Answer & Explanation:After reading the case, write one assignment feature for the Change Analysis and Plan (CAP).This Change project should be more than five pages.
healthcare_pharmacies_rq.docx
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HealthCare Pharmacies
HealthCare Pharmacies is a family-owned chain of pharmacies or drugstores consisting of 40
stores scattered across two southern states. It has been a reasonably successful operation for nearly 50
years, serving small to large cities (25,000 up in population) across the region. The company was
founded by two brothers (William Smith, the Pharmacist, and James Smith, the retailer), one a
pharmacist, the other a discount retail specialist. As a result, their focus was on providing not just
pharmaceutical services (filling prescriptions, selling over-the-counter medical supplies), but also selling
any and everything that could be sold. Some prices lower than competitors, some higher. This is
reflective of their history as a small town drug store that also served as the “general” store in some
small communities (in the early days even smaller than 25,000), while recognizing the increasing
competitive impact of national chains such as K-Mart and Woolco (eventually it failed), regional discount
chains (e.g., Miller’s) and the emerging growth of Wal-Mart. Similar to Wal-Mart’s, the Smith brothers
used an encirclement process, opening stores in smaller towns and dominating those markets, before
expanding into larger cities.
The size of the stores typically ranges from 10,000 square feet to 15,000 square feet, depending
on the location. The stores looking much like the larger chain drug stores, with drugs being the primary
but not only focus (stores carry limited foods such as dairy products, canned soups, microwavable food
stuffs, etc., cosmetics, toys, household cleaning supplies, etc.). Additionally, they have traditionally had
a lunch counter with 5-6 booths, and 5-7 tables. The “lunch” counter in some locations also opens for
breakfast. Here, sandwiches, salads, soups, shakes, malts, etc. are sold, much like “soda fountains” or
lunch counters in the 1930s, 1940s and 1950s.
Although the company has been remarkable successful for most of its existence, recently same
store sales have begun to decline, showing a 2-4% decrease each year for the past four years.
Competition is increasing in intensity with Wal-Mart, CVS, Rite-Aid, the resurgence of Wal-Green’s, and
even with some grocery chains (e.g., Publix) including pharmacies in their stores. Even the internet is
having an impact as some potential customers will buy on-line from companies such as Amazon those
items they used to buy in the stores. Additionally, while they have attempted to having a little bit of
everything to offer, emphasis has never been about store appearance (many stores are quite cluttered
in appearance, with boxes stacked in aisles, dimmer lighting or burned-out bulbs, etc.), and the company
has become aware that customers are increasingly unhappy with poor or marginal customer service, in
the pharmacy as well as the rest of the store. A limited survey done for the company by a group of
students in a marketing research course at one of the universities located in a city where HealthCare has
stores has revealed that customers are increasingly unhappy with the service, and some have switched
to competitors whose prices are lower, or who offer better experiences. As one part of their study, the
students chose twelve typical drug store items at random for comparison, such as Head and Shoulders
shampoo, Tylenol Extra Strengths caplets, a Snickers candy bar, underarm deodorant, etc. A “basket” of
these nine items were consistently priced lower at a comparison CVS, and even more so at a Wal-Mart’s.
For example, one Healthcare Pharmacy store priced Scott’s toilet paper (4 rolls) at $5.99, but CVS priced
the same paper at $4.69. Healthcare Pharmacy priced Old Spice deodorant at $5.79, but CVS priced it at
$4.79. In response the company has run some sales and encouraged store managers to be more
customer friendly, but this has not seemed to have lead to improvements. Additionally, prescription
drug sales account for 67% of the revenues at the typical Healthcare Pharmacy store (the “soda
fountain/lunch counter” contributes 10-15% and the rest comes from over the counter
Employees present another problem for Healthcare Pharmacy. While many of the employees
who are long term seem content with how things are, turnover, however, does seem to be increasing,
especially among younger employees (younger than 30). Additionally, there is another troubling
statistic. In the pharmacy business turnover is calculated on a 30 day basis (percentage of terminations
to hires over a 30-day period). Historically, the turnover rate for HealthCare has been around 15%, but
over the past year it has climbed steadily to a level of 27% in the most recently calculated 30-day period.
Since pay is competitive with other pharmacies, there’s no clear answer to the increase.
William Smith passed away a year or so ago. James Smith is getting on in years and has decided
to retire. He has received some interest from an investment firm to sell the company, but would rather
it remain in the family. William’s daughter, Melissa, who has her MBA from State U., and has worked in
retail, in both department stores, and one of the national bookstore chains has joined the company as
the new President. Her uncle says it is up to her to save the company.
Melissa grew up “in the stores” but now returns to them attempting to see them through “new
eyes.” What she sees is troubling: Cluttered stores, with stock seemingly arranged in helter-skelter
fashion, complacency among employees at all levels, indifferent customer service. At company
headquarters, she finds much of the same attitude, but some apparent frustration as several staff
members complain that store managers and employees won’t “do what we tell them to do. They will for
awhile, then the next thing we know, it’s business as usual.” She visits with the HR department to find
out that although the increasing turnover rate has been noticed, there are no plans to study the issue
further or do anything “just yet.” Recruiting practices in hiring for stores, indeed through the
organization seem to be based on “who you know, how you look” and the store manager makes the
hiring decision for each store. Training is largely OJT, except for the pharmacists who are hired upon
graduation from accredited pharmacy schools. Performance reviews are annual, and based on a
discussion of “what’s going on.” Compensation is typical. Store managers are paid a flat salary.
Pharmacists are paid the same salary. Next highest salary is paid to the assistance store managers,
followed by pharmacy technicians, while floor employees (stock shelves, offer some limited service to
customers, run the cash register, etc.) are paid 10% over minimum wage. They all have some level of
healthcare benefits.
Sitting in her new executive office, Melissa feels a migraine coming on as she ponders the task
before her. She thinks a good first step may be to bring in an outside consultant possessing experience
in implementing change within an organization.
…
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