CVS

CVS
Student’s Name
Institutional Affiliation

CVS
Analyze the structure of the pharmacy industry. Identify the important drivers of competition in the pharmacy industry – i.e., what leads to success in each segment of the industry?
The pharmacy industry has different segments that the players in the industry can decide to concentrate on. One of the segments is institutional pharmacies. It deals with provisions of drugs to institutions like hospitals for in-patient use. Players in this segment need to be very efficient, and price sensitive as these are the important drivers of competition in the segment.
Another example of the segments in the pharmacy industry is retail pharmacies. Players in this segment concentrate on filling the prescriptions for their customers. Customer service is the major driver of competition in the segment because the firm deals with the customer directly.
Mail order is the third segment. Players in the segment concentrate on filling prescriptions for patients who require access to larger doses on a regular basis. Pricing is the major driver of competition in this segment. Since a patient requires large doses, he or she will need to spend a lot of money, and this will make him or her price sensitive.
Pharmacy services segment is the last segment. Players in the segment provide prescription drugs for different programs by the government, like the federal Medicare program. They also provide drugs for health insurers and large employers who self-insure their employees.

Efficiency and prices are the drivers of competition here. The government needs to work with an efficient firm that does not charge a lot of money for the drugs.
How has CVS used mergers and acquisitions to extend its position in the changing pharmacy market?
One of the things that drove change in the pharmacy market is the increase in the reliance on pharmacology drugs in the United States (Dyer, Godfrey, Jensen, & Wiley, 2017). Many Americans viewed the pharmacology drugs as the solution to health problems. CVS used mergers and acquisitions to get more pharmacology drugs to satisfy the increasing needs of the customers. The sophistication of drugs also led to change in the pharmacy market by increasing the drug prices. With every acquisition and merger, CVS dealt with competition, ensuring that it still maintained customers even though the drug prices increased.
Using the 8 S model, identify how each of CVS’s acquisitions adds value to the corporation.
Every CVS’s acquisition added value to the organization. For example, Clinton Drug, Target pharmacy, Omnicare, and Coram acquisitions covered the strategy part of the model. The acquisitions helped in the company’s mission of getting access to a wider variety of market and deepened its presence across the country. The acquisition of Soma was in line with the Systems part of the 8s model. It helped the organization in its technological needs. The acquisitions of Mack Drug chain, Arbor, Revco, Pittsburgh’s Stadtlander, Eckerd’s Pharmacy, and 500 People’s Drug Store, the company focused on the structure part of the 8s model. These stores would help the company to have control of the pharmacy industry because when combined, they made it a giant company in the industry. The acquisition of the Minute Clinic was a calculated move that covered the shared values and the staff aspects of the 8s model. The Minute Clinic and CVS had shared values of treating the sick. The staff at Minute Clinic was made up of nurse practitioners and physicians. The acquisition helped the company get the staff it needed to make it an overall health care provider. The acquisition of 541 Long’s drugs was a move meant to help in the re-Source aspect. It helped the organization to get more people working for it from different regions like Hawaii, which made it have diversity. The acquisition of Caremark aimed at helping with the style aspect of the model. It helped the organization’ leaders to have a negotiating leverage in the industry. Together, all the acquisitions led to strategic performance.
Consider the Target acquisition. Who (Target or CVS) will benefit more and why?
Both CVS and Target stand to gain from the CVS’ Target acquisition. However, Target stands to gain more than CVS. One of the reasons why Target will gain more is the fact that it will still maintain the foot traffic since the CVS pharmacy stores will be located inside Target. This means that a customer who comes to the premises to buy a particular drug can be enticed to buy something else from Target. On the other hand, a customer who comes to buy Target’s product cannot be enticed by the CVS’s drugs unless he or she is sick. Target will also gain from the fact that CVS will pay rent for the space its stores will be occupying.
What are the limits to CVS’s strategy for growth? What options for growth might it have given these limits? How should the company prepare itself for the future?
The CVS’s strategy for growth ever since it started operations in 1963 is acquisitions and merging with other companies. With every acquisition, the firm covers a bigger area. However, this strategy has a limit. Cost is one of the limits to CVS’s strategy. Acquisitions cost a lot of money, and, as such, in the future, the company may lack the capability to use the strategy. Employee retention is also a limit to this strategy. The people who used to work for a given firm before it was acquired may need to be retained by the company because they understand the area better than the newcomers do. CVS may encounter problems if the employees refuse to be retained. The option that CVS has to counter these problems is organic growth. For the future, the company should move from the acquisition strategy and learn how to start stores from scratch. This will help to counter the problems.
Reference
Dyer, J., Godfrey, P., Jensen, R., & Wiley, D. B. (2017). Strategic Management: Concepts and Cases (2nd ed.).