Walgreens' customer-oriented innovation strategy and quality management

Walgreens Stores Analysis Approach to Quality Management

Preface: Organizational Profile (Organizational Description & Challenges)

Walgreens deserves the fame and public recognition throughout America, after working on serving the community with health care products and information. Charles R. Walgreen, Sr. established the company in Gallesburg, Illinois, in 1901. The company was merely a small building, which then developed into the largest chain of drugstores.

Walgreen's unique strategy from the very beginning of its working process was giving the customers personal attention and reliability of order delivery. Since Walgreen Sr. started the store, he had invented the "two-minute drill," a famous strategy where Walgreen would take the order and engage the customers in friendly conversation while their orders were fulfilled. The orders were delivered to their door immediately, in minutes after they called.

The strategy gives the strong point on innovation, service or customer orientation and business reliability. Walgreen seems to know that innovation always works for his business. When later Charles Walgreen introduced the concept of serving hot food during cold weather in the soda fountain facility, the customers were excited. Not only they stopped at the stores to buy their prescriptions, but they also had Walgreen's food as another target. The company has been successfully implementing customer orientation in its literal meaning, giving the company rapid development. The number of stores grew into 20 by the year of 1919, and 525 in 1929. Recently they aim to open the 7000th store in 2010. The business does not only focus on medicines, but also makes the hit from malt shake, sandwiches, and daily products and electronic appliances in the recent days.

3. Strategic Planning

With more than 3500 stores established, Walgreens plan to learn more and give friendly approach to people in American community, wherever they are. Heller (2002) also helped recognizing Walgreens' plan to increase the growth even so.

The data by August 2002 showed that Walgreens have 3,884 stores, with 364 as the company grows. In average, the company has opened three stores everyday. The company still expects to see more stores established, reaching 375 other new ones in 2003. One latest discussion, perhaps due to 2010, the company would be working more to reach 7000 stores. The storeowner, Dan Jordnt had clearly stated that his company does not fear out of number; therefore it is possible that one day Walgreens opens even more than 10000 stores widespread in the U.S. For the said progress, it is reported that Walgreens made 10-12% annual sales. The president of the company however insisted that they would be able to remain on 12% every year, while analysts predicted the previous number would make sense as well (Heller, 2002).

The business people recognize this 101-year existence as phenomenal success. Walgreens' director of finance said that every Walgreen store's base is 4.5-year-old, while other competitor's store rates for 10-year-old. This means the business grows quite rapidly. They keep the organization fresh while it may take years for other companies to reach the same peak.

Strategy Development: 40

Deployment/Operation: 45

4. Customer and Market Focus

Since it first establishment, Charles Walgreen demanded the high quality of service delivered to his customers. Market Planning and Research is an individual department at Walgreens, theoretically it should be able to work under specified target. The company mission is "to offer customers the best drugstore service in America," according to the information on the company web site. So far, Walgreens is concentrating to the target of reaching American market thoroughly. Apart from selling drugs, Walgreens also operates on front-end products.

The company benefits from its well-known tradition, working towards people's image of fast delivery and personal customer care. The company claims that they work to educate professionals to cater people's need and preserve the original image of Walgreens. For this purpose, Walgreens also trains its employee for every level.

However, there is a sign that somehow there is not enough customer relationship supervision and standard from the company. So far there are also many indications that although Walgreens have separate departments in the corporation, the front level that is supposed to be reasonable to the customers, sometimes fail to keep the image in front of them.

A series of complaints were collected from PlanetFeedback.com, an Internet site that brings out community talk about services. Some of the filed complaints (which some remain unanswered) include the lack of employees on weekends, failure in filling prescriptions under different patients' name, annoying customer service, advertisement deceitfulness, and also lack of support from local store manager when customer files complaint.

Customer and Market Knowledge:

Customer Relationships and Satisfaction:

5. Information and Analysis

Walgreens has been utilizing the latest technology to maintain the information databases. Walgreens operates with an online-prescription community and its own virtual store to suit American's new trend of shopping. All store information can be accessed through the company web site. The site also houses many other types of information apart from company profile. Outside users can also gain other knowledge about pharmacy on the library. The stock information on the web site records the annual earning and customized report to every shareholder. In this way, Walgreens creates specified community to be served with important information at the earliest time.

Information about Walgreens comes from public relations department. External review of the organization performance comes from business publications and statistical record of the company growth and annual sales. The company still needs fair coverage about issues regarding the organization, since it would be unfair for public view if the organization only releases review on one angle only. There should be recorded that the company needs to compensate for $185,000 for its photo processor activity that endangers the environment and has violated the Department of Environmental Protection regulation (Boston Business Journal, 2003).

Measurement and Analysis of Organizational Performance:

Information Management:

6. Human Resources

For a high-class company like Walgreens, human resource is a very important element that leads to company success. Walgreens develops solid employee support, ranging from educational support, job openings for interns and permanent workers, and also competitive remuneration not only for employee's salary but also family benefits.

Walgreens invests for qualified pharmacists by providing Educational Assistance Program or the Pre-Pharmacy Educational Assistance Program. The program provides loans for employee to continue study in pharmacy school. The company also provides loans for employees who take four-year pharmacy study with certain requirements called Progressive Pharmacy Student Educational Assistance Program. There is also Location-based Pharmacy Student Educational Assistance Program for employees who study in certain states and wish to remain working in the same area.

The company also affords the basic benefit needs that also affect the employees and their family. The benefits range from basic salary, medical and dental insurance, prescription and employee discounts at Walgreens stores, onsite childcare center, shuttle transportation service and future financial planning or retirement program. There is no outside review about the benefit packages and how the service is accomplished; however those benefits are mentioned on the company web site.

About 35 different departments work significantly at Walgreens, covering different aspects from accounting and auditing, technology, communication, strategy, market research and planning, E-commerce, legal, and also performance development.

Work Systems:

Employee Education, Training, and Development:

Employee Well-Being and Satisfaction:

7. Process Management

As known before, Walgreens seems to follow the latest trend of innovation, despite its traditional mission orientation. The company works on its own pharmaceuticals supply and develops the strong chain relations within the departments. It also invests quite expensive project on technology, to support the delivery and recording services and outlaw the competitions.

Currently, Walgreens receives about 70% of its orders in electronic prescriptions using Intercom Plus. In the future, electronic prescription will be a standard in drug store industry. Walgreens also work together with the doctors in local areas ho have been starting to write electronic prescriptions. For Walgreens, this technology implementation puts it forward than other drug retailers. (Parks, 2001)

Recently, Walgreens also works together with AC Nielsen U.S. In using the Category Business Planner (CBP), an AC Nielsen web-based category management tool. With the Category Business Planner, Walgreens gains automatic pre-defined analysis of information about products sales and supplies. It enables the stores to manage the products they sell and also the cooperating product manufacturers and let them select the best ones according to AC Nielsen review, moreover this process is available online for speed and convenience (Business Wire, 2001)

Product and Service:

Business Processes:

Support Processes:

8. Business Results

Business Week Online recorded Walgreens on the 38th position of the best performers in industry. This position is advanced towards other competitors in drug store business. Walgreens reported to successfully reach 17% profit in 2002. It also beat the closest competitor, CVS in 2002. The success of the store, according to Walgreens CEO, David Bernauer, lies on the old belief about people. The company claims to always give people (the customers and the employees) the best attention and needs they want. This is why Walgreens implement one-store system, which besides fills in prescriptions and sell mild medicines also always looks at the opportunity of retails.

Customer-Focused Results:

Financial and Market Results:

Human Resources Results:

Organizational Effectiveness Results:

From this sample analysis, Walgreens gets total score of 890. The score reveals that after 101 years of operation, the company has found its effective and best form, which only needs to strengthen the standard and continue with the well-know technology and customer-oriented strategy. The company now has quite solid structure, network, and extensive capitals and shareholders that enable the company to operate and enlarge the chain. On the other hand, expanding the ring needs intensive in-retrospect and internal development; therefore the company can strengthen the human resources and provide them reasonable social skill training and standard customer care policy and supervision. It is necessary to maintain the customer satisfaction, the main mission that the company claims to fulfill.