OptumHealth SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by OptumHealth 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) OptumHealth is facing in its current business environment.

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

The SWOT Analysis framework enables 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the OptumHealth 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 central purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect OptumHealth strengths, and eradicate its weaknesses.

Step by Step Guide to OptumHealth SWOT Analysis

Strengths of OptumHealth – Internal Strategic Factors

As one of the leading organizations in its industry, OptumHealth has numerous strengths that enable 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 OptumHealth are –

• Successful track record of developing new products – product innovation.
• Highly skilled workforce through successful training and learning programs. OptumHealth is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
• 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 Free Cash Flow – OptumHealth has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Good Returns on Capital Expenditure – OptumHealth is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Strong Brand Portfolio – Over the years OptumHealth has invested in building a strong brand portfolio. The SWOT analysis of OptumHealth just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
• 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.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.

Weakness of OptumHealth – Internal Strategic Factors

Weakness are the areas where OptumHealth 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.

• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.
• Not highly successful at integrating firms with different work culture. As mentioned earlier even though OptumHealth is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• High attrition rate in work force – compare to other organizations in the industry OptumHealth has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that OptumHealth is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• 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 OptumHealth
• There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
• Limited success outside core business – Even though OptumHealth is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

Opportunities for OptumHealth – External Strategic Factors

• The market development will lead to dilution of competitor’s advantage and enable OptumHealth to increase its competitiveness compare to the other competitors.
• New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for OptumHealth to drive home its advantage in new technology and gain market share in the new product category.
• New trends in the consumer behavior can open up new market for the OptumHealth . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided OptumHealth an opportunity to enter a new emerging market.
• New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for OptumHealth. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• The new technology provides an opportunity to OptumHealth 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.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of OptumHealth’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.
• Government green drive also opens an opportunity for procurement of OptumHealth products by the state as well as federal government contractors.

Threats OptumHealth Facing - External Strategic Factors

• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for OptumHealth   in those markets.
• Imitation of the counterfeit and low quality product is also a threat to OptumHealth’s product especially in the emerging markets and low income markets.
• 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.
• Rising raw material can pose a threat to the OptumHealth profitability.
• 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.
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .

Limitations of SWOT Analysis for OptumHealth

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 OptumHealth
• 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 OptumHealth

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 OptumHealth 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 OptumHealth

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.

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Example of Weighted SWOT Analysis

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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)