University of Phoenix
CVS Caremark Business Analysis Part I
Investing mutual funds involves many aspects of confidence and knowledge when considering potential companies. One must know a company from the inside and out so they know exactly what their money is being used for. Having this knowledge means investors will not think twice about investing because they will feel confident that the company will provide a return on their investment. By performing a SWOT Analysis and examining how a company will fulfill the needs of internal and external stakeholders, investors will see what the current state of company is and what the foreseeable future holds. SWOT Analysis
A SWOT Analysis is a planning tool used to analyze an organization’s strengths, weaknesses, opportunities, and threats (Nickels, McHugh, & McHugh, 2010). CVS Caremark is the potential client that this SWOT Analysis will be conducted on in order to determine if they are the proper suitor for investors. Company Overview
CVS was founded in 1963 as a company that specialized in health and beauty products. Over time pharmacies were added, and CVS quickly grew in store locations over the next 4 decades by buying smaller pharmacy chains (“Our Company,” 2012). The big change in CVS occurred in 1997 with the purchase of the Revco pharmaceutical chain. Revco and its 2,500 store chain was now a part of the CVS brand and this quickly established CVS as a powerhouse in the pharmaceutical industry. Up until 2006 CVS focused on purchasing smaller pharmacy chains, by this time CVS began to focus on a different market segment, retail health clinics. With the purchase of the 500 location Minute Clinic Company, CVS now branched out into a new market segment that focused on patients getting quick and affordable healthcare which combined with getting their prescriptions filled all in one place (2012). Perhaps the biggest acquisition for CVS came 4 months later, with the purchase agreement and merger with Caremark, a pharmaceutical insurance company. CVS and Caremark merging created CVS Caremark and a major increase in revenue. With the merger, CVS now has control of customers with Caremark insurance. CVS has grown substantially since 1963, but while CVS has grown the company as a whole still needs to be dissected in order to determine if whether or not they are suitable for investors. Strengths
CVS Caremark has the benefit of having a strong brand. CVS has the most stores among all other pharmacy companies with well over 7,000 stores with the next closest pharmacy company with that many stores is Walgreens with a little over 6,000 stores (“Top Retailers,” 2012). With having Minute Clinic and Caremark affiliated with CVS, this allows consumers more options to at CVS compared to other retail pharmacies. CVS has the most revenue among all retail pharmaceutical companies. CVS Caremark has risen to power by purchasing small retail pharmacy companies and eliminating the competition. Other companies like Walgreens are trying to grow by using the same strategy. CVS Caremark in most instances has out bid Walgreens and other companies for the smaller retail pharmacy companies, preventing them from growing and using the same strategy CVS Caremark used (“CVS Caremark,” 2012). CVS Caremark has a highly regarded loyalty card program. The ExtraCare card is a loyalty based program that promotes customers to maintain a record of continuous shopping at CVS Caremark. Over time customers receive coupons, free products and other incentive based benefits. The ExtraCare card is used by more than 66 million customers. With the variety of products available to customers like food, beauty products and healthcare products, CVS along with its ExtraCare card promotes loyalty and it also has become a one stop shop for consumers nationwide. CVS Caremark has utilized how the store is laid out so it is accommodating to consumers. Every...