McKesson Company is one of the leading health care organizations in the USA. It is a pharmaceutical company that mainly deals with the distribution of pharmaceuticals while at the same time it provides medical suppliers to various health organizations, especially in the USA and Canada. Currently, it is one of the most successful health organizations, especially based on the Fortune 500 list where it is ranked number five (Pysh, 2017). Many factors determine the success of McKesson, including both internal and external factors. Thus, it is important to conduct a SWOT analysis to understand the success of McKesson Company.
SWOT Analysis
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Strengths -Strong brand portfolio in both the USA and Canada that gives it a competitive advantage in the market. The strong brand portfolio has made the company have loyal customers. -Strong presence in both the USA and Canadian market. It dominates the two markets making it enjoy economies of scale. -High customer satisfaction. The company’s customer relations management system has enabled it to enhance customer satisfaction -Efficient distribution networks. McKesson has a strong distribution community that is aligned to its goals and objectives, including strategies. |
Weaknesses -Dependency on the US market as the main source of its revenue. The company’s main operations are in the USA with some presence in Canada. -Little investment in modern technologies. Despite its success, the company is doing little to improve its technologies that can help in enhancing efficiency and effectiveness. -Lack of a wide product range. The company has a limited product line, which can give competitors the opportunity to dominate the market. |
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Opportunities -The decreasing cost of transportation due to improved technology that has led to lower shipping prices. -New markets in the emerging economies across the globe. McKesson can expand to emerging markets like China and Brazil to increase its global operations ( Tannoury & Attieh, 2017) . -Increased customer spending on pharmaceutical products. The emergence of new and complicated diseases has led to increased demand for pharmaceutical products. |
Threats -High competition in the pharmaceutical markets. Apart from new entrants, McKesson is facing stiff competition from Cardinal Healthcare Inc (CAH) and AmerisourceBergen Corp (ABC) (Pysh, 2017) . -The rising cost of raw materials. The cost of pharmaceutical raw materials is increasing, and this may affect McKesson's profitability -High level of imitation of counterfeits in the pharmaceutical companies is threatening the success of McKesson. |
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Definition of Strategic Action Plan
The strategic action plan of the company is to expand to other markets other than the USA and Canada. The company should expand to emerging markets such as Brazil and China where the consumption of pharmaceuticals is increasing ( Tannoury & Attieh, 2017) . McKesson should use its effective and strong distribution community to expand to the global market. Besides, it should invest in modern technologies to improve efficiency and effectiveness.
Strengths of the Organizational Structure
The main strength of the company’s organizational structure is its distribution network, which is associated with efficiency. The company has 31 distribution centers in the USA and another 14 in Canada (Pysh, 2017). As a result, it has attained a high level of order accuracy. Secondly, the company has succeeded in integrating complementary firms like CoverMyMeds to streamline its operations in the market, especially in terms of distribution. The company is determined to acquire technology companies to boost its operations in the global market.
Weaknesses of the Organizational Structure
The main internal weakness of the organizational structure is a failure to expand to other markers in the world. The over-dependence in the US market is a risky strategy, especially when the country faces an economic recession. The success of McKesson largely depends on the US market (Pysh, 2017). Besides, the company has not addressed the challenge of new entrants adequately, leading to some competition risks.
Attaining the Organizational Goals
Based on the internal and external environments, the main goal of McKesson is to be the leading pharmaceutical company in North America, especially the USA and Canada. The main focus of the company is to dominate the North American market. The second goal is to use modern technologies to improve the efficiency and effectiveness of its operations while gaining a competitive advantage in the market. The long-term goal of McKesson is to be the main pharmaceutical company in the world.
Linking Action Plan to Vision, Mission Statements, and Service Strategy
The mission of McKesson is to provide pharmaceutical solutions that improve productivity and profitability while improving customer satisfaction. The company can enhance its distribution network and modern technologies to improve profitability and productivity. The mission of the company is to change the cost and quality of healthcare services through the use of modern technologies. Therefore, McKesson needs more investments in technologies to achieve its action plans. Also, the service strategy of the company is linked to its strong distribution network, which is aimed at improving customer satisfaction.
Summary of the Overall Strategic Plan
To enhance its long-term success, McKesson should not rely on the US and Canada markets alone. On the contrary, it should expand to other North American countries, as well as emerging economies. The company should use modern technologies and a strong distribution network to expand to other markets. However, the main limitation is the different regulations that are found in various countries, especially due to increased health concerns. McKesson may face regulatory challenges when it expands to other markets. Different regulations are affecting the efficiency of the health care industry across the globe.
References
Pysh, P. (2017, October 18). The Intrinsic Value of McKesson Corp. Forbes . Retrieved from https://www.forbes.com/sites/prestonpysh/2017/10/18/mckesson-mck-stock- value/#143003c33ed4
Tannoury, M., & Attieh, Z. (2017). The influence of emerging markets on the pharmaceutical industry. Current Therapeutic Research , 86(1) , 19-22.
