Walgreens Specialty Pharmacy
The Walgreens Company is among the largest U.S. retail pharmacy chains. The firm offers such products as prescription drugs, general merchandise, and drugs without prescription. In 1909, the Walgreen Company became a corporation and succeeded running a business established in 1901 in Chicago. In the U.S., it is the largest self-governing specialty pharmacy supplier. The company’s headquarters are based in Deerfield, Illinois. The Walgreens mission statement is treating members of the company and customers with respect. It also aims at providing the most convenient consumer goods and health-care services, earning buyer’s trust as well as building shareholder value (Kasi, 2011).
One of the greatest strengths of Walgreens is being the leader in the market. It is the foremost drugstore in earnings growth, sales, and prescription drug share per store prescription sales. Walgreens outsells its closest competitor, CVS, by almost $7 billion per annum, and Rite Aid, the third ranked, by more than $30 billion. On average, Walgreens fills approximately 256 prescriptions every day as compared to 100 prescriptions filled by self-governing pharmacies (Mullis, 2006). This strength is a distinctive advantage of Walgreens since it outdoes all pharmacies in terms of growth and sales. The company has managed to establish itself as a trusted and known brand name all over the U.S. (Mullis, 2006).
Walgreens’ second strength is its superior settings. The company uses the strategy of organic growth that has allowed it to choose locations for opening new stores carefully. Walgreens competitors, for example, CVS, have also expanded, mostly through acquisitions, and therefore have to cope with the stores acquired in the existing locations. Walgreens stores are standalone settings that have enabled the company to expand easily delivering drive-thru services and 24-hour operation in current years (Kasi, 2011). Moreover, whilst other competitive strategies can be imitated over time, location benefits cannot. Superior locations of Walgreens Co. offer it a long-lasting competitive advantage. They can be regarded as a distinctive benefit for Walgreens since it can operate 24 hours and offer drive-thru services (Bloomberg, 2011).
Walgreens’ greatest weakness is its incapability to distance itself from opponents based on price. When Wal-Mart, a pharmacy provider ranked fourth, announced the sale of numerous generic prescription drugs in a month for only four dollars, Walgreens stock price dropped by 11% (Mullis, 2006). Walgreens being a large company in the industry is not a leader in low-cost products facing severe rivalry from discounters. In order to minimize the weakness, Walgreens should not match other competitors’ prices.
Walgreens’ second major weakness is its failure to utilize a major advantage fully over other retailers, namely, its capability to offer convenience to customers (Bloomberg, 2011). Although Walgreens achieves the latter by increasing locations that work 24 hours and delivering drive-thru services, its interior layout fails to reflect dedication to convenience. For instance, its stores in Oregon and Salem look jam-packed with stocks, an atmosphere contrary to the fast-service clean image that the company would love to show (Bloomberg, 2011). Items of health-care are not readily available since they are situated in the store’s rear. The layout of the store and design contradicts Walgreens’ goal of distancing itself from competitors by providing customers with convenience (Mullis, 2006). In order to minimize this weakness, Walgreens should redesign and change the layout of its stores to make it more convenient for customers.
The greatest Walgreens’ opportunity lies in the American population, the composition of which is changing over time. During the demographic shift, the aging generation of Baby Boomers will impact the pharmaceutical industry. The expectations of Walgreens are to increase the demand for prescriptions on the part of customers aged 65 years and above by thirty percent in the following few years (Kasi, 2011). A spectacular increase of older Americans will lead to an increased prescriptions demand and the prospective to raise revenues and sales in this category. Walgreens will utilize this opportunity by increasing its stocks in all stores and locations that operate twenty-four hours. By doing this, it will maximize sales and revenues from prescriptions to older Americans (Bloomberg, 2011).
Another Walgreens’ opportunity is in international markets. Walgreens is a domestic company in the U.S. As the U.S. market gets saturated, it will be required to expand internationally. While cultural disparities and government regulations will probably prove tricky given the Walgreens business nature, international markets offer important market expansion opportunities (Kasi, 2011). Moreover, competitors like Rite Aid and CVS have not entered international markets. Expanding to the latter will ensure Walgreens continues to be a leader in the market. Additionally, expanding internationally will ensure the company remains competitive against chains that offer large discounts like Wal-Mart, several of which have noteworthy international presence by now. It is a crucial opportunity for Walgreens to venture by expanding its services to other countries, and it is a way of maximizing revenues and sales ensuring competitive advantage over its competitors (Bloomberg, 2011).
The biggest Walgreens’ threats in the competitive market of prescription drugs emerge from intertype competitors (Bloomberg, 2011). Walgreens is not only competing with other drug stores and local pharmacies, but also with retailers like discounters and grocers showing to be alarming competitors progressively. Discounters show an exclusive threat, particularly considering price. Emphasis on low-cost of products and economies of scale through big companies like Wal-Mart signifies that it is impossible for Walgreens to contend over price against discounters (Bloomberg, 2011)
Another threat is a vulnerability to regulations and law changes in prescription drugs, which are highly controlled and regulated (Mullis, 2006). Recent changes in plans of prescription drugs exemplify Walgreens’ vulnerability since regulated fees for dispensing have reduced the company’s profit margin. Under these circumstances, additional reforms and modifications that may potentially lower prescription drugs profitability are not unanticipated. Walgreens heavily depends on sales of prescription drugs, a category with regulations mostly beyond its control, leaving the company vulnerable (Robbins & Coulter, 2012).
Based on the Walgreens’ SWOT analysis, its strengths include the company being a market leader with its superior settings. Weaknesses are the incapability to distance itself from opponents based on price and the failure to ensure customer convenience fully. Walgreens can offer online services to sell products internationally (Kasi, 2011). It will afford an opportunity to expand internationally and establish stores in other areas. Moreover, Walgreens can capitalize on the opportunity of offering all prescription drugs that to the American aging population (Bloomberg, 2011). It will enable the company to maximize sales and revenues from older customers. Furthermore, Walgreens can neutralize threats from intertype competitors who offer large discounts on prescription drugs by thoroughly marketing itself in the country and establishing many stores that operate on the twenty-four-hour basis. It will be advantageous since any time a customer gets sick, he or she can easily get prescription drugs. Walgreens can reduce its vulnerability to threats caused by prescription drugs regulations and laws by ensuring it has prescription drug suppliers who sell at a favorable price in order for the company to be able to adjust to the laws.
