MARKET RESEARCH AND SEGMENTATION (SLP)

SWOT Analysis of UnitedHealth Group

Shaneya Acker

Dr. Eric Oestmann

MHM 525

Trident University International

April 5, 2019

SWOT Analysis of UnitedHealth Group

Introduction

SWOT (Strengths-Weaknesses-Opportunities-Threats) is a tool that is used by organizations as well as auditing companies among others to conduct situational analyses of the company. It provides top management as well as prospective investors internal and external strategic factors. With UnitedHealth Group being one of the largest companies in the industry it has several strengths and opportunities that allow it to maintain its market position. However, I also experience weaknesses and threats.

Strengths

Among the leading strengths that UnitedHealth exhibits are its high level of consumer satisfaction that is attributed to the company’s dedicated consumer relations department. Through this department, the company can respond to various customers’ nationwide thereby creating good brand equity for potential clients. The second strength of the company is the strong portfolio, the company’s long reputation in the industry, as well as investments, have made the company a brand name ("About UnitedHealth Group", 2019). This has allowed the company to expand in various sectors as well as offer its shareholders varied products. The third strength is strong distribution networks; the company has been able to develop a strong distribution market through its various acquisitions as well as the increased market base. These distribution channels have allowed the company to reach to various communities of different socio-economic classes making the company diverse in its activities and products ("About UnitedHealth Group", 2019). The final strength the company has to offer is the strong integration strategy for firms that compliments its operations. This factor is the main contributor after a large number of policyholders, which has allowed the company to grow to its current state and offer professional services to its over 100 million clients.

Weaknesses

Though many people including analysts view the company as being generally successful, there are attributes concerning the company that limits its efficiency as well as effectiveness. The first is the company’s poor product demand forecasting; this results in the company having high in-house inventory. The second weakness is high employee turnover; this is associated with the high consumer base. This forces the company to spend millions in training new employees compared to its competitors. The poor marketing strategies are the third weakness; even though the company has registered high success rates in a variety of its products, the poor marketing strategy allows for other companies to take advantage of the factor (Trefis, 2015). The fourth weakness is the rigid culture the company has adopted. This limits other cultures from newly acquired companies to integrate easily. This results in frequent breakdowns in communication. Finally, the company has low profitability and Net contribution ratio and percentage respectively (Trefis, 2015).

Opportunities

With the strengths and weaknesses of UnitedHealth Group offering internal strategic factors that affect the company, the opportunities and threats offer the external strategic factors that influence the company. Among the first opportunities is the recent economic growth taking place (Japsen, 2018). With more people having disposable incomes the organization is expected to appeal to the new markets thereby increasing its market share. Another opportunity is the new markets that have developed because of government agreements with regards to technology. The government recently added new free trade agreements that have opened the new markets for UnitedHealth Group to explore (Japsen, 2018). The third opportunity is the recent decrement of shipping costs. This has allowed UnitedHealth Group to increase the quantity of imported material thereby having a direct impact on the company’s profitability. Finally, the scope of the company has resulted in the dilution of various competitor advantages thereby allowing UnitedHealth Group to have an increased stake in the medical and insurance industry.

Threats

Similar to weaknesses, these are the factors that limit the progression of the company within the industry. The first threat is related to the high turnover the company experienced, it is experiencing a shortage of skilled workforce, and this threatens the company’s profit generation. The second threat is the intense competition from various organizations operating in either of the two industries. In the past half-decade, the number of companies offering similar products and services as UnitedHealth has increased by a significant number (Trefis, 2015). Additionally, the varying state laws have resulted in the company taking up several litigations from its various subsidiaries. This limits the company’s operative capabilities thereby limiting its overall revenue generation. Finally, the growing strength of local distributors has the potential to limit the market share of the company.

References

About UnitedHealth Group. (2019). Retrieved from https://www.unitedhealthgroup.com/about.html

Japsen, B. (2018). UnitedHealth Group: 50M To Access New Personal Health Record In 2019. Retrieved from https://www.forbes.com/sites/brucejapsen/2018/11/27/unitedhealth-50m-to-access-new-personal-health-record-in-2019/#168a67f13a19

Trefis. (2015). Key Factors Driving UnitedHealth Group's Medicaid Managed Care Business. Retrieved from https://www.forbes.com/sites/greatspeculations/2015/04/01/key-factors-driving-unitedhealth-groups-medicaid-managed-care-business/#27e3ac95512d