The business environment determines the success or the failure of a company. Therefore, many successful companies use new technological developments and market trends to improve their routine business operations. Pharmaceutical firms are significant to the economic growth and well-being of humans. The companies research and develop new drugs that help countries overcome health pandemics, including COVID-19. Pharmaceutical companies are affected by environmental factors like competition, technology, economy, legal and political, and customer trends. Walgreens is one of the most successful pharmaceutical companies worldwide. With American origin, the company plays a significant role in the global health sector through drug distribution. COVID-19 had positive and negative influences on Walgreens. Consequently, the company enhanced its marketing and internal operations to attract more customers amid the pandemic. Therefore, Walgreens’s response to the pharmaceutical business environment has helped it overcome competition and natural pandemics like COVID-19.
Walgreens’ success journey began in Chicago in 1901 with a single small food front store. Charles Rudolph Walgreen founded the company and perpetuated the business to about twenty stores by 1919 (Taylor 33). The alcohol prohibition policies of the 1920s favored the company since it sold Whiskey, which was legalized (Olson et al. 1042). The company extended its product line by introducing a malted milkshake, which led to the establishment of ice cream processing plants. Moreover, the company expanded to other states like Minnesota, Missouri, and Wisconsin in the mid-1920s (Taylor 41). The 1930s were the company’s hallmark when it established about 397 stores with projected annual sales of about $ 4 000 000 (Barsky et al.). The selling of unique and essential products saved the company from the Great Depression, which ruined the global market and many American companies.
The company’s management was handed to Walgreen Jr. upon the death of its founder, Rudolph Walgreen. Although Walgreen Jr. significantly contributed to its success, the business lacked massive expansion experiences like in the past years (McComb 201-204). The company purchased Sanborns, the largest pharmacy store chain in Mexico (Barsky et al.). Moreover, the company purchased another drug store in the U.S., including the Mid-South drug store (Olson et al.). Consequently, the company has fledged into a reputable private pharmaceutical company in the U.S. Walgreens has advanced in drug manufacturing and distribution in the U.S. and other countries. The company’s success is attributed to its alliance, Walgreens Boots Alliance. The alliance brings together various brands specialized in drugs, cosmetics, skincare, office supplies, and other products. Walgreens is a successful pharmaceutical company that has revolutionized the drugs and cosmetics industries.
A business environment like competition, technology, economy, and legal factors are crucial for a company’s operations. Therefore, a business environment encompasses factors that affect business operations and are influenced by stakeholders, competitors, and policymakers (Kazancoglu et al. 592). The competition factor determines the company’s pricing and expansion strategies. Technological factors include the company’s capacity to integrate technology into its production and marketing activities. Meanwhile, the economy and legal factors determine the profitability and ease of the company’s operations in its different locations. Walgreens’s success and failure are attributed to various business environment factors: competition, technology, economy, and legal and political factors.
A competitive environment allows companies to develop innovative products and services to gain a competitive edge over their competitors. Moreover, the environment is a significant factor when developing marketing and pricing strategies. The pharmaceutical industry is less crowded due to strict public health regulations. However, the industry has business giants with sufficient financial muscles to expand the business and adopt new technological developments (Shabbir). Walgreens’s competitors include McKesson, J. C. Penney, Walmart, Rite Aid, and Sally Beauty.
Although Walgreens has adopted effective strategies to gain a competitive edge, its competitors have developed advanced technologies and a loyal consumer base. Companies like Sally Beauty, unlike Walgreens, have a long history of beauty product distribution. Meanwhile, CVS Health haw broad consumer bases in the pharmacy supply chain, gaining a competitive edge over Walgreens. However, Walgreens has remained a giant in drug distribution, placing it at a higher level than Walmart and J. C. Penney, contributing to its significant profitability ratio (Table 1.). The company’s alliance formation has significantly influenced the company’s success in other sectors related sectors of beauty and cosmetics. Although Walgreens is less advanced than firms like CVS Health, the company enjoys a broad consumer base in drug distribution and other beauty products manufacturing.
Technological advancements have greatly influenced drug distribution companies’ marketing and supply chain activities. The technology has helped companies adopt effective and precise technologies for quality control. Moreover, through technology, companies like Walgreens have advanced their internal processes, including payroll processing and communication with key consumers. The advent of 5G internet speed and artificial intelligence (A.I.) has bolstered the companies’ marketing activities (Paunov et al. 85-91). Furthermore, drugs, being sensitive products, requires quality checks that are free of human errors and processing faults. Therefore, technology is at the frontline of improving product and service delivery among companies that distribute drugs.
Walgreens and its affiliated brands utilize technology in various departments and manufacturing sectors. The company’s research department utilizes AI. and other smart technologies to identify and project product processing (Koshta et al.). The marketing department, seemingly the biggest beneficiary, utilizes social media and other information technology in marketing and promoting Walgreens’s products and services. The department has well-established social media and e-commerce platforms for product promotion and consumer engagement. The manufacturing department, among Walgreens’s affiliated brands like Almus Pharmaceutical, utilizes complex technologies like quantum computing and data analysis in developing effective products. Technological integration has significantly influenced the company’s product production and promotion activities.
An economy involves production, distribution, trade, other social values, and factors influencing the consumption of goods. Walgreens’s consumers are mostly Americans and other first-world countries where the company has branches. Although the company survived economic hardship during the Great Depression, the current economic trends significantly influenced the industry. The increasing U.S. gross domestic product (G.D.P.) of about $23 trillion positively influences the company (Bureau of Economic Analysis). Moreover, the post-COVID-19 economic recoveries are boosting the company’s production and distribution rates. For instance, many Americans are adopting healthy habits, including vaccination, which are the company’s primary products. Moreover, the increased employment rate in the U.S., U.K., and Germany has made the busiest sustainable since effective pension plans and insurance policies. Economic factors like high employment rates, improved G.D.P., and post-COVID-19 recovery plans positively influence Walgreens’s profitability.
Legal and Political Factors
Legal and political factors influence pricing, distribution, and other business processes in the pharmaceutical industry. Drugs and cosmetic products are sensitive and can significantly influence a company’s reputation in the competitive industry. Being a global company, Walgreens and affiliated companies are influenced by international consumer protection laws and health regulations (Cheldi). Moreover, the company is regulated by U.S. health regulations and business laws. For instance, the firm has faced several lawsuits against its products and management. Early this year, Florida filed a lawsuit against Walgreens (Anderson). The company was accused of prioritizing profits over public health (Anderson). The increasing number of cases negatively affects the company’s reputation in the competitive industry.
Stable political conditions help businesses flourish in the competitive global market. Moreover, politics influence companies’ economic growth through incentives and adequate regulatory frameworks. Walgreens enjoy stable U.S. politics that are economic growth-oriented. Moreover, the adoption of consumer protection laws and licensing regulations has influenced trust in the company’s activities among Americans. Although global politics like the recent Ukrainian-Russian wars affect the company, its production of drugs makes it an essential service provider. Therefore, global politics insignificantly influence Walgreens’s business activities and operations.
Walgreens specializes in selling pharmaceuticals and cosmetics essential to the current generation. The COVID-19 pandemic influenced health habits among Americans and other global communities. Consequently, there is an increasing trend of subscribing to health insurance policies and adopting healthy habits. The company benefits from the insurance companies that continently pay for drugs and other services offered by Walgreens to their clients. Moreover, increasing demand for beauty products due to social media and cultural influences (Ali Qalati et al.). The use of social influencers like musicians significantly boosts the company’s sales. Furthermore, technological trends like social media use have significantly influenced the company’s marketing activities.
COVID-19 Effects on the Company
The onset of COVID-19 was detrimental to business activities due to business closure as required by the government. The pandemic affected the industrial supply chain but increased technology use among consumers. Like many companies, Walgreens has developed a dependable e-commerce platform for clients to order any product. The pandemic led to the company’s use of virtual communication facilities to manage various organizational activities. The marketing department utilized social media and other information technologies in product promotion and distribution. Moreover, the company’s stores in various locations were virtually managed to reduce operational costs. Although COVID-19 influenced Walgreens’s operations, the company faced financial constraints in implementing the technology.
COVID-19 was a blessing in disguise among pharmaceutical companies. The increasing number of COVID-19 cases led to increased demand for COVID-19 vaccines and testing kits. Walgreens was among the companies authorized to distribute testing kits and vaccines. For instance, the company’s BinaxNOW testing kit recorded high sales during the pandemic. The pandemic was associated with increased high blood pressure and other lifestyle conditions. Consequently, the company’s products, like the FreeStyle glucose and blood pressure monitoring kits, were in demand. Although COVID-19 led to increased costs of technological adoption, the company enjoyed increased sales of healthcare products.
Walgreens’s Marketing Mix
Marketing is a significant business activity since it helps determine the company and helps identify the potential consumer base. Technological advancements have led to the adoption of innovative technology in marketing, allowing companies to identify and reach millions of potential consumers over the internet (Graesch et al.). Unlike traditional marketing, digitized marketing activities are convenient and cost-effective. Moreover, the adoption of A.I. among the digitized business platforms allows companies to interact with their customer through features like ‘automated replies and bots (Attaran 18). Therefore, innovative marketing has bolstered companies’ marketing activities and increased consumer base.
Walgreens, like many corporations, has an active marketing department that promotes its pharmaceutical and wellness products in the U.S and European countries. With about 18 500 stores in 11 countries, the company has developed an effective marketing plan to reach all consumers. Moreover, the marketing plan allows the company to identify consumer needs and present the products according to their behaviors. Walgreens uses social media, print media, and other digitized platforms to market its products.
Walgreens is one of the most reputable pharmaceutical companies offering quality products and services across the U.S. and Europe. Consequently, the company has established a loyal consumer base that offers a ready market for its products and services. Although the company targets corporate businesses in the pharmaceutical industry, the company’s market plan targets millennials and Gen X female shoppers (Thomas). The marketing department intends to make the target market adopt Walgreens as ‘their preferred pharmacy of choice.’ While health and wellness products are common among the aged, the company is revamping its stores to offer younger consumers more beauty and food options.
Walgreens, unlike its competitors, has adopted a less explored target market. The company’s competitors focus on aged consumers. Moreover, the competitors factor in insurance covers and purchasing power among the consumers. Choosing the millennials and generation x is a noble idea since most of them are easily influenced by social media. Moreover, unlike males, females offer a ready market for beauty products. The company has a potential broad-consumer base since its target market forms the majority of the population and social media use (Figure 2.). Therefore, female millennials and Gen X are suitable consumers of pharmaceutical and beauty products.
Offering (Products/ Service)
Walgreens offers products and services that are consistent with its target market. Although the company is well known for its pharmaceutical products and services, it has revamped its product line to offer various products. The company’s alliance with other brands has increased the products and services offered. For instance, its alliance with C.Y.O., Sleek MakeUp, and Soap & Glory has increased its cosmetics production and distribution. Meanwhile, the alliance with YourGoodSkin, No.7, and Botanics has led to the manufacturing and production of skin care health products. The company also offers medication services through its alliance with Almus Pharmaceuticals (Staines). Walgreens has adopted continuous product and service remodeling with an extensive product and service line to attract more consumers.
Extensive products and service lines have boosted Walgreens’s competitive edge. The company’s alliance with other reputable brands has led to the production of quality and all-inclusive products that serve most of the population. Competitors like Rite Aid, Sally Beauty, and McKesson have limited products and service lines. Consequently, Walgreens is more sustainable than its competitors due to its increased profitability and broad consumer base. Moreover, its specialization in pharmaceuticals gave it a competitive advantage over the competitors selling only beauty products. Therefore, Walgreens is more sustainable than its competitors due to its extensive products and service categories.
The company operates in developed countries with high G.D.P. and efficient insurance covers. Moreover, Walgreens has its majority of U.S. stores that have increased numbers of millennials and generation X (Thomas). The company has adopted a competitive pricing strategy that allows its stores to sell products at the prices of its competitors. Consequently, many consumers choose Walgreens since its prices are not different from other pharmaceutical companies. During its expansion and product promotion, the company adopts a penetration pricing strategy that offers products at lower prices than existing companies in the new location (Staines). Walgreens sells reputable wellness and cosmetics products that attract many consumers. Consequently, the company sells the products at prices relative to their value. The company’s diverse pricing strategies help in consumer retention and business sustainability.
Walgreens operates effectively to ensure that its products are available to consumers. The company’s consumers are available in the U.S., China, Thailand, and European countries. Therefore, Walgreens has partnered with drug manufacturers like Almus Pharmaceuticals and other large corporations to ensure constant product supply. The company has adopted physical and online stores that sell the company’s products to consumers. The use of physical stores allows the consumers to physically visit the company’s stores and choose their preferred products. Meanwhile, the company’s e-commerce platform allows consumers to choose products and request door delivery.
Walgreens has an advanced delivery system that distributes the products to all the states in U.S. and other American territories like Puerto Rico, American Samoa, and the Northern Mariana Islands (Walgreens). The company’s competitors have adopted a similar distribution system, online and physical stores. However, the competitors like Sally Beauty do not deliver their products to all U.S. states and American territories. Therefore, Walgreens’ distribution strategy is significant since it allows the company to deliver products to all its consumers in different states and countries.
Marketing communication is one of the highly invested business activities by Walgreens. The company has integrated marketing communication that allows it to reach its potential consumers and existing customers. Marketing communication is based on various factors: the number of targeted consumers, their locations, and technology use. The company uses social media platforms like Instagram, Facebook, and Pinterest to reach the millennials, who are its primary targets. Furthermore, the company has designated salespeople who attend to potential customers at physical stores and during events like fashion galas. Walgreens’s marketing communication strategy is effective since it allows the company to reach a broad potential consumer base. Unlike its competitors, Walgreens has adopted effective marketing communication that allows it to sell products to all consumer segments.
Walgreens has several strengths that make it survive in the competitive business environment. The company has formed an alliance with reputable companies that allow a smooth flow of products and services. The alliance has boosted the company’s supply chain, increasing its sustainability. Moreover, the company has recorded increasing revenues between 2019 and 2021 due to its dependable alliance. Walgreens’s 2019 annual revenue was $120.074 Billion; in 2020, the revenue was $121.982 Billion, and in 2021 the company recorded annual revenue of $132.509 Billion (Figure 1.). The increased revenue keeps the company afloat amid natural pandemics like COVID-19.
Moreover, the company has advanced technology that effectively makes its supply chain and marketing activities. The company’s affiliated brands, like Almus Pharmaceuticals, have adopted innovative manufacturing and drug-processing technology. Technological adoption has advanced the company’s marketing and communication activities. For instance, its e-commerce platform has features that allow consumers to track their product delivery and give feedback upon receiving the ordered products. Moreover, Walgreens utilizes innovative marketing technology to automatically responds to consumers and analyze the consumer responses for effective decision-making. Strategic alliances, a broad-consumer base, and technological adoption have significantly helped the company remain competitive in the market.
Although Walgreens exhibits strengths that make it survive in the competitive industry, the company has several weaknesses. Firstly, the company’s reputation is at risk due to the increasing lawsuits against it. The lawsuits attack the company’s products and its social responsibility. Consequently, many consumers are shifting to competitors with good reputations. Secondly, the company has an extensive product line and many affiliated brands leading to management difficulties. The company has a history of frequently hiring and firing its Chief Executive Officers. The lack of effective internal management has exacerbated employee conflicts and disorganization. Furthermore, the company lacks product specialization making it difficult for brand promotion. Increased lawsuits, inconsistent management, and lack of specialization in a particular product line make Walgreens vulnerable to competition.
Walgreens sells beauty and skincare products that are in demand among millennials. The company targets millennials and Gen X females who adore beauty. Moreover, the target customers are active on social media platforms, making it easy for the company to market products on social media. Moreover, there is an increasing rate of health and wellness activities, increasing the demand for Walgreens’s products. The company should take advantage of the opportunities to promote its products and attract more consumers. Moreover, the company can use advanced technology to enhance its marketing activities and internal processes. Existing opportunities: increased social media use, technological advancements, and beauty trends among the millennials and Gen X can help Walgreens boost its business activities.
The pharmacy supply chain industry is lucrative, attracting many investors and other existing corporations. Companies like Amazon.com plan to enter the industry due to their profitability (Shah). Consequently, there is a threat of increasingly stiff competition in the industry that may cause decreased revenue among existing companies like Walgreens. Moreover, Walgreens is facing several lawsuits challenging the company’s license issuance to unqualified distributors. Therefore, Walgreens is at risk of facing harsh sanctions necessitated by public outcry. Walgreens does not face supplier threats since its affiliated brand help in the manufacturing of its products. Although Walgreens is competitive, the company should be cautious of the threats within the pharmacy supply chain industry.
Statement of the Benchmark and Marketing Goal
Benchmark and Marketing Goal
Walgreens is a reputable company but faces various weaknesses and threats. However, there are many opportunities available to the company. Walgreens’s mission is to become the first choice for pharmacy well-being and beauty, caring for people worldwide (Walgreens). However, the company is currently facing management and stiff competition from giant firms in the industry. Consequently, the company’s annual revenues are lower than its competitors. For instance, in 2020, while Walgreens recorded annual revenue of $139.5 billion, its biggest competitor recorded annual revenue of $ 268.7 billion. Therefore, Walgreens should adopt practical marketing activities and strategic alliances with fashion industries to increase the number of target customers in two years.
The company should channel its resources to digital marketing that attracts millennials, and a significant number of Gen X. Walgreens can adopt social influencers like Football stars, musicians, and reputable personalities to drive its social media campaigns. With millions of millennials and Gen X subscribers on social media platforms, the company would increase its sales and consequent annual revenues. Moreover, the beauty industry goes hand-in-hand with the fashion industry. Walgreens can involve its board of directors in acquiring and forming strategic alliances with reputable fashion companies. Attracting more target customers and forming strategic alliances with reputable fashion firms will help Walgreens improve its annual revenues in two years.
Walgreens is a reputable pharmaceutical industry brand operating in the U.S., Europe, and some Asian countries. The company has formed a strategic alliance with other corporations with advanced production systems. The company is influenced by various environmental factors leading to its success and failures. The company’s technological adoption has significantly improved its products’ production, distribution, and marketing. However, the company faces several lawsuits contributing to a negative brand reputation. Walgreens enjoys strengths like advanced technology, various products and services, and strategic alliance benefits. With a target market of millennials, the company can take advantage of social media platforms for advertising activities. Strategic alliances with reputable fashion companies will help the company increase its annual revenues. While Walgreens is successful in various sectors, the company can adopt various strategies to become more competitive.
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Table 1. Walgreens Profitability Ratios Quarterly Data, 2018 to 2019 (Stock Analysis on Net)
|Walgreens Boots Alliance Inc.|
|Aug 31, 2019||May 31, 2019||Feb 28, 2019||Nov 30, 2018|
|Return on Sales|
|Gross profit margin||21.97%||22.31%||22.59%||23.10%|
|Operating profit margin||3.65%||4.13%||4.43%||4.82%|
|Net profit margin||2.91%||3.53%||3.77%||3.96%|
|Return on Investment|
|Return on equity (ROE)||16.94%||19.96%||20.72%||20.80%|
|Return on assets (ROA)||5.89%||7.02%||7.29%||7.61%|
Table SEQ Table * ARABIC 2. Walgreen SWOT Analysis Chart (Shastri)