Walgreens Analysis

Topics: Retailing, Medical prescription, Pharmacology Pages: 7 (2214 words) Published: April 12, 2011
Vision statement analysis

To be “My Walgreens” for everyone in America — the first choice in health and daily living … owning the strategic territory of “well.”

Effective elements of the statement:
Graphic - the company’s vision clearly paints a picture of the company becoming the nation's top retail resource for pharmacy and health-and-wellness services and products. Easy to communicate – the vision is easy understandable, has memorable slogan “My Walgreens for everyone in America” Feasible – Walgreens already is drug retailing industry leader, so the statement is pretty reasonable and achievable. Desirable – it is a desirable outcome for the company stakeholders. It will create more jobs, make shareholders richer and customers happier.

Vague and incomplete – while describing a laudable objective, it provides no guidance for a developing strategy for management.

Five Forces Model
Force 1: Competitive Rivalry – High
Drug retailing industry is becoming saturated and therefore more competitive. Walgreen’s biggest rivals are CVS and RiteAid, but it also faces serious competition from mass merchants like Wal- Mart, Target and many other local supermarkets like Giant Eagle, Acme, etc. These retailers carry a broad assortment of merchandise and have a large customer base that visits the store regularly. Competing based on customer service and conveniently located prime locations is a differentiation that Walgreens employs to avoid the competition from large supermarkets. However, in order to do this, they sacrifice lower prices. To stay ahead in competition with its rivals the company keeps innovating their way of business and modifying the growth formula. First, it was digital photo services, RFIDs, touch tone prescription refills, online orders, health and wellness units. Now Walgreen’s management announced that it is cutting the pace of new-store growth and started improving efficiency and image of the existing ones. By constantly reinventing their business Walgreens keeps entering into different markets like photo lab, cosmetics, tobacco products, groceries, hardware and so on. Therefore, their competitor is just about every store, from small gas station to huge hardware store. Walgreens has been around for 104 years. They have been around longer than any of their competitors. For this reason, Walgreens is able to be the first one to do a lot of things. Since Walgreens has been around so long, they know the trade and know where to look for the best suppliers for nonprescription drugs and general merchandise. Force 2: Threat of New Entrants - Low

Major retailers, including Walgreens, are utilizing economies of scale to compete in the drug retail industry. They also have built brand equity and relationships and networks with different supply and distribution channels what is always difficult at first. For these reasons, new entrants face high barriers entering this business. Challenges to enter drug retail market are toughened by legal barriers as well. This is a type of business that requires specific licenses and is highly regulated by government. Pharmacists themselves have many regulations and rules that they must follow to safely distribute drugs. An additional challenge for new entrants comes from the chronic shortage of pharmacists. Experts estimate there are currently 8,000 unfilled pharmacist positions and predict that there will be a shortage of 150,000 pharmacists by 2020. Force 3: Threat of Substitute Products – High

Walgreens’ ability to service many different product markets make them vulnerable to substitution. The real threat and primary concern of substitution for Walgreens is of companies that provide the same services and apply the same functions. Customers that wish to fill their prescriptions can have this service performed by countless numbers of pharmacies in the market area. Grocery shoppers can simply purchase their food items at the local supermarket. Tobacco users...
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