Capstone

1

11

Week 6 External and Internal Environment Assignment

Yvonne Winn

BUS499 Business Administration Capstone

Professor Keller

February 13, 2021

Week 6 Assignment 2

This paper seeks to analyze CVS Corporation, a health organization located in Lowell, Massachusetts, the United States (CVS Health, 2). Specifically, the study's focus is to evaluate CVS Corporation's internal and external environments, which are essential in determining its success or failure. The study will analyze the general environment and establish how its various segments affect CVS corporation's operations. Forces of competition are central to a company's performance, and this study will review the various forces, both internal and external, that influence the organization's growth. The paper will also outline the company's strengths, weaknesses, capabilities, and core competencies, besides identifying appropriate strategies to capitalize on its strengths and tactics to fix its weaknesses.

General Environment

The general environment in businesses consists of segments such as the political, economic, social, technological, environmental, and legal aspects. Among these segments, the two most influential ones affecting CVS Corporation are technological and social segments.

Technological Segment

Technological advancements have revolutionized healthcare operations, forcing firms to adopt new technologies to remain competitive (Hitt, Ireland, & Hoskisson, 1). Technological innovations have led to the establishment of electronic health records, wearable health devices, telemedicine, and remote monitoring appliances. Such technological advancements have increased competition in healthcare, which has forced CVS Corporation to respond appropriately by adopting technology in its operations to remain competitive. For instance, the company recently introduced a tool called Symphony, a medical alert system that helps caregivers remotely monitor their elderly loved ones' health. The tool has a suite of sensors to monitor room temperature, movement, fall, or any other unusual behavior (CVS Health, 2). Embracing technology in its operations has helped CVS Corporation remain competitive.

Social Segment

The social segment in healthcare includes social factors such as age distribution, lifestyle, education level, and spending habits that influence healthcare trends. The social segment undergoes continuous changes, and health organizations must always be aware of these changes to respond appropriately. For instance, chronic and lifestyle diseases are very prevalent in American society. Health organizations must find a way to address them as a way to meet their customer's needs. According to the Centers for Disease Control and Prevention (4), six in ten adults in the U.S. have a chronic disease, while 4 in every 10 have two or more diseases. The leading causes of chronic diseases are tobacco use and poor lifestyle behaviors. To respond to the needs of its social segments, CVS Corporation became the first pharmacy retailer to ban the sale of tobacco and its products in its centers. Through its Aetna Foundation, CVS Corporation partners with like-minded firms to promote healthy living. For instance, it supports anti-vaping campaigns in schools and communities to minimizing smoking among youths (CVS Health, 3). This is among its initiatives to address its social segment.

Five Forces of Competition

Like in other industries, competition forces in healthcare include supplier power, buyer power, competitive rivalry, the threat of substitution, and the threat of new entries. Among these forces, the two most significant to CVS Corporation include competitive rivalry and the threat of new entries.

The threat of New Entries

The threat of new entries is among the forces affecting CVS corporation and can hinder its growth. Across the United States, the number of new health facilities has been on the rise over the years, which presents stiff competition to existing firms like CVS Corporation. To address the challenge of increased competitive rivalry, CVS Corporation has been on an expansion drive, which has led it to have more than 9900 retail locations in 49 states, the District of Columbia, and Puerto Rico. It also has 1100-minute clinic locations, which has helped it survive competition from upcoming firms (CVS Health, 2).

Competitive Rivalry

Besides the threat from new entrants, CVS Corporation faces stiff competition from established health facilities in the country. According to the American Hospital Association (5), there are 6,090 hospitals in the U.S. according to 2019 data. This number is made up of community hospitals, non-governmental facilities, federal hospitals, among others. The existence of these many facilities offers stiff competition to CVS Corporation. To address this challenge, CVS has broadened its range of services and introduced new products to competitive.

Future Improvements

CVS Corporation has many opportunities for growth and improvement despite the various forces threatening its growth. As highlighted earlier, the company's main segments are technological and social, while the main competitive forces are competitive rivalry and the threat of new entrants. CVS has many opportunities to improve on these segments. For instance, the increase in technological advancements offers CVS the opportunity to integrate technology into its undertakings (CVS Health, 3). The organization should embrace telemedicine as a way of serving many clients, especially during this pandemic. Regarding the social segment, the RVS corporation should sponsor sensitization campaigns on healthy living as part of its corporate social responsibility. That would increase its visibility and impact in the community. To address the threat of new entrants, CVS should continue with its expansion drive to benefit from economies of scale, unlike the new entrants. On competitive rivalry, the organization should strive to make its services more affordable to outdo the competitors.

Greatest External Threat

The greatest threat facing CVS Corporation is the ongoing Covid-19 pandemic. The pandemic has affected all health facilities since frontline health workers have been experiencing the greatest risk of contracting the disease. Since CVS has more than 9900 retail locations, its staff are at the risk of contracting the virus, which would cripple its operations. A Covid-19 outbreak in its facilities would threaten its existence (Corwin, Ani, & George, 6). To mitigate this threat, CVS Corporation should conduct sensitization campaigns within its facilities to ensure all staff observes safety measures. Besides, it should ensure the staff has all the necessary protective gear. That would increase public confidence, hence attracting more patients to its facilities.

Greatest Opportunity

The company's greatest opportunity is to leverage technology advancements to improve its clients' quality of services. Recently, CVS Corporation launched a medical alert system known as Symphony to help caregivers monitor their loved ones remotely. Such a move highlights CVS's potential in digitizing its processes. Therefore, due to its massive resources, the company has a chance to digitize many of its programs, hence reaching many people and increasing profitability.

Strengths and Weaknesses

The greatest strength for CVS is its ability to establish itself as the dominant health organization in the U.S. due to its large network of facilities. The company has one of the largest presence in the U.S. and can dominate the health sector. The organization has a presence in 49 states, with more than 9900 outlets in the country. It also has 1100-minute clinic locations, with over 54 million visits to these clinics (CVS Health, 2). Having an established infrastructure gives CVS Corporation an advantage due to its economies of scale. Therefore, unlike competitors and new entrants in the market, CVS's greatest ability is to continue its expansion programs and establish itself as a dominant player in the health sector. The company's weakness is that it lacks power over regulatory changes in the health sector. Regulatory changes such as a decrease in drug prices will be costly for the company.

Strategy or Tactic

CVS's greatest strength is its massive resources and its presence in over 49 states. That means it has more resources than many of the health organizations in the U.S. To take advantage of that strength, CVS should engage in mergers and acquisitions to reduce competition in the U.S. market (Hitt, Ireland & Hoskisson, 1). It should also establish firms globally. Reduced competition and larger presence will increase its profitability. Due to its lack of control on government regulation, the firm should enter into contracts with suppliers to buy supplies at fixed prices for several or months regardless of a change in government policy.

Resources, Capabilities, and Core Competencies

CVS's key resources are experienced personnel, while its capabilities are the availability of financial resources. Its core competencies are professionalism and quality healthcare. Its experienced personnel in over 9900 locations make it one of the most staffed institutions. Due to its large size, the company can expand further, hence increasing productivity (CVS Health, 2). Lastly, its experienced staff and quality services, which are its core competencies, grant it leverage against other small firms in the industry.

Sources

1. Hitt, Ireland, & Hoskisson. 2020. Strategic management: Concepts and Cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning

2. CVS Health. 2021. CVS Health at a glance. https://cvshealth.com/about/facts-and-company-information

3. CVS Health. 2021. Aetna foundation. https://cvshealth.com/social-responsibility/aetna-foundation

4. Centers for Disease Control and Prevention. n.d. Chronic diseases in America. National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP). https://www.cdc.gov/chronicdisease/resources/infographic/chronic-diseases.htm

5. American Hospital Association. 2021. Fast Facts on U.S. Hospitals, 2021. https://www.aha.org/statistics/fast-facts-us-hospitals

6. Corwin, Rhyan., Ani, Tuner., & George, Miller. 2020. Tracking the U.S. health sector: The impact of the Covid-19 pandemic. Springer Link. https://link.springer.com/article/10.1057/s11369-020-00195-z