CVS Pharmacy is the subsidiary company of American health and retail care CVS health. The company is headquartered in Rhode Island. CVS pharmacy is one of the biggest pharmacy chain in United States in terms of locations and total prescription income. The company sells prescribed drugs and broad assortment of the general merchandise, which include over-the-counter drugs, cosmetics, products, seasonal merchandise, photo finishing, greeting cards, and also convenience food through Longs drugs stores and CVS pharmacy (CVS, 2020).
VRIO analysis is an analytical tool used for evaluating the resources and capabilities of the company. The components of VRIO tool are Value, Rareness, Imitability and Organization. These components help the company in achieving competitive advantage. Here is the detailed VRIO analysis of CVS.
VALUE
The first component of the framework is analyzing the valuable resources of the company which enables the firm in exploiting the opportunities that are beneficial for the company. These resources also defend the company against threats. Valuable resources of the company also help in increasing customer value. It is necessary for the company to assess the resources constantly to make sure it does not lose its value. CVS pharmacy is able to gain so much recognition because of valuable resources. Its information technology is regarded as valuable resources for streamlining the retail pharmacy and conveniently manage the healthcare service operations. Its partnership with Walmart helps the company in increasing the customer value (Newton, 2019).
RARITY
Resources and capabilities which are acquired by any one or few companies are known as rare resources. Valuable and rare resources grant the company with temporary competitive advantage. However, if the resources are easily accessible, competitors will use it to gain benefits and this will leads to competitive parity. CVS is one of the leading company in U.S but it has the capability and resources to expand itself in international markets. It possesses the capacity of operating the healthcare facilities to greater level. CVS is able to own patents, which makes its products rare in the market. Its financial resource is also very rare, which makes it one of the biggest healthcare company in the U.S (Edwards, 2018).
IMITABILITY
Third component of the VRIO framework is imitability. This component focuses on the resources to be costly to imitate. The resources will be difficult to imitate if it will be costly, difficult to buy or find substitute for. The company that will have valuable, rare, and difficult to imitate resources will be able to achieve sustained competitive advantage. CVS pharmacy is able to maintain its brand value over the period of time. Its financial resource is difficult to imitate. Moreover, not all competitors are able to operate on large scale or have the capacity for that. CVS has maintained and developed its popularity and brand image which is also one of the difficult resource to imitate (Newton, 2019).
ORGANIZATION
This is the last and very important component of the model. The resources alone cannot be beneficial for the company if they are not properly managed or organized. It is necessary for the company to organize the resources, systems, processes, organizational structures, policies, and organizational culture to imitate the capabilities and resources. If the company is able to achieve all the four components, it will be able to achieve sustained competitive advantage. CVS is one of the biggest company which has organized operations, supply chain, and distribution network. The company has talented staff which helps it to grow. The economies of scale are also organized and achieved to gain more benefits (Admin, 2018).
CONCLUSION
VRIO analysis indicates that CVS pharmacy has achieved competitive advantage over its competitors. This was achieved by selling and preparing drugs in prices which competitors find difficult to deal in with. Moreover, it has achieved loyal customer base that helps the company to grow. It also provides other miscellaneous items like refreshments, cosmetics, magazines etc to attract more consumers.
| V | R | I | O | ||
| Supply Chain | ✓ | ✓ | ✓ | Competitive Parity | |
| Information technology | ✓ | ✓ | Competitive Parity | ||
| Inventory management | ✓ | ✓ | ✓ | Competitive advantage | |
| Brand Equity | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Operational complementation | ✓ | ✓ | ✓ | ✓ | Sustainable competitive advantage |
| Talented HR | ✓ | ✓ | ✓ | ✓ | Competitive parity |
REFERENCES
Admin, 2018. CVS pharmacy company analysis. [Online], Available at: https://uniquewritersbay.com/blog/cvs-pharmacy-company-analysis/, [Accessed on: 30th April, 2020].
CVS health, 2020. About the company. [Online], Available at: https://cvshealth.com/about, [Accessed on: 30th April, 2020].
Edward, Z. 2018. VRIO analysis of CVS health. [Online], Available at: https://www.case48.com/vrio-analysis/12614-CVS-Health, [Accessed on: 30th April, 2020].
Newton, V. 2019. CVS Value Chain Analysis & VRIO/VRIN Analysis (Resource-Based View). [Online], Available at: https://www.rancord.org/cvs-vrio-vrin-analysis-value-chain-analysis-rbv-competitive-advantages, [Accessed on: 30th April, 2020].