Walgreens Pharmacy operates in an Oligopoly market structure. The retail pharmacy environment also has the Oligopoly characteristic of significant entry barriers. The barriers are restriction of ownership and restriction of where the business can be established (Walgreens). The ownership barriers are established by the government and state only Pharmacists or an incorporated company that has directors and shareholder members that are registered pharmacists are allowed to open and own a pharmacy. Licensed pharmacists are required to be on duty during the hours of operations. Current Economic Trends
Walgreens faces many challenges. In the face of a slowing economy families are making tough decision on how to spend money. Many American are making the choice of putting food on the table or buying medication. Some of the challenges that Walgreens must face are a slowing economy, new competition, and government regulations changes. Pharmacy sales and script counts as an industry are slowing. From 2007-2008 sales increased 1.8% from 249.2 billion from 253.6 billion. Script counts increased 0.6% from 3.52 billion scripts to 3.54 billion scripts. Walgreens is a company that is use to double digit growth numbers. To face the new slowing economy Walgreens has created a program called Rewiring for growth and POWER. The Walgreens Rewiring for growth project is about protecting the company’s profits in a slowing economy. The program will reduce operating cost and create more productivity. The program will realign Walgreens capabilities, culture, and costs to meet its goals and the current economic environment. The target savings is one billion dollars in annual cost savings by 2011. The saving will be reached by reducing over head at corporate and work throughout stores. Walgreens has also planned to open fewer stores in the future and concentrate on extracting more profit from existing stores. Rewiring for growth will free up Capital and give greater flexibility for investment in strengthen the core business. Technology
As with any industry, technology constantly evolves and can improve process and product. The distant future cannot be predicted for an organization like Walgreens. However, the organization is taking advantage and switching older technologies to new ones to make minor improvements. Instead of using technology to make major changes to the way the business operates, smaller things are being looked at to make an impact. For example, Walgreens is looking at ways to cut down energy. Walgreens has conducted research on lighting, coolers, sensors and other electronics to cut down their electric and cooling bills. As with any technology, when it first comes out, the price of that technology is at its highest and least efficient. As time progresses, it becomes more efficient and affordable. This goes for any organization in the same industry as Walgreens. Walgreens must find the balance between price, efficiency, and convenience to maintain optimal use of resources. Trends
Walgreens may face dramatic changes in the prices of prescription drugs due to the health reform that the government might implement. However, Americans are not sure if that health reform will even pass. One element that seems to bring changes to Walgreens is the increasing demand for prescription drugs. According to USATODAY (2001) “Drug spending is driven by three factors: an increase in prescriptions written; a rise in individual prescription costs; and a shift to more expensive drugs from older, or generic, products, the study found” (¶ 6). Many people are getting sicker and more doctors are over treating many patients. These two factors lead to an increase in spending on prescriptions drugs. Another important trend to take into account is that many people are also getting older and will need to buy more prescription drugs. When a drug enters the market it changes the landscape dramatically....