Introduction
CVS Health Corporation is a leading American healthcare company. It provides a vast range of services and is not a classic medical group that owns a chain of pharmacies. Instead, the company is primarily a healthcare provider, which makes it expand its network. It drives management and administration offerings, develops a sales plan, and optimizes client costs. The firm has an independent group of physicians and pharmacists who develop recommended products in various classes of drugs. Moreover, it offers to counsel and helps identify and capture cost-saving opportunities for specialty drugs. CVS is one of the most successful companies in the U.S. due to its continuous technological innovation and adaptation to market challenges.
SWOT Analysis Table
Strengths
It is reasonable to start by describing the advantages and strengths that allow the company to compete in a rapidly changing marketplace. One distinct advantage of CVS Health is that thousands of CVS stores are close to customers. Around 80% of U.S. citizens live less than 16 kilometers from the nearest CVS location (Quezada et al., 2019). Placing its locations close to mainstream consumers gives the firm a competitive advantage. Furthermore, CVS Health’s partnership with Teladoc, a provider of telemedicine services particularly relevant during the coronavirus pandemic, was another step in bringing the company closer to consumers facing unprecedented quarantine restrictions in recent years (Koh et al., 2019). Moreover, CVS is constantly innovating digitally, making the company one of the innovators in digital health solutions. Their virtual services attract modern customers who value time above all else. The corporation has also created a culture among distributors and dealers where dealers promote the company’s products and spend money to train the sales team. Quality knowledge promotes products and explains to customers how to get the most out of a product.
Weaknesses
To remain competitive, a company must be aware of weaknesses. Although CVS Health is one of the leading companies in the industry, it is having difficulty expanding into other industries because of its current culture (Koh et al., 2019). It certainly has a negative impact on the company’s performance and significantly cuts into its capabilities. Human resources policy is furthermore among its weaknesses. The corporation has a high turnover rate due to poor labor conditions and has to spend significantly more money on employee training and development than its competitors (Quezada et al., 2019). Compared to rivals, the firm is not particularly efficient in anticipating product demand, which leads to a higher percentage of missed opportunities. As a result, the company keeps more inventory internally and in the distribution channel.
Opportunities
CVS is an innovator in the marketplace, which opens up tremendous opportunities for the company to grow. The demand for virtual medical consultations via CVS will continue to rise in the years to come, which is another factor in the attractiveness of investing in the company. The corporation can increase the number of virtual services and conquer the market even more. CVS Health falls into the category of conservative investments characterized by relatively low risk (Koh et al., 2019). The non-cyclical nature of the industry in which CVS operates allows the firm to generate stable revenues and profits regardless of the economic situation. The company’s vertical integration lowers consumer costs, which, with the government’s intense focus on drug prices, presents an additional opportunity compared to competitors (York et al., 2021). CVS Health can likewise use new technology to implement a differentiated approach to pricing in a new market. It will allow the company to retain current customers by providing excellent service and attracting new clients through various value-based offerings. Equally promising is the ability to expand into new markets, allowing the company to improve operational efficiency and expand its customer base.
Threats
The most basic risk that can be identified is the daily one associated with prescription drug availability, pricing, and safety. CVS Health’s profitability could be threatened by rising raw material prices and changing drug formulations (York et al., 2021). Such risks, if negatively impacted, can harm business results. Moreover, a significant danger is the legalization of the Democrats program, which would eliminate the PBM plans business and part of the company’s insurance business, which generates 60% of the company’s operating profits (York et al., 2021). Equally risky is the threat of increased competition in the pharmacy business from online retailers. Products are likewise vulnerable to counterfeiting and imitation of low-quality products, especially in developing countries and low-income regions.
Conclusion
CVS Health has worked thoroughly to oppose the rivalry and adapt to rapidly changing market conditions. Despite the high level of competition and threats, the company has maintained its leading position. However, existing weaknesses in personnel policy, organizational culture, and slow expansions affect efficiency and profitability. Therefore, CVS Health has to focus on its existing resources and capabilities to expand to other markets and customer bases. The company has significant advantages and is particularly active in adopting digital technologies, giving it a great chance to develop and win customers’ attachment.
References
Koh, H. K., Singer, S. J., & Edmondson, A. C. (2019). Health as a way of doing business. Jama, 321(1), 33-34. doi:10.1001/jama.2018.18935
Quezada, L. E., Reinao, E. A., Palominos, P. I., & Oddershede, A. M. (2019). Measuring performance using SWOT analysis and balanced scorecard. Procedia Manufacturing, 39, 786-793.
York, J., Lugo, K., Jarosz, L., & Toscani, M. (2021). CVS health faces a new wave of disruption. International Journal of Pharmaceutical and Healthcare Marketing, 15(3), 333-353.