20 The Mission of CVs. Corporate Social Res CASE 2O The Mission of CVS: Corporat
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20 The Mission of CVs. Corporate Social Res CASE 2O The Mission of CVS: Corporate Social Responsibility and Pharmacy Innovation INTRODUCTION In 1963 brothers Stanley and Sidney Goldstein founded the first Consumer value stoee Cvs with partner Ralph Hoagland in Lowell, Massachusetts. The store originally health and beauty supplies. widely successful, and grew to include 17 in one By 1967 CVS began offering in-store pharmacy departments, and less than a decade it was acquired by the retail holding corporation Melville Corporation. This marked the ning of CVS's expansion across the east coast through new store openings or mergers and acquisitions. It soon reached the milestone of $100 million in sales in 1974 exceeding As the company grew, it faced intense competition, which it tesponded to through a differentiation strategy. CVS focused on its core offerings of health and beauty products. placing in shopping malls to generate more foot traffic. This strategy worked the company, allowing it to hit si billion in sales by 1985.The company celebrated its 25 h year in 1988 with 750 stores and si 6 billion in sales The acquisition Peoples Drug enabled CVS to establish its presence more widely along the coast and spurred the launch of PharmaCare, a pharmacy benefit management (PBM) company and scr vices to employers and insurers. In 1996 the Melville Corporation restructured, became independent as a publicly traded company on the New York Stock Exchange. This new surge of investment allowed the company expand widely across the nation to into the Midwest and Southeast. CVS's acquisition of 2,500 Revco stores the larg became est acquisition in US, retail pharmacy history. With the rise of the Internet. CVs seized upon the opportunity to launch CVs.com in 1999 (and cont after the 2007 Caremark acquisition), became the first fully i the introduced the with This industry, marked another first for the US. pharmacy retail anniversary than 4,000 stores Card loyalty program in 2001. The company's 40th more increasing westward expansion, 44 million loyalty card and acquisitions 7,000th following five years, the company's and open its to gain leadership in key markets, begin a mail order business, acquiring after retail location. also undergo change Caremark a prescription benefits management organization. the direction of and Michelle Urban for and under for dassraon case heas prepared by Yixing Chen, Christine Shields, ediorial assistance. was peepared or legal CFerrell and Ferrell o 2015 Julian prov handling of an administrative material ion rather than to either efsrtive or ineffective through All sources fr case were obtained this byExplanation / Answer
1. CVS encountered many ethical challenges. One of the biggest challenges it faced was "ethical case concerning HIPPA".
The ethical issue that was bothering in this case was about disposing patient’s privacy information. Not only it is relevant to norms but it was also violating the HIPPA privacy rule. To handle this situation, CVS settled with HHS(Health& Human Services) for 7 guide lines to deal with privacy information. Also CVS signed to consent to a biennial audit from an independent third party. This audit is meant to ensure that CVS’s program meets the FTC’s standards for its security program.
Q.2. CVS has always taken care of all its stakeholders, from stockholders to customers and society. In 2014, It took a major decision not to sell tobacco anymore. This decsion brings different results and concerns for different stakeholders.
As tobacco selling used to bring about $2 billion annually to the company, turning this business down brings concerns for shareholders. As their dividend and profit fell down. But, if we think from society and customers point of view, this decision would seems a wise one. CVS is in business of providing health cae in US and it contradicts with the business of selling tobacco. If they did not stop selling tobacco products, It would make it easier for younger age groups to begin smoking and more difficult for those trying to quit smoking. For CVS, the decision will reduce their short-term profits. However, As the long-term benefits will make up the difference by gaining reputation.
Q.3. Being in a business of providing health care makes a business more socially respnsible than others. Because it is about health of the customers and society. Thus, positioning itself as being socially responsible would definitely increases the credibility and trustworthiness of the company.
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