Strategic Analysis of United Health Group: External Environment Report

This report offers a comprehensive external analysis of United Health Group, a major healthcare organization. It begins with an executive summary outlining the report's purpose: to assess the external environment and its impact on the company's strategy. The analysis employs PESTEL to examine political, economic, social, technological, environmental, and legal factors influencing the company, identifying key influences and change drivers. The report then applies Porter's Five Forces to evaluate industry competitiveness, highlighting critical forces. A strategy canvas and blue ocean strategy are also explored to assess the company's strategic positioning and identify potential market opportunities. The report concludes with an overview of the findings and their implications for United Health Group's strategic direction and success, providing a thorough examination of the external factors shaping its business.

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Business Strategy and Analysis
(Healthcare Organization: United Health Group)

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Contents
Executive Summary.........................................................................................................................2
External Analysis.............................................................................................................................4
PESTEL analysis.........................................................................................................................4
1. Summary of PESTEL analysis of organization........................................................4
2. Three influences related to the future industry change...........................................6
Five forces analysis......................................................................................................................7
1. Five force analysis of organization.............................................................................7
2. Three key forces from five forces...............................................................................8
Strategy Canvas.........................................................................................................................10
1. Strategy canvas of business......................................................................................10
2. Five critical success factors.......................................................................................10
Blue Ocean.................................................................................................................................12
Blue Ocean market space....................................................................................................12
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Executive Summary
This report describes the external analysis of the healthcare organization. The healthcare
organization that is selected for the external analysis is United Health Group. This analysis is
used to describe the various strategies of the organization and identifies the several factors of the
company that is responsible for the success of the company. The external analysis of the
company is very beneficial, as it describes the several factors that help in better growth of the
company. The strength, weakness, opportunities, threats and several factors of environment
analyzed by using the external analysis and this helps in the betterment of the organization. It
also helps in improving the profit and sales of the organization (Grant and Jordan, 2015). The
external analysis provides a brief description of the environment of the company and manages
the proper growth of the company. The United Health Group is a healthcare organization located
in America. It offers several health products and insurance services. It is the largest organization
as per the revenue of the world. The revenue in the year 2018 is $ 226.2 billion and the total
number of customers is 115 million. In the year 1974, Richard Taylor Burke founded Charter
Med Incorporated, a private company. The UnitedHealth care was reorganized in the year 1977
and it becomes the parent company of the charter Med Company. The first benefit of pharmacy
management is started in UnitedHealth care in the year 1988. This Company considered as the
largest healthcare company in the world. This company offers the services approx. 115 million
customers. The current strategic position of the UnitedHealth Group is more reliable towards
customers. The position of the organization in the healthcare industry is very high and it allows
the use of services to the customers at a very low price. The company provides great support to
the people in living healthier lives and makes the health system better for the customers. The
several innovative approaches managed in the local communities by the specific healthcare
organization (Obama, 2016). This study provides various findings related to the UnitedHealth
Group that provides the best health services to the people. The external analysis of healthcare
gives various finding related information to the business like it gives information regarding the
external environment of the business. The study includes the description of the Porter five forces,
strategy canvas, and Blue Ocean. All of these factors define the external environment of the
business. The revenue of the organization in the year 2018 is $ 22,620 crores. The stock price of
the company is US$ 244.25 +1.16 (+0.48%). The financial data of an organization shows some

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critical value that defines the benefits of the company. The collected revenue for the year 2018
shows a better profit from the company.
External Analysis
PESTEL analysis
1. Summary of PESTEL analysis of the organization
The PESTEL analysis is a strategic tool that defines the macro-environmental factors related to
the organization. PESTEL defines political factors, economic factors, social factors,
technological factors, environmental factors, and legal factors. The changes occurred in the
factors gives a proper impact on the UnitedHealth Group as well as other health care companies
also. It also affected the profitability of the specific organization (Hoffman and Paradise, 2008).
The several challenges will also discuss in the PESTEL analysis. The description of factors are
described below-
 Political Factors
These are the main factors that affect the UnitedHealth Group and it provides profitability
in the relevant market. It maintains various political risks and manages the political
environment. The industry includes several systematic risks which are related to the
political environment. It maintains the political stability in the UnitedHealth Group. It
analyzes the level of corruption, which includes the various regulations included in the
healthcare sector (Hans, et. al., 2012). The political factors are responsible to analyze the
taxation, which involves the tax rates and incentives. Some legal framework is also
included in the political factors of the UnitedHealth Group. The legal framework includes
some of the regulations in the political factors, which are related to the proper
management of political risks and maintenance of political stability.
 Economic Factors
The economic factors are also involved in the pestle analysis of the UnitedHealth Group.
The economic factors include inflation rate, savings rate, foreign exchange rate, interest
rate and various factors related to the demand and investment in the economy. The
organization uses the economic factors of the country and maintains its plans related to
health care (Yuksel, 2012). Several economic factors can be analyzed such as exchange

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rates, the efficiency of financial markets, quality of infrastructure in the health care
industry, workforce skills, and education level in the economy and productivity in the
economy.
 Social Factors
The social factors include the proper culture of the society and the impact of the culture
on the business organization. The behavior of the population plays a great role in the
marketing of the UnitedHealth Group, which also attract the customers of a particular
market. The several social factors include which are demographics and skill level of the
population, a culture of the people and society, education standard of the population,
nature of the society and attitude of the people.
 Technological Factors
Technology is the most important factor of the business and especially for the healthcare
organization. The several factors of technology affect various operations of the
UnitedHealth Group. The technology plays a role in providing healthcare services. The
various impacts are seen in the organization by the technological factors which relate
with developments occurred in organization, impact on the cost structure, impact on
value chain structure, rate of technological diffusion and impact on the offering of
products.
 Environmental Factors
The environment is also largely affected the organizational activities and affect the
overall process of the organization in providing healthcare services. The various markets
have various environmental factors and it can affect the business in various ways (Halik,
2012). The organization needs to analyze several environmental factors before entering a
new market. The new market has different environmental standards, which need to
operate in new markets. The various environmental factors are like the weather, climate
change; air, and water pollution, laws regulate environmental pollution, management of
waste, recycling and several endangered species.
 Legal Factors
The several laws are incorporated with UnitedHealth Group, as in providing the several
healthcare services the legal activities are also matters. The various laws are related to

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this organization, which are discrimination law, employment law, consumer protection
law, anti-trust law, and data protection.

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2. Three influences related to the future industry change
By the above analysis, it has been determined that there are many influences, which helps the
organization in implementing various changes in the relevant healthcare industry. PESTEL
analysis is very beneficial for the UnitedHealth Group as it helps in determining the external
analysis of the organization and the external environment of the business. The external
environmental factors help in managing the overall business activities. The three influences,
which make several changes in the industry, are described below-
 Managing the political factors by analyzing the political environment of the
organization
By analyzing the political environment, several influences analyzed that maintain the
stability in the organization. The political factors are the most important part of the
organization as they increase or decrease the profitability of the organization
(Rothaermel, 2013). The UnitedHealth Group maintains the importance of the healthcare
plans and manages the economy of the country.
 Managing the impact of culture on the organization
The overall impact of culture is also created a great impact on the organization like
UnitedHealth Group. The social factors are also an important tool in the business of the
healthcare organization. These organizations provide healthcare services to the people of
the society itself so the social factors have great influence regarding the changes in the
industry. The management of the culture improves the societal factors, helps in managing
the people, and improves the industry for future involvement.
 Manage the laws related to the external environment of the organization
Legal factors also play an important role in the external environment of healthcare
organizations. The business of healthcare includes several laws and regulations. As per
the determination, it has been analyzed that the legal framework gives protection to the
proper rights of the business company. By maintain the laws and regulations, the future
of the healthcare industry can be easily managed.

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Five forces analysis
1. Five force analysis of the organization
The porter five forces is also a strategic management tool that helps to analyze the industry and
profitability of the organization. This tool is used to develop the strategy for increasing the
competitive advantage for the UnitedHealth Group and provide long-term profits for managing
the healthcare plans (Montgomery and Oladapo, 2014). The Porter five forces include the threat
of new entrants, bargaining power of suppliers, bargaining power of buyers, threat from
substitute products and rivalry among the existing players. The description of five forces related
to the UnitedHealth Group is discussed below-
The threat of New Entrants
As per the information, it has been determined that the new entrants bring innovation in the
healthcare industry and increases the new ways of doing things. This process provides pressure
in the specific organization by reducing the costs, the lower strategy of pricing and need to
provide new value propositions to the customers of the organization (Dobbs, 2014). The
organization is requiring facing these challenges and managing them as per the requirements of
the business. The organization needs to invent new products and services to manage these
challenges and it attracts the customers and improves the business process.
Bargaining Power of Suppliers
Every company purchases their material from different suppliers and most of the suppliers
decrease their margins. Many powerful suppliers can use their power to extract higher prices and
this process impact the overall profitability of the organization and create a big challenge for the
UnitedHealth Group (Maresove and Kuca, 2014). The organization needs to tackle the
bargaining power of suppliers by changing the designs of the products and make the proper
supply chain with the suppliers.
Bargaining Power of Buyers
The buyers of the organization demanded in the market at a higher pitch and they need to buy the
best products offered by the organization on the minimum price. This gives the pressure on the
organization and then the UnitedHealth Group need to face the challenges of the buyers. For

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such challenges, the organization needs to increase the offers and discounts. The organization
manages this problem by make a large base of customers as this can reduce the bargaining power
of buyers.
Threat from the substitute products
The threat from the new products affect the organization as the same products fulfill the needs of
the customers and this can decrease the profitability of the business (Porter and Lee, 2016). So
the organization manages this problem by becoming a service-oriented as compared to product-
oriented and by properly analyzes the needs of the customers.
Rivalry among existing players
This is also a big challenge for the organization as it makes the prices down and decreases the
profits of the business. As the UnitedHealth Group, have many competitors in the market. The
process of sustainable differentiation can manage this problem.
2. Three key forces from five forces
By the above discussion of five forces, it has been determined that from the five forces three
forces are most important for the healthcare organization and these need to be managed for
increasing the profitability of the organization. Among five forces, the main three forces are
bargaining power of suppliers, bargaining power of buyers and threat of the new products in the
market (Rosenberg and Ferlie, 2016). All these three forces are more influenced by the Porter
five forces. The description of these three forces are described below-
 Bargaining power of suppliers
This process is important as the suppliers use their powers in providing raw material to
the organization. Therefore, the organization needs to make a proper supply chain to get
rid of this challenge. By making several designs of the product, it can decrease the power
of suppliers.
 Bargaining power of buyers

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This force is also important in the process of the healthcare organization. As the buyers
demand a lot and they need offers and discounts. To overcome this challenge, the
organization need to make a large base of customers as it reduces the bargaining power of
buyers and the organization needs to make innovative products to reduce the side effects
of this problem.
 The threat of new products
The threat of new products is also a big problem for the UnitedHealth Group because a
similar product comes in the market decreases the profits of the company. The
organization needs to focus on the services rather than the products and they need to
increase the switching cost for the customers (Aithal, 2016).

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Strategy Canvas
1. Strategy canvas of business
Strategy of business External Environment Business Concpets Quality of Services
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1
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3
4
5
6
7
Strategy Canvas
Molina Health care CVS Health
The above chart is related to the strategy of a canvas of the UnitedHealth Group that shows the
competition of the organization with its rivals. The two main rivals of the organization are
Molina Health care and CVS Health. These companies also provide health insurance services
and these are the great rivals of the specific organization (Dobbs, 2014). The above graph shows
the differences between these two with the UnitedHealth group. The strategy of business that is
used by these two organizations is an effective marketing strategy as well as providing its
services with better quality to its consumers. The graphs represent the level of competition with
these two competitors and prepare a strategy canvas of these two organizations in order to
compare with the United Health Group.
2. Five critical success factors
There are several factors that are responsible for the success of the healthcare industry. For
attaining the success in the healthcare industry, the organizations need to manage many activities
of the business. The factors are very much interrelated with the industry and the activities of the
business (Muhtaroglu, et. al., 2013). As per the UnitedHealth Group, the healthcare organization

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needs to adopt these factors for getting success in the industry. The five critical success factors of
the healthcare industry are described below-
 Information system adjustment
This is one of the most important success factors, which include the proper adjustment of the
system or organization. This factor includes the strategy used by the organization so that it
becomes effective for the customers.
 Business Process adjustment
This process includes the overall process of the business used to achieve success in the
healthcare industry. This also includes as a key success factor of the organization. The
organization needs to adopt the process of business more effective than competitors so the
profitability can be increased.
 Organizational Resistance
This resistance can decrease the chance of success but sometimes the organization can
succeed with the fear of the organizational resistance. This is also one of the important
factors that are responsible for the success of the healthcare industry.
 Top management support
The support of the management is also responsible for the success of the healthcare
organization (Barquet, et. al., 2013). The support of the top management includes the several
favors needs by the business and this support improves the overall strategy of the business.
 The capability of key members
The organization has many key members that involve in business activities. The capability of
the key members is important for the success of the business. So the healthcare organization
needs to see that the key members are capable enough or not.