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Cvs Caremark to Drop Tobacco

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February 25, 2014

Essay 2 CVS Caremark
Steven Graham
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Background and Introduction of CVS Caremark Decision

On February 5th CVS Caremark announced that they would cease the sale of cigarettes and other tobacco products in its stores. This measure is scheduled to begin by October 1, 2014. Once this action is taken, CVS Caremark will be the first national pharmacy chain to drop the sale of tobacco products. The President and CEO of CVS Caremark, Larry Merlo, stated the following, "Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health." Tobacco sales represent $2 billion in annual revenue for CVS Caremark. This is causing many to question if this is a good move for CVS Caremark.

Analyzing this Decision with Respect to Key Stakeholders It seems crucial to analyze the aforementioned decision with respect to three key stakeholders. The stakeholders that will be analyzed are CVS Caremark employees, shareholders, and customers. This is not an exhaustive list of stakeholders, but it represents fundamental primary stakeholders. Employees of CVS Caremark have a significant stake in the company’s decision to drop the sale of tobacco products. Some employees may fear the significant profit loss that this decision represents. This fear would likely be compounded by the lack of details that CVS Caremark has provided on how they will combat this profit effect. Danielle Marcus, a spokeswoman for CVS Caremark, stated that CVS has “identified incremental opportunities that are expected to offset the profitability impact.” Unfortunately, she failed to identify any of them.2 Employees rely on the profitability of the company they work for to ensure job security. Employees, however, may be pleased to work for a company

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