Example Of Organisation’s Value Chain AND Design Essay
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Businesses sustain profitability and market share through proper strategies towards ensuring profitability. Accordingly, through investing into proper strategies, plausible outcomes are bound to prevail. Thus, this paper will examine business strategy as per CVS health and the evident case questions.
The organizational value chain and design is pegged on the provision of coordinated solutions towards managing specialty patients. As such, the company aims at ensuring that the specialty pharmacy is construed towards effective service and product provision. As such, specialty consumers entail 8% of the patients but consume more than 40% of the payer’s total costs. The organization has incorporated a fair value hierarchy. CVS health incorporates the fair value hierarchy that is a three level approach that consists of the following in regards to value chain and design:
Level 1: the inputs are unadjusted quoted prices in the diverse active markets for the identical assets or liabilities that the organization has the capability in accessing the measurement date.
Level 2: direct and indirect communication with the prospective customers prevails for plausible decision making among the stakeholders.
Level 3: outputs, based on the management best estimate in the consumer market, effective pricing and policy formulation prevails.
Institutional, corporate and business strategies
The organizational operational mandate from the analysis of CVS Core competency denotes the most fundamental operational distinctive capability. As such, from the analysis of CVS health, its online platform forms the core competency or what distinct it from other organizations in regards to performance. Accordingly, from the analysis of the company, investing into website optimization towards enhancing customer traffic is a pivotal approach by the organization towards necessitating profitable outcomes and meeting the vision and mission statement of increasing sales through plausible service and product delivery
Porter five forces analysis
Porter five forces analysis denote an evaluation of the competitive environment in regards to the different issues. Thus, from the analysis of CVS health, the diverse issues that impact on the company include:
Buyer power: the consumers have extensive power in regards to bargaining. Products and services sold by the company are highly competitive. High buyer power denotes that the customers influence the pricing aspects of the organization.
Threat of new entrants: low
The pharmaceutical sector is highly finance dependant. Thus, from the analysis of the sector, the evident need for capital investment dissuades new entrants.
The pharmaceutical industry is highly competitive. Competitive rivalry emanates from the diverse companies in the sector.
Threat of substitutes: low
The substitutes are quite minimal. As such, the pharmaceutical industry is innovative based. The intensive investment into innovation denotes disparity and patent based. Notion of patents entail that substitutes are minimal.
Power of suppliers: Low
Suppliers have a minimal power in regards to the raw materials provided. Through the evident raw materials the suppliers cannot command an extensive power.
Financial position of organisation
The organization has been grappling with the prospect of slack in performance especially in regards to profitability. From the evaluation of the organization, despite the increase in profitability by a mere 3%, the company has had to re-evaluate its operational dynamics. Thus, the financial position of the organization, it has been on the upward trend in performance and costs percentage:
Revenues have increased by 20% between 2012 and 2013
Costs of operation have increased 30%
Three plausible strategic directions
After an extensive analysis of the internal and external environment of CVS health, there are various strategies that the company can incorporate. Thus, the two main approaches include:
Customer relationship management
Customer relationship management is critical towards sustenance of competitiveness and profitability. Accordingly, from the analysis of CVS health, it is critical that the organization invests into distinct service delivery to ensure profitability in performance. The online approach in performance should invest into the following approaches to sustain proper customer relationship management:
Invest into direct mauling towards ensuring follow up of its customers to maintain customer acquisition
Maintaining extensive communication with its customers through communication using the various tools such as mobile phone, emailing and so forth
Sustaining an open complaint handling of the various issues raised by the various customers
Ensuring an online feedback management in regards to issues raised by the customers
Investing into direct mailing with its prospective customers
Diversification of product and service delivery
Diversification is critical towards enhancing profitability within the organization. Accordingly, towards sustenance of profitable outcomes, the company should set up a various regional stores in which customers can sample the various fresh products and make purchases. Furthermore, the company should also diversify into offering a more consumer to consumer model in their online mandate. As such, customers can acquire products and services at a given fee that CVS health is bound to accrue in the online mandate. Through investing into the customer to customer model, more revenues are bound to prevail within the organization.
Generate more income source
Sustain revenue yield
Ensure competitive pricing with other rivals such as Tesco and Salisbury
Organisational, implementation concerns and recommendations
Immaterial resources denote skills ad competencies towards ensuring plausible strategy implementation. Accordingly, from the analysis of CVS health, it is imperative that the various top level managers are incorporated towards successful diversification strategy. The top level management should be inclusive of the founders. Incorporating the founders is critical towards effective and all inclusive policy formulation since the top level managers were critical towards successful growth of the company. The internalization of effective skills and competency is bound to generate profitability and success of the diversification approach.
Human resources are imperative towards implementation of the policy statement of the diversification approach. Human resource is highly pivotal within the IT department towards the inculcation of the consumer to consumer model and effective good and service delivery in the new pharmaceutical stores. The diversification approach is a shift of the various operational facets of the organization that require human resource towards successful outcomes.
Development of a novel online business model requires investment of finances to necessitate positive outcomes. Thus, from the analysis of CVS health, financial investment should aim towards developing an effective website that can manage the consumer to consumer model. Additionally, financial investment is critical towards setting up diverse stores that focus on customer relationship management within a physical mandate.
Targets denote the performance approach to be accomplished by the organization. Thus, from the analysis of the company, the two main targets are as follows:
10% increase in profitability in the holy year financial statements. Profit growth should emanate from the new customer market that is bound to catapult the organizational revenue yield.
15% increase in sales in the first six months due to the diversification into the consumer to consumer model and inculcation of the physical stores in which customers can access fresh produce. A more physical interaction with the customers should further enhance organizational relationship with its customers and sustain loyal clientele.
The diversification approach focuses on the inculcation of plausible approaches that are permanent and construed towards enhancing organizational performance. Thus, from the analysis of CVS health, the inculcation of the consumer to consumer model should be within a 3 month mandate and setting up of the stores should be within a 5 month mandate. The stores should be within the major cities in Britain as the first test market. The success or failure of the target markets should lay forth the plausibility or viability of the strategy.
CVS health should implement an effective performance mandate that depends on the diversification prospects. Through the implementation of plausible diversification approach, the company should develop diverse products and services that the customers can acquire. Incorporating a mandatory product and service diversification platform in the online approach, the company is bound to catapult its profitability.
Strategy formulation is imperative towards mitigating the diverse challenges that impact on organizational performance. Thus, from the above analysis of CVS health, the investment into the diversification approach is bound to enhance revenue yield and profitability of the business. Improvement in sales and profitability are two critical aspects towards further growth of the business.
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