Sample Critical Thinking Paper on the Matching Stage of the Strategic Formulation Framework of CVS Caremark Incorporation

The running of an organization involves making critical decisions to ensure maximum productivity under every market condition. The strategic managers are bestowed with this critical role of balancing various contrasting factors and propose overall direction of the organization. As a result, top management strategists apply a three- staged analytical framework to assess and establish the most viable strategy to be adopted.  Each of the three stages, namely the formulation, matching, and decision stage- is composed of different tools and mechanisms.  Although either of the tools may be used by any organization, certain organization factors may make it suitable for particular tools than others. This essay evaluates a possible analytical framework for Samsung Group Company. However, the essay’s focus is restricted to two strategic tools that can be used at the matching stage of the decision-making framework.

The matching stage involves the process of establishing a match between the organization’s key internal and external factors.  This stage aims at applying the organization’s resources and skills to exploit external opportunities while tackling the accompanying challenges.  Matching stage utilizes various matrices including the SWOT (Strength, Weakness, Opportunities, and Threats), the SPACE, the BCG, the IE, and the Grand Strategy Matrices (Isoherranen, 2012). However, this essay finds that the SWOT and SPACE techniques are more appropriate for the Caremark Company. Any data and company’s information included this analysis was obtained from the company’s official website (caremark.com).

The SWOT Matrix for CVS Caremark

The SWOT procedure is an extensive analysis of an organization’s internal weakness versus the external opportunities and threats (Ayub et al., 2012).  The following table summarizes the SWOT analysis scheme for the CVS Caremark

                                     

            Internal Factors

 

 

External Factors

Internal Strengths:

·         Leading provider of prescriptions and pharmacy

·         Customer loyalty

·         Easy of access-Website and Mobile applications

·         Economies of scale

·         CVS/Advice Nurse Program

 

Internal Weaknesses

·         Government involvement and control

·         Company policies instability

·         Poor demographic presence

·         Controversy on product quality

·         Easy target for robberies

External Opportunities:

·         Unexplored beauty industry

·         Acquisition and merger

·         Demographic spread

·         Effective use of technology

Using Strengths to exploit Opportunities:

ü  Take advantage of customer’s loyalty in pharmacy services to market  its beauty product

ü  Take advantage of its economies of scale to acquire

Exploiting opportunities to Overcome weaknesses

ü  Enhance the technological means of data storage and analysis to keep track the companies policies

ü  Install technological security measures

External Threats:

·         Customer’s incompetency

·         Lack of highly experienced staffs

·         Growing competition

 

 

 

 

 

Using strengths to handle threats:

ü  Economies of scale enable the organization to produce at low cost, hence can set competitive prices for its products

ü  Enhance  CVS nurse program to train and equip staffs with relevant skill

ü  Simplification of Website and apps portals to a more user friendly to counter customer’s  incompetency

Minimizing weaknesses to avoid threats:

ü  Increase demographic presence to neighborhood minimizes the risk of customer incompetency in electronic access

ü  Clear its product quality controversy to withstand competition

 

 

SPACE Matrix for CVS Caremark

The SPACE techniques involve the evaluation of the significance of different variables to the company and assigning each of the variables its score depending on its relevance. The SPACE matrix contains four different quadrants, namely the conservative, aggressive, defensive and competitive. The aim is to rank the organization into one of these quadrants to establish the most suitable strategy for it. The following is an analysis that aids in classifying CVS Caremark into its suitable category.

Internal Analysis External Analysis
Financial Position:

Return on Investment                             3

Levarage                                                 6

Liquidity                                                 3

Working capital                                      6

Cashflow                                                6

Average=4.8

Industry Stability:

·         Growth Potential                            4

·         Financial potential                          6

·         Ease of market entry                      2

·         Resource Utilization                      3

·         Profit Potential                                4

Average= 3.8

Competitive Advantage

·         Market share                                -1

·         Product Quality                            -2

·         Customer Loyalty                        -3

·         Technical knowledge                   -4

·         Degree of vertical Integration    -2

Average= -2.4

Environmental Stability

·         Inflation                                         -1

·         Technological  changes                -5

·         Price Elasticity of Demand            -2

·         Competitive Pressure                   -4

·         Barriers in market entry               -2

Average= -3.6

 

Plotting the above in X-Y Cartesian

Possible Strategies

As shown above, CVS Caremark falls in the Aggressive quadrant. The possible strategies for this level include evaluating ways to penetrate the market. As shown in the SWOT analysis, one possible market is the beauty industry. Other possible strategies include developing the market and products as well as diversifying the existing market. These could be achieved through increasing demographic presence.

Executive Summary

CVS Caremark is one of the largest pharmacist suppliers in the United States. It is based in Woonsocket, Rode Island; however, its outlet is distributed in various parts of the country.  For instance, the group operates over 7000 pharmacies and drug stores across the region. CVS Caremark is a public company that is listed in the US foreign exchange.  As noted above, the Caremark group highly influenced by the government of the day. This influence has greatly contributed to the operation instability as every incoming government imposes peculiar policies to the company. Nonetheless, this analysis has highlighted some of the ways into which the company may utilize its resources to counter the market challenges.  For example, the company may advance its technological use to counter the externally-instigated instability. It has also pointed out some of the most viable strategies for the company depending on its present situation. For instance, the company should focus on penetrating new markets while developing the existing market and products.

References

Ayub, A., Razzaq, A., Aslam, M. S., & Iftekhar, H. (2013). A Conceptual Framework On Evaluating Swot Analysis As The Mediator In Strategic Marketing Planning Through Marketing Intelligence. European Journal of Business and Social Sciences, 2(1), 91-98.

Caremark Website.  (2014). Retrieved Dec

Isoherranen, Ville. (2012). Strategy Analysis Frameworks For Strategy Orientation And Focus. Universitatis Ouluensis.