Marketing Case: Analysis of the Business Environment and Strategic Actions (Case Study Sample)

CVS HEALTH CASE STUDY
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CVS Health Case Study
The strategic management of CVS Health deals with the formulation and implementation of the organization’s goals and objectives. The top managers often initiate the process by setting its targets and designing the strategies to achieve them (CVS Health, 2017). The firm is an American-based retail pharmacy and healthcare provider with its head office in Woonsocket. It began its operations in 1964 as a chain of beauty and health stores but later expanded to include pharmaceutical products. The enterprise has also undergone numerous restructuring that includes joining the Melville Corporation and merging with Caremark Rx (Yahoo Finance, 2017). Moreover, it underwent a change of name from CVS Caremark Corporation which it assumed in 2007 upon the merger with Caremark to CVS Health after it decided to abandon tobacco products (CVS Health, 2017). Currently, it is listed on the New York Stock Exchange and has its principal subsidiaries comprised of CVS Caremark, MinuteClinic, CVS Pharmacy, and CVS Speciality.
The Process of Strategic Management by CVS Health
The company’s administration often focuses on coordinating and aligning its resources and operations with its vision, mission, and the set strategies to help fulfill its purpose of providing quality pharmaceutical products, enhancing the consumer experience, as well as maximizing the shareholders' wealth CVS Health (2016). The firm sets on a yearly basis its financial, quality, and administrative targets that inform the strategic management process. The top leaders than assesses the internal and external environments for an understanding on how to adjust the organization’s activities. It then formulates its approaches to achieving the goals through high and necessary organizational strategic plans (CVS Health, 2017). The enterprise then engages all the relevant stakeholders such as the employees and the suppliers in implementing the plan. Lastly, it conducts an on-going evaluation that ascertains the progress and recommends for necessary adjustments.
Analysis of the Business Environment and Strategic Actions
Internal Analysis
The analysis reveals how the internal operations and condition of the organization affects its strategic plans (CVS Health, 2016). Internally, the firm has both the activities that facilitate the achievement of its goals and those that hinder the attainment of the set target.
Strengths. The firm has several operations and assets that help it to move towards achieving its strategic plans. The experienced team of management has been of the essence in realizing the notable success of the firm concerning the smooth operations and popularity of its brands. The administrators have adequately handled their planning, directing, organizing, staffing, and controlling commitments that have seen the organization operate continuously without having to halt its operations from technical hitches (CVS Health, 2016). There is also the team of committed workers that are committed to seeing the company achieve its strategic goals as well as reaching its mission. The staff is united, and the fact that they have a clear channel of airing their grievance has made it possible for them to stay in harmony.
Additionally, CVS Health has sufficient capital assets that are critical to ensuring that it conducts operations in a planned manner and that it finance its daily activities (CVS Health, 2017). Another notable element of the internal environment is the existence of a plan of operations and the influential organizational culture that influences the employees to undertake their duties and behave desirably.
Weaknesses. Apart from the strengths, the firm experiences lack of a comprehensive marketing strategy. Currently, the organization focuses much on using the visual media as opposed to the social media. For instance, its website lacks the instant chat system that could enable the visitors to ask questions and obtain immediate feedback. Therefore, it is possible that the firm fails to reach all its potential clients (CVS Health, 2016). Also, the specialization in offering different pharmaceutical products by its subsidiary stores has seen the buyers fail to obtain some of the products that they may need from their nearest CVS Health outlets.
External Environments
Opportunities. The organization has the chance of growing and expanding its activities to other territories given that it is a known brand that many people already embrace. In fact, it could venture into the outside countries through Foreign Direct Investments or by partnering with the local medical businesses such as the large chemists and supply them with their products (CVS Health, 2017). The organization also has the possibility of expanding its portfolio to include healthy food supplement, thereby, increasing the volume of sales and profitability.
Threats. The company faces stiff competition from both the peer companies and minor ones such as UnitedHealth and Cigna Corp. The existence of the firms that move to occupy the largest share of the market has seen the enterprise fail to achieve its desired sales volume at a time. Different participants are continuing to join the market and the organization might in the future realize a substantial reduction in sales (CVS Health, 2017). Another threat is the worldwide civic education regarding the consumption of healthy food and proper body exercise that has seen individuals reduce their consumption of the manufactured drugs due to the reduction of minor illnesses that come as a result of consuming non-healthy foods. At least the firm has lost a significant part of its sales due to such enlightenment.
Required Changes
From the SWOT analysis, it is evident that CVS Health faces serious threats and weaknesses despite having notable strengths and opportunities (Gassmann, Frankenberger, & Sauer, 2016). Therefore, there is the need to adjust the strategic management to ensure that the desirable aspects of the organization overcome the undesirable factors such as stiff competition and lack of comprehensive marketing.
First, the company needs to focus on how to counter the weaknesses and threats. Concerning marketing, CVS Health should improve on digital media advertisement by creating and maintaining instant chat with visitors to their social media such as website, Facebook, Twitter, and Instagram. On specialization, the organization should produce its products in different plants, but share the sales outlets for the various outputs (Gassmann, Frankenberger, & Sauer, 2016). The strategy will see the firm boost its sales volume because the buyers will readily obtain products from the shops without having to contact other nearby stores that might belong to competitors.
CVS Health also needs to expand to other territories where none of the competitors have significant influence to boost is sales and popularity. For instance, it should set up its stores in the developing countries within Africa and America to build their brand before their competitors venture in such areas (Gassmann, Frankenberger, & Sauer, 2016). To counter the effect of healthy food education that has led to the reduction in the consumption of their products, the firm should use its opportunity to diversify and produce healthy dietary supplements such as immune boosters.
Notably, there should also be a focus on further improving the capacity of the strengths and undertaking the opportunities. The firm needs first to evaluate the current level of operations and set their targets to ensure proper and maximum utilization of the strengths and opportunities. For instance, the company should use its sufficient capital to expand its portfolio as well as venture into other foreign countries, thus ensuring an increased sales volume (Gassmann, Frankenberger, & Sauer, 2016). There is further need to retain the current staff given that they have displayed a commitment to the organization. Otherwise, a high influx rate could lead to the firm recruiting inexperienced personnel that would fail to deliver the desired quality.
Pro-Forma Financial Statements Analysis
Pre-empted Results after the Changes in Strategic Management Results
The proposed changes in strategic management will enable the organization to realize increased sales volume and profit as shown in the tables below.
Assumptions:
1. CVS Health’s performance without the new strategies will see the financial statements items change following the past trend. The pattern will maintain for the coming three years because there are not severe financial phenomena such as hyper inflation or a general economic crisis that is likely to take place. Note: the trend will be calculated by obtaining the average percentage change from the past performance in three years.
2. The new strategies will see the organization increase its results by 10% in 2017, 20% in 2018, and 30% in 2019 for sales revenues, gross profit, operating expense, and EBIT. The rise will be as a result of the expansion that will enable the organization to obtain additional buyers.
3. The total assets, liabilities, and shareholders’ equity will increase by 10% in 2017, 20% in 2018, and 30% in 2019. The rise will be due to the increased activity that will see the organization source for more funds and use liabilities to create assets for expansion.
4. The cash flows from financing, operating, and investing activities will increase by 10% in 2017, 20% in 2018, and 30% in 2019. The rise will be initiated by the increased operations concerning sales, the new investments, and the need for funds for expansion.
Income Statement
Table 1: Income Statement for past Performance
Financial Statement Item 2014 ($000,000)2015 ($000,000)Percentage change 2016 (...