Walgreen Store - Speech or Presentation Example

? Walgreen Store The paper aims to proffer a comparative analysis of two different major retailers of pharmaceutical drugs in terms of determining the significant differences or similarities in management styles and mode of operation. Using direct observation of product mix, customer type, store locations, layout and other observations, the discourse would aim to describe the features of Walgreens, as compared to CVS Pharmacy. Likewise, the kind of training the managers receive before they are given that position would be identified. A SWOT analysis of Walgreens would finally be presented, as required. Walgreen Store The leadership position in any business endeavor depends on an interplay of factors that ensure an organization’s success. The CBS Interactive Business Network (2011) released a report conducted by the Drug Store News on the top 30 retail pharmacy chain in the United States and revealed that Walgreens topped all other retail stores in terms of sales in 2004. Second in line is CVS Caremark. However, in the 2010 Drug News Report, the reverse was eminent: CVS overtook the leadership over Walgreens (Drug Store News, 2010). In this regard, the essay aims to proffer a comparative analysis of these two different major retailers of pharmaceutical drugs in terms of determining the significant differences or similarities in management styles and mode of operation. Comparative Features The tabular illustration below detailed comparative details of significant features of both Walgreens and CVS: WALGREENS CVS Incorporation Date 1901 1963 Location Chicago Massachusetts Founder Charles R.Walgreen, Sr. Stanley Bros., Sidney Goldstein, Ralph Hoagland 2009 Sales $83 Billion $99 Billion Prescription Sales $41 Billion $55 Billion Products Prescription Drugs (65%) Prescription Drugs (67.5%) General Merchandise (11%) HBC (8.5%) OTC Drugs (10%) OTC Drugs (9%) HBC (6%) General Merchandise (5%) WALGREENS CVS Products (continued) Home Health Care (4%) Groceries (5%) Groceries (4%) Home Health Care (5%) Customer Sales Retail 99.5% Retail 99% Internet 0.5% Internet 1% Total Stores 7,162 7,074 Stores Opened in 2010 320 300 Source: Chain Store Guide cited in Drug Store News, 2010, pp. 8 & 18. Management Team TRAINING PROGRAMS Walgreens “robust training programs in place to give our team members every opportunity to explore their interests and reach their goals… from informal enrichment and mentorships to formal certification and training” (Walgreens: Training Programs, 2011, pars. 1 & 2) CVS “50 training and development programs exist across the Company, including our Emerging Leaders Program (where) Participants attend development sessions focused on leadership competencies and building functional skills and knowledge. They are also provided with on-the-job experiences and opportunities to further enhance their leadership skills. Throughout the development process, they have access to coaches who support their growth as leaders” (CVS: Opportunities, 2011, pars. 1 & 3). Employees in both Walgreens and CVS are highly motivated given the vast opportunities for development through availment of training programs that could earmark productive careers as leaders and in managerial positions in the future. At Walgreens, for example, professional development is encourage through both lateral and vertical movements that expand experience and training in various fields, honing employees’ skills according to their interests and goals. At CVS, through internal promotions and the sheer volume and quality of training programs, employees’ talents and skills are developed through their career service at the organization. As indicated, leaders are developed through the Emerging Leaders Program at CVS and through enrichment, mentorship, formal certification and training at Walgreens. Exemplary performances are duly rewarded in both organizations. At CVS, the rewards and recognition programs are as follows: Paragon Award (“the highest honor a colleague can achieve within our company” (CVS: Recognition, 2011, par. 2); Chairman’s Award (“noteworthy accomplishments by non-store colleagues” (CVS: Recognition, 2011, par. 3); and Breakthrough Awards (“recognize those colleagues who not only deliver top-notch results and execution, but in particular those who are innovative in their approach” (CVS: Recognition, 2011. Par. 4). At Walgreens, exemplary performance is likewise rewarded “in addition to competitive salaries, Walgreens offers one of the most comprehensive benefits programs in our industry, with many perks available whether you’re a full- OR part-time team member – like profit sharing, store discounts and a stock purchase plan” (Walgreens: Benefits, 2011, par. 1). Other Management Styles and Culture WALGREENS CVS Corporate Culture “a fast-paced and establishment of unifying vision, innovative company” mission and values (CVS: Our Culture, (Walgreens: Corp. Culture, 2011, par.1) 2011, par. 1) Diversity “respect and dignity are “committed to building an key values at Walgreen” environment of inclusion and (Walgreens: Diversity, acceptance that values diversity 2011, par.1) across all areas of our business” (CVS: Diversity, 2011, par. 1) SWOT Analysis of Walgreens The study by Villenueve (2007) outlined the significant strengths, weaknesses, opportunities and threats faced by Walgreens, to wit: Strengths As averred by Villenueve (2007), Walgreens’ greatest strength is their primarily knowledge and awareness of the needs of their customers. Being in the business since 1901, or for more than a century, Walgreens have been aware of the customers’ need for convenience, good structural design, space and strategic location. As emphasized, “Walgreens has a competitive advantage over CVS because nearly all of the new Walgreens store are freestanding and built from the ground up, ensuring that there is highly visible locations” (Villenueve, 2007, p. 4). In addition, Walgreens always respond to the demands of the customers in terms of products and services (24/7 hours, offering diverse products and services from beauty products, photo shops, open clinics, among others). Walgreens is also always at the look out for innovation through energy conservation using solar panels, implementation of radio frequency identification for close monitoring of in-store displays regardless of location (Villenueve, 2007, p. 6). Weaknesses The weaknesses of Walgreens pose as their problems, to wit: (1) the grid format of store layouts make locating products difficult (“too many products are crammed into too small space that finding the right product is often difficult” (Villanueve, 2007, p. )); (2) aisles are too narrow and parking lots are not wide enough; (3) impolite sales personnel and lack of knowledge in products and the willingness to assist customers; (4) updates in regulations regarding selling prescription drugs; and (5) prescription drugs are too expensive (Villanueve, 2007). The key symptoms of these problems are: (1) customer complaints due to identified dilemmas: restricted space, narrow aisles and parking lots; (2) decline in sales as customers seek other retail pharmacy chains; (3) decline in market shares; (3) high operating costs; and (4) reversal of leadership position. Opportunities As noted Drug Store News (2010) there are various opportunities that Walgreens face in terms of the strategies that it recently launched: (1) the purchase of Duane Reade, a New York drugstore, would strengthen its foothold in the New York market where CVS emerged as the market leader; (2) pharmacy file of 17 Ike’s and Super D drug stores were purchased from USA Drugs to increase market shares in the Memphis area; and (3) the implementation of Customer Centric Retailing (CCR) aims “to enhance the customer experience in every way we can” (Drug Store News, 2010, p. 22) and reduced redundancy by eliminating 4000 items in their product line, focusing on customer needs and revising store layout with full store redesign; among other plans. Threats The threats that Walgreens face come in terms of increased competitive pressures from other retail pharmacy stores, particularly CVS, and other major retailers such as Wal-Mart and Target (Villanueve, 2007, p. 10). In addition, more threats are eminent in terms of political regulations and restrictions in “Medicaid’s pharmacy reimbursement plan, leaving Walgreens with less incentive to fill in these prescriptions because of the cut in profit margins” (Villanueve, 2007, p. 10). Finally, there are threats posed by pending lawsuits due to the nature of the products they sell. Porter’s Five Forces of Walgreens Porter’s five forces are discussed in terms of the forces of rivalry, threat of substitutes, buyer power, supplier power and threat of new entrants and entry barriers, as detailed below: Rivalry The intensity of competition in the retail pharmacy industry is stiff, especially with regards to CVS, regarded as the industry leader. The Drug Store News (2010) presented the major competitors of Walgreens, aside from CVS, as Rite Aid, Walmart, Target, Kroger, among others. Stiff competition is eminent due to the large number of firms that compete using the same sets of products and services in strategic geographic locations. Threat of Substitutes Considered as moderate by McDonnell (2006, p. 12), threat of substitutes is actually skewed towards high level as the products and services offered by these retail stores are basically the same; therefore, consumers can opt to go from one retail store to the other and practically get the same product for practically the same price. As indicated in the abovementioned product features, all product categories of Walgreens are being offered by CVS with minimal difference in percentage composition. Buying Power The buying power of consumers in the pharmaceutical retail industry is low given that the prices of drugs, especially prescription drugs, are regulated by federal and state agencies. In this regard, buyers have no significant influence on the prices of drugs across pharmaceutical retail stores. Supplier Power The power of suppliers of drugs and medicines in the pharmaceutical retail industry is deemed high given that they dictate the prices of these products based on demand and on the prices of raw materials, research and other crucial costs needed to produce identified drugs. At Walgreens, as in other competitors, all drug prices are dictated by standard industry prices and regulated by federal and state agencies. Threat of New Entrants and Entry Barriers Since there are established organizations that have been identified to be major participants and competitors in the industry, the threat of new entrants are considered moderate. The strategies being employed by major players, such as CVS and Walgreens, are to purchase existing drug stores to increase their respective market shares. Overall, using Porter’s five forces model, Walgreens faces moderate to high competitive pressures from existing major players in the industry, such as CVS and other major retail chains (Walmart and Target), consistent with the threat analysis as mentioned above. As all players offer practically the same product lines and services, competitive advantage is manifested through the implementation of innovative strategies that focus on satisfying the diverse needs of the customers and in providing unique and distinct added features that make one retail store surpass the performance of another. By highlighting Walgreens’ strengths and capturing opportunities in the environment, their planned strategies to increase market share and to retain the leadership position is potentially viable. Conclusion From the comparative analysis presented between features, management training, operations, corporate profile and SWOT analysis, it could be deduced that Walgreens has been experiencing stiff competition from CVS in terms of applying basically the same strategies and serving the same clientele. Their market leadership has been eroded due to redundancy in products that prove to be cost intensive, coupled with ineffective store lay-out structure that diminished convenience of customers in shopping for their needs. The strategic move of CVS to purchase and takeover the operations of Arbor Drugs in February 2010 paved the way for its leadership position, surpassing Walgreens in sales potentials and market share (Arditi, 2010). The current strategies of Walgreens to address their problems and weaknesses, in conjunction with marketing efforts to purchase other pharmacy retail outlets, review products to eliminate redundancy, restructure full store layout and refocus on the customers’ needs would prove to be designed to regain the leadership that they have worked through the years to retain. References Arditi, L. (2010). CVS Acquires Michigan Drug Chain, Surpassed Walgreens as Biggest in Nation. Retrieved 17 May 2011. < http://www.highbeam.com/doc/1G1-20221353.html> CVS Caremark. (2011). Diversity. Retrieved 17 May 2011. ------------------. (2011). Opportunities. Retrieved 17 May 2011. < http://info.cvscaremark.com/our-company/corporate-responsibility/workplace/great-place-work> --------------. (2011). Our Culture. Retrieved 17 May 2011. -------------. (2011). Recognition. Retrieved 17 May 2011. Drug Store News. (2010). Retail Chain Pharmacy Yearbook. Retrieved 17 May 2011. < http://arc.drugstorenews.com/DigitalEdition/DSN_Yearbook/pageflip.html> McDonnel, M (2006). Walgreen Co. (WAG). Retrieved 17 May 2010. "Top 30 retail pharmacy chains."(2008). Drug Store News. FindArticles.com. Retrieved 16 May, 2011. Villanueve, A. (2007). Walgreens: Strategic Analysis. Retrieved 17 May 2011. < http://www.acraretail.org/documents/Walgreens_Villeneuve.pdf> Walgreens. (2011). Benefits. Retrieved 17 May 2011. -------------. (2011). Corporate Culture. Retrieved 17 May 2011. -------------. (2011). Diversity. Retrieved 17 May 2011. -------------. (2011). Training Programs. Retrieved 17 May 2011. < http://careers.walgreens.com/life-at-walgreens/training-programs.aspx> Read More