Analysis of The Rites Aid Pharmacy - Research Paper Example

The Rite Aid Company is an organization that is based on the core values of improving the health and wellness of all communities by engaging diverse experiences in ensuring that customers are provided with the best possible products and services to meet all unique medical needs. The mission statement shows how the Rite Aid Company is committed to creating superior customer value for its products and services. In this regard, previous analysis of the pharmaceutical industry indicates that the company has the majority of its customers are from low-income earning groups. Additionally, the Rite Aid Company has not effectively segmented its stores to meet the different income classes of its consumers (MHL News, 2005).

Though the Rites Aid Company faces tough competition from Walgreens, which has the largest retail location in the US, The Rites Aid Pharmacy has implemented diversification of operation by engaging in the sale of prescription drugs and front-end retail sales. The Walgreens Company relies on providing customers with multichannel, convenient access to consumer goods and services as well as prescription drugs. Currently, the Rite Aid Company has implemented a competitive strategy of introducing the WELLNESS+ and LIVING MORE customer loyalty programs, a private band, and the formation of a strategic alliance with the General Nutrition Corporation in providing vitamins and other nutritive supplements. The strategies have significant impacts in improving customer satisfaction and loyalty as well as attracting new customers and ultimately gaining more market share (Colliver, 2009).

Additionally, the Rite Aid Company has expanded its operation over the years through increased revenue growth and the acquisition of smaller pharmacy chains, the Gray Drug chains, and the Thrifty PayLess Company. The company has implemented policies regarding the maintenance of a hygienic environment in all its outlets. Moreover, the company has an advanced vision of integrating online services where its products can easily be sold online, as well as introducing an organizational website to maintain the company’s electronic presence to customers (Colliver, 2009).

The company has also experienced huge financial deficits after the acquisition of Brooks Eckerd by debt financing to pay the $2.3 billion obligation. This has increased the company’s indebtedness resulting in overlapping stores and increased interest payments. Due to increased competition from bigger retailers, increasing preference for generic drugs, and economic dynamics, the same stores have limited sales growth and low sales margins. Although the company has maintained adequate cash flows to service the $2.3 billion debt, it has limited its ability to improve its operation and the debt has caused numerous quarterly losses. As a result, shareholders have lost more than $2.9 billion in stock value and over $10.9 billion in value due to the accounting scandal. The management has been criticized for failing to provide quality leadership, effective strategies, and poor execution of organizational policies (Breidenbach, 2010).