SWOT Analysis of McKesson

McKesson Corporation SWOT

by Shamsul
McKesson SWOT Analysis
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SWOT Analysis of McKesson

 

McKesson managers can take advantage of SWOT analysis, an important strategic planning tool to conduct a situational analysis of the company. It is an excellent tool for identifying the current strengths, weaknesses, opportunities, and threats. These are some essential business factors that can influence the business and performance of McKesson. We do the SWOT Analysis of McKesson and learn how to achieve the success from their experience.

McKesson is one of the largest American companies that provide health information technology, care management tools, medical supplies, and distribution of pharmaceuticals. It is a leading organization in its industry. Till now, they have maintained their market position by reviewing and conducting a careful SWOT analysis. However, it is a simple analysis to perform but requires the coordination of various departments working within the organization such as finance, strategic management, marketing, information, and operations.

This tool helps the organization to review its internal as well as external strategic business factors. Without further wait, let’s read the SWOT analysis of McKesson.

Company Name: McKesson Corporation

Founders: Charles Olcott, John McKesson

Founded: 1833, New York, New York, United States

Headquarters: Irving, Texas, United States

CEO: Brian S. Tyler (Apr 01, 2019-)

Type: Pharmaceuticals

Sector: Healthcare and Pharma

Tagline: It’s not just a package, it’s a patient.

Unique Selling Proposition: McKesson makes the business of health care run better.

Customers: Healthcare technology and pharma distributors.

Target Consumers: Pharmacies, hospitals, medical, and pharmaceuticals manufacturers

Revenue: 238.228 billion dollars (2021)

Net Income: -4.539 billion dollars (2021)

Strengths of McKesson | SWOT Analysis of McKesson

Being a leader in its business environment, McKesson has so many positive points and strengths. These factors allow the company to thrive in the industry at a fast pace. These factors give the company a competitive edge and increase its annual revenue and net earnings. It also enables the organization to penetrate new markets. Here are some important strengths of McKesson,

  • The brand portfolio of McKesson is highly strong. They have invested a lot in creating a robust brand portfolio since its launch. It is an important strength of the brand. Just because of this strength, the company can invest in the development of new products and attract new customers without spending so much on marketing or advertising.
  • McKesson’s go to market policies are really successful for its brand and even products.
  • The company offers a high level of customer satisfaction through its amazing product line and services. Indeed, its customer base is really strong and loyal to the brand. They have established strong relations with customers. As a result, McKesson’s brand equity is also very strong, giving the company a big edge over competitors.
  • In the last few years, McKesson has integrated several technology firms and other brands to enhance and modernize its performance and business operations. It has helped the brand create a robust supply chain network system. The company has such a good track record when it comes to mergers and acquisitions.

  • The company has strong relationships with dealers and distributors. The most significant advantage of this relationship is that they not only train their sales team on how to sell McKesson’s products and actually take part in the promotion of the organization. They also convince customers how they can take ultimate benefit of McKesson’s products and services. This thing works in favor of the company and increases its brand awareness.
  • McKesson knows how to venture into a new market. They are really good at entering new markets. Moreover, their performance in new markets is commendable and allows the company to increase its revenue stream. They are continuously diversifying their business into different countries to become a leader.
  • The major strength of the company is that it has reliable suppliers. The strong base of suppliers enables them to get raw materials at competitive prices and quickly. So, they do not face any supply chain issues from suppliers.
 

Weaknesses of McKesson | SWOT Analysis of McKesson

Just like strengths, McKesson has some weaknesses too. Weaknesses are the areas that require improvement for further growth. Weaknesses can disrupt business performance and allow competitors to take the lead. The biggest advantage of SWOT is that it identifies your weaknesses that you can easily improve to maintain your competitiveness and market position. Below, we have curated some important weaknesses of McKesson.

  • It is an era of new technologies and innovation. Technology is the most crucial factor in making business easier for any company. McKesson does not have a strong technological infrastructure as compared to its competitors. Technology is necessary for expanding and improving the business. They need to invest more money in technological infrastructure in order to integrate the business process. Currently, investing in technology is not the main priority of McKesson, which can be considered its weakness.
  • As compared to the competitors, the company has major gaps in product variety. This lack of new products can give a big opportunity to its competitors to make a huge impact in the market by offering new products and services.
  • According to economic experts, the net contribution percentage and profitability ratio is very alarming for McKesson and below the market average.

  • Due to the entry of fresh players in the market, the company has lost a significant amount of market share because the new companies are eating its market share. These are some vital challenges that McKesson should solve. They should develop an internal feedback system to contact the sales team immediately to fix present issues.
  • The company’s financial planning department is not so strong. They failed to conduct effective financial planning. The inequality in the liquid and current assets shows that McKesson can use cash in a better way to enhance its product line.
  • The overall business structure of McKesson is only well-matched with the company’s current business model. So, it is facing trouble in expansion and introducing new product line.
  • Over the years, the McKesson company has acquired several companies and startups to boost its working and business performance. But, they failed to integrate with the work culture of these companies. This thing has created plenty of problems for the organization. So, technically speaking, the track record of mergers and acquisitions is not so successful.
 

Opportunities for McKesson | SWOT Analysis of McKesson

  • The firm can take advantage of decreasing transportation costs to deliver its products to different corners of the world easily. It is a wonderful opportunity for McKesson to gain market share and boost its productivity by exploiting this advantage.
  • After several years of slow growth and economic recession, the economic cycle is now getting better, which directly increases the spending power of customers. The organization can increase its market value and attract new consumers efficiently.
  • Government support in different matters such as free trade agreements and the adoption of the latest technology can boost the company. They can capture new markets by enhancing their offers and services.
  • By adopting new technologies, the company can make cost-effective products and re-adjust its pricing strategy. It will help the brand retain its loyal customers and target new ones efficiently.

  • A lower inflation rate can be proved beneficial for McKesson as it brings economic stability to the market.
  • The development of the industry will dilute the opportunities of competitors. Indeed, McKesson can exploit this factor in its favor to enhance its market competitiveness.
  • Governments are taking serious steps for the environment and building new environmental policies. Moreover, these policies will create plenty of opportunities for companies like McKesson. The company can adopt ethical practices and promote greener products just to take the attention of customers and environmentalists.
  • McKesson should diversify its e-commerce platform in order to increase its online sales. With an online channel, McKesson can easily understand the needs of customers in a better way and can develop useful products to satisfy their requirements. By investing in an online platform, the company can open several doors to growth and expansion.
 

Threats to McKesson | SWOT Analysis of McKesson

  • Bestselling or profitable products are seasonal in nature. When the season is over, this could affect the sales and revenue stream of the company negatively. Also, this factor can disturb the long or short-term goals of the company.
  • New environmental policies such as Paris Agreement 2016 could be harmful to the business working of McKesson.
  • The organization is highly exposed to the liability laws of different countries. They can face different liability claims. It is another serious threat to the profitability and sustainability of the brand.
  • The rising cost of raw materials and production can also create trouble for the company in the future. This factor poses a huge threat to McKesson.
  • Being an international organization, McKesson is highly vulnerable to currency fluctuations and exchange rates. Political instability is also a big threat.
  • McKesson can experience lawsuits and legal actions in different countries over several issues. They can face criticism over standards and foreign laws.
  • In the American economy, the culture of isolationism is growing swiftly. This factor can badly impact the profitability and annual earnings of McKesson.
  • It is nearly impossible to reduce the risk of low-quality products from counterfeit brands. They can destroy the image or reputation of McKesson in the international markets, especially in the developing markets.

 
 

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