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Kelvon Glass INT 640 Dr. Linda Ueltschy 3-1 Milestone One: Situational Analysis and Situational Target Market Summary

II. Situational Analysis CVS Health runs its company using a M-form organizational structure. The structure has multiple divisions or subsidiaries, such as CVS Caremark, CVS Pharmacy, MinuteClinic, and the Brazilian subsidiary Drogaria Onofre. In addition, this corporate structure is cooperative in terms of the divisions’ cooperation in sharing information and resources, such as retail pharmacies’ physical space shared with MinuteClinic clinics (Anderson, 2019). CVS has locations in every state along with the U.S. territories. The only country that had a global presence was Brazil when CVS bought a subsidiary named Drogaria Onofre in 2013, the pharmacy had 51 stores. CVS sold the company in 2019 (Reuters, 2019). Company’s Product Line CVS Health has a few subsidiary services from retail locations, pharmacy locations along with providing healthcare benefit opportunities. They also have corporate offices throughout the United States. In 2023 46% of CVS Health revenue came from Pharmacy services in the majority of the locations across the country the pharmacy is located in retail outlets. The Retail outlets of CVS Health made 6% of the revenue for 2023 which is a combination of over the counter drug and everything else. HealthCare services for CVS Health are currently the second leading revenue generator with 26% (Trefis, 2023). Their HealthCare, retail, and pharmacy services are only within the U.S. with no international footprint, throughout the world in many countries needing basic health priorities. Expanding to Brazil till create a larger revenue. CVS Health is currently leading in pharmacy retail companies with 25.6% of prescription revenue in 2022 on retail/LTC pharmacy and pharmacy services. Walgreens comes second with 15.5% and RiteAid being 7th place with 2.3%. Demographic and Composition

CVS Health leads their mission statement strives for “building an entire world of health care around each and every person we serve, no matter where they are on their journey. We listen, show empathy and deliver innovative solutions that serve people’s unique needs and earn their loyalty. Because how we deliver our services is just as important as what we deliver “ (CVS Health, n.d.). Brazil is the most populated country in South America with 217,036,475 as of today based on data from the United Nations which ranks 7th in the world. The median age within Brazil is 33 with 20.27% being ages 0-14, 69.85% being 15-64 and 9.88% being 65 or older (GlobalEdge, 2022). Brazil has a life expectancy of 76.18 years with infant mortality being 12.9 per 1,000 live births. 98% of Brazil speaks Portuguese and the country has the second largest christian population in the whole world (Worldometer, 2023). The Country is tolerant to all religions and cultures but the majority is christian base which should help with the marketing plan and ideas as it will be easy to offer modern medical and health advice or assistance. Socio Cultural Environment The country is defined by a socioeconomic status which is socially reinforced. The pay gaps between classes are significantly large which show throughout between lower, middle and upper. Brazil personal relationships and group focus relies on the ability to work together and interpersonal approach for working and social activities. In the culture they rely on building trust and making sure that they can have successful business interactions. business relationships develop between people more than the companies they represent. If a company changes a lead representative or negotiator, business dealings may stop until the new person develops their own relationships. Brazil is a very formal country, always learning how to address people before speaking to them, asking how they would like to be addressed using correct surnames and

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honorifics. Ask personal questions and check with a colleague or local national about rules of protocol and etiquette about specific circumstances since using proper etiquette is important (SNHU Culture Wizard,2023). Skin color plays a major role within the Brazilian community, Although you may not observe any overt discrimination, it is important to be aware of underlying social systems. As in many post-colonial societies, there are sometimes embedded biases towards people with darker skin color. B razilians generally value experience and camaraderie among their colleagues, and they may have an established personal relationship with their boss. However, they may defer to a boss’s instruction more readily than most egalitarian societies, and will likely expect those above them to make decisions ( SNHU Culture Wizard, 2023). External macro environmental The risks that I see can hurt Brazil chances in the business sector and create success within the economy. One being Brazil having a sensitive fiscal position, its position in 2023 shows a deterioration driven by sluggish revenues, large spending increases mostly related to expansion of Bolsa Familia social benefits, and settlement of the remaining stock of court- ordered "precatorio" payments (FitchRating, 2023). Another one is high costs of production (wages, energy, logistics, credit) that harm competitiveness, failing products getting to the distribution on time and making sure products are ready. Poor infrastructure and inefficient customs processes mean getting products to a destination can often be a lengthier process than exporters are accustomed to experiencing. Companies should be prepared to face fees and delays in getting goods into the market (International Trade Administration, 2023). Brazil shows a great opportunity because they have the largest healthcare market within South America. U.S. companies can be competitive in the Brazilian market when offering high

quality, innovative, and cost-competitive products. The leading sub-sectors for pharmaceuticals are: Chronic diseases (blood pressure) , diabetes, cardiovascular, contraceptives etc. Trade environment With Brazil being the biggest market in South America, the country has shown its business environment is acceptable. The debt collection within the country is not always efficient. Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable (Coface, 2022). Brazil has a no trade agreement that imposes high taxes and tariffs on imported goods and services from the U.S. and other countries. Moreover, Brazil applies federal, state, and local taxes and charges to imports that can effectively double the cost of imported products in Brazil (International Trade Administration, 2023). Situational Market Summary Sending CVS Health to Brazil would improve their health within the country. This will show the strengths along with opportunities to combat against the weaknesses and prevent threats. Strengths and External Opportunities Brazil is the largest country in South America with a life expectancy as I mentioned before is 76.18, because the life expectancy is pretty well within brazil many if the aging population can utilize the healthcare services. Which can be a major demographic CVS would like to gain and attract for providing healthcare services for its pharmacies. Major infectious diseases in Brazil include HIV/AIDS; tuberculosis; arboviruses such as dengue, chikungunya, and Zika; malaria; bacterial diarrhea; hepatitis; and neglected tropical diseases, such as Chagas,

leishmaniasis and schistosomiasis. Brazil had a major Zika outbreak from 2015-2017 ( Global Research in Brazil | NIH: National Institute of Allergy and Infectious Diseases , 2023). CVS Health actually uses technology for its operations to bring in customer experience and bring in more business. A tech advancement employed by CVS Health is its mobile app, using it to refill their prescription, pull up medical information and make payments on their accounts. Because of new technology the marketing communications can spread the use of CVS health throughout the country putting in new locations where one is needed. Strengths and External Threats CVS Health can be built in Brazil using the way they built here in the United States but at a faster rate because of current technology and accessibility. U.S. Based companies also have to deal with government laws and guidelines when importing goods along with tax regulations. Which can lead to drug pricing problems with the rising cost of drugs along with prescriptions will show great threat for CVS Health corporation's ability to keep low drug prices. Weaknesses and External Opportunities At the moment CVS Health is a U.S. market company and is only limited within the country. Just like America, Brazil has access to westernized technology to spread CVS Health such as Commercials, Digital footprint such as website ads, and mobile apps for CVS. Culture Crossing is an evolving database of cross-cultural information about every country in the world. The country guides to culture allow people from all walks of life to share essential tips with each other about how to navigate our increasingly borderless world with savvy and sensitivity (Global Edge, 2023). Weaknesses and External Threats

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CVS Health faces a couple intense other retail pharmacy chains just like Walgreen, RiteAid and many online pharmacies. Healthcare industry within the U.S. and worldwide is often heavily regulated. Changing of healthcare policies and regulations could affect CVS Health in a negative way. If the Brazilian government has healthcare acts or any type of medicare pay regulations for its residents can be one example of policies that will hurt CVS. Synthesis of Factors CVS Health has amazing opportunities to expand to other countries for a global expansion especially in Brazil. With Brazil's population and country size they will greatly benefit with healthcare services along with retail healthcare. CVS Health has had a rich history and leading service in the pharmacy brand.

References: Global Research in Brazil | NIH: National Institute of Allergy and Infectious Diseases . (2023, February 10). Www.niaid.nih.gov. https://www.niaid.nih.gov/research/global- research-brazil#:~:text=Brazil%20is%20the%20largest%20country International Trade Administration. (2023, March 21). Brazil - Market Challenges . Www.trade.gov. https://www.trade.gov/country-commercial-guides/brazil-market- challenges CVS Health. (n.d.). Our Purpose | CVS Health . Www.cvshealth.com. https://www.cvshealth.com/about/our-people/our-purpose.html Worldometer. (2023). Brazil Population (2019) - Worldometers . Worldometers.info. https://www.worldometers.info/world-population/brazil-population/ Fein, A. J., & Ph.D. (2023, March 8). The Top 15 U.S. Pharmacies of 2022: Market Shares and Revenues at the Biggest Companies . Drug Channels. https://www.drugchannels.net/2023/03/the-top-15-us-pharmacies-of-2022-market.html CVS Health Revenues: How Does CVS Make Money? (n.d.). Trefis. https://www.trefis.com/data/companies/CVS/no-login-required/MX1D0hKT/CVS- Health-Revenues-How-Does-CVS-Make-Money- Reuters. (2019, February 21). Pharmacy chain CVS eyes exit from Brazil -report (Reuters, Ed.) [Review of Pharmacy chain CVS eyes exit from Brazil -report ]. https://www.reuters.com/article/idUSL1N20G0K1/

ShieldSquare Captcha . (n.d.). Www.globaldata.com. https://www.globaldata.com/data- insights/retail-amp-wholesale/number-of-cvs-health-stores-globally/ Globaledge. (2019). Brazil: Introduction . Msu.edu. https://globaledge.msu.edu/countries/brazil Home . (n.d.). Snhu.culturewizard.com. https://snhu.culturewizard.com/app/cp/076/Home

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