Review Illustration Capsule 7.1, \"Walgreens Boots Alliance, Inc.: Entering Fore

Question

Review Illustration Capsule 7.1, "Walgreens Boots Alliance, Inc.: Entering Foreign Markets via Alliance Followed by Merger" in your textbook. Compare and contrast the examples of international strategic alliances that are illustrated. Include at least one APA-formatted citation from your textbook, Crafting & Executing Strategy, to support your rationale and receive full credit

Entering Foreign Markets via Alliance Followed by Merger CAPSULE 7.1 Walgreens pharmacy began in 1901 as a single store on the South Side of Chicago, and grew to become the larg est chain of pharmacy retailers in America. Walgreens Walgreens as an early pioneer of the "self-service pharmacy and domes- tic network of stores after the Second World War. This growth-focused strategy served Walgreens well up until the beginning of the 21st century, by which time it had arly saturated the U.S. market. By 2014, 75 percent of Americans lived within five miles of a Walgreens. The company was also facing threats to its core busi wel ss model. Walgreens relies heavily on pharmacy sales which generally are paid for by someone other than the patient, usually the government or an insurance com pany. As the government and insurers started to ma a more sustained effort to cut costs, Walgreens's core profit center was at risk. To mitigate these threats, W ith drug companies. In light of these advantages, greens looked to enter foreign marke Michoel Nagle/Bloomberg via Getty Images Walgreens moved quickly to partner with and later Walgreens found an ideal international partn acquire Alliance Boots and merged both companies in Alliance Boots. Based in the UK, Alliance Boots had a 2014 to become Walgreens Boots Alliance. Walgreens global footprint with 3.300 stores across 10 countries. Boots Alliance, Inc. is now one of the world's largest A partnership with Alliance Boots had several strategic drug purchasers, able to negotiate from a strong posi advantages, allowing Walgreens to gain swift entry into tion with drug companies and other suppliers to realize foreign markets as well as complementary assets and economies of scale in its current businesses. expertise. First, it gave Walgreens access to new mar kets beyond the saturated United States for itsei the merger. Walgreens Boots Alliances stock has more pharmacies. Second, it provided Walgreens with a new than doubled in value since the first news of the part revenue stream in wholesale drugs. Alliance Boots held nership in 2012. However, the company is still struggling a vast European distribution network for wholesale o integrate and faces new risks such as currency fluc drug sales; Walgreens could leverage that network and tuation in its new combined position. Yet as the pharma- expertise to build a similar model in the United States ceutical industry continues to consolidate, Walgreens Finally, a merger with Alliance Boots would strengthen is in an undoubtedly stronger position to continue to The market has thus far responded favorably to isting business by increasing the com grow in the future thanks to its strategic international acquisition. pany's market position and therefore bargaining power

Explanation / Answer

The examples of international strategic alliances that are illustrated in the case include -

1. Strategic alliance or partnership - The firm Walgreens partnered with Alliance Boots to gain entry to European market that provided new revenue stream to the firm.

2. Merger/Acquisition - This makes the combined firm much bigger compared to either firms partnering or working together and sharing revenues. The overall firm's market position and bargaining power with drug companies increases thus providing the firm with economies of scale and increased revenues.

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