Check Coca-Cola’s stock price if you think this will help CVS. Coke jumped into bed with the govt for their obesity initiative, and the stock has been a horrid performed during one of the longest runs of the stock market.
The CEO decided to serve the interests of the govt instead of the shareholders. IT IS THE DUTY OF THE CEO TO BE MORALITY NEUTRAL.
It’s the duty of the CEO to run the company in a manner that provides good return on the investments made by the shareholders.
If the CEO fails to do this, then the action to make any sort of a correction is in the hands of the shareholders.
I don’t see an apple apples comparison between CVS and Coke here anyways. Tobacco use is declining. The need for health services is increasing and will continue to do so. The former is low margin and the latter high margin, with the prospects of breakeven the first year and then increased revenue during the following years.
On that basis alone it looks like a logical and reasonable business move.
“The CEO decided to serve the interests of the govt instead of the shareholders. IT IS THE DUTY OF THE CEO TO BE MORALITY NEUTRAL.”
No. As others have pointed out, the CEO chose to expand a higher margin (the health clinics), at the expense of a low margin, commodity product. There is no evidence of govt pressure (if this was about govt pressure, it would have happened decades ago), and this is morality neutral.
Also, to the extent Coke’s stock has fallen, it has been largely due to falling sales. Soft drink sales in general have been down, largely because consumers have become more health conscious. Pointing to their obesity initiative as the source of the stock drop is a huge stretch.