July 16, 2012
This paper will provide insight into the strengths, weaknesses, opportunities, and threats of the Walgreens Company, the nation’s leading drugstore chain. The company’s key stakeholders – customers, employees and the community are also identified and an explanation provided as to how the company is satisfying the needs and wants of each stakeholder type. This paper analyzes the strengths of the company as the industry leader with its wide portfolio of products and services, as well as establishing the benchmark for growth through acquisitions. The company’s weaknesses include prescription errors resulting in death and being unable to keep pace with a price competitive structure against large discounters. Walgreens is positioned to capitalize on the growing e-prescription demand and benefit from the recent health care reform policies. The company’s decision to severe its relationship with Express Scripts, Inc. has negatively impacted customer count resulting in a top line revenue decrease. Finally, this paper will conclude with my decision as a mutual fund manager to invest in Walgreens.
Walgreens Co. SWOT Analysis
Walgreens is the nation’s largest chain of pharmacy and food retailers and leads the chain drugstore industry in both sales and profit. It currently owns and operates 8,307 locations in the U.S., District of Columbia and Puerto Rico. In the fiscal year 2011, Walgreens’s sales were $72 billion, with earnings of $2.7 billion (a near 30% increase from FY2010). The company’s mission is to be the most trusted convenient multichannel provider and advisor of innovative pharmacy, health and wellness solutions, and consumer goods and services in communities across America. (Walgreens Co., 2012) Over six million customers visit the stores on a daily basis and 819 million prescriptions were filled in fiscal 2011. With 247,000 employees and approximately 18,000 items available in each store, Walgreens remains among the fastest growing retailers in the country. Founded in 1901, Walgreens provides the most convenient access to consumer goods and services and pharmacy, health and wellness services, in America. (Walgreens Co., 2012) Many of its innovations including, but not limited to, computerized, connected pharmacies, drive-thru pharmacies, one-hour photo-finishing, expanded convenience food-and-drink sections; Express Pay and prescription label instructions have become standards in the industry. Strengths
Industry Leader. Walgreens’s greatest strength is their market position as an industry leader. Approximately 75% of the U.S. population lives within a five mile radius of a Walgreens store. An extensive store network increases the company’s accessibility to its customers and allows for the opportunity to leverage its footprint giving it a competitive advantage versus its competitors. The focus on delivering exceptional value and service, fueled by the culture of operational excellence and innovation, produced record profits, the strongest increase in net income in a decade and the largest growth in earnings per share in more than 15 years. (Wasson, 2011) Gaining Strength through Acquisition. Walgreens has focused its efforts on acquisitions over the past few years. This year, Walgreens has entered into an agreement with Alliance Boots to invest $6.7 million in stock and cash in exchange for a 45% equity ownership stake in Alliance Boots. Alliance Boots is the leading international pharmacy-led health and beauty group in Europe and is similar to Walgreens in terms of iconic branding, complementary geographic footprints, shared values and a heritage of trusted healthcare services. Walgreens also entered into an agreement this year to purchase a regional drugstore chain in the mid-South region of the United States from Stephen L. LaFrance Holdings, Inc. The transaction includes 144...