An analysis of CVS Health Corporation\'s current business model is as follows: C
ID: 389207 • Letter: A
Question
An analysis of CVS Health Corporation's current business model is as follows:
CVSHealth has determined their consumer base as all consumers who require prescriptions, health assistance, in-home health care options, and urgent care services. The focus of the firm is not on a specific target consumer, but on filling a specific need of all consumers. This does not limit their customer segment. CVS also states that “pharmacy service clients include employers, insurance companies, unions, government, Medicare Part-D Plans, and other health care plan sponsors”.
A value proposition seeks to “solve customer problems and satisfy customer needs” (Osterwalder & Pigneur, 2010, p. 16). CVSHealth seeks to increase their value through delivering break-through products and services, from advising patients on their medications at our CVS Pharmacy® locations, to introducing unique programs to help control costs for our clients at CVS Caremark®, to innovating how care is delivered to our patients with complex conditions through CVS SpecialtyTM, to improving pharmacy care for the senior community through Omnicare®, or by expanding access to high-quality, low-cost care at CVS MinuteClinic®.
The firm also adds value through a streamlined authorization for specialty consumers and new delivery options.
CVS utilizes channels communication through direct mail, emails, promotional signage and their ExtraCare rewards program. These utilize these outlets to increase consumer awareness of promotions, sales efforts, and new products. The ExtraCare program rewards the consumer for repeat purchases. This increases the consumer's perceived value and communicates CVS’s value for their repeat consumers through exclusive pricing and promotions within the program. The firm focuses on direct sales of their product through their physical locations. They also provide online customer-surveys at the bottom of each receipt to allowing consumers to provide the firm with valuable post-purchase feedback through the Pharmacy Advisor Program. CVS Health operates through two main segments: Pharmacy Services and Retail/LTC (long-term care) Pharmacy Services, which accounts for around 60% of sales, is the company's pharmacy benefits management (PBM) division. The separation of the division allows the pharmacists and pharmacists techs to focus on the needs of the patents and not the sales of “in-front” merchandise.
With customer relationships, CVS utilizes a “personal assistance” model, which focuses on building a relationship based on human interaction and this happens both on-sight at the point of sale and through their call centers. The focus is on interacting with the consumer, face-to-face, to communicate the value the firm has in their consumer. Along with their focus on prescription coverage, CVS also utilizes Minute-Clinics to treat urgent, non-life-threatening health needs that require human interaction to diagnose that treat. The interaction goes beyond in-store interactions because call-centers are set up for consumers to call with concerns, comments, or questions that will be answered by a representative.
The key resources within the firm are the facilities, suppliers, distributors, qualified pharmacist and staff, contracts with generic prescription companies, and a large cash flow. These key resources are the foundation of CVSHealths’ business model. Key partnerships include; a 50:50 with Cardinal Health to increase the selection of generic drugs available. A strategic alliance between Target and CVS, where CVS took over the pharmacy aspect of Target. The firm acquired Coram and Omnicare to increase their distribution outlets and introduce them into both the in-home health care and into nursing home facilities. The costs of the products are variable and dependent on supply and demand. The prices are determined by the pharmaceutical companies. CVS focusing on being a cost-driven firm and reducing the cost to consumers through acquisitions and contracting generic suppliers.
CVS existing strategy is congruent with their current business model. In a quick overview, CVS struck a deal in 2017 to acquire Aetna in response to the notion that Amazon would be entering the prescription retailer market. “The deal will allow CVS to further expand the health care services it offers and providing it with more leverage in negotiations for drug prices. This acquisition would allow CVS to expand beyond just a retail pharmacy and into healthcare provision. After the acquisition of Omnicare, CVS moved it into nursing home pharmacy market. In 2015, CVS acquired Coram and introduced the company into the specialty pharmaceutical market. CVS is in the beginning stages of offering fusion services. These services include offers ambulatory infusion suites, which offer patients an alternative to a hospital environment with IV infusions and other infusion therapy services in a safe, monitored area. The current strategy focuses on entering new markets, adding stores in existing markets and relocating stores to more convenient sites.
An alternative strategy for CVS includes expanding the business internationally so that the company could survive in the fast-changing market economy and find new markets and customers.
Based on the current business model, propose a new business model for CVS Health Corporation.
Explanation / Answer
Answer:
Based on the current business model, proposal for new business model for CVS Health Corporation is as below.
VCS Health Services in International market: This is the proposal for the CVS Corporation that they can plan to move towards the international market so that they can grow their market and achieve higher market share in the international market. The key benefit from this international business expansion model is as below
Increased Revenue and profit: The international exposure will create high revenue for the organization and they will be able to convert their skill set into good revenue range in the international market. Thus they will get good profit in their international business model.
New Market for CVS: The international business proposal will help the CVS to find new market for them which will provide them new platform so that they can leverage their capabilities and grow their business easily.
New Customers for CVS: The new market in international market will help them to find new customers and will get different learning in managing and catering global customers in the health sector.
New Learning and Expertise: This international business will provide the new and different learning and exposure for their health business. This will develop new expertise among their team and they will emerge more capable and skilled.
Increase in competitive strength: The international business model will help them to get wider exposure and learning and will improve their competitive strength in the market. The brand image will be improved and international name will influence the competitors globally.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.