Examine the CFO being no exception. The CFO,

Examine and discuss the evolving role of the CFO. What
significant changes have occurred in recent years? What changes do you see
evolving in the next 10 years? Support each of your observations with credible
references.

Whit the CFO being such an important role, it’s no wonder it is a constantly
changing one. As business needs and customer base change, so does the role of
whomever is handling the money, with the CFO being no exception. The CFO, now,
must be just as strategic of a thinker/planner as they are with managing
figures. Having a background in accounting and/or finance enables the CFO to
step back and view a business as a system, instead of just focusing on numbers.
We’re seeing CFOs act more as business partners vs. a traditional accounting
guru (Zehnder). A CFO needs to be able to predict and act- meaning that they
need to know the market and respond to its changes, accordingly. What better
way to do this than to act as one of the CEO’s right-hand people. It allows for
a greater influence and business reach. CFOs have also been taking on larger
roles in the IT department. Sysco Software credits this shift to there being a
large financial burden, when purchasing, maintaining, and using technology. It
more than makes sense that the CFO be involved in overseeing something that can
be a large business investment (7 Emerging Trends…) That harkens more to risk
mitigation, as having a mastery over the technology used will lessen the risk
of tech-related losses. I would imagine that risks like data breaches, improper
use of a system, poor training, etc. can all lead to a financial loss, if not
properly controlled.

Prepare analysis of the selected company’s competitive
strategy using Porter’s 5 factor model. What are the competitive strengths of
the company? What are the competitive weaknesses?  It is recommended that
you acquire the SWOT report for the company (from the UMUC online Library)

I’ve chosen to research CVS/Pharmacy. I’ve been working for them, for the
past 6 years, so I thought it would be fun to dig a little deeper into the
company’s story. Porter’s 5 factor model analyzes business profitability by
looking at five “forces” that impact it. Thee four forces of Supplier
Bargaining Power, Threat of Substitutes Products/Services, Bargaining Power of Buyers,
and Threat of New Entrants all feed into the force of Rivalry Among Existing
Competitors. I used the SWOT analysis from UMUC’s Online Library, for reference
purposes https://store.marketline.com/report/a12fec31-0d18-4b30-82d2-dee3dd74d9de–cvs-health-corporation-strategy-swot-and-corporate-finance-report/
.

Supplier Bargaining Power – CVS would
buy its supplies from multiple vendors. The thing to remember is that CVS is a
Pharmacy and consumer goods retailer, with a house brand. There are three main
types of goods CVS is purchasing, to sell as end products. Raw materials to
manufacture house brands, prescription medications for pharmacy dispensing and
OTC medicines/merchandise. With CVS being the largest pharmacy retailer in the
US, suppliers of raw materials, used for house brands, would have more
leverage. CVS will either must pay the price or spend money finding a
substitute vendor. For name brand goods sole, in the stores, supplier power
would be slightly lower, as these is already an expected profit margin stores
seek to earn from the sale of goods. The supplier would have more success,
bargaining with their own supply chain, than trying to control some of the
market through CVS. To combat these instances, CVS should look more towards
establishing connections with third party businesses who are largely dependent
upon CVS, for income (growing manufacturing plants, distribution centers, etc.

Threat of Substitutes- There are
many other options to CVS, ranging from brick and mortar stores like Walgreens
and Rite Aid, to online retailers and big box stores like Wal-Mart and Kmart.
CVS’s advantage would be the ability to offer quality house brands, at a
reduced cost to its customers. Also, capitalizing on the personalized
experience of having a neighborhood pharmacist/store would attract more of the
internet-averse consumer base.

Bargaining Power of Buyers – This
is, perhaps, the biggest obstacle to CVS. Society seems to become increasingly
demanding and bargain savvy. Coupons and easy access to direct competitors have
many consumers always on the lookout for the best deal. There are many people
who prefer quantity to quality, and have no issue buying just about anything
for a large enough discount. Buyer Power is relatively high, at CVS. The name
stands for Consumer Value Store. Customers have no problem putting that to the
test. CVS constantly tries to improve its loyalty program and expand its offering
of niche items, to give itself more of a competitive edge.

Threat of New Entrants – This threat
is not at the top of CVS’s list of problems, but still should not be ignored.
New entrants often try to come on the market with lower prices and/or superior
product offerings. As you may or may not know, CVS has been expanding its reach
(think Target and Aetna) in efforts to separate itself from competition. It
would be very difficult for a new entrant to come along with as much reach as
CVS, in terms of medical management (prescriptions, on site eye doctors, on
site nurses, etc.). If CVS continues to push forward with innovations and
expanding its business reach, new entrants would be discouraged and would
become less and less of a threat. They would, most likely, seek to collaborate
with existing companies, instead of entering the scene as competition.

Rivalry Amongst Existing Competitors
– There is stiff competition, especially from Walgreens, in CVS’s market. Aside
from other pharmacy retailers and box store chains, there’s also competition
from grocery stores, independent pharmacies, online pharmaceutical retailers,
and medical practice places from places like Kaiser Permanente. CVS must ensure
that it maintains a dominant presence, and tries to do so by being an international
corporation.

 

What are the most important things that you learned
from the study of this week’s readings and assignments? Remember to always
include appropriate references

I think that the most important thing I learned is that a CFO isn’t just
someone who only handles finance. The CFO is a flexible, and very
knowledgeable, person who helps in decision making and setting the pace for a
company’s future. They seem to be taking more of a role of Operations Director,
coupled with money and resource management.  Being a proficient strategist is necessary for
a CFO to be successful.

 

Works Cited:

7 emerging trends that are changing finance: Evolving CFO role. (2016,
January 27). Retrieved January 10, 2018, from https://www.sysco-software.com/7-emerging-trends-that-are-changing-finance-1-evolving-cfo-role/
 

Published by Sysco Software

 

Egon Zehnder –
The evolving role of the CFO: the CEO’s key business partner. (n.d.). Retrieved
January 09, 2018, from https://www.egonzehnder.com/leadership-insights/the-evolving-role-of-the-cfo-the-ceos-key-business-partner.html

 

Works Referenced:

Changing Role of CFO –
Course Resource

https://www.pwc.com/gx/en/energy-utilities-mining/assets/pwc-changing-role-of-the-cfo.pdf

 

CVS SWOT Analysis

https://store.marketline.com/report/a12fec31-0d18-4b30-82d2-dee3dd74d9de–cvs-health-corporation-strategy-swot-and-corporate-finance-report/