Rite Aid is a Fortune 500 company in the United States. Its headquarters are in East Pennsboro Township in Pennsylvania near Camp Hill. The company began its operations in 1962. Its founder was Alex Grass. Company started as a single store in Scranton, Pennsylvania. It is a public company since 1968 when it joined the American Stock Exchange. It has grown tremendously with time. In addition to being the largest drugstore chain on the East Coast, it is also the third largest in the United States. The company is in public trade on the New York Stock Exchange under the name RAD since 1970. Its rank on May 2012 in Fortune 500 Largest Corporations in the US was #113.
Overview (vision, mission), Goals and Objectives
The mission statement of Rite Aid leads the employees to know the kind of customer service the company wishes to create in its operations. This is crucial since the employees are involved in the daily operations of the company. Rite Aid’s missions Statement is:
“To be a successful chain of friendly, neighborhood drugstores. Our knowledgeable, caring associates work together to provide a superior pharmacy experience, and offer everyday products and services that help our valued customers lead healthier, happier lives”. Zilizo kwenye akiba - Zinazofanana:The objective of the company is to provide customer satisfaction as well as be the leading drug provider. To achieve this, the company has set core values that guide its employees. One of the values is passion for its customers. The company creates a high level of loyalty to its customers to provide better services. It also encourages, inspires and motivates its associates to reach their full potentials and create conducive working environment. The company is also dedicated to winning through teamwork. It is also committed to respect and diversity for the individual. The company cares for its neighbors by involvement in corporate social responsibility programs (Morgan & Morgan 2010).
Current Business Strategies
Other than its values and employee motivation, Rite Aid employs unique business strategies to maximize its sales and maintain good customer relationships. The company is a member of the New York Stocks Exchange. Therefore, it sets policies which will favor the price of its stocks to maximize its market capitalization. One of the unique strategies that Rite Aid uses is the customer loyalty and rewards program. In April 2010, it launched the use of the Wellness plus Card in all its stores. They do not charge for membership. The card also has several benefits. It guarantees free wellness and health advantages. With the card, the customer can get drug discounts, shopping discounts and special prices.
Analysis of Current Situation
The company is third after Walgreen and CVS in drugstore chains in the country. It sells beauty aids, greeting cards, convenience items, and prescriptions. The prescriptions account for more than two-thirds of the company’s total sales. It has a total of 4665 stores in around 30 states in the East Coast (District of Columbia). The company also sells private-label products. The current Chief Executive Officer is John Standley. He was promoted from the Chief Operating Officer. The chairperson of the management board is Mary Simmons, the former CEO. Ken Martindale is the current Chief Operating Officer after promotion from Pathmark’s co-President.
Industry and Company Profile
In 1972, Rite Aid had 267 stores in 10 different states in the US. By 1981, it was ranked as the third largest store in the States. Its sales went beyond a $1 billion mark in 1983. After this, Rite Aid acquired a 420-store which led to its expansion to more than 2000 different drug stores along the East Coast. In 1987, Rite Aid acquired another Company by the name of Gray Drug. This further expanded its locations on the East Coast. The company also absorbed Read’s Drug Store from Maryland. It also went ahead to purchase a company in Ohio on 1989 by the name of Lane Drug owned by People’s Drug. These were 114 units which further expanded its market. The company also owns drug patents from both acquisition and inventions. Currently, it has 640 stores in New York alone. Other major states with maximum number of drugstore are California and Pennsylvania with more than 560 stores each.
Internal and External Environmental Analysis
Rite Aid employs different professionals as any other pharmaceutical companies. The main population of the company’s employees includes salesmen in different drugstores. It also has store pharmacists who deal with prescriptions. The company also has different managerial positions in a hierarchy depending on the regions of control. It also has customer complaint divisions in each store to handle customer relations. It employs medical and pharmaceutical researchers to deal with medical researches and inventions of new drugs and prescriptions. It also has marketing, sales, purchases, technology and research departments all under the Chief Executive Officer. Externally, the company interacts directly with the customers and the government. The company also runs different community programs to support the wellness of its immediate community. It is also in direct link with health and clinical facilities with the aim of communication of data and information about changes in medical prescriptions and any trends in the medical field.
The company has experienced some challenges as well as successes in recent years. It had a major scandal in accounting which led to departure of top executives and affected CEO Martin Grass who served six years in prison. This scandal led to drastic fall in market capitalization. The company also had some problems in the pharmacy complaint department. It had to implement another complaint program to curb numerous customer complaints. The company paid $7 million in settlement of allegations that it had submitted false claims for prescriptions to the government’s health insurance. The company also faced major losses both in revenues and share prices in 2007 after acquisition of Brooks/Eckerd stores. The company, however, has managed to rise from these challenges. This is due to their strategic plans by their governing committee and leadership from their CEO, John Standley. The company has also come up with private brand patents and unique customer reward and loyalty programs which have helped it retaining its markets.
The revenues of the Rite Aid Corporation have grown in each fiscal year. Recently, its revenues grew from $25.2 billion to $26.1 billion in one fiscal year, respectively in March 2011 and March 2012. This was a great increase since the company’s revenues had gone down in the year 2010. The company blamed this decrease on the global economic recession which affected all major companies not only in the US but also in the international markets. The revenues as at February 2010 were $25.7 billion down from $26.3 billion in 2009. The company’s ability to reduce the costs in terms of the percentage of sales meant for administrative, selling and general costs have been impressive. It has reduced these costs to 25% down from 25.61% in the 2011/2012 financial year. The company has also experienced a tremendous improvement from $555.4 million to $368.6 million in terms of the bottom line losses (Riggs & Bonk 2008).
Strategy and Recommendations
The Rite Aid Company is currently struggling from an outstanding debt it owes, which is over $6 billion. This debt takes over 80% of the total assets of the company. Therefore, the strategic recommendations of the company should be to reduce the debt which takes a large percentage of their revenue. The debt is so big that the total assets are $2 billion less than the total liabilities. It should constantly upgrade their assets to avoid insolvency. Company should also use technology that is up to date. These technologies include firewall data security and e-scribing among others. Company should also invest heavily in marketing to curb competition from other major pharmaceutical companies. It should also struggle to maintain their assets in compliance with federal laws.
The Rite Aid Corporation exhibits different new trends in the market with the aim of market penetration. It has recently launched the use of mobile location where one can find the nearest store with the use of a mobile phone. With the right leadership and policies, the company will rise from the debt problem and soon become the top drugstore chain in the States. It should also invest in market penetration to the west and not only focus on the east. This way, company will eventually pay its debts and increase revenues. The essay has outlined information about Rite Aid and its market strategies with the aim of expansion.