Major Aspects of Duane Reade Business - Term Paper Example

Term paper Contents Contents 2 Introduction 3 My experience 3 Competitive advantage of Duane Reade 4 Threats 5 CVS 5 Walmart 5 Issues with the merger of DR and Walgreens 6 Benefits from the merger of DR and Walgreens 6 Competitive landscape benefiting my manager 8 Conclusion 8 References 10 Introduction The company Duane Reade was founded in 1960. The firm has its headquarters in New York. Duane Reade deals with pharmaceutical and some other types of products. Recently it has become a subsidiary company of Walgreens Boots Alliance. The company has its chain of convenience and pharmacy stores mainly in New York. Duane Reade is famous for its large number of stores. The firm was founded by Eli Cohen, Abraham Cohen and Jack Cohen. Presently the company has around 250 stores in different locations. Other than pharmaceutical products the company deals with beauty, grocery, cosmetic, household and seasonal products. The stores of this company are designed in a very systematic way. Earlier the company was owned by Oak Hill Capital Partners. It was a private equity firm. In 2010 Duane Reade was acquired by Walgreen Company. This case study explains some aspects of Duane Reade business in a detailed way. The firm is operating its business in retail industry. In USA, there are many big players present in the retail market. Duane Reade is experiencing strong competition in this industry. It is also facing threats from its strong competitors like Walmart, CVS etc. Some of the strategies of Duane Reade provide it competitive advantage which is explained in this case study. The firm is also experiencing some benefits and issues for its merger with Walgreen Company which are highlighted in this case study. My experience I am an employee of Duane Reade. I am working in this company for a long time. In Duane Reade I am holding the position of shift manager. I have learned many good things from this organization and have a very good experience with it. As a shift manager I have got the opportunity to know many vital things from this company. Duane Reade has faced different types of situations for performing its business activities. I have experienced those situations and observed many things. Earlier Duane Reade had huge amount of debts. But presently the company has repaid its debts and it is now expanding at a faster rate. Competitive advantage of Duane Reade In New York, Duane Reade is the largest drugstore chain. The sales volume of this company is very high. So Duane Reade is able to sell its products at a lower rate that its competitors. For this reason the company has a large customer base. It acts as a strong advantage to the firm. I have seen the company in implementing various marketing and operational strategies which are tailored to meet the needs and requirements of its targeted customers of New York. This helped Duane Reade to acquire and retain more number of customers than other companies operating in this industry. The retail stores of this firm are small but their numbers are huge (Plunkett, 2008). The company has established its stores in different parts of its targeted market area. As a result Duane Reade gets the advantage of reaching and attracting more customers with the help of its large number of stores. The firm has acquired many small pharmacies and drug store chains which facilitated it to grow its market and sales. Many of the stores of Duane Reade are located in high traffic and famous areas of New York. As a result the brand name of this company has become very popular. This provides an advantage to Duane Reade to strengthen its brand and establish a strong position in the competitive market of USA. The firm has established a strong reputation as a reliable drug store (Holsted, Jones and Levin, 2012). This is because the company provides many conveniences in its beauty and health care products. As a result my company experiences huge sale of non pharmacy products which contribute a lot in increasing its revenue. Extensive network of Duane Reade provides the competitive advantage of creating strong local market. The computerized operational system of this company offers it the benefit of linking all of its stores. This strong linkage helps the company to operate its business process effectively in all of its stores. Therefore the firm experiences the competitive advantage in offering wide range of high quality services and products to its customers. Threats As a shift manager of Duane Reade I have observed that the company is facing some threats in operating its business in competitive market of USA. The company is operating its business in such a sector where new companies can establish their business easily. Therefore many new companies are developing at faster rates which are obstructing the growth of Duane Reade. Labor cost of the company is also increasing day by day (Barney, 2007). As a result the profit of the company is decreasing which is threatening the development of this business. Its Strong competitors like CVS and Walmart are capturing its market share. CVS CVS is a direct competitor of Duane Reade. CVS is a strong threat for Duane Reade. CVS is a giant company in this industry which is rapidly expanding its business. The company has huge number of specialty drugstores and retail stores. These stores provide different types of benefits and facilities to the customers. The firm also offers health services to its customers by its Minute clinics which are located in most of its stores. As a result this company is able to attract and satisfy more customers than Duane Reade (David, 2009). CVS is also implementing strong marketing and advertising strategies for which it is acquiring many customers. I think these effective marketing and operational strategies of CVS are threatening the business position of Duane Reade. Walmart Another strong competitor of Duane Reade is Walmart. It is one of the largest retail companies in USA. The company has its present is many countries of the world. According to my understanding there are many similarities between Walmart and Duane Reade which have become threat for Duane Reade. Rapid expansion of Walmart creates the competition tough for Duane Reade. Walmart has large number of suppliers from whom the company purchases product at a low cost. As a result the like Duane Reade, Walmart also sell low priced products. Therefore it creates a threat for my company to lose its customers (Porter, 2013). Issues with the merger of DR and Walgreens Duane Reade had huge amount of debt in the market of New York for which the growth of the company was being hampered. After the merger with Walgreens, Duane Reade was able to repay its debts. Walgreen is one of the largest drug retailing companies in USA. It has its stores all over in USA. Earlier I have seen Duane Reade was operating its business only in New York City. The company did not have enough financial strength to expand its market. But with the merger with Walgreen this issue of Duane Reade was solved. Duane Reade uses modern technology to sell its products. With this merger Walgreens acquired the technology of Duane Reade to sell its own products. Walgreen needed a good bonding with administrators of drug plan (Porter, 2008). This merger also solved this issue of Walgreens. Duane Reade is into this business for a long time. Therefore this company has strong bonding with drug plan administrators. Through Duane Reade, Walgreens is able to establish better relationship with them. Walgreens is a large company than Duane Reade. But has a strong popularity in New York. Walgreens was facing competition from Duane Reade in that region. This merger has reduced the competition of Walgreens. Benefits from the merger of DR and Walgreens The merger of Duane Reade and Walgreens provided many benefits to both of these companies in several ways. I have seen Duane Reade facing financial instability for a long time. Through the company has many stores in different parts of New York but still it was facing financial crisis. The merger with Walgreens benefited Duane Reade to reduce its financial instability. Huge financial recourses of Walgreen are helping Duane Reade to grow its business at a faster rate. After the merger the company is able to repay all its debts. Duane Reade has large customer base in New York. By merging the business with this company, Walgeens has acquired large number of customers. As a result its sales and revenue are increasing a lot. With the help of this merger Walgreens is able to reach more number of customers. Duane Reade has many stores in New York City. This merger benefited Walgreens to increase its store numbers. Duane Reade store designed has improved a lot after the merger. The service quality of its employees has also enhanced. Many new systems and processes are implemented in Duane Reade which provides benefits to its customers. Walgreens is famous for its operational efficiency. As a subsidiary of Walgreens, Duane Reade enjoys the benefit of Walgreens operational efficiency. As a shift manager of Duane Reade I have observed that earlier the company was facing some problems with its management system. But after the merger with large organization Walgreens, the company is able to reduce its management issues and problems. I have observed that top managers of Walgreen are helping Duane Reade for implementing effective strategies to improve its business operations. This has helped to increase business opportunities for both of these companies. This merger provided a leadership position to Walgreen in the drugstore market of USA. I am observing that Duane Reade is putting huge effort in making its brand stronger while Walgreen is focusing more on improving different customer centric approach for selling its products in urban markets. Combination of both of these efforts is helping these companies to enhance their business growth. Before the merger Duane Reade has faced huge loss. As a result the net operating loss of this company is high. With this merger Walgreens is getting benefit from the loss of Durane Reade. Net operating loss of Durane Reade provides additional value to Walgreens by reducing its taxes. Various unnecessary costs of both of these companies are reduced after this merger which benefits both of these companies to increase their profits. Competitive landscape benefiting my manager The merger of Walgreens and Durane Reade benefited all the employees of these companies. With this merger Walgreens has acquired one of its strong competitors as a result the company has to deal with less number of competitors. This benefits my manager to focus more on his career growth as well as the career growth of its employees. Now my manager doesn’t have to take much stress to deal with strong competition or to acquire more customers. So he is now putting more effort to know and understand the market in a better way which is helping him to develop effective strategies for the company. Implementing those strategies at right time are benefiting my manager to establish a strong position within the company. I have observed that my manager is getting all of these benefits for this merger. Conclusion This case study deals with the merger of two companies namely Durane Reade and Walgreens. Durane Reade is a very old company which mainly deals with pharmaceuticals products. The company has its strong present in New York City. It has huge number of stores in this city. This firm has created a strong brand name in New York. Though the company is small but it has huge number of customers. But the company was facing strong competition from the competitive retail market of USA. It also had huge amount of debt. To improve its business condition Durane Reade was merged with Walgreens. The company Walgreens holds a strong position in USA market. This merger benefited both of these companies in various ways. As an employee of Durane Reade I have shared my working experience in this case study in a detailed way. Competitive advantage of Durane Reade provided many benefits to Walgreens. Durane Reade is also benefited from Walgreens different types of resources. This merger helped both of these companies to reduce their threats and to increase their opportunities. Even the employees of these companies are strongly benefited from this. Walgreens has become one of the largest drugstore retail companies in USA after this merger. References Barney, J. (2007). Gaining and sustaining competitive advantage. 4th edition. New Jersey: Pearson Education International. David, F. R. (2009). Strategic management concepts. 12th edition. New Jersey: Pearson Education International. Holsted, N., Jones, J. and Levin, B. (2012). Walgreen Co. Retrieved From: http://economics-files.pomona.edu/jlikens/SeniorSeminars/Likens2012/reports/Walgreens.pdf. Plunkett, W. J. (2008). Plunketts retail industry almanac 2009: The only comprehensive guide to the retail industry. Texas: Plunkett Research. Porter, M. (2008). Competitive strategy: Techniques for analyzing industries and competitors. New York: Simon & Schuster. Porter, M. (2013). On competition. Harvard: Harvard Business Press. Read More