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Final presentation rad

  1. 1. Case Analysis<br />Presented By: Hannah Muegge<br />Rebecca Quinones<br />Emmanuel Rodriguez<br />Ross Rotwein<br />
  2. 2. Presentation Overview<br />History<br />Internal Mismanagement<br />Unionization<br />SWOT Analysis<br />Proposed Solution<br />Conclusion<br />
  3. 3. RITE AID Corporation - History<br /> Mission Statement<br />To be a successful chain of friendly, neighborhood drugstores. Our knowledgeable, caring associates work together to provide a superior pharmacy experience, and offer everyday products and services that help our valued customers lead healthier, happier lives.<br />
  4. 4. History(continued)<br />Began in 1958 when Alex Grass incorporated Rack Rite Distributors, Inc<br />1962: Thrift D Discount Center opened in Scranton, Pennsylvania <br />1962: U.S. federal legislation repealed the fair trade laws that fixed minimum retail prices on most products<br />1963-1983: Acquisitions and growth across the US bringing sales in excess of over $1 Billion<br />
  5. 5. THEPROBLEM: INTERNAL MISMANAGEMENT & LACK OF COMMUNICATION<br />1999: Internal investigation reveals undisclosed holdings between the Corporation and original founders, the Grass Family.<br />1998-1999: Accounting errors and discrepancies reveal losses of $1.06 billion<br />2003: Martin Grass pleads guilty, and six other former executives are charged with accounting fraud. A civil lawsuit is still pending.<br />
  6. 6. Unionization of Rite Aid<br />Closures of over 250 Rite Aid stores nation-wide<br />Company loses money and leading to poor working conditions<br />Formations of unions begin in search of fair contracts and better lifestyle<br />
  7. 7. Employee Free Choice Act<br />Employees say Rite Aid is trying to undermine the formation of new Unions.<br />EFCA would allow people to freely join a union and give them the freedom to bargain.<br />Employees state Rite Aid engages in “illegal firing.”<br />EFCA gives employees the right petition without intimidation.<br />
  8. 8. ILWU Riots<br />The International Warehouse and Water Union founded in 19th century along the pacific coast by the longshoremen<br />Riots of unfair treatment in Lancaster, California.<br />Strengthen “alliances with other unions for collective bargaining.”<br />
  9. 9. “Day of Action”<br />December 15,2010: day of protest to raise awareness of unfair treatment of workers.<br />Protests conducted at 40 different stores through-out 13 states.<br />Lancaster, California center of protests.<br />Revolted that “28 times over the increases of their insurers.” <br />400 employees in New York left without jobs due to store closures.<br />
  10. 10. SWOT Analysis<br />
  11. 11. Strengths<br />Ranked number 100 in the Fortune 500<br />3rd largest pharmacy in the nation.<br />About 4,800 stores<br />$221 million Revenue increase from 2009 to 2010 (View revenue chart next slide) <br />67.9% sales from pharmaceutical products and 32.1 % from other over the counter products. <br />Great employee benefits and over 97,000 associates.<br />E Business:<br />
  12. 12. Revenue Chart<br />
  13. 13. Weaknesses<br />Lost over $130 million 2010<br />Has closed about 229 stores.<br />Still plans to close 117as losses double.<br />Darren Beckom:Former –Rite Aid Employee<br />What’s next?<br />
  14. 14. Weaknesses(continued)<br />Credibility. Bad reputation after:<br />Rite Aid corporate bust.<br />Accounting scandal revealed.<br />Corporate officers arrested, including CEO Martin Grass.<br />Will stockholders and investors forgive Rite Aidcorporate? <br />Rite Aid has improvedand focused more onbusiness ethics. <br />
  15. 15. Weaknesses(continued)<br />Financial weaknesses<br />Rite Aid has lost $79.07 million in the last quarter of 2010.<br />The 3rd largest pharmacy has been reporting losses since 2007.<br />Results that shareholders have no more equity.<br />Rite Aid has a $6.2 billion in long-term debt. <br />
  16. 16. Opportunities<br />Advertising and Credibility recognition:<br />Non-for-profit organizations<br />Rite Aid Foundation:<br />Donated $4.9 million to Children’s Miracle Network<br />Donated $50 Thousand to American Red Cross to assist relief efforts in Japan.<br />Awarded grants totaling more than $11 million to about 820 organizations and 488 communities. <br />
  17. 17. Opportunities (continued)<br />Financial side:<br />Successfully refinanced around $343 million in loans. <br />Back in the game with NYSE:<br />More potential for prospective Rite Aid investors, and current stockholders/investors. <br />Assessed by consulting companies to improve management. <br />Rite Aid still remains one of the top pharmacies in the nation, being the 3rd largest drugstore.<br />
  18. 18. Threats<br />Two types of threats:<br />1) Internal Threats<br /> Dangers that can affect business internally, such as employees, employee turnover, union strikes, debt, management, and so on. <br /> 2) External Threats<br />Dangers that the company can encounter from the outside (externally). Examples can include: competition, demand, economy, tax increases, inflation, and so on. <br />
  19. 19. Internal Threats(continued)<br />Pharmaceutical products are not the only ones with expiration dates…<br />Unfortunately, union contracts expire as well…<br />Rite Aid’s contract withUnited Food and Commercial Workers (UFCW) Local 880. <br />Contract expired April 2010, still trying to negotiate.<br />UFCW is on strike against Rite Aid Pharmacies.<br /> Union strike is telling customers to stop supporting Rite Aid <br />This is has created more negative credibility towards Rite Aid.<br />More than 60% of sales come from pharmaceutical products!<br />
  20. 20. Internal Threats(continued)<br />Rite aid is at a $79.04 million loss in last quarter of 2010. (Income statement)<br />Rite Aid Income Statement Quarterly-11/27/2010<br />Total Revenue: $6.20 BillionGross Profit: $1.64 BillionOperating Income: $63.01 MillionNet Loss: $(79.07) Million<br />
  21. 21. External Threats<br />Competitors: None of them have net losses!<br />Walgreens Quarterly Income Statement-2/28/2011Total Revenue $18.50 BillionGross Profit $5.32 BillionOperating Income $1.21 BillionNet Income $739.00 Million<br />Publix Quarterly Income Statement-12/25/2010Total Revenue $6.43 BillionGross Profit $1.80 BillionOperating Income $488.93 MillionNet Income $342.10 Million<br />CVS Quarterly Income Statement-12/31/2010Total Revenue $24.77 BillionGross Profit $5.09 BillionOperating Income $1.77 BillionNet Income $1.03 Billion<br />
  22. 22. Proposed Solution<br />Negotiate an agreement that will suit Rite Aid, their employees, their investors, and the union.<br />Rite Aid employees need instruction regarding unions.<br />Improvement in Rite Aid communication towards their employees.<br />
  23. 23. Action vs. Reaction<br />Action is faster than reaction!<br />Rite Aid needs to act as soon as possible in order to overcome the obstacles that face Rite Aid with such threats!<br />Rite Aid is still ranked the 3rdlargest pharmacy in the nation! Rite Aid still has potential to act before reaction hits!<br />
  24. 24. Conclusion<br />Rite Aid Corporation and other unionized drug stores in the New York area have been offered an agreement by the National Health and Human Services Employees Union.<br />. Rite Aid’s part would be to recognize Union 1199 as the collective bargaining agent if more than half of their employees sign cards expressing their interest to join Union 1199<br />Rite Aid stands to gain at least $40 million through pharmaceutical sales.<br />