Duane Reade, Bain Capital, CEO Anthony Cuti
Since the inception of Duane Reade in 1960, the drug chain has recorded remarkable growth from three stores started by the Cohen family comprising Eli, Abraham and Jack Cohen. The company named after streets from where the location of its first full-service drugstore between the Manhattan streets of Duane and Reade, sold to Bain Capital in 1992 and five years later to DLJ completed its IPO in 1998. However, the acquisition by Oak Hill Capital partners
turned it into a private company in 2004. The driving force behind the company growth is the store-layout strategy where each store comprises four sections: beauty and cosmetic, pharmacy, seasonal products, alongside household and grocery divisions. Under this layout, the cosmetic section occupies the space to the entrance, pharmacy to the rear space as the other sections occupy the rest of the storage space.
The growth orientation strategy introduced by the then CEO Anthony Cuti, saw the company hit 249 stores by 2005 from a figure of 59 in 1996. In spite of
the growth recorded in operations points and the acquisition of Rock Bottom Stores Inc., it has not lived to the anticipations as long-term debts accumulated to $ 405 million in 2008. Although Oak hill injected $125 million to prevent it from defaulting while refreshing the Chain's image, Walgreen acquired it for $618 million in Cash and $457 million debt assumption (Dealbook,
[...] Business Analysis-Duane Reade 1.0 Overview of Duane Reade Since the inception of Duane Reade in 1960, the drug chain has recorded remarkable growth from three stores started by the Cohen family comprising Eli, Abraham and Jack Cohen. The company named after streets from where the location of its first full-service drugstore between the Manhattan streets of Duane and Reade, sold to Bain Capital in 1992 and five years later to DLJ completed its IPO in 1998. However, the acquisition by Oak Hill Capital partners turned it into a private company in 2004. [...]
[...] The launch of Wellness65+ program for the elderly patients, targets the high spending of this segment. Furthermore, the company has diversified its product portfolio through private-label brands and same-store sales growth. The company competitiveness arises from its rising operations of generic drugs, sustenance of prescription plans to its existing customers and the Wellness+ loyalty program to improve its front-end (Trefis Team , 2013) Internal Analysis The success of Duane Reade Company lay in the strengths it portrays in its internal structures that yields competitive edge over other competitors. [...]
[...] (2010, February 17). Walgreen to Buy Duane Reade for $ 1.1 Billion. Retrieved December from http://dealbook.nytimes.com/2010/02/17/walgreens-to-buyduane-reade-for-1-1-billion/?_r=0 Foster, B. (2011, December 19). Top 10 trends for health care and wellness in 2012. Retrieved December from http://drugstorenews.com/article/top-10-trends-health-careand-wellness-2012 Goldstein, J. (2008, January 24). Wal-Mart Tries Pharmacy Benefit Management. Retrieved December from http://blogs.wsj.com/health/2008/01/24/wal-mart-triespharmacy-benefit-management/ Heise, J. (2009, October). Global Trends in Pharmacy. [...]
[...] Besides, the company should restructure their debt refinancing plans to accommodate their growth strategy and diversified product portfolio in generic drugs. This would prevent the company from experiencing strained resources. Involving the targeted customers during feasibility study will provide the company with benefits of offering customerspecific products and eliminate poor merchandise selections. Lastly, continual review of internal structures of the company and regular environment scanning would eliminate weaknesses and ensure its operations are up-to-date with environmental trends Bibliography Castner, M., Hayes, J., & Shankle, D. (2009, April). The Global Pharmaceutical Industry. Retrieved December from https://web.duke.edu/soc142/team2/political.html Dealbook. [...]
[...] Finally, since the acquisition of Duane Reade by Walgreen it benefits from the bargaining power enjoyed by other subsidiaries. e. Buyer power The industry encounters moderate bargaining power from insurance companies and less from power from individual consumers. However, they are likely to face more buyers' power from prescription benefits managers as the government puts cost-cutting pressure on the healthcare industry (Holsted, Jones, & Levin, 2012) Competitor Analysis Although Walgreen acquired Duane Reade drug stores, the company faces stiff competition from stores operated by Wal-Mart, CVS Caremark Corporation, and Rite Aid Corporation. [...]
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