CVS Lives up to its Mission by Banning Cigarette Sales

Tobacco

While nearly every large public corporation has a mission statement that explains its values and direction, not every corporation lives up to its mission. This can be particularly difficult when social responsibility conflicts with profitability.

Case in point: CVS Pharmacy, the second largest pharmacy chain in the U.S.

Last year CVS stopped selling tobacco products, and declined to enter the growing e-cigarette market. A year after the move, CVS released research that it claims shows how its decision encouraged Americans to buy few cigarettes. In states where CVS has a 15% market share, there was an overall market drop of 1% in sales of cigarettes. While 1% might seem very small, it represents an estimated 95 million packs of cigarettes, or five fewer packs per smoker and a substantial contribution to the diseases associated with tobacco. Corresponding to the drop in cigarette sales, sales of nicotine patch products increased 4%.

The move cost the company an estimated $2 billion in revenue. There may a cost to social responsibility, but the gain benefits the larger society and shows us that mission is important to strategy.

Group Activities and Discussion Questions:

  1. Discuss the importance of mission and vision in the strategic planning of a company.
  2. Bring up CVS’ Web site and social responsibility statement: http://www.cvshealth.com/social-responsibility
  3. The CVS press release can be viewed at: http://www.cvshealth.com/content/cvs-health-marks-first-anniversary-tobacco-removal-new-data-decision’s-impact-extends
  4. How does the company’s action to quit selling tobacco products match its mission?
  5. Discuss the difficulty of taking potentially profit-reducing action in order to meet mission.
  6. Divide students into teams. Have each team select a company that interests them and have them locate the company’s mission and values statements. Do these companies match the statements?

Source: Bloomberg, Brandchannel.com, other news sources

Leave a comment

Filed under Classroom Activities

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s