Walgreens Management Challenges
Lauren Smith
August 11, 2015
MGT2037

It all started with Charles R. Walgreen and an innovative idea to change the way pharmacies and drug stores were run. After leaving Dixon, Illinois Walgreen started his journey to Chicago where he worked a long side many innovative pharmacists of his time. He had a strong desire to give customers exceptional customer service, give customers a selection of many goods that were affordable, and to offer customers high quality prescriptions while keeping costs low. He decided to open Walgreens Drugstore and never imagined that one day Walgreens would be the largest drugstore chain in the United States. Walgreens may be the most successful drugstore chain, but it certainly didn’t get this way without its fair share of challenges along the way. By 1930 there were over 500 chains and was well on its way to becoming a major contender in the pharmacy business. When the Great Depression hit, like any other business his stores were affected by the slowing dying economy. However, he used this time to keep changing his business for the better. Upon his death in 1939, Walgreen left his company and well trained management team to his son, who continued to keep the chain alive and thriving and making it the Walgreens we know today. A major blow came to the iconic drugstore in 2011. For the first time since its opening, Walgreens faced financial hardships. Costs of operating were outrageous and were out weighing the return profits; investors and shareholders weren’t making any money and hadn’t been. According to John Palizza, a graduate business professor at Rice University, "What started to happen in the mid-2000s is they got so enamored of growth that they lost sight of the expense line,” (Sweeney, 2011). Management needed to find ways to cut costs and still provide the sense of community that Charles Walgreen intended his company to have. CEO Gregory Wasson strengthened his relationships with drug plan administrators and began using other drug dispensary methods other than keeping it all in the back of the stores. A short year later in 2012 Walgreens was faced with another challenge. They changed their strategic model and reinvented itself to focus on improving healthcare. The management team came up with a three tier plan of action to improve their focus. Part 1 allowed them to shift the focus from retail to a more health centered store. They remolded the way the pharmacy ran, created in house clinics where immunization and health screenings are given. Secondly, with the increase of technology, they invested in an in IT upgrade that would allow them to have any patient information at their disposal. It even gave patients that ability to open their online portals and access any information regarding their prescriptions and other health matters. “Through the use of technology, physicians have real-time access to medication adherence, and pharmacists have information about physician encounters. When patients come to the store to pick up their prescriptions, pharmacists can advise them on behalf of physicians,” (Jung, 2012). Lastly, they wanted their pharmacist to be a more active role in patient care. Along with filling prescriptions, Walgreens management wanted the pharmacists to have a more one on one interaction with patients and build a sense of community, not only in dealing with prescriptions, but any health related topic. Again in 2012 Walgreens took a hit and came under public scrutiny for unethical acts. “Drug Enforcement Agency (DEA) accused the pharmacy chain, Walgreens with "endangering public safety" and prevented Walgreens from shipping OxyContin and other dangerous painkillers from their Jupiter, Florida distribution center,” (Skolek 2012). Part of the DEA’s job is to monitor the ordering patterns of pharmaceutical companies and they noted that a few Florida Walgreens were ordering astronomical amounts of OxyContin. On average a pharmacy will order around 73,000 OxyContin pills per year, these Walgreens in Florida were ordering well over 2 million pills in a single year, red flagging them by the DEA. “Fake prescriptions are being presented to a pharmacy, the addicts and dealers often get the prescriptions from clinics, known as "pill mills," where doctors prescribe the drugs with virtually no medical history being obtained from the "patient." It is a "cash and carry" transaction. Give the pill mill doctor the cash and carry out your drug of choice,” (Skolek, 2012). Narcotic abuse is quickly becoming an epidemic here in the United States. To see such a popular and successful chain’s name attached to this could have been detrimental to the company. Harming the wellbeing, or even being accused of harming, of individuals is a major ethical issue. In this instance filling what were believed to be fake prescriptions is harming the good of the community by allowing drug addicts to keep getting their fix without any real inquiries into their problem.
The most recent feat Walgreens corporate management has overcome is the completion of their merger with Alliance Boots. CEO Gregory Wasson had a goal of taking Walgreens internationally and it has been set in motion. Alliance Boots, headquartered in Nottingham England, “In 2012 Walgreens purchased a 45% stake in Alliance Boots for $6.7 billion, with an option to complete the acquisition for an additional $9.5 billion,” (Walgreens Merger Set to Proceed , 2014). Upon completion of this merger Walgreens Boots Alliance Inc was formed. New acting CEO of Walgreens Boots Alliance, Stefan Pessina states, “We have forged a worldwide health care champion, becoming global gives us the ability to generate significant and sustainable benefits for local markets and all stakeholders,” (Hurst, 2014).
With many changes and challenges over time, the future for Walgreens is high. It is the largest and fastest growing drugstore in the United States. At the end of the fiscal year in 2010 Walgreens had its highest recorded sales over 67 billion dollars, an average income of about two billion dollars, and is basically a debt free company. With a good management team and system in place in the corporate world of Walgreens this company will continue to grow.

Bibliography
Hurst, E. J. (2014, 12 31). Walgreen-Alliance Boots deal is complete . Chicago Tribune .
Jung, A. (2012). Walgreen's Strategic Transformation . Retrieved from EY:Building a better working world : http://www.ey.com/GL/en/Industries/Life-Sciences/Walgreens-strategic-transformation
Our History. (n.d.). Retrieved from Walgreens: http://www.walgreens.com/topic/about/companyhistory.jsp
Skolek, M. (2012, 08 11). Walgreens, OxyContin Profits, Ethical Responsibility and the DEA. Retrieved from Salem News: http://salem-news.com/articles/september232012/pill-deaths-ms.php
Sweeney, B. (2011, 07 16). Drugstore Drama: Old ways no longer work for Walgreen. Retrieved from Crain's Chicago Business : http://www.chicagobusiness.com/article/20110716/ISSUE01/307169974/drugstore-drama-the-old-ways-no-longer-work-for-walgreen
Walgreens Merger Set to Proceed . (2014, 08 18). MMR, pp. 1,10.