Walgreens Strategic Analysis
Veronica Washington 0180175 Walgreens Pharmacy (WAG) An Industry Leader at the Inflection Point
The following report is an in-depth discussion of Walgreens Pharmacy with an analysis and assessment of the company’s strategic initiatives. Each strategy yields a direct purpose of diminishing the influence of a specific force from Porter’s 5-force Model as the supporting data culminates an outlook on the company’s future.
COMPANY OVERVIEW Charles Walgreen of Chicago, Illinois, pioneered the first Walgreens in 1901, with corporate headquarters now located in Deerfield, Illinois. In the company’s 100-year reign as the prescription industry leader, Walgreens changed from war bonds, soda fountains, and restaurants to 24-hour store access, nationwide locations, easy-to-use online stores, and health care clinics. 6,400 stores now operate in all 50 states including Puerto Rico, with 30% open 24 hours. By 2010, Walgreen’s aspires to operate 7,000 stores nationwide and pave the way for the organic growth of 13,000 sites. As of December 2007, Walgreens employs 226,000 associates, hiring 25,000 in 2007 (WAG Annual Reports, 2007). According to the company’s 2007 annual reports, “Walgreens has been listed on: Fortune magazine’s Most Admired Companies in America list…ranked 44th on the Fortune 500 list of largest U.S-based companies…[and] ranked the leading online drugstore.” (WAG Annual Reports, 2007) In the past 2 years especially, Walgreens embarked on several ventures that will enable them to have first-mover advantage in the healthcare industry.
CURRENT FINANCIAL INFORMATION In 2007, Walgreens increased net sales by 13.4% to $53.7 billion and increased net income by 16.6% to $2.04 billion. Long-term investments, which have consistently increased by roughly $100 million dollars each year since 2004, reflect company profits (WAG Annual Reports, 2007). In the 2007 operating cash flow analysis, Walgreens yielded a yearly total over
The following report is an in-depth discussion of Walgreens Pharmacy with an analysis and assessment of the company’s strategic initiatives. Each strategy yields a direct purpose of diminishing the influence of a specific force from Porter’s 5-force Model as the supporting data culminates an outlook on the company’s future.
COMPANY OVERVIEW Charles Walgreen of Chicago, Illinois, pioneered the first Walgreens in 1901, with corporate headquarters now located in Deerfield, Illinois. In the company’s 100-year reign as the prescription industry leader, Walgreens changed from war bonds, soda fountains, and restaurants to 24-hour store access, nationwide locations, easy-to-use online stores, and health care clinics. 6,400 stores now operate in all 50 states including Puerto Rico, with 30% open 24 hours. By 2010, Walgreen’s aspires to operate 7,000 stores nationwide and pave the way for the organic growth of 13,000 sites. As of December 2007, Walgreens employs 226,000 associates, hiring 25,000 in 2007 (WAG Annual Reports, 2007). According to the company’s 2007 annual reports, “Walgreens has been listed on: Fortune magazine’s Most Admired Companies in America list…ranked 44th on the Fortune 500 list of largest U.S-based companies…[and] ranked the leading online drugstore.” (WAG Annual Reports, 2007) In the past 2 years especially, Walgreens embarked on several ventures that will enable them to have first-mover advantage in the healthcare industry.
CURRENT FINANCIAL INFORMATION In 2007, Walgreens increased net sales by 13.4% to $53.7 billion and increased net income by 16.6% to $2.04 billion. Long-term investments, which have consistently increased by roughly $100 million dollars each year since 2004, reflect company profits (WAG Annual Reports, 2007). In the 2007 operating cash flow analysis, Walgreens yielded a yearly total over
References: Berman, D. (2007, January 17). CVS Raises Caremark Bid, Pressuring Express Scripts. Wall Street Journal (Eastern Edition), p. A.4. Retrieved November 9, 2008, from Wall Street Journal database Caremark Rx Inc.: Advisory Firm Urges Holders To Accept Offer From CVS. (2007, March 14) Lueck, S. (2007, September 19). Politics & Economics: Democrats to Revisit Medicare Provisions. Wall Street Journal (Eastern Edition), p.A.12. Retrieved October 23, 2008, from Wall Street Journal database Merrick, A. (2008, March 19). How Walgreen Changed Its Prescription for Growth. Wall Street Journal (Eastern Edition), p. B.1. Retrieved October 20, 2008, from Wall Street Journal database Merrick, A. (2008, October 9). Walgreen Abandons Bid for Longs; Drug Chain Cites Weak Economy, Withdraws $2.7 Billion Offer. Wall Street Journal (Eastern Edition), p. B.1. Retrieved November 9, 2008, from Wall Street Journal database Stewart, J. (2006, November 8). Common Sense: Letdown Over Deal By CVS, Caremark Offers Opportunity. Wall Street Journal (Eastern Edition), p. D.2. Retrieved November 9, 2008, from Wall Street Journal database Porter, Michael E. (2008. Jan) “The Five Competitive Forces that Shape Strategy.” Harvard Business Review. Porter, Michael E. (2008.Nov) “Why America Needs an Economic Strategy” Business Week Walgreens Annual Reports, The (2007, Dec 31). Questions and Answers for Shareholders. Walgreens Annual Reports, The (2007, Dec 31). Management’s Discussion and Analysis of Results of Operations and Financial Condition