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Wednesday, April 13, 2011

Four criteria test CVS Corporation


Distinctive Competencies

The four criteria shown in Table 1 are used to determine whether or not the resources and capabilities of CVS are core competencies and can be a source of competitive advantage.
Four Criteria Test for Sustainable Competitive Advantage
                                           Table: 1
Resource
Or
Capability
Valuable
Rare
Costly
To
Imitate
Non-
Substitutable
Competitive
Consequence
Performance
Implications
Brand Image

Yes
Yes
Yes
Yes
Sustainable
 Competitive
Advantage
Above Average Returns
Innovation
Yes
No
Yes
No
Competitive
Parity
Average Returns
Financial Position
Yes
Yes
Yes
No
Temporary
Competitive
Advantage
Above
Average Returns
Demographic
And Geographical Segmentation
Yes
No
Yes
No
Competitive
Parity
Average
Returns

Knowledge base
    Yes
No
Yes
No
Competitive
Parity
Average
Returns



Chart interpretation. Brand Image was determined to be a sustainable competitive advantage for CVS. Even though there are many reputable companies in the Pharmacy Retail Industry, CVS is the only brand that has the widest presence all over the country and now outside the country too. In the past, CVS conducted a market research to help identify the target market for the chain. The research identified three customer profiles: young moms in their 30s, working mothers in their 40s with older children living at home, and retired women in their 60s and older. CVS was quick to work on this finding and therefore as a brand CVS appeals to most women as a brand. (Bailey, 2007)
         CVS’ Innovation is great, but hardly unmatchable. Hence, it gives Competitive Parity and Average Returns .Its biggest achievement is MinuteClinic , which is the largest provider of retail-based health care in the United States. The special thing about these is that MinuteClinic health care centers are staffed by masters-prepared, board- certified nurse practitioners that specialize in family health care and are trained to diagnose, treat and write prescriptions for common family illnesses. (CVS ,2010d). This may be very innovative and a good boost for business at CVS but it is not something that cannot be emulated by their competitors.
When it comes to the financials, CVS is well ahead in the industry. Even though, financial stability, in today’s times is difficult to attain and even more difficult to maintain, financial success is valuable but it is neither rare nor non-substitutable. Year over year, CVS Caremark Corporation has been able to grow revenues from $87.5B to $98.7B. Best of all, the company has been able to reduce the percentage of sales devoted to income tax expense from 2.51% to 2.23%. This was the main fact that led to a bottom line growth from $3.2B to $3.7B.(Business Week,2010)
When we talk about Demographic and Geographical Segmentation, CVS competes very well. Even though it earns Comparative parity with Average returns only because this strategy may be valuable and expensive  but is neither rare nor non substitutable.
Walgreens and CVS both have approx 7000 stores, though the growth rate of Walgreens is much slower than that of CVS. ( Walgreens,2010).
And lastly, the knowledge base at CVS Is a valuable and a costly strategy but is neither rare nor non-substitutable, which is why it gives CVS comparative parity with average returns. Health care and technology knowledge base is immense at CVS. Apart from the medical know how, the Technology Information Systems team offers full-service technology solutions for the enterprise with a goal to become a valued partner with each business unit within the company. The team helps maintain a multi-functional implementation of innovative technology solutions (CVS Caremark, 2010e)


                                                                    
                                                                   




                                                                REFRENCES



Bailey Raina (2007).CVS Corporation.(Life to the Fullest Campaign) .Retrieved on April 16,2010 from


Caremark Company (2010d). Press release. Retrieved on April 16, 2010 from



Business Week (2010).CVS Caremark Corp. Retrieved on April 16,2010 from


Walgreens (2010). Frequently asked Questions. Retrieved on April on April 16 ,2010 from


Caremark Company (2010e). Information systems. Retrieved on April16, 2010 from
















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