The decision by CVS to end cigarette sales–as part of a larger rebranding to promote health–is not an example of Stakeholder Theory being practiced, but rather a gamble to generate more value for the company. Estimates peg losses at $2 billion in sales per year as a result of the policy. Thus, the simplest conclusion is that the company is sacrificing revenue, and profit, to reduce the distribution of a dangerous product.

Photo by Seth Wenig

But, if CVS’ decision was strictly moral, it would not be erecting multi-story inflatable cigarettes, adorned with the slogan, “Cigarettes out. Health in.” around cities. CVS is in pursuit of a new, revenue stream that is larger than its tobacco sales: acting as an auxiliary to the overburdened primary care network. The company already runs 900 walk-in clinics. By leveraging its high-profile cigarette ban as a marketing strategy, the chain is hoping to lend credence to its new name, CVS Health, and make it synonymous with health and wellness. A new, focused brand, will give it an advantage over tobacco selling competitors like Walgreens and Rite-Aid in the primary-care space.

And thus while a consequence of the policy may in fact be a benefit to consumer stakeholders, the decisions were done to impress shareholders, and to eventually generate value, per Friedman’s beliefs.