Weaknesses:

Apart from the above-mentioned strengths there are many weaknesses as well in the business model of the company which is affecting the level of profits and operations of CVS. There are many security issues in the stores of CVS which can be considered as the biggest weakness of CVS, many of the highly expensive drugs have been theft from the stores which places question marks on the ability of the management to develop robust security systems. Moreover, this could also lead to some investigations conducted by the regulatory authorities which affected the reputation and goodwill of the company to some extent.

Another weakness in CVS is their acquisition strategies, although the investment and acquisition strategy proves to be game changer for CVS but there are many acquisitions which resulted in extreme loss for the company. The aggressive acquisition strategy often leads to acquisition of stores which are not strong enough to increase the value to the company. There is no strict screening procedures of stores prior to acquisitions which is the main reason for the poor stores being acquired. And the acquisition of stores is often wrongly priced which means that many of the stores have been acquired by giving higher prices as compared to their sales and earning potential. (Kasi)\

CVS Company Research and Valuation Harvard Case Solution & Analysis

Opportunities:

Although there are many weaknesses present in the business environment of the company but it can be argued that there are opportunities available which could reduce or eliminate the weaknesses to acceptable level. The main opportunity that is available to the company is mergers and acquisitions. Although the company acquires stores but they haven’t acquired large companies till now. Majority of the acquisitions are of stores and small companies but little consideration is given to the companies. Substantial economies of scale could be achieved by the CVS if the non-core functions of different companies are combined. Apart from the financial resources the CVS have also managerial resources which could be used to acquire companies effectively.

Another opportunity that is available to the company is to operate in different diversified sectors, as they have diversified in the past they can still diversify into other sectors. It is very important for the company to effectively invest and operate in different sectors in order to ensure the smooth earnings. If the earnings from one sector is affected it will be compensated from the growth in another sector which is the main advantage of the diversification.

Threats:

The legal risk represents the main threat which the CVS is exposed to. The regulatory authority and government have introduced several strict rules and regulations in recent times for the companies operating in the health care and pharmaceutical sector. Failure to adhere to these laws can result in significant fines and penalties which could affect the earnings of the company. The non-compliance can even threaten the going concern status of CVS in case of a serious breach of law which depicts the significance of the threat.

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