Team D

Mike Coulombe
Stacy Storms
Amanda Strimpel
Robert Yockey

Executive Summary
Case Statement:
CVS Caremark is a national company that has high competition with other companies in the
industry and has the challenge of keeping up with changing consumer expectations.

Mission and Vision Evaluation:

CVS Caremarks mission and vision statement could add some more parts in order to
make it stronger. It includes the customers, products and services, philosophy, self-concept,
concern for public image, and concern for employees. In order for the mission statement to be
more effective and meet all the criteria of a strong mission statement the company should add its
markets, and the concern for survival, growth and profitability.

Milestones:
1963- The first CVS store, selling health and beauty products, is founded in Lowell,
Massachusetts by brothers Stanley and Sidney Goldstein and partner Ralph Hoagland.
1967- CVS begins operation of its first stores with pharmacy departments, opening locations in
Warwick and Cumberland, Rhode Island.
1999- Caremark launches online prescription refills.

External Assessment:
The two most important factors noted on the external factors matrix are the aging
population and the demand for generic drugs increased. The aging population will be in the need
for more prescription medications. This could cause more customers to come into CVS locations
and use their pharmacies to get their prescription medications. The demand for generic drugs
increasing also could bring more customers into the locations because CVS offers its own brand
on some medicines and also sells many other brands of medicines that customers could buy
without having to go to the doctor and pharmacy for them.

Internal Assessment:
CVS Caremarks main strength is the brand and presence the company boasts. With over
9000 locations, CVS has a stronger brand recognition than most competitors. In turn they boast
higher revenues than competitors. With branding they are able to offer generic brand goods at
more affordable price points to the consumer. This paired with a diverse portfolio of services,
keeps CVS ahead of the curve.
CVS has some setbacks that can and will cause weaknesses in the future. Competitor
Walgreens took Pharmacy-Benefits Manager contracts away from CVS, causing a loss of over
40 million prescriptions this year. CVS also shows weak sales on the global market and needs to
take initiative to grow this sector. CVS along with the rest of the industry also has to deal with
Team D
Mike Coulombe
Stacy Storms
Amanda Strimpel
Robert Yockey

rising health care costs including rising drug costs in the U.S. Keeping cost competitive remains
a challenge that will continue into the future.

Industry Analysis:
Rivalry in the pharmacy and health services is fierce. There is strong competition for
large contracts with insurance and healthcare providers. Walgreens, CVSs biggest competitor
continues to land many of these huge contracts. However, there is a lot of room in the industry
to expand and diversify new products and services.
Potential Development of new products is a definitive issue in the industry. There is new
technology and innovative products being developed daily by a long list of companies. CVS
does a good job at getting into new markets through diversifying its services and technological
updates. Aside from the development of new products, there are several new generic drug
companies from foreign markets entering the game. With these new generic drugs, large
pharmacies will compete for better pricing.
There is an extreme amount of bargaining power from drug suppliers. Drug companies
hold the reigns regarding pricing. Due to protected patent laws in the U.S. and no legislation in
place to control drug pricing, drug companies are able to charge what they want (Lupkin, 2016).
Therefore pharmacies are at the mercy high drug prices making it hard to discount products to
consumers.
There is little bargaining power from the consumer. Due to the nature of the products
being health care related and needed, consumers are forced to pay big drug company prices.
Consumers do have options as far as to whom they use as their pharmacy, however with the
exception of discount programs, pricing is pretty steady across the board. There is room to offer
a broader range of services that may entice consumers. This do not negate the low bargaining
power of the consumer.

Financial Analysis:
CVS is doing fairly well when it comes to the companys financial standings against the
industry and all its competition. Looking at some of the most important ratios like current ratio,
return on equity, and net profit margin, CVS is in good standings. The company has a current
ratio of 1.05 which is reasonably higher than the industry which is 0.79. This means CVS can
pay off its short term debt and responsibilities better than the industry. CVS also has a return on
equity of 14.24 which is lower than the industry which has a return of 17.48. However, the
company does have a five year average of 12.60, which may not sound good, but with this years
return being higher, it means the company is growing and able to give more back to its investors
now and hopefully will be able to continue with this trend in the future. Last, but not least, when
looking at CVSs net profit margin, the company has a 2.77 net profit margin. Although it is not
as high as the industrys margin which is 3.76, this is still fairly good and shows CVS can turn its
revenue into actual profit after all its expenses. It also shows that CVS has room for
improvement within this financial section.
Team D
Mike Coulombe
Stacy Storms
Amanda Strimpel
Robert Yockey

Competitive Strategies:
The three strategies created included building more CVS stores, creating a larger online
presence and a delivery service to go along with the online business, and finally to build more
Minute Clinics. These three strategies would allow more customers to use the products and
services CVS provides, keep up with the changing demands of the customers by making it more
convenient for them to get their prescriptions, and to allow more people get the healthcare they
need in order to help keep them healthy and live up to the companys mission statement of
helping the world live a better and healthier lifestyle.

Recommended Strategy:
To use the worldwide expansion strategy helps CVS from many fronts. It will help to
increase its brand recognition, increase its logistics chain, and give it access to a bigger
market. If there is a decline in the US market from increased regulations, the worldwide market
will give it diversity access to market spaces that are quickly growing. This could help insulate it
from any losses that it may face in light of a decline in U.S. sales. It can also help to reduce its
costs, buying from suppliers in larger volume to increase its bargaining power.

Ethical and Social Responsibility Dimensions of the Recommended Strategy:

CVS looks to offer quality products and service at a low cost. There is a problem in the
U.S. that has come out of the rising cost in the products and services in the healthcare
industry. By continuing its worldwide expansion, the reduction in costs can be passed on to the
consumers, without losing any profit margins. If consumers are able to access the offerings of
CVS, like its Minute Clinics, and its generic prescriptions easier, it could help to put pressure on
the industry to control its costs as well instead of a consistent rise. It may be the first step
towards fixing a social epidemic in the U.S. and the world alike in light of the current opioid
crisis.

Implementation Plan:
To implement its worldwide expansion, the company would want to focus on the needs
of the communities that it is servicing, like their mission and vision statement suggest. This has
been the key to its success in its market space, and helped it to maintain its status at the top of the
tightly competitive industry. Using the Minute Clinics in its worldwide expansion will help it to
maintain its hold, and offer a new service that most other companies do not. With the increasing
age of the worldwide population it is important to stay focused on keeping their costs down, so
that it can offer affordable prices to its cost-conscious shoppers.
To be able to afford its expansion, CVS will start having to reduce its cash flow, and
investors returns to put money back in to paying down its debts to increase its leverage with the
banks. After this is done CVS can pay for its new stores with a combination of loans and stock
offerings. When these large worldwide markets start to show returns, its increased assets will
Team D
Mike Coulombe
Stacy Storms
Amanda Strimpel
Robert Yockey

start to show the returns that it is historically known to do, and its cash flow and market share
will increase.