Walgreens Company Report - Intro, Innovation, and Company History - Company Vision, and Mission Statement - Industry Information - Macroenviroment Analysis - Porters Five Forces Model - Strategic Groups - Competitor Analysis - Value Chain Analysis - Distinctive Competencies and Sustainable Competitive Advantages - Financial Analysis - Results Analysis - SWOT Analysis / SWOT Chart - Strengths, Weaknesses, Opportunities, Threats, - Business Level Strategy - Business Level Strategy - Analysis Advantages - Business-Level Strategy - Analysis Disadvantages - Key Strategic Issues - Strategic Alternative #1 - Strategic Alternative #2 - Strategic Decision Tree - Conclusions / Improvements - Q&A

1. Final Presentation
Leah Challenger, Xavier Cordova,
Brandon Earls, Erica Gutierrez, Carol
Medina, Shivam Shah, Dameon Williams

2. ●
● 2013: August 2013: 8,500+ stores nationwide!
1901: Charles R. Walgreen Sr.
Once Upon a Pharmacy...

3. To be the first choice in
healthy and daily living To help
people get, stay,
for everyone in America and live well
– and beyond

4. Mission Statement (Carol)
“To be the most trusted, convenient multichannel provider and
advisor of innovative pharmacy, health and wellness solutions,
and consumer goods and services in communities across
America. A destination where health and happiness come
together to help people get well, stay well and live well.”

5. Industry Information (Brandon)
● SIC Code-Drug stores and proprietary stores (5912)
● NAICS Code-Pharmacies and Drug Stores (446110)
● retail of prescription drugs, proprietary drugs, non-prescriptions, cosmetics, toiletries, etc.
Industry Growth
Industry Profits

6. Macroenvironment Analysis (Carol)
● Economic Forces
○ Global economic slowdown
● Global Forces
○ Acquisitions and expansions overseas
● Demographic Forces
○ Nationwide spread of prescription drug abuse
○ Baby Boomer Generation
○ Social class- lower incomes

7. Macroenvironment Analysis (Carol)
● Technological Forces
○ Online retailing
○ Mail order prescriptions
○ Advertising via internet
● Social Forces
○ Overall greater health consciousness
○ Green initiatives
● Political and Legal Forces
○ Affordable Care Act
○ Stringent Government regulations

8. Industry Attractiveness

9. Strategic Groups (Leah)
● Companies competing in the retail drug industry
○ Walgreens, CVS, Rite Aid, Walmart, Target, Kroger, SAM’s Club
● Top 3 Include
○ Walgreens
■ Apx. 8,081 locations
○ CVS
■ Apx. 7,500 locations
○ Rite Aid
■ Apx. 4,623 locations

10. Competitor Analysis (Leah)
●Walgreens:
○ Convert stores into the Well Experience store format
○ Store layout, pharmacy and healthcare operations, product selection
○ Broader assortment of beauty brands
○ Increase customer engagement
●CVS:
○ 15 years of loyalty card data
○ Personalized advertising and promotions
○ “Cluster concept” store format expand grocery, fresh foods, and faster checkout.
●Rite-Aid:
○ Opened first wellness store concept in 2011
○ “Genuine well-being” store format
○ Operates 1,174 wellness stores

11. Value Chain Analysis (Brandon)Primary
Activities
Value Chain Analysis Findings-Primary
Value Chain Activity Value Adding, Neutral or Negative Impact on Value
Research and
Development-
Positive
● Converted the cost of prescription drugs
● Implementing Wellness Centers
Production-
Positive
● Offering loyalty programs to attract consumers
● Providing customers and patients with service
Marketing and
Sales- Positive
● Walgreens Balance Rewards Card
● Over 500 private brands sold to customers
Customer Service-
Positive
● Bringing more value to customers and patients
● Operating full Wellness center in Flagship stores

12. Value Chain Analysis (Brandon)Support
Activities
Value Chain Analysis Findings-Support
Value Chain Activity Value Adding, Neutral or Negative Impact on Value
Materials
Management-
Positive
● Industry leader in freight supply chain
● TAGG Logistics fulfills and distributes product to Walgreens
Human Resources-
Negative
● Need for better training and development
● Persons with disabilities
Information
Systems- Positive
● Online prescriptions filled; do not deliver pharmaceuticals
● Ranked first amongst retailers
Company
Infrastructure-
Neutral
● Centralized infrastructure
● “Open-door” policy
● 3-part legal infrastructure

13. Efficiency:
●Materials management
●Real estate management
Quality:
●Brand name recognition & loyalty
●The Well Experience
Innovation:
●NetZero Initiative
●Private label brands and partnerships
●Walgreens 2.0 next-generation store technology system
Customer Responsiveness:
●Rewards program
●Targeted discounts and promotions
Distinctive Competencies and Sustainable
Competitive Advantages (Carol)

14. Financial Analysis (Shivam)
Ratios Walgreens Industry
FY2009 FY2010 FY2011 FY2012 FY 2013 FY2009 FY2010 FY2011 FY2012 FY2013
Liquidity Ratios
Current Ratio 1.78 1.6 1.52 1.23 1.11 3.0 2.9 2.9 3.1 3.2
Quick Ratio 0.78 0.61 0.53 0.43 0.33 1.6 1.5 1.3 1.5 1.6
Leverage Ratios
Debt to Asset Ratio 0.43 .45 0.46 0.45 0.45 0.46 0.39 0.42 0.38 .36
Debt to Equity Ratio 0.74 0.82 0.85 0.83 0.81 0.47 0.42 0.47 0.42 .43
Activity Ratios
Inventory Turnover 9.33 9.14 8.98 10.17 9.37 13.5 13.7 13.7 13 13.8
Days Sales Outstanding 11.05 12.64 13.26 14.81 15.31 16.1 15.5 15 14.2 14.1
Profitability Ratios
Return on Total Assets 0.08 0.08 0.10 .06 .05 0.09 0.07 0.08 0.1 0.1
Return on Equity 0.14 .14 0.18 0.12 0.14 0.15 0.11 0.14 0.16 0.18

15. Results Analysis (Shivam)
● 2013 net sales of $72.2 billion
● Strong liquidity with consistently positive cash flows from operating income
● Repeatedly strong quarterly results and attractive growth
● Walgreens initiated several programs to reduce costs and improve operational efficiency

16. Results (Cont.) (Shivam)

17. Strengths (Erica)
●
● Balance Rewards Loyalty Program
● Private label product lines
● Well Experience Model
● Alliance Boots Acquisition
● Experts in managing real estate
● Alliance with Amerisource Bergan Corp. (ABC)
First mover in sustainable facilities

18. ● Demand for affordable healthcare and drugs
has created a loss in profit margins
● Revenue, Operating Profit & Net Profit
decreased from 2011 to 2012
● Customer service training programs
● Cost management and pricing strategy
Weaknesses (Erica)

19. Opportunities (Erica)
●Demographic -
○ Americans over age 65
○ 30 million uninsured Americans
●Sustainability - Expand Net Zero model
●Technological - ECommerce and Digital
Channels
●Global - Expand into international markets
●Sociocultural -
○ Penetrate private label market
○ Generic Drug trend increased
○ Expand Well Experience Model

20. Threats (Dameon)
● Rivalry Among Competitors- Regional and national drugstore chains.
● Government Regulations- Vulnerable to changes.
● Economic- Global economic slowdown
forecasts risk of slow down.

21. STRENGTHS
●Walgreens Brand Recognition
●Successful fully functional Net-Zero energy store
●Balance Rewards Loyalty Program
●Well Experience Model
●Alliance Boots Acquisition
●Expertise in managing real estate
●Alliance with Amerisource Bergan Corp.
●Successful high market share in private label
product lines
WEAKNESSES
●Recent push for affordable healthcare and drugs
has created a loss in profit margins
●Revenue, Operating Profit & Net Profit decreased
from 2011 to 2012
●Customer service training programs
●Cost management and pricing strategy
OPPORTUNITIES
●Expand Net-Zero energy stores
●Grow clinical healthcare divisions
●Market expansion into international markets
●Diversify private label market
●Implement “Well Experience” model throughout
●Flagship stores; introduce in-store partnerships
●E-Commerce
●Emerging health care services- baby boomers &
Protection and Affordable Care Act
THREATS
●Highly competitive industry
●CVS’s acquisition of Caremark
●Recent changes in federal, state, and local
regulations
●E-Commerce
●CVS no-cigarette sales policy
SWOT Chart (Xavier)

22. Business-Level Strategy (Xavier)
● Focus on the company’s strengths/competitive advantages, addressing threats and
weaknesses
● Four Generic Strategies
● Cost Leadership
● Focused Low Cost
● Differentiation
● Focused Differentiation

23. Business-Level Strategy Analysis
Advantages (Erica)
Differentiation:
●Creates a barrier to entry
●Increases brand loyalty
●Market Share
●Balance Rewards Program
●Wellness Program
Technology:
●Single network
●Drugstore.com

24. Business-Level Strategy Analysis
Disadvantages (Dameon)
Need to Address Weaknesses:
●Cost of Research and Development
●Need for greater in-store convenience/layout
Difficulty in Price Differentiation:
●Target Pharmacy
●Lower Cost associated with Lower Profits

25. Key Strategic Issues (Xavier)
Walgreens has faced numerous strategic issues:
●The changing healthcare environment and reinventing the customer experience in
stores
●Differentiation from competitors like CVS and Rite-Aid by creating a superior all-around
convenience experience for consumers
●Walgreens will be “stepping out of the traditional drug store format and creating
something unique, new and special"

26. Strategic Alternative #1 (Erica)
Differentiation from Competition
• Enhance Well Experience Model
◦ In-house Starbucks Cafe
◦ In-house Paul Mitchell

27. Strategic Alternative #2 (Leah)
Differentiation from Competitors (CVS,
Rite Aid)
●Walgreens continues to implement the
NetZero Green Initiative in stores
●Short term costs vs long term return
●Implement Net-zero equipment in existing
stores

28. Strategic Decision Tree (Xavier)
Superior
Convenience
Differentiation Beauty/Starbucks
Partnership
Starbucks Partnership
Health/Beauty
Partnerships
NetZero
Initiative
Well
Experience
New NetZero Stores
Only
Global Store Changes
● High-End Beauty Market
Penetration
○ Alienation of Low-Cost
Consumers
● Attraction of New Market
Segment Consumer
○ Conflict with Starbucks
Partners
● Increased Market
Share/Media
○ Confusion in Walgreens
Culture/Alienation of
Employees & Consumers
● Increased Market Share/Cost
Savings
○ High-Cost Implementation
● Low-Cost Restructure &
Positive Media
○ Inconsistent Culture

29. Conclusions/Improvements (Shivam)
● 850 Well Experience stores
● Cost Leadership with generics
● Reposition as one-stop shop for
● High-End Superior Convenience
● Achieve our Vision