Taylor Boucher - Ben Blackstone
Alisha Cote - Orlando Melado
Table Of Contents
• History
• Current Vision & Mission
Statements
• New Vision & Mission Statements
• Existing Strategies & Performance
• External Analysis
• Industry Analysis of Major Competitors
•
•
•
•
Opportunities
Threats
CPM
EFE
• Internal Audit
• Organizational Structure
• Income Statement
• Balance Sheet
Table of Contents cont.
• Internal Audit cont.
•
•
•
•
Financial Ratios
Strengths
Weaknesses
IFE
• Strategy Formulation
• SWOT Matrix
•
•
•
•
SPACE Matrix
GSM
Possible Strategies
QSPM
• Final Strategy
• Goals and Objectives
• Projected Financials
• 3 Year Agenda
Walgreens: History
• 1901 - Charles R. Walgreen Sr. purchased the Chicago drugstore where he had
•
•
•
•
worked as a pharmacist - and that started the Walgreen chain. His energy and
enthusiasm soon led to new ideas and ambitious expansion. For example, he
manufactured his own line of drug products to ensure high quality and low prices.
1909 - The second Walgreen store opened.
1916 - Nine stores incorporated as Walgreen Co.
1922 - Walgreens invented the malted milkshake. Customers stood three and four
deep around the soda fountain to buy the "double-rich chocolate malted milk."
1926 - The 100th store opened in Chicago.
History cont.
• 1927 - Walgreen Co. stock went public.
• 1939 - Charles Walgreen Sr. died and Charles Walgreen Jr. became the company's
president.
• 1946 - Walgreens acquired its first foreign property when the company bought the
Mexican retailer Sanborn's. In 1984, the company sold Sanborn's.
• 1960 - Walgreens entered the Puerto Rico market. Walgreens filled its 100 millionth
prescription, far more than any drug chain at that time.
• 1968 - Walgreens became the first major drug chain to put its prescriptions into
child-resistant containers, long before it was required by law.
History cont.
•
•
•
•
•
1969 - Charles Walgreen III became the company's president.
1975 - Walgreens reached $1 billion in sales.
1984 - Walgreens opened its 1,000th store, at 1200 N. Dearborn in Chicago.
1994 - The 2,000th store opened in Cleveland.
1999 - Walgreens.com, a comprehensive online pharmacy, was launched offering customers a
convenient and secure way to take care of many pharmaceutical and healthcare needs online. In
addition, the site provides Mayo Clinic Health Information, a trusted source in health and
wellness information. Charles Walgreen III retired. L. Daniel Jorndt is named chairman.
• 2000 - Walgreens reached the 3,000-store mark when its location at Halsted and Monroe in
Chicago opened.
History cont.
• 2006 - In July, president Jeffrey A. Rein was named CEO while former CEO and chairman David W.
Bernauer continued as chairman. Also in July, Walgreens acquired Happy Harrys drugstore chain, adding 76
stores, primarily in Delaware. In the fall, Walgreens began offering in-store health clinics, called Health
Corner Clinics, with nurse practitioners treating walk-in patients for common ailments. During 2006, clinics
opened in St. Louis, Kansas City, Chicago and Atlanta."
• 2008 - Walgreens completed its acquisitions of worksite health care providers I-trax/CHD Meridian
Healthcare and Whole Health Management. Jeff Rein retires as CEO, and Alan McNally is named the
company's chairman of the board and acting CEO.
• 2009 - Greg Wasson is appointed as CEO of the company. Walgreens opened its first store in Alaska,
marking its presence in all 50 states. The company celebrated the opening of its 7,000th store nationwide
with a grand opening in Brooklyn, N.Y. Walgreens offered H1N1 vaccinations at all of its pharmacies and
Take Care Clinics nationwide to fight the flu pandemic.
• 2010 - Charles R. Walgreen III retired from the company's board of directors after 46 years of service.
Walgreens completed its acquisition of the Duane Reade drugstore chain in New York. Walgreens opened its
first Well Experience format stores in Oak Park and Wheeling, IL.
Current Vision & Mission Statements
• Vision: To be “My Walgreens” for
everyone in America – The first choice
in health and daily living… Owning
the strategic territory “well.”
• Mission: To be the most trusted,
convenient multichannel provider and
advisor of innovative pharmacy, health
and wellness solutions, and consumer
goods and services in community
across America. A destination where
health and happiness come together to
help people get well, stay well and live
well.
Revised Vision Statement
• Our vision is to be "My Walgreens" for everyone in America -the first choice
in health and daily living- while providing a healthy work environment and
making the world a better place.
Revised Mission Statement
• Walgreens strives to provide our customers (1) with a pharmacy/convenient store
that is the most trusted, multichannel provider and advisor of innovative pharmacy,
health and wellness solutions, and consumer goods and services in communities
across America (2, 3). Consistently improving our technology ensures our customers
have a great experience (4). Here at Walgreens we are dedicated to making all our
operations efficient in order to protect the environment, be profitable, and stay
above our competitors (5, 6, 7, 8). In our workplaces we encourage our employees
to help us make their workplace a happy and enjoyable experience. Our philosophy
is: happy employees equals happy customers equals a happy world(9).
Existing Strategies & Performance
• Convenient locations on street corners in large
metropolitan areas with high amounts of foot traffic.
• 70% of America lives within 5 miles of a Walgreenscompany serves 5.6 million customers daily.
• Two major types of selling techniques used are
suggestive selling and encouraging impulse buying.
• 75% of Walgreens transactions come from female clients.
External Analysis
Industry Analysis of Major Competitors
Retail Pharmacy Industrial Trends
Opportunities
• In 2010, 95 million citizens in the US will be over 50 years old, compared to 75 million in 2002.
• EPS is rising which makes Walgreens look like a good long term investment, this can raise equity using
stocks.
• Physician shortage is expected to increase from 13,700 physicians in 2010 to 130,600 in 2025 across all
specialties
• The Baby Boomer population which is the largest market segment in the U.S. holds 2/3rds of the nation’s
income.
• Prescription drug use is at 12.5 prescriptions a year at age 60, increases to 20 at 70 years old, under 5 at 44
and under.
• Growing trend of in-store health clinics could cause an increase in Walgreens already existing 700 take care
clinics.
• 442,333 companies comprised the US drugstore industry, 50 of the largest companies generate
approximately 70% of revenue.
Threats
• The future of cheaper pills and the recession will cut spending for the average customer.
• Transformation of the Health Care system will provide challenges for not just the customers but
the pharmaceutical companies
• Every other pharmaceutical competitor can adapt the same changes that Walgreens does to keep
up with them.
• US Customs estimate that 10 million US citizens bring in medications land boarders each year.
• High unemployment rates of approximately 9.5 % in 2011, which leads to job insecurity among
the working population.
• The potential of another stock market crash similar to August 4, 2011 which caused stock prices
to crash over 512 points, this creates insecurity among investors.
• 48 million Americans ages 19-64 did not fill a prescription due to cost in 2010, 66% increase
since 2001.
CPM
EFE
Internal Audit
Organizational Structure
Income Statement
Balance Sheet Assets
Balance Sheet Liabilities & Equity
Financial Ratios
Strengths
• Online retailer provides more than 3 million new online customers and 60,000 new products that Walgreens
now distributes through its 7,700 drugstores.
• 7.1 % increase in sales and 29.8% increase in net income is greater than industry average throughout every
department throughout October.
• Walgreens currently operates 8,210 pharmacies in deliberately chosen prominent and prime locations, often
on busy intersections
• Walgreens reported a 6.3 percent increase in prescription sales for 2011.
• Walgreens also seeks entrance in the grocery business with fresh produce and has added up to 500 food
items in their stores.
• Increase in market share 19.5%
• Walgreens has 8,210 locations throughout all 50 states, plus District of Columbia, Guam, and Puerto Rico
Weaknesses
• Advertisement and marketing is weak in relation to the amount they spend compared to their
competitors.
• Instead of acquiring existing store, they build a new Walgreens from the ground up costing more
money
•
•
•
•
•
Walgreens does not own all its property (5 million sq. ft), lease 40% of stores.
Crowded parking lots make it tough for customers to have easy in and out access.
Failure to promote brands for baby-boomers and younger generations
Competitors like Walmart are beginning to operate 24 hour pharmacies.
Large discounters like Wal-Mart have drastic affect on Walgreens if they offer prescription
medications at lower prices
IFE
Strategy Formulation
SWOT Matrix
Space Matrix
GSM
1.
2.
3.
4.
5.
6.
7.
Market Development
Market Penetration
Product Development
Forward Integration
Backward Integration
Horizontal Integration
Related Diversification
Possible Strategies
• Increase marketing by 15% for Take Care Clinics & store sale prices.
• Create a discount program for members including special discounts
for senior citizens.
QSPM Opportunities & Threats
QSPM Strengths & Weaknesses
Final Strategy
Design and implement a member discount
program that will tailor to all generations.
Goals & Objectives
• Increase sales by 10% in the first year of implementation.
• Gain 5,000,000 discount card members in first year of implementation.
• Advertise our discount cards in-store and online through the Walgreens’
websites.
Projected Financials
Income Statement
Fiscal Year
2011
2012 *numbers in millions
Net Sales
72,184
79,402 10% increase
Cost of Sales
51,692
56,852 CGS
Gross Profit
20,492
22,550 CGS
selling, general, and admin. Expenses
16,561
17,468 CGS
gain on sale of business
operating income
other (expense) income
434
4,365
-71
0 none this year
5,082
-71 same
Earnings before income tax provision
4,294
5,011
income tax provision
1,580
1,804 36.7% income tax
Net earnings
2,714
3,207
Projected Financials cont.
Balance Sheet
2011
2012
Assets
Current assets
cash and cash equivalents
$1,556.00
2,925 fudged cash to make balance
accounts rec. net
$2,497.00
2,497
inventories
other current assets
8,044
8,848 add 10% due to sales increase
225
225
12,322
14,495
11,526
11,526
goodwill
2,017
2,071
other non-current assets
1,589
1,689 add 100 million in programming systems
total non-current assets
15,132
15,286
Total Assets
27,454
29,781
total current assets
Non-Current Assets
property, equipment, at cost, plus acc. Dep. And amort.
Projected Financials cont.
Liabilities and Shareholder's Equity
Current Liabilities
short-term borrowings
trade accounts payable
accrued expenses and other liabilities
income taxes
total current liabilities
Non-Current Liabilities
long-term debt
deffered income taxes
other non current liabilites
total non-current liabilities
Shareholder's Equity
13
4,810
3,075
185
8,083
13
4,810
3,075
185
8,083
2,396
343
1,785
4,524
2,396
343
1,785
4,524
preferred stock, $.0625 par value, authorized 32 million shares, 0 issued
common stock, $.078125 par value, authorized 3.2 billion shares, issued 1,025,400,000
shares in 2011 and 2010
paid-in-capital
employee stock loan receivable
retained earnings
accumulated other comprehensive income (loss)
80
834
-34
18,877
16
80 same
834 same
-34 same
22,084 added net income to ret. Earnings
16 same
treasury stock at cost, 136,105,870 shares in 2011 and 86,794,947 shares in 2010
Total Shareholder's Equtiy
Total Liabilities and Shareholders Equity
-4,926
14,847
27,454
-4,926 same
17,174
29,781
3 Year Agenda
• Year 1: Research and develop discount card programs for customers.
• Year 2: Update all Walgreens store computer systems to adapt to the
discount programs and train employees on the discount programs.
• Year 3: Advertise and implement the discount programs.
Update
• In Evanston, Ill, Walgreens launched the first ever net zero energy retail store. It has 2 wind
turbines, nearly 850 solar panels, and a geothermal system.
• Walgreens received a perfect score of 100 on the 2014 Corporate Equality index.
• Walgreens now has special programs to help their customers get and stay healthy. In January,
they launched a program called “Sponsorship to Quit” to help people quit smoking. They also
have programs to increase awareness for HIV and AIDS.
• Walgreens sales have been consistently increasing. In February there sales increased by 5%.
• Walgreens consistently donates to different causes to help people. Recently they donated
$100,000 to New York and New Jersey hurricane relief funds, $100,000 to the American Red
Cross to help the people in the Philippines, and $25,000 to the American Red Cross Oso
Mudslide Relief Fund.
Sources
• http://www.drugchannels.net/2013/06/drugstore-industry-profits-riseagain.html
• www.walgreens.com
• http://economicsfiles.pomona.edu/jlikens/SeniorSeminars/Likens2012/reports/Walgreens.pd
f
• Strategic Management, By: Fred R. David