Cvs Case Study
History, Development, and Growth Established in 1963, Consumer Value Store (CVS) was founded by brothers Stanley and Sidney Goldstein and business partner Ralph Hoagland in Lowell, Massachusetts. CVS began the operation of its first stores with pharmacy departments in 1967, opening locations in Warwick and Cumberland, Rhode Island. In 1984, CVS/pharmacy became the 15th largest pharmacy chain in the U.S. with 408 stores and $414 million in sales. With growing success CVS decided to acquire a web based startup company, Soma.com, the first major online pharmacy, for $30 million in stock. The web site, soon rebranded CVS.com, enabled customers to order prescriptions and general merchandise for either in-store pickup …show more content…
As of December 31, 2009, it operated 569 clinics in 25 states. It also mostly operates within CVS/pharmacy locations. In 1999, CVS acquired Soma.com, the first major online pharmacy, for $30 million in stock. The web site was then renamed to CVS.com. It allowed CVS to become the first fully integrated online and brick-and-mortar pharmacy. It enabled customers to order prescriptions and general merchandise for either in-store pickup or mail delivery. The CVS leading market position helps its brand image and in increasing its bargaining power. CVS has a name that has brand awareness as a nationwide retailer known for its convenience in urban communities. The company has positioned itself as a “healthcare expertise” brand.
CVS’s greatest weakness is that it is not the market leader in the retail pharmaceutical industry. Its strongest competitor is Walgreens Corporation. CVS trails Walgreens in sales by nearly $7 billion annually. CVS leveraged it way into the market by acquiring existing companies such as Eckerd, Osco, and Savon. Buying a competing chain along with its prescription files was an easier way for them to expand their footprints, as opposed to starting from scratch with new stores. In 2010, CVS was summoned to pay a record fine for selling a chemical used to make methamphetamine. In the largest-ever civil penalty under the Controlled Substances Act, CVS had to pay $77.6 million for selling pseudoephedrine, according to the U.S.