External Factors Influencing Aetna's Strategic Management

This essay provides a comprehensive assessment of the external business environment affecting Aetna, a healthcare firm, based on a case study. It identifies and evaluates political, economic, social, technological, legal, and environmental (PESTLE) factors that influence Aetna's strategic management and goals. The analysis includes an examination of the US healthcare industry using Porter's Five Forces model, assessing the threat of new entrants, bargaining power of suppliers and buyers, threats of substitutes, and competitive rivalry. Furthermore, a SWOT analysis is conducted to highlight Aetna's strengths, weaknesses, opportunities, and threats. The essay concludes that understanding and addressing these external factors are crucial for Aetna to maintain profitability and achieve its strategic objectives in a competitive market.

External Business Environments -
Assessment 2 Individual Essay
based on problem-solving from
case study

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Business Environment.............................................................................................................3
2. Analysing the environment .....................................................................................................3
3. External factors which affect the goals and influence its strategic management are as
follows:........................................................................................................................................3
4. Analysing the US healthcare Industry.....................................................................................5
5. Aetna SWOT analysis..............................................................................................................6
CONCLUSION ...............................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
The external business environment refers to the environment which used to describe the
economic, political, legal, social and other factors which affects the environment. The
organization must understand the changing environment and must cope- up with the changes.
This report is based on the William's case study and on its firm that is Aetna. This report will
evaluate about the different external factors which affect and influence its strategic management.
MAIN BODY
1. Business Environment
Business environment refers to the environment which is the collection of the external
and internal factors of the environment. This includes employees, customers expectations,
clients, suppliers, owners, changing trends, economic changes, market trends, etc. The
organization must analyse the business environment which used to maintain the profitability of
the company.
2. Analysing the environment
By doing the environmental scanning the service sector has the different approaches in
order to analyse the environment. The macro environment includes the porters five forces model
and by doing the PESTLE analysis the company can have the external business environment of
the company. In order to scan the internal environment the organization can do the SWOT
analysis.
3. External factors which affect the goals and influence its strategic management are as follows:
Political factors: These factors are determined by the extent of the government and
influence the economy or the industry (Ramli, Muljono and Afendi, 2018). The government
may impose new taxes and policies and impose those taxes on the company which may affect the
revenue. These factors include the tax policies, trade tariffs, fiscal policies, etc. as it may affect
the business environment. Political factors play an important role a can have impact on the
Aetna's profitability in the certain market. As the company is having its business operations in
more than 12 countries so it may get affected by the political factors. By focusing on the

changing factors the company can influence its strategic management. In order to achieve the
success the service sector can diversify the risk systematically.
Environmental factors: These factors are those factors which used to have influence on
the surrounding or on the external environment. It includes the following factors which are
weather, climate, geographical location, environmental offsets, etc. The organization should be
ready to cope up with the environmental challenges which helps them to survive in the market
(Kartiwi and et.al., 2018). As every market has its different norms related to the environment so
the service sector mus focus on each environment. Before entering and having the heath care
facilities for patients the sector must focus on the pollution, weather, changing climate, waste
management in the health care sectors, etc. By coping up with the changes the company can take
care of the patients as well as environment.
Social factors: These are those factors which has direct impact on the social environment
of the market. These factors include the change in the customers needs and preferences, market
trends, population, demographics, etc. These factors used to have direct influence on the people
of the market (Pham and Tipton, 2018). The organization must focus on this as in the case study
the company is facing problem related to the people only. The good culture in the society and
good things for the patients play an important role for the company to do good in the society. By
having this it will help the company to determine and design the market and helps the health care
sectors.
Technological factors: These factors includes the change in the technology which may
affect the operations of the company. This used to have favourable and unfavourable impact on
the service sector. It helps the firm to have automation in the work and makes the work easier. It
is the fast changing technique which may affect the profitability of the company (Christodoulou
and Cullinane, 2019). The cited firm must change its technology accordingly which helps the
firm to survive in the competitive market. By adopting the changes in technology it helps Aetna
to have good competition in the market. The company must focus on the impact of the cost
structure in order to bring the new technology in the firm.
Legal factors: These factors includes both the internal and external faces which may
affect the profitability of the service sectors. There are some laws which affect the business
environment in the country so the organization must focus and follow the laws of the particular
country (Achinas and et.al., 2019). The legal factors have some laws which are consumer laws,

safety laws, labour laws, etc. The firm must focus on the legal factors before entering into the
market as it makes the company to achieve the competitive advantage in the market. There are
some factors that the Aetna must consider some laws before having leadership and entering into
the new market are discrimination law, copyright, intellectual property law, data protection law,
anti- trust laws in health care plans, etc. This will help the service sector to provide better
services to their patients.
Economic factors: These factors used to determine the performance of the economy
which has direct impact on the company or on the industry. Rise in the inflation rates of the
economy will have bad impact on the service sectors and mismanages the budget of the
company. It includes the inflation rate, foreign exchange rates, interest rates, economic growth
rates, etc. The organization can use the economic actors of the country where they are having its
business operations and it will solve the problem of the health care sector. The company must
focus on the following factors before entering into the market which are intervention of the
government on health care sectors, exchange rates, education level in the economy,
unemployment rates, etc. By focusing on these factors the cited sector can achieve their goals.
The cited organization must focus on the above cited external factors which have direct
impact on the health care sectors. But by determining these factors and focusing on these factors
the company can solve its problem and earn good profits in the market. These actors may affect
the company's goal and it influences the strategic management of the firm.
4. Analysing the US healthcare Industry
By using the porter's Five forces Model the analysis of the US healthcare industry can be
done which is described as below:
1. Threat of new entrants: The new entrants in the service sector used to bring
innovation which may affect the healthcare industry. By this it increases the cost
of the exiting healthcare sectors in the US.
2. Bargaining power of suppliers: The hospitals used to buy raw materials from the
suppliers and the suppliers may charge the high prices which may impact the
profitability of the hospitals (Nandonde, 2019).
3. Bargaining power of buyers: The buyers always wanting good services at the low
prices. The healthcare industry of US should have large customers base which
reduces the bargaining power.

4. Threats of substitutes: The healthcare industry can bring the service oriented
rather than having the product oriented changes only. They must satisfy the need
of the customers instead of bringing in required things.
5. Rivalry with the competitors: The healthcare industry of the US must have rivalry
among them and it affects the profitability (Boafo, Kraa and Webu, 2018). The
industry should build sustainable differentiation in order to compete in the market.
5. Aetna SWOT analysis
Strengths
1. Having 18.5 million members in there health
care segment.
2. It has customer loyalty and also have strong
management.
Weaknesses
1. It has less diversity in their policies
2. The organization has very static presence in
the online market.
Opportunities
1. Service sector can grow further by having
the merger and acquisition with another service
sectors (Benzaghta and et.al., 2021).
Threats
1. There is high competition in the market and
having the rapid changes in the technology.
2. Intervention of the government can cause
affect in growth.
CONCLUSION
From the above essay it is described about the external environmental factors which
affects the company. The external factors descried above are political, economic, social,
technological. Legal and environmental factors. The service sector must focus on these factors in
order to have good profitability in every market. Further it describes about the external forces by
evaluating the porters five forces model and SWOT analysis to scan the internal environment.

REFERENCES
Books and journals
Achinas, S. and et.al., 2019. A PESTLE analysis of biofuels energy industry in
Europe. Sustainability. 11(21). p.5981.
Benzaghta, M. A. and et.al., 2021. SWOT analysis applications: An integrative literature
review. Journal of Global Business Insights. 6(1). pp.55-73.
Boafo, N. D., Kraa, J. J. and Webu, C. G., 2018. Porter’s Five Forces Impact on the Performance
of Companies in the Banking Industry In Ghana.
Christodoulou, A. and Cullinane, K., 2019. Identifying the main opportunities and challenges
from the implementation of a port energy management system: A SWOT/PESTLE
analysis. Sustainability. 11(21). p.6046.
Kartiwi, M. and et.al., 2018. Impact of external factors on determining E-commerce benefits
among SMEs in Malaysia. Journal of Global Entrepreneurship Research. 8(1). pp.1-12.
Nandonde, F.A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence. 38(4). pp.54-61.
Pham, G. and Tipton, T., 2018. Internal and external factors that support children's minority first
language and English. Language, Speech, and Hearing Services in Schools. 49(3).
pp.595-606.
Ramli, N., Muljono, P. and Afendi, F. M., 2018. External Factors, Internal Factors and Self-
Directed Learning Readiness. Journal of Education and e-Learning Research. 5(1).
pp.37-42.