Walgreens Boots Alliance Company Analysis

Walgreens Boots Alliance (WBA) is the largest pharmaceutical and health products retailer across Europe and United States. WBA provides health and beauty products to consumers worldwide through investments and collaborations with companies. Collaborations have enabled the company to provide branded and generic products and establish pharmaceutical centers and branches worldwide. The company's NAICS (North American Industry Classification System) code is 446110, belonging to the Pharmacies and Drug Stores category of businesses and retailers. The five forces business analysis model enables an economist to identify the major competitive forces within an industry to determine whether or not it is desirable for investment. Therefore, using the five forces model, the pharmaceutical industry’s competition is identified and can be used to determine the strengths and weaknesses of Walgreens Boots Alliance.

WBA's retail and pharmaceutical industry competitors influence the organization's profitability. The first force, according to Porter, describes the rivalry between competitors in a particular field of business (Martin, 2022). WBA's competitors include Trulieve, Rite Aid, Target, Walmart, and CVS. Trulieve, CVS, and Rite Aid are healthcare product providers in retail, while Target and Walmart provide general merchandise to consumers (Boparai, 2021). Like WBA, Target is a retailer specializing in beauty products. There has been a significant increase in the number of pharmaceutical product providers in the United States in the 21^st century, contributing to the reduced monopoly of particular health product providers. With over 60,000 pharmacies in the US, citizens have easy access to pharmaceutical products (Competition, Consolidation, and Evolution in the Pharmacy Market, 2021). Additionally, the production and provision of both branded and generic products prove the competitiveness of the pharmaceutical industry in the US. In the retailing industry, the manufacturers of pharmaceutical products determine the prices of their products. The organization prefers using a diversified business model that focuses on customer needs instead of the competitors to determine how they sell their products (Walgreen Company’s Strategic Audit | Free Essay Example, 2022). Therefore, the competitive rivalry of WBA reduced the monopoly of pharmaceutical products in the US but does not influence WBA's profitability.

Walgreens Boots Alliance has a diverse network of suppliers that ensure that pharmaceutical products offered by the organization are constant and provide low-cost products. WBA has held various summits to increase the diversity of its suppliers, considering brands that produce products for minority people in the community (Competition, Consolidation, and Evolution in the Pharmacy Market, 2021). The organizational suppliers are major manufacturers of healthcare and beauty products, including McKesson Corporation in Germany, to increase its capital base and range of pharmaceutical products (Boparai, 2021). Additionally, the organization has made partnerships with VillageMD, which provide it with enough capital to run efficiently for its period of operation. This merger with VillageMD has allowed WBA to provide consumers with pharmaceutical products at a lower cost (Boparai, 2021). However, these financial and raw materials suppliers have low bargaining power with Walgreens since the retail company is well established and the supplies are usually contractual. Therefore, WBA has many suppliers with low bargaining power, but the organization's contract has enabled low-cost products to be provided to customers.

The bargaining power of consumers and the threat of entry of pharmaceutical products’ substitutes influence the cost at which WBA offers its products and its long-term market relevance. Consumers’ bargaining power is high since most pharmaceutical stores offer similar products at the same price. For instance, CVS, a pharmaceutical brand, offers similar products as WBA and has almost as many stores as Walgreens in the US (Akturk & Ketzenberg, 2022). If customers switch from Walgreens to other retailers or pharmaceutical stores, the products provided are similar since there are constantly prescribed medicines for different conditions by varying physicians. However, there's a high threat of using substitutes for the pharmaceutical industry since people continue to lead healthier lifestyles, reducing their need for medication (Boparai, 2021). Additionally, vitamins in the industry are slowly replacing the need for medication since they improve the well-being and immunity of users (Boparai, 2021). Over time, with a healthier population, there will be little need for medication, though there are medicines that hospitals and people constantly use. Therefore, the similarity of prices across different pharmacies implies high consumers' bargaining power, while the use of vitamins and healthy lifestyles are substitute threats.

The threat of new market entrants is low, which has influenced the market dominance of Walgreens Boots Alliance. The increased number of pharmacies in the US has not displaced the place of WBA as a major retailer of pharmaceutical products in the country (Boparai, 2021). It would take many years of establishment and gaining the trust of suppliers to increase the capacity of new entrants and to pose as competition to WBA. Additionally, a rigorous process is used before being a qualified pharmacist and a health products retailer (Yang et al., 2022). The process includes gaining adequate skills in scientific majors and qualifying for a business license with FDA to be an approved retailer of pharmaceutical products (Yang et al., 2022). Maintaining relevance in the industry demands mastery of the business environment, highly qualified staff, reliable suppliers, and high-quality products, among other requirements. The amalgamation of these factors influences the ease of entry into the pharmaceutical industry, implying that the requirements of entry into the pharmaceutical industry limit the number of qualified retailers. Therefore, the threat of market entry by new pharmacies is low since WBA is a well-established retailer in the pharmaceutical industry, and considering the requirements before entering.

Using the five forces model of business competitors' analysis, the strengths and weaknesses of WBA are identified. For instance, WBA has a varied number of competitors who provide pharmaceutical products, including CVS, which is the biggest competitor of the organization. The rivalry between competitors is low since many pharmacies have been established in the United States. WBA has a varied number of suppliers ranging from supplies in raw materials and financial support. The most recent partnership of Walgreens with VillageMD has enabled the provision of products to customers at lower costs, enabling the organization is at par with its competitors. Additionally, the high bargaining power of consumers and the threat of using substitutes have influenced the relevance of WBA in the industry. Due to the many requirements of entry into the pharmaceutical industry, the threat of new entrants into the market is low. Therefore, there is a high possibility that Walgreens Boots Alliance will remain relevant in the retailing and pharmaceutical industries.

References

Akturk, M. S., & Ketzenberg, M. (2022). Exploring the competitive dimension of omnichannel retailing. Management Science, 68(4), 2732-2750. https://doi.org/10.1287/mnsc.2021.4008.

Boparai, I. (2021). Walgreens Boots Alliance Investment Report. https://ecommons.luc.edu/cgi/viewcontent.cgi?article=1505&context=ures.

Competition, Consolidation, and Evolution in the Pharmacy Market. (2021). Commonwealth Fund. https://www.commonwealthfund.org/publications/issue-briefs/2021/aug/competition-consolidation-evolution-pharmacy-market.

Martin, M. (2022). How Porter’s Five Forces Can Help Small Businesses Analyze the Competition. Business News Daily. https://www.businessnewsdaily.com/5446-porters-five-forces.html.

Walgreen Company’s Strategic Audit | Free Essay Example. (2022). StudyCorgi.Com. https://studycorgi.com/walgreen-companys-strategic-audit/.

Yang, T., Kessler, L. G., Thompson, M. J., & Lutz, B. R. (2022). Requirements and Study Designs for US Regulatory Approval of Influenza Home Tests. Journal of Clinical Microbiology, 60(5), e01884-21. https://doi.org/10.1128/jcm.01884-21.