Strategic Analysis: McKesson. The paper focuses on McKesson and the application of a number of strategic analysis models to examine the company’s external and internal environment along with their business-level strategies…
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Such industry-level trends can have a considerable impact on McKesson’s strategy and operations. Michael Porter’s Five Forces will be applied as a framework the external analysis of McKesson particularly for reviewing the bargaining power of buyers, bargaining power of suppliers, availability of substitutes, threat of new entrants, and intensity of industry rivalry. Meanwhile, internal analysis will also be performed to examine McKesson’s own capabilities and performance. To have a more comprehensive view, a SWOT analysis will be performed to identify the company’s internal attributes, which are its strengths and weaknesses, along with the external attributes, referring to possible opportunities and threats. Company Background McKesson is known to be the largest pharmaceutical distributor in the United States as well as in the entire North America with which they distribute to over 40,000 pharmacy locations from hospitals and community pharmacies to government agencies and retail distributors (CNN 2009). At present, the company has been ranked as 15th in the FORTUNE 500 as they have obtained over $112.1 billion for their annual revenue. As a medical supply company, McKesson has been aiming to distribute homecare and medical-surgical supplies along with information technologies which allow the health care sector to carry out more effective and safer patient care. McKesson is comprised of a wide range of businesses that serve the health care industry; these are primarily divided into two, the distribution solutions and the technology solutions. While the former emphasizes the distribution of medical supplies, the latter signifies the healthcare information technology systems that the company has developed in reducing or eliminating the need for paper medical records and prescriptions. For instance, it has been reported that their hardware and software are being utilized in over 70% of the hospitals in the United States that have a capacity of 200 beds or more. McKesson’s hospital information system solutions are also comprised of electronic health record systems and clinical decision support systems that enable the company to address the needs of various areas in the healthcare sector (McKesson 2011). However, the company has experienced a number of difficulties over the years that have challenged their use of business strategies. For instance, in their establishment of the McKesson Information Solutions, the change resulted to a considerable increase in turnover in all organizational levels. In addition, scores for employee and customer satisfaction were notably reduced; furthermore, members of the senior executive team and the middle management also departed from the organization, thereby generating more than a 20% increase in overall turnover and losing the confidence of customers. Majority of the concerns associated with McKesson has emphasized management and external issues which have consequently influenced their business-level strategies. The following sections will then look into the internal and external environment of the company, thereby examining their strengths and weaknesses along with the possible opportunities and threats. One of the most noteworthy strengths of Mckesson since the 1960s has been the company’s vision and commitment, especially of the top level management (Clemons and Row 14). They have aimed to generate more effective ways of improving the position of the company in the coming years and obtain competitive advantage over similar firms. After its management, the greatest strength of McKesson is its size with which increased sales and net income have been evident
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