CVS Marketing Development Essays

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Porter’s Five Forces
Forces Grade Note
Segment Rivalry Strong The current market is divided between a few powerful competitors that can relatively easily attract customers from one another as the switching costs are low and practical absence of product differentiation contributes to the easy loss of market share.
Threat of Mobility Weak While the new entrants only need a relatively simple GUI and a supplier in order to enter the market, the federal and local regulations will require significant investments prior to any positive cash flow. Again, the differentiation is practically non-existent and the new entrants will have to compete with financially established enterprises capitalizing on competitive advantage.
Supplier power
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The firm employs about 190,000 people and boasts the 20 million strong consumer base with projected growth 3.5 million within the next three years. The firm’s Price-to-Earnings Ratio (P/E) of about 21 is higher than P/Es of its primary competitors. Hence, CVS reported 21 bps increase and the total gain of $68 million in the last year. At the same time, the forward earning on the CVS stock yielded over 9.3% allowing the firm easily meets its dividend obligations. The EPS proves that the stock has been performing well at over 30%. The revenue has been growing at 15.7% per year during the last three years compare to 14.2% revenue growth within the industry. This stock's forward earnings yield of 7.41% is the annual return it would generate if its profits remained fixed and it paid out all of its earnings as dividends. This is normal compared with the earnings yields of other stocks in the industry, and is healthy in absolute terms. Finally, most companies in the industry have generated very low returns on assets over the past five years. CVS has posted results that are about average for the industry, though its ROA over the most recent 12 months was very high.
Porter’s Generic Strategies
Provided the CVS position in the market, it is clearly pursuing the low-cost leadership strategy. The company offers the same goods or, sometimes,
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