PEST & SWOT Analysis: Evaluating Health Insurance Business Environment

This essay provides a comprehensive analysis of the business environment surrounding the healthcare insurance industry. It begins by defining the business environment and explaining why organizations analyze it, highlighting the importance of identifying threats and opportunities. The analysis employs various tools and approaches, including systematic, ad hoc, and processed form approaches. The essay utilizes PESTLE analysis to examine the macro environment, focusing on political, economic, social, technological, legal, and environmental factors impacting the health insurance sector. Porter's Five Forces framework is applied to assess the micro environment, evaluating the threats of new entrants and substitutes, bargaining power of buyers and suppliers, and competitive rivalry. Finally, a SWOT analysis of Aetna is conducted, identifying the company's strengths, weaknesses, opportunities, and threats. The essay concludes by emphasizing the need for strategic actions to address the challenges and capitalize on the opportunities within the dynamic healthcare insurance landscape. Desklib provides access to similar solved assignments and study resources for students.

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Table of Contents
Task 1: Business environment.........................................................................................................1
What is the business environment?........................................................................................1
Why do organisations analyse business environment?..........................................................1
Task 2: Analysing the environment.................................................................................................1
Approaches to environmental analysis...................................................................................1
Tools used to analyse the Macro environment.......................................................................1
Tools used to analyse the Micro environment........................................................................2
Tools used to analyse the internal environment.....................................................................2
Task 3: Analysis pest analysis: Healthcare insurance industry......................................................2
Evaluation of the Health Insurance Industry using PEST Analysis.......................................2
Task 4: Evaluation of the health insurance industry........................................................................3
Michael Porter's Framework Analysis...................................................................................3
Task 5: Aetna SWOT analysis.........................................................................................................3
Evaluation of Aetna using SWOT Analysis...........................................................................3
References........................................................................................................................................4

Task 1: Business environment
What is the business environment?
Business environment can be defined as the variety of factors which influences the
company's ability to build and maintain the relationships with customers in a successful manner.
It is basically the sum total of all forces that are external or internal to the business firm and they
highly affects the functioning of the organization. It includes different factors such as customers
demands, market conditions, competitors, suppliers, technological, economical, legal, political,
social, government, cultural and many more (Cepel, Belas, Rozsa and Strnad, 2019).
Why do organisations analyse business environment?
Organizations analyse the business environment so that they can identify the level of
influence of the different factors of environment that can impact the company. Impact of forces
of general as well as the operating environment that can have on the operations of the business.
Such identification and analysis helps in achieving the goals and objectives of the business
(Halbert and Ingulli, 2020). This is because it supports in determining of the threats and
opportunity in the market place. It further assist in forecasting of the future with proper decision
making process. That is why organizations analyse business environment.
Task 2: Analysing the environment
Approaches to environmental analysis
There are basically three major approaches to environmental analysis. Systematic
approach is one of the approach. Information about the analysis is collected in a systematic
manner. It has a direct impact on the firm as it is collected and updated regularly in order to
monitor changes in the environment (Cepel, 2019). Ad hoc approach is an another approach.
Surveys are used for collecting the data so that trends can be understood and unforeseen
developments can be estimated. Processed form approach is also an another approach. Secondary
information is used by the firm which is already collected from various sources and then further
processed for final use.
Tools used to analyse the Macro environment
PESTLE analysis is one of the tool used to analyse the macro environment. It is the tool
which is used to obtain the macro picture of the business environment. It basically stands for the
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political, economical, social, technological, legal and environmental analysis. It facilitates the
firm for forming the impression of the forces which can impact the new business or an industry.
SWOT analysis is an another tool used to analyse the macro environment (Sołoducho-Pelc and
Sulich, 2020). It is basically a situational analysis which is used to determine the internal as well
as the external factors which usually impacts the strategic plans of the firm. It stands for
strengths, weaknesses, opportunities and threats.
Tools used to analyse the Micro environment
Porter's five forces analysis is one of the tool used to analyse the micro environment. It is
defined as the framework which analysis the operating environment of the firm. Operating
environment includes the customers and suppliers along with the competitors and public. It scans
this environment for better gaining of the competitive advantage to the organisation. It basically
have five forces through which the environment can be analysed. Such as threat of substitutes,
threat of new entrants, bargaining power of buyers, bargaining power of suppliers and
competitive rivalry (Chaika, 2020).
Tools used to analyse the internal environment
There are several tools used to analyse the internal environment. Such as gap analysis in
which the actual and expected results are measures for further improvements. Another tool is the
strategy evaluation in which the tactics are examined for better positive outcomes. VRIO
analysis is a tool which stands for the valuable, rare, inimitable and organizational resources
which are owned by the company are evaluated. Core competency analysis is a tool which
analysis the competitive gaps for further enhancements (Nikitina and Lapiņa, 2019).
Task 3: Analysis pest analysis: Healthcare insurance industry
Evaluation of the Health Insurance Industry using PEST Analysis
Political factor includes the growth of influence of public policy in healthcare insurance
industry. Economical factor includes the overhauling of the program of H1B work visa managed
by Trump administration. Social factor includes that there are individuals who are healthy do not
opt for the insurance under updated laws (Radović-Marković, Salamzadeh and Vujičić, 2019).
Technological factor includes the adoption of digital technologies to foster innovation such as
block-chain technology. Legal factor includes the regulations under Affordable Care act and
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Obamacare changing market dynamics. Environmental factor includes the focusing on the
sustainability principles.
Task 4: Evaluation of the health insurance industry
Michael Porter's Framework Analysis
Health insurance industry has high threats of new entrants. It can be tackled by
innovating new products and services in order to build economies of scale and spending money
of research and developments. Health insurance industry has high bargaining power of suppliers.
It can be tackled by building proper supply chain management strategies while experimenting the
product design. Health insurance industry has high bargaining power of buyers. It can be tackled
by building huge base of consumers and rapid innovation (Pérez-De-Lema, Hansen, Madrid-
Gujjarro and Silva-Santos, 2019). Health insurance industry has high threats of substitutes. It can
be tackled by being service oriented more than product oriented. By understanding the core
demands of the customers so that switching cost for the customers can be increased. Health
insurance industry has high competitive rivalry. It can be tackled by developing the sustainable
differentiation and also to collaborate with the competitors.
Task 5: Aetna SWOT analysis
Evaluation of Aetna using SWOT Analysis
Strengths includes strong market positioning and advantages of cost due to size.
Weaknesses includes over-dependence on domestic markets and structure of cost of the products.
Opportunities includes strengths can be multiplied by proposed acquisition with the help of CVS
health and expanding into emerging economies (Luiz, Ganson and Wennmann, 2019). Threats
includes business uncertainty due to the regulatory issues. Moreover, there is a growing and
tough competition because of the existing as well as the new entrants in the healthcare insurance
industry.
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References
Books and journals
Cepel, M., 2019. Social and cultural factors and their impact on the quality of business
environment in the SME segment.
Cepel, M., Belas, J., Rozsa, Z. and Strnad, Z., 2019. Selected economic factors of the quality of
business environment. Journal of International Studies.
Chaika, O.I., 2020. Communicative strategies in cross-cultural business environment. Науковий
журнал «Міжнародний філологічний часопис». Київ:«МІЛЕНІУМ, pp.114-121.
Halbert, T. and Ingulli, E., 2020. Law and ethics in the business environment. Cengage Learning.
Luiz, J.M., Ganson, B. and Wennmann, A., 2019. Business environment reforms in fragile and
conflict-affected states: From a transactions towards a systems approach. Journal of
International Business Policy, 2(3), pp.217-236.
Nikitina, T. and Lapiņa, I., 2019. Creating and managing knowledge towards managerial
competence development in contemporary business environment. Knowledge Management
Research & Practice, 17(1), pp.96-107.
Pérez-De-Lema, D.G., Hansen, P.B., Madrid-Gujjarro, A. and Silva-Santos, J.L., 2019. Influence
of the business environment in the dynamics of innovation and in the performance of
SMEs. International Journal of Innovation Management, 23(05), p.1950044.
Radović-Marković, M., Salamzadeh, A. and Vujičić, S., 2019. Selection of organization models
and creation of competences of the employed people for the sake of competitiveness
growth in global business environment. International Review, (1-2), pp.64-71.
Sołoducho-Pelc, L. and Sulich, A., 2020. Between sustainable and temporary competitive
advantages in the unstable business environment. Sustainability, 12(21), p.8832.
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