My Comment on “CVS Bans Cigarettes” from Yue Cao’s Blog
“CVS announces it will stop selling tobacco” is an example of management strategy for VBM. Profits are obviously important for a for-profit company like CVS, but CVS understands profits are never the only thing that matters.
CVS is not just facing lost $2 billion in revenue over a full year from the sales of tobacco, but also losing money on all the other stuff that smokers might buy. As Yue Cao mentions in her blog, it seems like “executive uses others’ money to illustrate social responsibility, because the $2-billion-decreases will impose financial burden on employees or stakeholders.” However, as a $126 billion company and the United State’s biggest provider of prescription drugs, the loss of $2 billion in revenue will not put CVS into financial trouble. Obamacare has also helped it recover and improve in long term. CVS has been filling more prescriptions and developing its pharmacy service, which manages drug-benefit plans for insurers and employers.
Milton Friedman states, “The only social responsibility of business is to earn profits while following law and basic ethical customs.” Between profits and business ethics is a relationship of dialectical unity. CVS loses $2 billion in revenue temporarily; relatively, different from its greedy and shortsighted competitors who do not intend to ban tobacco sales so far, it will create more profits in long term.
Reference
http://www.pittnews.com/opinion/article_6f9da0ec-8ed8-11e3-b2c7-001a4bcf6878.html