CVS Health: Redefining the Value Proposition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of CVS Health: Redefining the Value Proposition
"CVS Health: Redefining the Value Proposition" explores how a company can use shared value as a lens to think about competition and strategy choices in a challenging and evolving industry. The case takes a historical look at the structure of the retail pharmacy industry and the changing nature of rivalry among competitors. The case examines how CVS was able to surpass the long-time industry leader, Walgreens, and highlights CVS Health's shift in strategy starting in the mid-2000s.
Authors :: Michael E. Porter, Jorge Ramirez-Vallejo, Alexandra Houghtalin
Swot Analysis of "CVS Health: Redefining the Value Proposition" written by Michael E. Porter, Jorge Ramirez-Vallejo, Alexandra Houghtalin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cvs Redefining facing as an external strategic factors. Some of the topics covered in CVS Health: Redefining the Value Proposition case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the CVS Health: Redefining the Value Proposition casestudy better are - – increasing energy prices, central banks are concerned over increasing inflation, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices,
there is backlash against globalization, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of CVS Health: Redefining the Value Proposition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CVS Health: Redefining the Value Proposition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cvs Redefining, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cvs Redefining operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of CVS Health: Redefining the Value Proposition can be done for the following purposes –
1. Strategic planning using facts provided in CVS Health: Redefining the Value Proposition case study
2. Improving business portfolio management of Cvs Redefining
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cvs Redefining
Strengths CVS Health: Redefining the Value Proposition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cvs Redefining in CVS Health: Redefining the Value Proposition Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Cvs Redefining in the sector have low bargaining power. CVS Health: Redefining the Value Proposition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cvs Redefining to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Cvs Redefining has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cvs Redefining to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Cvs Redefining has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Innovation driven organization
– Cvs Redefining is one of the most innovative firm in sector. Manager in CVS Health: Redefining the Value Proposition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Cvs Redefining has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study CVS Health: Redefining the Value Proposition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Cvs Redefining is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Cvs Redefining is present in almost all the verticals within the industry. This has provided firm in CVS Health: Redefining the Value Proposition case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to recruit top talent
– Cvs Redefining is one of the leading recruiters in the industry. Managers in the CVS Health: Redefining the Value Proposition are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Cvs Redefining is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael E. Porter, Jorge Ramirez-Vallejo, Alexandra Houghtalin can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cvs Redefining digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cvs Redefining has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- Cvs Redefining is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Cvs Redefining is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CVS Health: Redefining the Value Proposition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Cvs Redefining has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in CVS Health: Redefining the Value Proposition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses CVS Health: Redefining the Value Proposition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CVS Health: Redefining the Value Proposition are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study CVS Health: Redefining the Value Proposition, in the dynamic environment Cvs Redefining has struggled to respond to the nimble upstart competition. Cvs Redefining has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Cvs Redefining is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cvs Redefining needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cvs Redefining to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study CVS Health: Redefining the Value Proposition has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cvs Redefining 's lucrative customers.
Slow to strategic competitive environment developments
– As CVS Health: Redefining the Value Proposition HBR case study mentions - Cvs Redefining takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Cvs Redefining has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Cvs Redefining has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Cvs Redefining has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Cvs Redefining even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Cvs Redefining has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cvs Redefining is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study CVS Health: Redefining the Value Proposition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Cvs Redefining has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Cvs Redefining, firm in the HBR case study CVS Health: Redefining the Value Proposition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities CVS Health: Redefining the Value Proposition | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study CVS Health: Redefining the Value Proposition are -
Creating value in data economy
– The success of analytics program of Cvs Redefining has opened avenues for new revenue streams for the organization in the industry. This can help Cvs Redefining to build a more holistic ecosystem as suggested in the CVS Health: Redefining the Value Proposition case study. Cvs Redefining can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Cvs Redefining can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Cvs Redefining to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Cvs Redefining to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Developing new processes and practices
– Cvs Redefining can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cvs Redefining can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cvs Redefining is facing challenges because of the dominance of functional experts in the organization. CVS Health: Redefining the Value Proposition case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Cvs Redefining can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CVS Health: Redefining the Value Proposition suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cvs Redefining in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Cvs Redefining has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study CVS Health: Redefining the Value Proposition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cvs Redefining to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cvs Redefining can use these opportunities to build new business models that can help the communities that Cvs Redefining operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Cvs Redefining can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cvs Redefining can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats CVS Health: Redefining the Value Proposition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CVS Health: Redefining the Value Proposition are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cvs Redefining in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Cvs Redefining demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cvs Redefining can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study CVS Health: Redefining the Value Proposition .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cvs Redefining with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Cvs Redefining is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Cvs Redefining will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CVS Health: Redefining the Value Proposition, Cvs Redefining may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cvs Redefining can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Cvs Redefining has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cvs Redefining needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Cvs Redefining high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Cvs Redefining needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Cvs Redefining needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Weighted SWOT Analysis of CVS Health: Redefining the Value Proposition Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study CVS Health: Redefining the Value Proposition needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study CVS Health: Redefining the Value Proposition is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study CVS Health: Redefining the Value Proposition is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of CVS Health: Redefining the Value Proposition is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Cvs Redefining needs to make to build a sustainable competitive advantage.