Old mission statement:

Our mission is to improve the lives of those we serve by making innovative and high-quality
health and pharmacy services safe, affordable and easy to access. It begins with three words
“Above all else”.

New mission statement:

Our mission is to provide health and pharmacy services to the patients who want to get better
health(1) and located in United states(3) we aims to provide prescribed drugs, general
merchandise, and beauty products(2) For the better and easy services to our customers we have
made a convenient method of filling their prescription using CVS mobile app, similarly they
could save their all prescriptions in their smartphones(4) We aims to maximize our reach to the
customers for which we are expanding our retail pharmacy stores and clinics throughout the
united states(5) we are proud of being innovative and unique in production of new products and
services(7) we implement values in action program for employees, in which peers nominate each
other for leadership traits, each nomination grants points, which can be redeemed for travel and
more(9) In order to make world a healthier place we had discontinued cigarettes and tobacco
products(8) we aim to provide high quality and affordable care to our customers(6)

Keys:

1. Customers
2. Product or services
3. Markets
4. Technology
5. Survival, growth and profitability
6. Philosophy
7. Distinctive competence
8. Public image
9. Employers
CPM Analysis:
Total Weight 1.00.

Rating 1 to 4

CVS Health Walgreen Walmart

Critical Success Weight Rating Weighte Rating Weighte Rating Weighted
Factors d Score d Score Score
1. Financial 0.1 3 0.3 3 0.3 4 0.4
Position
0.15 3 0.45 2 0.3 3 0.45
2. Customer
Loyalty 0.15 4 0.6 2 0.3 4 0.6

3. Diversity 0.1 2 0.2 3 0.3 4 0.4

4. Price
0.1 3 0.3 3 0.3 3 0.3
Competitivenes
s 0.05 3 0.15 2 0.3 4 0.2
5. Quality
0.05 3 0.15 2 0.1 4 0.2
6. Marketing
0.1 4 0.4 3 0.3 4 0.4
7. Market Share
8. Organized
Supply Chain
0.2 3 0.6 2 0.4 4 0.8
9. Innovation

Total 1.00 3.15 2.6 3.75

1. Financial Position is very important for CVS Health Corporation, they have a strong
financial position as they have reached 1 billion in yearly revenues in 1990’s and also
they serve 5m customers daily, and also they are now intended to acquire Aetna Co, so it
gets a ranking of 3 which is less than Walmart because Walmart have a more stronger
position than the CVS, but its high than Walgreen.
2. Customer Loyalty is a major success factor for CVS Health Co, as they serve 5m
customers daily so retaining these customers could lead to a stronger and sustaining
position in the future, so for sustaining those customers CVS arranged a program named
as Extra care for Loyal Customers, so CVS gets a rating of 3 which is lower than the
Walmart.
3. CVS has been diversifying its portfolio from the very beginning, in 2018 they got a top
50 ranking in the list of diversity by Diversity Inc. Also they acquired over 2500 stores
from Revco which makes them more diversified, that’s why CVS got a rating of 4.
4. Price competition are the main success factor for any organization, CVP focuses less on
the price competition, all they focus is on the innovation and diversification which
ultimately attract new and retain old customers, so CVS gets a rating of 1, in contrast
Walmart offers more competitive pricing which is why its rating is 4.
5. CVS operated in two segments Health Services and Retail Sectors, they offer specialty
health service products and standalone Medicare, CVS get a ranking of 3 which is same
as the other competitors offering.
6. Walmart focuses mainly on marketing that why its gets a rating of 4, while CVP focus is
much less on the marketing, also for the CVS the marketing role is not a very critical
success factor, as they are operating in a health care industry that why it’s got a weight of
0.05.
7. CVS has a huge customer base, around 5m customers are daily served by CVS Health
Corporation also CVS offers everything from snacks to beauty, home goods and
pharmaceuticals products, that’s why it gets a rating of 3, but its Competitor Walmart
have a rating of 4 because they serve more customers and offers more products than
CVS.
8. Organized Supply Chain is major critical success factor for CVS, as to control and reduce
the cost CVP has acquired more than 2500 retail stores from Revco, also they have 9800
retail stores, more than 1100 walk in pharmacy stores and 94m pharmacy plan members,
so CVS get a ranking of 4.
9. Innovation is the most important success factor for any organization that’s why it gets a
weight of 2, in 1994 CVS introduced pharm care to the industry, also they had launched
many innovative projects such as Urban initiative, CVS Finance Centre etc, they also had
 launched the Extra Care services for loyal customers which makes CVS more innovative
so they got a rating of 3 which is again less than the Walmart because Walmart has
launched more innovative projects and products than CVS.

External Factor Evaluation Matrix

Regulatory approvals, stock price, double size of cvs

Total weight 1:00 Rating 1 to 4

Key External Factors Weight Rating Weighted

Score
Opportunities

1. Entry into new vertical of insurance 0.15 4 0.6

and health care managed
2. Growth through acquisition and 0.12 4 0.48
mergers
3. Increasing walk-in medical clinics 0.15 3 0.45

4. Expanding to other Regions 0.15 3 0.45

Threats

1. Competition 0.12 4 0.48

2. Government intervention 0.08 3 0.24

3. Regulatory Approvals 0.07 3 0.21

4. Increase cost of Acquisition of Aetna 0.05 2 0.1

Inc.
5. Exchange Rates 0.11 3 0.33

TOTAL 1.00 3.34

Opportunities

1. Entry into new vertical of insurance and health care managed

Acquisition of Aetna would help CVS health care to enter into new vertical of insurance
and managed care. The acquisition incorporates CVS pharmacy and the insurance
provider Aetna, typically blurring distinct lines to lower the costs. CVS also has one of
CVS Caremark’s main pharmaceutical benefits managers as well as its Silver Script
division with a main Medicare Part D sponsor.
2. Growth through acquisition and merger
The company have the opportunity to grow by acquisition and merger of different
companies having different business line that would add significant value to the
operations and profitability of CVS/

3. Increase in Walk-in Medical clinics:

CVS currently have 1100 walk in medical clinics, and CVS serves about 5 million
customers per day, so increase in medical clinics could potentially capture more
consumers and thus will increase the revenues. This strategy could be possible as there
are 94m pharmacy plan members with CVS, so I assigned a rating of 3 and weight of
0.15 to this opportunity.

4. Expanding to other Regions:

CVS currently located in US and also retail location in Brazil and Puerto Rico, has a
customer base of 5m daily, so expansion to the other regions could increase the customer
base and brand development in other regions, which will ultimately increase the
revenues, so based on these, I assigned a rating of 3 because its competitor Walmart is
ahead from CVS.

Threats

1. Competition
There is a high competition, conventionally or unconventionally in global drug market
special in retail sector of drug. The competition is not limited to retail sector but also
PMB (pharmacy benefit manager). This high competition may affect the company in
terms of market share, operations and business strategic position.

2. Government intervention
In order to protect their population from adverse drug effects, many governments world-
wide place restrictions on pharmaceutical firms. These regulations also extend the
 process of selling new drugs. In the United States of America, the Food and Drug
Administration (FDA) guarantees that the safety and effectiveness of new medications is
rigorously evaluated to reduce side effects. So, the concerned authority of any
government can affect the operations of business in terms price and, usage and testing of
drugs.

3. Regulatory Approvals:
Acquisition of Aetna Inc. may lead to a greater variance in the expected cost, sales or
growth due to the regulatory approvals, so I assigned a weight of 0.07 and a rating of 3 to
this factor.

4. Increase cost of Acquisition of Aetna Inc.:

Through acquisition process Aetna shareholder will receive 145$ per share and also
0.8378 share of CVS for each share, while at the end of 2017 Aetna stock price were
74.21 per share, so this acquisition may greatly affect the earnings of CVS and could
possibly increase the cost,

5. Exchange Rates:
As CVS is US based company and also have a retail stores in Brazil and Puerto Rico, and
they are also expecting to expand into the new markets, so there will be a great risk in
when exchange rates fluctuates which could possibly increase the cost for CVS Inc. so o
assigned a rating of 3 to this factor.

Internal Factor Evaluation

Total weight 1:00
 Rating 1 to 4

Key Internal Factors Weight Rating Weighted

Score
Strengths

1. Largest drug retailer 0.15 4 0.60

2. Brand name 0.05 3 0.15

3. Leading pharmacy benefits company through health 0.1 4 0.20

care services
4. Pharmacy Plan Members 0.2 4 0.8

5. Strong performance 0.05 3 0.15

Weaknesses

1. Weak presence outside U.S.A 0.06 4 0.24

2. Product Development: 0.1 3 0.30

3. Geographical Concentration: 0.05 4 0.2

TOTAL 1.00 3.32

Strength

1. Largest drug retailer

CVS Health one of the largest drug retailer operating over 9800 retails location in US,
and also retail stores in Puerto and Brazil. The US drug store is dominated by 3 players,
CVS health care, Walgreen. So I assigned a weight of 0.15 and rate of 4.
2. Brand name
 The CVS brand is a major strength and core competency that empowers the company
against its main competitors. For example, through its brand, the retail pharmacy
enterprise is easily recognized and achieves a generally positive corporate image among
target customers.

3. Leading pharmacy benefits company through health care services

CVS is expanding to specialty pharmacy services and they also offer they also offers the
most popular stand-alone Medicare Part D prescription drug plans, they also had
introduced the pharma care to the industry and also Extra care to the loyal customers. So
they are the first movers that’s why it got a rating of 4 and a weight of 1.

4. Pharmacy Plan Members:

CVS has a huge number of pharmacy plan members which is more than 94m, through
this force CVS can achieve its objective in US and also in the other regions.

5. Strong performance
The company has strong performance and the have built financially strong shareholder’s
value. It has shown a consistent performance and maintains a strong bottom line. It has
ranked among 50 diversified companies and ranked 10th up spot due to promoting and
hiring minorities and women.

Weaknesses

1. Weak presence outside USA:

CVS has very low presence outside US, they currently operate only in Puerto Rico and
Brazil, while its competitor Walmart has a worldwide presence with much more brand
awareness. So I assigned a rating of 4 to this factor.

2. Product Development:
 Even though CVS health is leading organization in industry, but they are facing
challenges in moving to other products, as compared its competitor Walmart have a vast
line of products so, I assigned it a rating of

3. Geographical Concentration:
CVS main revenues came from the US, they should also focus on the other regions, the
company current strategy is also focused on expanding health care services only in the
US, but not moving to the other regions.

SWOT, Matching Factors:

TOWS Analysis:

Opportunities
1. Entry into new vertical of
insurance and health care
managed
2. Growth through
acquisition and mergers
3. Increasing walk-in medical 5. Exchange Rates
clinics
4. Expanding to other
Regions
Strength S-O Strategies
1. Largest drug retailer  Being one of the largest
2. Brand name health care service provider,
3. Leading pharmacy with having 9800 retail
benefits company stores and 1100 walk in
Threats
1. Competition
2. Government intervention
3. Regulatory Approvals
4. Increase cost of Acquisition of
Aetna Inc.
S-T Strategies
 Through effective communication
of product benefits and high
quality could increase the brand
awareness among consumers,
 through health care clinics, so it is very easy for
services the CVS to enter in a new
4. Pharmacy Plan vertical of insurance. (S1,
Members O1).
5. Strong performance
 As CVS has a strong
financial performance they
currently serve 5 million
customers daily, so the
strong financial position of
CVS will help to acquire the
Aetna Co. (S5, O2).
 CVS currently have 1100
walk in medical clinics and
the current customer base is
5m, so the company can
effectively increase the walk
in clinics through its 94m
pharmacy plan members.
(S4, O3).
which will ultimately lead to
customer loyalty and could
possibly decrease the
competition. (S2, T1).
 Being largest drug dealers CVS
can negotiate with the
government for the product and
services terms and conditions in
order to reduce the interventions
from the government.
 Being largest drug dealer CVS
can go for the forward exchange
rate contracts or can manage the
foreign currency accounts in
order to reduce the exchange rate
risk. (S1, T5).

 Expansion to other regions

could be very effective for
CVS, the strong brand
image of CVS in US,
Germany and Rico will help
to the brand awareness of
CVS in other regions and
also in the other markets.
(S2, O4).
 Weaknesses W-O Strategies
1. Weak presence outside  Through acquisition or
U.S.A merging strategy CVS can
2. Product Development: increase its presence
3. Geographical outside the US, Acquiring
Concentration: of Aetna could also lead to
a double capitalization of
CVS Company. (W1, S2).
 For the new line of
products, CVS could either
merge or acquire with other
companies with different
line of products, or CVS
can develop its own
manufactured line of
products to the market.
W-T Strategies
 CVS can invest the research and
development for new product
line, so through this, CVS can
reduce the competition on its
existing products, and also can
get the sales from the new
product lines.
(W2, T1).
 Merger strategy of CVS with
other geographically different
companies could help the
company to increase the
customer base in other regions
and also this strategy will help
the company to reduce the
exchange rate losses.

S-O Strategies:

Being one of the largest health care service provider, with having 9800 retail stores and 1100
walk in clinics, CVS can enter into a new vertical line of insurance, which will help the company
to increase the revenues and customer base. Entering into a new vertical line of insurance
requires a huge investment which CVS currently have and have a strong financial position. This
can be possible by effective marketing strategy for its services.
Acquiring Aetna Co. will help the CVS Company to double its capitalization, and also will
increase the market share, as currently Aetna Co. is nation most diversified health care and
insurance company. CVS has a strong financial performance as are they currently serving 5
million customers daily, so the strong financial position of CVS will help the company to acquire
Aetna Co.

Through its 94m pharmacy plan members and the revenues from the current 5m customer, the
company can effectively increase the walk in clinics. As CVS currently have 1100 walk in
medical clinics, increasing the medical clinics could largely attract new customers and also it
will help in the sales of retail sector products.

Expansion to other regions could be very effective for CVS, the strong brand image of CVS in
US, Germany and Rico will help to the brand awareness of CVS in other regions and also in the
other markets. Through the help of CVS pharmacy plan member’s effective execution of service
and strategy for the new regions will be required, in order to fulfill the local consumer needs.

S-T Strategies:
CVS can increase the investment in the research and development for its products in order to
provide best quality with least cost. Through effective communication of product benefits and
high quality could increase the brand awareness among consumers, which will ultimately lead to
customer loyalty and could possibly decrease the competition.

Being largest drug dealers CVS can negotiate with the government for the product and services
terms and conditions in order to reduce the interventions from the government. A proper
monitoring system should be applied by CVS in order to make sure that it follows all the
government laws.

As CVS is mainly operating in US, Puerto Rico and Germany and now they are intended to go to
new markets, so being the largest drug dealer CVS can go for the forward exchange rate
contracts in which CVS will fix the exchange rate for future so any fluctuation in the exchange
rate should not effect on the cost. CVS can also manage the foreign currency so that they don’t
need to go for the exchange which will help in reducing the exchange rate risk.
W-O Strategies:

Increasing global expansion will region CVS a huge investment, to be effective and profitable
outside the US, CVS In. should go for the acquisition or merging strategy in order to increase its
presence outside the US, Acquiring of Aetna could also lead to a double capitalization of CVS
Company.

Development of new line of products will require the CVS to focus on the customers’ needs and
demands and then an investment for the research and development to come up with a new
product line, or CVS could either merge with or acquire the other companies with different line
of products to offer new products in the market.

W-T Strategies:

Proper distribution network of CVS product and services will lead to a decreased cost of
products and services. CVS can also invest in the research and development for new product
line, so through this, CVS can reduce the competition on its existing products, and also can get
the sales from the new product lines. So these strategies CVS can lead in the pricing strategies
which will increase its competitive advantage.

Managing effective merger strategy of CVS according to the consumer needs and wants, with the
other geographically different companies could help the company to increase the customer base
and brand image in other regions and also this strategy will help the company to reduce the
exchange rate losses.

BCG Matrix:
 The revenue and profits for the CVS and its competitors are not given in the case study. So I
decided to take the revenues and growth rate from the Annual reports for both companies.

 CVS retail sector revenue has a growth rate of 12% annually and the revenue for the retail
sector for year ended 2017 was 48,385m. [ CITATION CVS17 \l 1033 ]

 CVS pharmacy service has a growth rate of 28% annually and the revenue for the pharmacy
sector for year ended 2017 was 184,765m. [ CITATION CVS17 \l 1033 ]

 The revenue for the competitor Walgreen have a revenue of 100400m for both sectors with a
growth rate of 11.1 % for retail and 0.8 percent for pharmacy. [CITATION Wal17 \l 1033 ]
 The segment revenues for the Walgreen were not clear on the annual reports.
 Based on the analysis of these figures, the CVS pharmacy sector is have a greater market
share than any of its competitors and also its growth rate is high, so this sector is placed in
the Star quadrant.
 The retail sector has a relative slower growth rate and also the revenues are also low but its
performing better than its competitors so I placed it in the Cash Cow quadrant of BCG
matrix.

IE Matrix:
 The IFE score is taken by the total score of IFE matrix, which is 3.34.
 The EFE score is taken by the EFE matrix total score, which is 3.32.
 For divisions of segments the IE matrix cannot be created as for the division of Retail
sector the weighted score are below than 1 (As mentioned below), so I move for the
overall company IE matrix.
  Based on the IE matrix the CVS holds in the cell 1, which suggests us the grow and build
strategy, so the CVS should focus on the strategies of market penetration, market
development and product development in order to further boost its revenues and capture
more market share. CVS should also move for the backward, upward or horizontal
integration strategies.

Grand Strategy Matrix:

 Based on the Analysis of CPM, IFE and EFE, CVS has a clear and strong competitive
advantage and also the growth rate of health care services is high so I put both of the
segments in the first quadrants.
  The Pharmacy sector has a major market share and a competitive advantage, also as
analyzed in the BCG matrix, the growth rate of pharmacy services is very high, so I put
the Pharmacy sector in first quadrant’s top.
 The retail sector of CVS has a relatively slow growth rate, but its revenue and market
share is greater than its competitor Walgreen and also the growth rate was increasing by
12%, as mentioned in the BCG matrix, so I put the retail sector in the first quarter’s
bottom position.
 Both of the segments should follow market penetration and development strategies, as
based on the grand strategy matrix quadrants.

QSPM Analysis:
Alternatives Expanding to Increasing
other Regions Medical
Clinics
Factors Weight AS TAS AS TAS
Strengths
Largest drug retailer 0.15 2 0.3 4 0.6
Brand name 0.05 4 0.2 4 0.2
Leading pharmacy benefits company 0.1 3 0.3 4 0.4
through health care services
Pharmacy Plan Members 0.2 4 0.8 4 0.8
Strong performance 0.05 4 0.2 3 0.15
Weaknesses
Weak presence outside U.S.A 0.06 4 0.24 2 0.12
Product Development: 0.1 - -
Geographical Concentration: 0.05 - -
Weight AS ATS AS ATS
Opportunities
Entry into new vertical of insurance 0.15 2 0.3 2 0.3
and health care managed
 Growth through acquisition and 0.12 4 0.44 3 0.36
mergers
Increasing walk-in medical clinics 0.15 - -
Expanding to other Regions 0.15 - -
Threats
Competition 0.12 4 0.48 4 0.48
Government intervention 0.08 4 0.32 3 0.24
Regulatory Approvals 0.07 3 0.21 4 0.28
Increase cost of Acquisition of 0.05 - -
Aetna Inc.
Exchange Rates 0.11 4 0.44 -
4.33 3.93
Grand Total

 The strategic alternatives available to CVS health Co. is expanding to other regions and
increasing medical clinics.
 For the QSPM analysis the factors of internal and external environment are included the
same as included in the IFE and EFE matrix, and the weight assigned to each factor are
also the same.
 The grand total are the sum of the total attractive scores of strength, weaknesses,
opportunity and threats.
 Based on the total score of QSPM the most attractive strategy for the CVS health Co. is
expanding to the other markets because it have the highest score of 4.33.

References
CVS HEALTH, 2017. CVS Health Reports Fourth Quarter Results. [Online]
Available at: https://cvshealth.com/news-and-insights/press-releases/cvs-health-reports-fourth-quarter-
results-and-updates-2018-full#:~:text=Net%20revenues%20for%20the%20year,months%20ended
%20December%2031%2C%202017.
[Accessed Octuber 2020].

Wallgreen, 2017. Walgreens Boots Alliance Reports Fourth Quarter and Fiscal 2017 Results. [Online]
Available at: https://www.walgreensbootsalliance.com/news-media/press-releases/2017/walgreens-
boots-alliance-reports-fourth-quarter-and-fiscal-2017
[Accessed Octuber 2020].