Doing the right thing first is seldom easy. CVS Caremark announced hat it would become the first national pharmacy chain to avoid selling cigarettes along with other tobacco products altogether. The company’s chief executive, Larry J. Merlo, said “We came to the decision that cigarettes and providing medical care just don’t go together within the same setting,” based on the New York City Times.
It is a gutsy, principled and potentially expensive move. It’s especially gutsy, and controversial, to get a publicly traded company.
The initial estimates are that the decision will definitely cost https://Locationsnearmenow.Net/CVS-Near-Me-And-CVS-Hours/ about $2 billion in sales, or about 17 cents per share of stock, annually. I suspect these estimates are probably low. CVS may only sell $2 billion in cigarettes and tobacco products, although not many customers just purchase a pack of cigarettes whenever they proceed to the drugstore. Once they are there, they probably pick up other things too. Maybe milk. Maybe candy. Maybe the prescriptions they need to counter the numerous harmful effects of smoking.
CVS is increasingly moving toward providing more health services at their stores. The pharmacy chain provides the second largest variety of retail locations in the united states, 800 in which include “Minute Clinics” that offer basic care for common ailments and preventive measures like flu shots. Merlo has said CVS desires to add 700 more such clinics by 2017. The clear narrative CVS hopes to convey to the public is that it is actually a company less about selling assorted retail products and a lot more about meeting health care needs which do not require a visit to the doctor.
I actually have without doubt that, as CVS says, companies focused on protecting health have zero business inside the tobacco business. A few will probably argue they may have no business in, say, the candy business either. I don’t buy that logic, though. Candy will not inexorably poison us as tobacco does.
If CVS were a privately held company, the analysis could stop there. Private business people can do anything they want using their companies. They can choose to forego profit for principle.
A telephone call like this one is tougher for your directors and managers of the publicly traded enterprise like CVS. These people have a fiduciary duty to shareholders, which duty generally takes the type of maximizing the long-run value of the home – which is, the company – entrusted to them. CVS may reason that its long-run value is enhanced by sitting on principle this way. It seems like clear that the argument will, in large part, concern positioning the company to adopt a more substantial share in the healthcare dollar moving forward. The company’s leadership may also reason that standing on principle is probably going to draw some customers for them, even since they lose others.
Maybe that logic is sound, but it is not going to be simple to prove. I am certain someone will file a lawsuit obliging CVS Customer Service to prove it, too. Unfortunately for CVS’ directors and management team, the likely effect on revenue and customer traffic is far more easily quantified compared to the projected and intangible benefits they presumably hope this decision can provide.
Meanwhile, CVS is doubling down on its position. It will not only stop selling tobacco products completely by October, but it will launch a “robust national quitting smoking program” this spring, the La Times reported.
Although some shareholders may be hard to win over, CVS’ decision is drawing praise from medical professionals and antismoking groups. Kathleen Sebelius, secretary of Health insurance and Human Services, said in a statement, “Today’s CVS/Caremark announcement helps bring our country closer to achieving a tobacco-free generation.” Dr. Risa Lavizzo-Mourey, president and chief executive officer from the Robert Wood Johnson Foundation, said from the decision, “CVS is clearly establishing a leadership position to make the nation healthier as well as in creating a culture of health.” (2) Such public endorsements will probably help CVS justify its choice, though they may not be enough alone to appease shareholders right away.
I don’t think CVS does wrong by doing the right thing. Even a public firm can lead by example, and the demonstration of a company inside the healthcare business making its customers’ health its chief business focus is actually a powerful one. Time will zrfhfn if CVS’ shareholders will reap the rewards of being patient with this change. In every case, I think the positioning of https://Locationsnearmenow.Net/CVS-Pharmacy-Hours-Open-Close/ – besides being ethically strong – has sufficient business justification that courts should refrain from second-guessing it. If shareholders are unhappy, they can elect a brand new board to pick new managers, or they can just sell their shares.
Congratulations to CVS on obtaining the guts to go first. This nonsmoker, at the very least, is ready to walk an added block or two to show my appreciation through my purchases. The walking is going to be great for me, too.