Running head: CVS PHARMACY: PEST ANALYSIS CVS Pharmacy: PEST Analysis Jaclyn Hurley Southern New Hampshire University 7/26/2017 1 CVS PHARMACY: PEST ANALYSIS In the world today, a company succeeds when it understands and put in balance the internal and external forces about its market. Internally, a company evaluates its strengths and weaknesses and establishes mechanisms on how to exploit the strengths and to overcome weaknesses. Also, it looks at the available opportunities and how to capitalize on them as well as the possible threats and how to avoid their probable setbacks. Far from that, it is essential to be sufficiently aware of the external environment; it affects the business from the outside and changes many aspects which can also promote success or failure. As contained herein, this analysis evaluates the key areas about the political, economical, social, and technological factors that can have far-reaching effects as far as the CVS Pharmacy’s business is concerned. Most importantly, it gives a reflection on the areas to give priority and the reasons behind it. With no doubt, CVS Pharmacy is exploiting a volatile market; most of the benefits and advantageous market forces are likely to vanish soon. Irrespective of its dominance and an encouraging market position compared to its competitors, it is wrong to deduce that the current position will remain unchanged in the future. Indeed, there is a possibility of many companies emerging and matching its methods, influence, or product and services variations. However, the primary concern is not about addressing the cases that are highly expected; new companies must keep on emerging, and every company should be prepared for that. The issue to take into account is what the macro-environment looks like. In this regard, it translates to understanding how the key aspects of the political, economic, social, and technological segments around it can influence its business prospects. Evidently, it is a likely scenario for a company to be very active internally only to be let down by the outside forces. As a result, if these factors are known in respect to CVS Pharmacy, it will be possible to give an accurate judgment whether it is ready to compete or not. 2 CVS PHARMACY: PEST ANALYSIS 3 PEST Analysis: This is very crucial for showcasing the kind of environment CVS Pharmacy will be operating in the days ahead. The crucial factors to consider are as outlined in the template Political factors Economic factors • Prevailing trade policies/regulations • The country’s taxation rates • Pressures from other countries • Income level clusters • Government opinion and political • Current trends and dollar/pound changes • Leaders and shareholders influence Social factors performance • Inflation and interest rates Technological factors • Consumer preferences and attitudes • Changes and demand in IT • Cultural split and taboos • Current global technology levels • Buying patterns and ethics • Digital marketing • Changing lifestyles and media • Threats and opportunities with influence associated technologies-cyber security The macro environment as an aspect of external audit provides a description of issues which have a relative impact on the progress of the company from an outside perspective. These features cannot be assumed as their input to the success of the company’s performance is of high magnitude. The political/ legal issues emanate from what the country has categorized as lawful or unlawful (Terpstra, Foley, & Sarathy, 2012). It also touches the key decisions that the policy makers make which can affect the business climate of a particular product (Teece, 2010). In this CVS PHARMACY: PEST ANALYSIS respect, the CVS Pharmacy’s marketing plan must be adherent to the current political recommendations although it has been operating under the same before. However, they keep on changing considering that political offices keep on changing due to occupation by new leaders. On the other hand, the economic side of the macro-environment reflects on the current status of the people and whether they can be receptive to the product in place. In this regard, CVS products and services just as in the case with other companies need to address the economic situation of the target group. However, even if the company may be willing to do so, issues like taxation rates, income levels in a particular area and during different times, currency performance, and inflation always influence pricing patterns of products and services. CVS Pharmacy also needs to remain highly responsive and come up with measures on the ways to address different scenarios’ needs without keeping the customer at a disadvantage. In the world today, the social environment influences to a great extent a company’s success. In connection to that, understanding of the customers’ preferred choices, market segmentation and how customers’ rate the competitive offerings are some of the main factors that influence the success a marketing strategy that a company adopts (Teece, 2010). Different segments of the population may be having similar needs, but the way they perceive the product or service that a company offers makes a big difference. The best case scenario involves the retrogressive cultures where the influence of religion is very high; they understand medicine differently, and in some situations, some people believe that drugs do not play any vital role in a person at all. In response to that, it is a case for CVS Pharmacy to take into account as it seeks globalization. 4 CVS PHARMACY: PEST ANALYSIS Apart from the cultural aspect in the social factors, another aspect that affects medicine consumption is the buying patterns and ethics. The way consumers take drugs has never been static, and it is never easy to predict how the future will be. Ethics affects the market both internally and externally. While it has to do with what the customers feel about the company and its products or services internally, ethics deal with what the external environment expects a company to conduct its business on the macro-environment. As a result, there are endless pressures to meet social standards which at times may not mean well for the company. Thus, it remains a responsibility of CVS Pharmacy to understand such factors and adopt marketing mechanics that ensure preparedness in case a critical change is imperative. Also, people’s lifestyle and media influence remain crucial factors to consider too. As the years advance, one thing that people continue embracing is healthy living; they have known the importance of taking water and fruits, regular exercises, and taking balanced diets among other interventions (McWay, 2014). In it, the prevalence of many diseases keeps on going down which as well means less intake of drugs. From the numerous media outlets too, there is a lot of information online as well as in print and mobile Apps regarding a healthy lifestyle. Due to the ease of accessibility, people are currently able to practice healthy lifestyles hence the reduced need for drugs; this leads to less business in the pharmaceutical industry. Just as it is applicable in other market situations, technology affects to a great extent business in the pharmaceutical industry. Indeed, as time advances, the possibility for the physical stores to close down and activities in CVS.com in CVS Pharmacy are very likely. In many companies in the world, the need for physical contact when doing business has declined. The dominant concern with it is that it is a global issue; countries are going the tech way, and many 5 CVS PHARMACY: PEST ANALYSIS business aspects are also becoming digital. Even if it is hard to make drug intake digital, most of its associated activities are through the net. A significant element in the technological environment involves the utilization of digital marketing. However, even if the technology is going places, the pharmaceutical industry is yet to embrace it. Unfortunately, the main reason is not that it cannot be applied, but many do not know the way to go about it (DiMasi, Grabowski, & Hansen, 2016). Due to this disadvantage, it has become challenging for many companies to switch from traditional marketing tactics and embrace the utilization of the present day’s marketing tactics; social media, email marketing, and the use of mobile Application is somewhat insignificant despite their availability. Apart from the issue of low digital marketing, a growing concern in the technology environment involves threats and in particular cyber security. As the business world continues becoming digitized, the more the threats emerge about the same. Currently, no danger is more harmful through technology than the ones emerging from cyber security issues; hacking of people’s information, identity theft, phishing, and its related behaviors are common (Ciampa & Revels, 2013). In connection, the pharmaceutical industry is not immune in any way. As the need to embrace technology and in particular digital marketing increases, the higher the risk involved. From the macro-environment analysis, it is evident that the outside pressures present numerous risks to the pharmaceutical industry particularly matters involving compliance, customer interaction, marketing essentials, and health information protection. In fact, no area can CVS Pharmacy’s management overlook since each impact in a unique way. In this respect, it is vital like earlier mentioned to ensure all at balance; the different concerns are addressed over time while incorporating the most practical intervention measures. 6 CVS PHARMACY: PEST ANALYSIS Prioritized List When making a choice for one’s company, the factors with the greatest impact are the ones that require prioritization all the time. Regardless of the business type and the market it exploits as well, it is vital to understand its strengths and preparedness to face the external market too. Issues are never similar, and their potential impacts vary with time and circumstances. For instance, for the political factors, the impact of leaders and shareholders’ influence is not high compared to changes in the country’s policies particularly in the event of political leadership change. Also, the impact of attitudes is not similar to the change in lifestyles in the case of the social factors. In the political factors, the primary concern for CVS Pharmacy should be trading policies and regulations. As times change, different governments take over leadership in various states. The new leaders prompt many shifts in the policies which as well affect business climate. For instance, it is a case in the United States that new drug approvals have hit a new low bearing in mind that there was only approval of 22 new molecular entities in 2016. Surprisingly, this figure was a 51% drop compared to the previous year where 45 NMEs got approval (Arnum, 2017). Still, on the issue of policies and regulations, the approval of new businesses significantly affects the stability and competitiveness of the current ones. In this respect, irrespective of whether CVS Pharmacy is doing its business nationally or internationally, it is imperative to understand how government policies in the respective target areas are working, changes about situations, and the way the key sectors are affected by them. As a result, it will become easier for it to be aware of the favorable environments to set up new ventures, expand the current ones, or close down as well. 7 CVS PHARMACY: PEST ANALYSIS On the economic factors, the one that CVS Pharmacy needs to give priority is the income level of the people. In the world today, even if a place can be having a standard lifestyle, it is impossible for the people to have the same income levels. Income level in business influences tastes, preferences, and attitudes. In most cases, the low-income earners are likely to consider the price of a product or a service as a priority while high-income earners are likely to prefer quality as opposed to the cost. With such information, it will be easier for the company to know where to set businesses, the price and quality variations, and the type of product or service to offer. Social factors also influence business environments significantly. However, from the ones noted in the PEST analysis, the one to prioritize is changing lifestyles; they mean changing the need for drugs, variation in services required, and demand for additions that CVS Pharmacy may not be offering today. For instance, the issue of people embracing healthier lifestyles is a growing concern; it is an indication that there is more focus on the preventive as opposed to healing approaches. This change means that CVS Pharmacy should be considering giving more supplements apart from drugs. Similarly, patients are stronger these days since they know their rights too; they have more knowledge to decide which pharmacy to get services from hence the need for quality products and services as well (DiMasi, Grabowski, & Hansen, 2016). About the technological factors, the one requiring prioritization as far as CVS Pharmacy’s situation is concerned is digital marketing. It is an unfortunate case that the pharmaceutical industry is yet to embrace it considering that without change from traditional marketing approaches there is no business success (Mayar & Ramsey, 2011). It is also a way that guarantees quick and easier reach of the entire world (Terpstra et al., 2012). Even if CVS has embraced digital marketing through CVS.com, the urge to incorporate more technological features to intensify its online marketing is still vital. 8 CVS PHARMACY: PEST ANALYSIS Evaluating Readiness The justified way to examine whether CVS Pharmacy can compete in the market domain is to look at its strengths to counter the numerous challenges in the macro-environment. Fortunately, it is apparent that it is in a stable position and keeps on advancing its business aspects to match the needs of the time. It is no doubt that responsiveness and adaptability have been its principal strengths up to date. Indeed, if it remains that way, it is appropriate to affirm that its dominance will not be adversely affected as it seeks global expansion. As evidence, the external environment of the pharmacy business is more sensitive towards ethics. CVS has addressed that issue by being more ethical in its business dealings; there are no scandals of late. Secondly, digital marketing is a vital component in the macroenvironment and the company has factored through CVS.com. Thirdly, changing lifestyle patterns seem to be a crucial element in the social factors. The company has addressed it through offering convenience foods apart from drugs. Above all, the people’s income levels appear to affect business shape in great details. The company is offering an assortment of products and services where the customers can choose according to what they can afford. In conclusion, a company’s competitiveness depends on having the proper resources to meet various needs of its micro and macro environments. From the analysis above, it is evident that there are many factors in the macro-environment with a possibility of bringing down a business any day. However, CVS Pharmacy has addressed all these needs on time. Indeed, it has a remarkable aspect in every critical area that addresses the emerging requirements of the political, economic, social, and technological situations. In this respect, it is justified to affirm that it is ready to compete. 9 CVS PHARMACY: PEST ANALYSIS 10 References Arnum, P.V. (2017). The Top 10 Issues for the Pharma Industry in 2017. N.p.: DCAT Connect. Ciampa, M. D., & Revels, M. (2013). Introduction to healthcare information technology. Boston, MA: Course Technology. DiMasi, J. A., Grabowski, H. G., & Hansen, R. W. (2016). Innovation in the pharmaceutical industry: new estimates of R&D costs. Journal of health economics, 47, 20-33. Mayar, V., & Ramsey, G. (2011). Digital Impact: The two secrets to online marketing success. Hoboken, N.J: John Wiley & Sons. McWay, D. C. (2014). Today's health information management: An integrated approach. Clifton Park, NY: Delmar/Cengage Learning. Teece, D. J. (2010). Business models, business strategy, and innovation. Long range planning, 43(2), 172-194. Terpstra, V., Foley, J., & Sarathy, R. (2012). International marketing. Naper Press.
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