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Walgreens pharmacy began in 1901 as a single store on the South Side of Chicago and grew to become the largest chain of pharmacy retailers in America

Management

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Walgreens pharmacy began in 1901 as a single store on the South Side of Chicago and grew to become the largest chain of pharmacy retailers in America. Walgreens was an early pioneer of the "self-service" pharmacy and found success by moving quickly to build a vast domestic network of stores after the WWII. This growth-focused strategy served Walgreens well up until the beginning of the 21 Century, by which time it had nearly saturated the US market. By 2014, 75 percent of Americans lived within five miles of a Walgreens. The company was also facing threats to its core business model. Walgreens relies heavily on pharmacy sales, which are generally paid for my someone other than the patient, usually the government or an insurance company. As the government and insurers started to make a more sustained effort to cut costs, Walgreens' core profit center was at risk. To mitigate these threats, Walgreens looked to enter foreign markets. 

Walgreens found an ideal international partner in Alliance Boots. Based in the UK, Alliance Boots had a global footprint with 3,300 stores across 10 countries. Alliance Boots held a vast European distribution network for wholesale drug sales. Walgreens moved quickly to partner with and later acquire Alliance Boots and merged both companies in 2014 to become Walgreens Boots Alliance. Walgreens Boots Alliance is now one of the world's largest drug purchasers, able to negotiate from a strong position with drug companies and other suppliers to realize economies of scale in its current businesses.

 

The market has thus far responded favorably to the merger, as the stock has more than doubled in value since the news of the partnership in 2012. However, the company is still struggling to integrate and faces new risks such as currency exchange fluctuations in its combined position. Yet as the pharmaceutical industry continues to consolidate, Walgreens is in an undoubtedly stronger position to continue growth into the future.

a.    How did Walgreens use its alliance with Boots Alliance to gain sustainable global competitive advantage? (1 point)

 

 

b.    Using the Hambrick Model (Strategy Diamond) what was Walgreens initial strategy? (2 points)

 

 

c.    Using the Hambrick Model (Strategy Diamond) what is Walgreens Boots Alliance current strategy? (2 points)

 

 

d.    Conduct a SWOT Analysis on Walgreens Boots Alliance. (2 points)