Rite Aid Corporation: An Uncertain Future (Simplified Chinese version)
(4 pages of text)
Case (Pub Mat)
Rite Aid Corporation (Rite Aid) shareholders had turned down a US$3 million bonus proposed for the chief executive officer (CEO) and elected a new board chair. Under the CEO’s leadership, Rite Aid had paid off some debt and returned to modest profitability. However, two failed plans to sell the business had shaken the shareholders’ confidence. Having dealt with falling sales, shrinking profits, the sale of over half of its stores, and the news that Amazon.com Inc. had acquired an online pharmacy, Rite Aid was facing challenges from all sides. The drugstore industry was in turmoil, and without a buyer, the board chair needed to revisit the company’s strategy and its management’s capabilities. In the face of consolidation, vertical integration, and disruption from new entrants, survival was uncertain. Could Rite Aid survive on its own? Would it be feasible to attempt a third merger agreement, or were more radical options needed?
This case is suitable for use in an undergraduate- or graduate-level course on strategy, marketing, or operations. After working through the case and assignment questions, students will be able to do the following:
- Understand the impact of consolidation and disintermediation on the pharmaceutical and health industries.
- Address the threat of direct-to-consumer sales on the retail industry.
- Evaluate the option of economies of scope as compared to economies of scale.
- Evaluate the option of cost leadership as compared to differentiation.
United States, Large, 2018
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