Unitedhealth SWOT Analysis / Matrix

Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Unitedhealth managers to do a situational analysis of the organization . It is a useful technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Unitedhealth is facing in its current business environment.

The Unitedhealth is one of the leading firms in its industry. Unitedhealth maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis.  SWOT analysis a highly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework helps an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Unitedhealth to develop four types of strategies:

• SO (strengths-opportunities) Strategies
• WO (weaknesses-opportunities) Strategies
• ST (strengths-threats) Strategies
•  WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The main purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Unitedhealth strengths, and eradicate its weaknesses.

Step by Step Guide to Unitedhealth SWOT Analysis

Strengths of Unitedhealth – Internal Strategic Factors

As one of the leading firms in its industry, Unitedhealth has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Unitedhealth are –

• Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
• Strong distribution network – Over the years Unitedhealth has built a reliable distribution network that can reach majority of its potential market.
• Automation of activities brought consistency of quality to Unitedhealth products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Superb Performance in New Markets – Unitedhealth has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
• Strong Free Cash Flow – Unitedhealth has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Good Returns on Capital Expenditure – Unitedhealth is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
• Strong Brand Portfolio – Over the years Unitedhealth has invested in building a strong brand portfolio. The SWOT analysis of Unitedhealth just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

Weakness of Unitedhealth – Internal Strategic Factors

Weakness are the areas where Unitedhealth can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Unitedhealth is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• The profitability ratio and Net Contribution % of Unitedhealth are below the industry average.
• Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Unitedhealth
• Investment in Research and Development is below the fastest growing players in the industry. Even though Unitedhealth is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
• The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
• Limited success outside core business – Even though Unitedhealth is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Unitedhealth has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

Opportunities for Unitedhealth – External Strategic Factors

• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Unitedhealth to capture new customers and increase its market share.
• Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Unitedhealth.
• The new technology provides an opportunity to Unitedhealth to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
• The market development will lead to dilution of competitor’s advantage and enable Unitedhealth to increase its competitiveness compare to the other competitors.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Unitedhealth an opportunity to enter a new emerging market.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Unitedhealth to increase its profitability.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Unitedhealth’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.

Threats Unitedhealth Facing - External Strategic Factors

• No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
• Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
• Imitation of the counterfeit and low quality product is also a threat to Unitedhealth’s product especially in the emerging markets and low income markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Unitedhealth   in those markets.

Limitations of SWOT Analysis for Unitedhealth

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

• Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
• SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
• The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Unitedhealth
• SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
• SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Weighted SWOT Analysis of Unitedhealth

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Unitedhealth managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Unitedhealth

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

Buy Custom Essay and Term Paper on SWOT Analysis / Matrix , Weighted SWOT Analysis of Unitedhealth

Example of Weighted SWOT Analysis

You can email us to get an example document of Weighted SWOT analysis.

SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

• M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
• A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
• O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
• L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
• R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)