Strategic

Planning
CVS Our Vision
HEALTH
We want to help people to live longer, healthier,
happier lives.

help people on their path to better health

Arizona State University

OGL 355 - Leading Organizational Innovation and Change
4/21/2022
By: Elvin Ayala, Cynthia Nieto Vargas, Harley Senical, Joseph Todisco, Ricardo Ramirez, and
Casey Beaty
 What is CVS HEALTH? And what does CVS
HEALTH do to help?

CVS Health is the leader in health solutions companies,

delivering care, unlike our competitors. We reach more
people and help more communities across America
through our community presence, digital channels, and
substantial numbers of caretakers (physicians,
pharmacists, nurses, and nurse practitioners). We help
people with their health, monitor recurring medication
needs, and provide access to affordable health and
wellness services wherever and whenever people need
us. Finally, we help people navigate the healthcare
system by streamlining processes, lowering costs, and
being a trusted partner for every meaningful health
moment. And we do it all with heart, every day.
 Strategic Focus

➢ Focuses on personalized services for patients and members to

Current State receive the best quality health care experience.

➢ Delivering effective results through consumer marketing

Future State strategies specifically in high-growth areas of the business and

introducing new health products, services and technologies will
enhance shareholder value (CVS Health Corporation, 2021).

The Structure ➢ Organization Revolutionization

➢
The Solution Global expansion to reach a broader audience to
continue to help more people across the globe.

“Now is the time to undertake our next major evolution and capitalize on
our role as the leading health solutions company in America,” said CVS
Health President and CEO Karen S. Lynch. (CVS Health Corporation, 2021)
 gnition & Public trust:
cial responsibility by
pporting communities and
th national partnerships
clude pharmacy services,
ellness services, health plans,
services, and prescription
ge
of penetration in the retail
market and healthcare industry
d States
Strengths
Regulations and Interventions
Threats
ompetition from mail order
business model and related
erstanding of culture in new
SWOT ANALYSIS
▼ Easily copied retail format for en
market segment
▼ Vulnerability to government regu
▼ Does not accept military insuran
▼ limited MOAT (Walgreens, RiteA
Walmart, Amazon, Grocery store
advantage over competitors
▼ Limited success predicting dema
(missed opportunities & higher i
Weaknesses
Opportunities ➢ Global Expansion.
➢ -Average shoppers are typica
GenX, opportunity to attract
millennial, and Gen Z Shopp
➢ Continue pledge to reduce em
by 2031
➢ 85% of US population live w
miles of a CVS. Opportunity
follow same blueprint with g
markets.
➢ Become budget conscious of
Porter Model
Threat of Substitutes New Entrants
(Low) (Low)
❖ Medication and care are provided relatively equally between ❖ Amazon Care (Amazon Pharmacy); allowing patients to
like companies. purchase medications and to be shipped to their home.
❖ The threat of new entrants could steal customers with cheaper ❖ Telehealth Services that deliver more advanced care.
plans or medication. ❖ Other health companies that emphasize service orientation.
❖ CVS could safeguard by strengthening their network to make it ❖ Health care companies that take military insurance/discounts (like
more difficult to leave. TRICARE).

Supplier Power Buyer Power

(Low)
Rilvalry
(High)
❖ More suppliers than buyers - little control over prices (Very High)
❖ Lowering prices by negotiating directly with drug
❖ Standardized products. ❖ Retail pharmacies: Multiple
manufacturers.
❖ No substitutes for products - not contended. competitors
❖ Patients/Customers importance of purchasing high-quality products
❖ CVS is an important consumer for suppliers - profits ❖ Walgreens 18.5%, Cigna 10.3%, ⎻Moderate bargaining power.
are tied to supplier costs which means suppliers have to ❖ Express Scripts, Rite Aid ❖ Patients/buyers that are price sensitive ⎻High bargaining power.
provide reasonable pricing. ❖ Supermarkets:
❖ Suppliers have concentration in specific region which is ❖ Specific product alternatives ⎻Moderate bargaining power.
❖ Walmart, Safeway
also higher than buyers
❖ Independent pharmacies 1/3 of
brick and mortar in the US.
❖ Small chains
❖ Health Insurance companies:
❖ UnitedHealth Group (OptumRx)
❖ E-commerce platforms account for
37% of drug sales in the US since
2019

5
 POLITICAL
❖ Government resource allocation and time
scale
❖ Changing policies with the new government -
trends with the next election, could lead to
changes made in the healthcare sector.
❖ Importance of local governments in the United
States
❖ Regulatory practices - This is the major
change we see. Over the last few years, the
government and other local economies have
changed regulations on how companies in
healthcare facilities can operate and what
they can distribute.
❖ FDA regulations and compliance
TECHNOLOGICAL
❖ Continued convenient modernization utilizing the CVS
mobile app for prescription refills.
❖ Utilization of Scrypt-Sync to allow all prescriptions to be
refilled, and picked up in one order.
❖ Instillation of CVS vending machines in large social
gathering locations such as malls, airports, hotels, and
college campuses.
❖ Moving towards using Epic Software System, a leader in
medical records, to accommodate an ever-growing client
list.
❖ Natural growth of MinuteClinics in areas of need. This will
serve as a less intense version of urgent care.
❖ Utilization of this advancement will allow for growth in
areas outside of North America, and promote an ever-
growing need for more patient-pharmacy partnership.
ECONOMIC
❖ Inflation rates can slow the growth and hiring
due to decreased profitability
❖ (Stankiewicz, 2018)
❖ Interest rates can positively or negatively
impact the growth of the company in reference
to building new locations
❖ Consumer spending trends can be tracked to
plan for seasonal inventory adjustments
(cold/flu season, allergies, sports and wellness,
etc)
❖ Changes in unemployment rates will affect
discretionary spending as well as access to/or
decreases in health insurance that may affect
the pharmaceutical market
❖ Increasing salaries for employees/new hires to
retain employees in a competitive market
(Repko, 2021)
LEGAL
❖ CVS and their legal team have battled the legal
issues with the spread of COVID-19
❖ Established 260 person legal team that
supports business units, in addition they have
integrated government affairs and public policy
to help decision making.
❖ Has established the use of outside firms for
more complex legal issues for company
P E S T L E
Social
❖They provide access to health care services, affordable
housing, and medicine. CVS HEALTH also addresses food
scarcity and promotes education and job opportunities (Social
Determinants of Health, n.d.).
❖CVS HEALTH has committed to improving community health
in various ways:
❖$100 million commitment through support free clinics
❖Delivered $134 million in free medical services to 1.8 million
people since 2006
❖Helping insurance members through their healthcare platform
addressing factors impacting their health
❖ (Social Determinants of Health, n.d.).
❖CVS HEALTH connects members to community-based
resources.
❖Using transportation to improve health (working with Lyft).
❖Commitment to the Healthy Babies and Moms
❖Addressing and supporting many Policy Perspectives to
improve health & wellness for communities across the
country.
ENVIRONMENTAL
❖ Commitment to reduce overall environmental
footprint by 50% by the year 2030.
❖ Establish policies and targets that will be
routinely monitored, enforced and reviewed.
❖ Implementation of energy and greenhouse
gas emissions programs for all operations.
❖ Engagement and communication with
government agencies and leaders in all
matters related to maintaining a healthy world.
❖ Incorporated the “Go Green at CVS” initiative.
❖ Spearheaded their green initiative by allowing
for used medicinal bottles to be recycled both
in store, and by mail as to reduce waste
footprint.
Grand Strategy

MARKET PENETRATION

AND EXPANSION
 Functional Strategies
Continued Expansion Strategy
● Design amazon style warehouses outside the U.S to
2
network and reduce time/costs.
● Create a global insurance company
● Design cloud-based software that allows doctors to
input medication that links to the hubs, which is
charged to insurance, packaged, and shipped before
leaving the office/hospital.
● Develop and establish abroad events/jobs/healthcare
opportunities that will target primary countries that
require better healthcare.
4
Risk Mitigation Strategy
● Ensure adequate cash flow/credit availability.
● It was initially implemented in western
influenced/individualized cultural locations.
● Collaborate with popular local insurance
providers to refer patients to Doctors that align
with the CVS network.
● Implement a diverse supply chain and obtain
several suppliers.
● Communicate with local leaders as to promote
customer buy-in.
Marketing Strategy
● Direct to consumer medication (from Doctor
to doorstep on the same day)
1 ● Design marketing that appeals to local
culture and quality of life
● Partner with local pharmacies in international
markets to allow for branding and marketing
opportunities to limit financial risk.
● Expand and work with more international
health insurance plans (for example, Aetna).
As a result, patients can access all
established healthcare services ( like
HealthHUB, MinuteClinics, telehealth,
products, etc.) to receive preventative care.
3
Human Resource Strategy
● Provide access to high pay/benefits to
employees to build community relations.
● Remain sensitive to necessary cultural
customs, holidays, and norms
● Operate on different leadership styles and
marketing strategies (like cost leadership
generic strategy) to maintain a competitive
advantage and achieve a broad service-
oriented dynamic for incoming and current
customers.
● Create promotion pipelines that give
employees opportunities to challenge
themselves in new positions.
 Conclusion
CVS is well situated within its peer group, they
are building upon their strengths while
safeguarding against market encroachment but
they must remain focused on growth in new
segments.

CVS must continue to build brand loyalty with

younger demographics while continuing to care
for the older generations.

They must also understand and remain vigilant

of external risks that the legal, social, and
economic impacts may have on future growth.

We believe the Grand Strategy that most

benefits CVS is Market Penetration and
Expansion. In order to achieve their Grand
Strategy CVS must:

● Commitment to building a distribution network to quickly deliver medication to customers doors

● Build a cloud based software system integrated into hospitals/Dr’s offices to instantly communicate
prescriptions to distribution centers for packaging and delivery

● After successful integration in the US, begin expansion into major European cities with full integration
throughout Europe in 10 years.
 ➔ Anderson, D. (2019, March 29). CVS’s Business Model, Generic Strategy & Intensive Growth Strategies. Retrieved
from Rancord Society:
https://www.rancord.org/cvs-business-model-generic-competitive-intensive-growth-strategies
➔ CVS. (n.d.). CVS Health. Retrieved from Our Purpose: https://www.cvshealth.com/about-cvs-health/our-purpose
➔ Thomas, M. (n.d.). CVS Mission Statement (Core Mission & Analysis). Retrieved from https://querysprout.com/:

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