on new stores and more on making productive the existing stores. (Tahir, 2011)
Other challenges Walgreens is facing are reimbursements and on-going pressures with regard to private and government health plans and trying to get paid a certain amount per prescription. They’ll need to have a better relationship with government drug plan administrators. They also need to keep their customers buying their medications instead of using online or mail in medication by rival companies. (Sweeney, 2011)
The issues and challenges for CVS

CVS is facing new issues regarding its new health insurance wellness policy. This controversial insurance will cost its employees more money if they don’t participate in its company’s wellness program; which requires each employee submit to a health screen. This may give employees the right to file employee litigation against the company. On the federal level, the policy could be subject to discrimination claims and on the state level, there are potential privacy concerns about who is looking at this information. It is a legal matter which may affect the company which legal issues which is something companies try to avoid. Although plans like this are common, attorneys theorized that the pharmacy’s program has drawn heightened scrutiny because the consequences for refusing to participate were framed as a penalty rather than an incentive. (Grande, 2013)
CVS also faces issues with public authorities over illegal practices with refilling prescriptions. CVS was sanctioned by Medicare and they can’t enroll new people in SilverScript until it cleans up its act. CVS blamed its SilverScript troubles on “an enrollment system conversion” that “brought about an increase in call volume and issues related to claims processing.” As a result many seniors who found themselves facing inexplicably large bills that CVS refused to negotiate. Medicare received 2,340 complaints about SilverScript in just the first two weeks of January 2013; a rate four times greater than for all other Medicare-approved drug programs combined. CVS is blaming these incidents on overzealous pharmacy managers but internal emails and documents suggest that these incidents were more common than what they really want the public to perceive. The U.S. Justice Department also is looking into whether CVS violated a $17.5-million settlement. The company is now being investigated by federal and state authorities for having refilled prescriptions and billed insurers without patients’ approval. (Lazarus, 2013)

COURSE OF ACTION RECOMMENDED
If you were in a position to advise this company, what strategy would you recommend to sustain competitive advantage and achieve future growth? Be specific and list the steps the company shoCourse of Action Recommended

Both CVS and Walgreens have substantial issues that are being addressed; these issues have created challenges that greatly affected how each entity operates and function; as well as how each organization is viewed by their respected stakeholders and the state and federal authorities.
Our recommendation is that both companies should quickly redeem themselves by adhering to state and federal regulations on proper business practices. Furthermore it is imperative that both CVS and Walgreen continue to push forward in respects to ensuring consumer’s satisfaction and upgrading their stores. Consumers demand an organization that is operated with integrity and willingness to always place the consumers’ needs first. The main direction of these organizations should be to excel in providing goods services; while attaining a positive reputation. This can ensure the continued support and patronage from their loyal consumer base.
uld take for successful implementation of your course of action. (20 points)

OPINION
What do you think of this case study? Describe what you believe are the lessons learned from this case. (10 points)
When you have completed the paper using the above sections, insert a page break and have a separate references page. The references should be listed in accordance with the APA guidelines as shown in the tutorial.
ORDER THIS ESSAY HERE NOW AND GET A DSICOUNT !!!!