Healthcare Insurance: Business Environment, PEST, Porter & Aetna SWOT

This essay provides a comprehensive analysis of the business environment within the healthcare insurance industry, focusing on factors that influence the operational dynamics of firms like Aetna, Inc. It begins by defining the business environment and explaining the importance of its analysis for risk reduction and long-term sustainability. The essay then outlines common approaches to environmental analysis, including systematic, ad hoc, and processed-form approaches, and identifies key tools used to analyze both the macro (PESTLE, Porter’s Five Forces) and micro environments (SWOT, ETOP). An internal environmental analysis using McKinsey 7-S and VRIO frameworks is also discussed. The analysis then delves into the health insurance industry, applying a PEST analysis to Aetna, Inc., evaluating the industry using Michael Porter's Five Forces, and concluding with a SWOT analysis of Aetna, highlighting its strengths, weaknesses, opportunities, and threats. The essay references academic sources to support its findings and arguments.

Assessment 2: Essay
Writing

Table of Contents
Business environment......................................................................................................................3
What is the business environment?........................................................................................3
Why do organisations analyse the business environment?.....................................................3
Analysing the environment..............................................................................................................3
List and describe common approaches to environmental analysis.........................................3
What tools are typically used to analyse the Macro environment?........................................3
What tools are typically used to analyse the Micro environment?.........................................4
What tools are typically used to analyse the internal environment?......................................4
Industry: Health Care: Insurance & Managed Care - Health Insurance Industry............................4
Analysis PEST Analysis.........................................................................................................4
An Evaluation of the Health Insurance Industry Using Michael Porter's Framework...........4
Aetna SWOT Analysis...........................................................................................................5
References........................................................................................................................................6

Business environment
What is the business environment?
The term business environment refers to sum total of factors including internal as well as
external that are capable of influencing internal operational working of the business firm. In its
inclusion factors such as government, suppliers, culture etc. are being taken into consideration
(Abdulghaffar and Akkad, 2021).
Why do organisations analyse the business environment?
The managers of the workforce analysis the business environment, as it helps them to
reduce the associated risk with core business goals as well as objectives. In addition to this, long-
term existence of a business firm can also be ensured as consumer needs and related demands are
taken care of that integrates the productivity of the business firm (Hamilton and Webster, 2018).
Analysing the environment
List and describe common approaches to environmental analysis
 Systematic approach: For the given approach information or data with regards to
significant changes in legislation and regulations reported in the region and is engaged
towards performing systematic research in the market.
 Ad hoc approach: For this approach given organisation conduct special studies and
surveys for dealing with the particular environmental issue over a period of time.
 Processed-form approach: Under this approach related information and data with regards
to the business environment is being extracted from available different sources. The
managers at the business just need to process the given information or data.
What tools are typically used to analyse the Macro environment?
 PESTLE analysis: Political, economic, social, technology, legal and environmental
factors are included in the model.
 Porter’s Five Forces model: Threat of substitution, the threat of competition, power of
supplier, power of buyer and threat of new entrants are elements that are included in the
model.

What tools are typically used to analyse the Micro environment?
 SWOT analysis: Elements such as strength, weaknesses, opportunities and threats are
being considered under this analysis.
 ETOP technique: Under this external analysis technique, opportunities and threats to an
organisation is being taken into consideration.
What tools are typically used to analyse the internal environment?
 McKinsey 7-S: Under this model competency of several resources within the operational
firm are being taken into consideration. This growth aspect within the workforce can be
considered and understandings can be built with respect to improving organisational
performance.
 VRIO analysis: For this analysis internal resources of the business firm are being taken
into consideration. It forms an effective through which resource allocation within the
business firm can be effectively ensured (Tikhonov and Zelentsova, 2021).
Industry: Health Care: Insurance & Managed Care - Health Insurance
Industry
Analysis PEST Analysis
 Political factors: Aetna, Inc. operations are highly impacted by political factors. This
includes; political stability, taxation, anti-trust laws related to health care plans and many
more relative elements.
 Economic factors: The given company is affected through factors including; inflation
rates, interest rates and comparative advantage of host country and healthcare sector.
 Social factors: Factors such as cultures, level of education and demographics of the
population are the major factor that affects the working of the insurance company within
the social factors.
 Technological factors: Regular updates in technology, impact on cost structure and rate
of technology diffusion are the factors that affects working of the business firm.
An Evaluation of the Health Insurance Industry Using Michael Porter's Framework
 Power of buyer: There is a high power of buyer to Aetna, Inc. for the reason being high
demands are made by customers in contemporary markets. Therefore, profit margins of
the company are to be compromised.

 Power of supplier: The provided company faces difficulties due to limited suppliers
available in the region. This causes a high cost of raw materials made available to the
firm and thus resulting in profit margins.
 Threat of substitution: The given institution faces a high threat of substitution as a
similar type of services are available throughout the given operational region.
 Threat of competition: The said company works under a very competitive health care
plans industry which sometimes takes a toll on the long-term profitability of the industry.
 Threat of new entrants: In light of the fact that a new business institute brings the latest
innovation and performs activities in an entirely differential manner. This acts as a
challenge or barrier to the long-term existence of the mentioned company.
Aetna SWOT Analysis
Strengths
 Established brand: Aetna Inc. is an
American health insurance company
that has its existence since 1853.
 Segmentation strategies: The company
segments its market customer that helps
them implement effective business
strategies.
Weaknesses
 Low-profit margins: Aetna Inc.
operates with a motive to provide social
benefits within the society, thus profit
margins are compromised.
 Change management strategies: The
company faced a loss of $280 million
last year due to frequent changes in
business environment.
Opportunities
 High-quality health-care facilities:
Aetna Inc. provides insurance to a
higher quality of healthcare facilities
that secures long-term existence in
quality preference future markets.
 Innovation: The provided company
takes use of innovative technology and
planning that provides them with an
opportunity to excel in the future
Threats
 Changes in business environment:
Aetna Inc. faced a huge threat with
regards to a business environment.
 Competition: In the contemporary
market high competition is faced by a
respective insurance company.

business environment.

References
Books and Journals
Abdulghaffar, N.A. and Akkad, G.S., 2021. Internal and external barriers to entrepreneurship in
Saudi Arabia. Digest of Middle East Studies, 30(2), pp.116-134.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Tikhonov, A. and Zelentsova, L., 2021. Analysis of External and Internal Factors of Business
Competitiveness. Quality-Access to Success, 22(182).
Online
The external environment ‐ Leading Change: A Conversation with Ron Williams, 2009.
[Online]. Available at:
<file:///C:/Users/user/Downloads/YLKDneY1nI_1635182291%20(1).pdf>