Researching of Aetna Business Environment

Subject: Strategic Management
Pages: 5
Words: 1084
Reading time:
4 min
Study level: Bachelor

Business Environment

A company’s operational and financial outcomes may be favorably or adversely influenced by the company’s internal setting, which business executives can control. Business executives may have little or no influence over the external environment, which may provide the biggest hurdles to their company’s growth. It is common for businesses to perform environmental assessments and adopt policies tailored specifically to the needs of the market they operate in. In addition to the overall environment, there is also the operational environment. Economic, political, cultural, technical, ecological, and demographic factors are all included in a company’s overall environment. The corporation conducts an environmental study to comprehend better the impact of the general and operational environments on operational processes.

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Aetna Inc.’s external analysis is a planned technique to examine the macro setting of the firm. Fluctuations in the macro-environment rudiments may directly influence Aetna Inc. and can also distress other participants in the health care plans. The macro-environment fundamentals may affect the Porter Five Forces that affect the plan and market position. In addition, they may affect an individual company’s competitiveness or the overall financial results of the Healthcare business (The external environment ‐ Leading Change, 2022, p. 1). External analysis stretches important depth concerning functioning issues Aetna Inc. will challenge in a dominant macro setting other than competition dynamics. For example, an Industry may be extremely lucrative with a great development path. Yet, it will not benefit Aetna Inc. in an insecure political climate.

Environmental Analysis

Environmental scanning may be done in various ways, from a more systematic approach to a more ad hoc one. Methodology selection is influenced by several factors, including the amount and quality of essential data, the source from which it was obtained, and the timeliness and relevancy of the data. Situation Writing, Simulations, Single Parameter Inference, Morphology Analysis, Cross-Impact Assessment, Field Force Assessment, and Game Theory are the most utilized methodologies. In addition, statistical methods are used, and Judgmental and institutional methods are also extensively utilized.

The economy has had difficult several years, and Aetna is no different. Despite growing membership, the company’s economic expansion in 2008 and 2009 was lower than in prior years. It faces more expenditures, lower revenue, and a 30% drop in net earnings. The major strategic issue for Aetna is to guarantee that its current insurance offerings and operational policies meet the criteria established by the new federal law. However, although the law presents obstacles, it also provides opportunities by increasing the number of healthcare coverage people have.

Industry

As a result of PEST research, Aetna Inc. will have an improved conception of the problems it will meet in the current macroeconomic environment. Aetna Inc., for instance, won’t profit from an extremely lucrative industry with a robust development route if it is located in a diplomatically insecure region.

Political

Political factors profoundly incline Aetna Inc.’s long-term success in a specific nation or market. One of Aetna’s major hazards is that the company operates in more than a dozen nations and is exposed to various dangers in each country’s politics. Therefore, it is essential to spread risk exposures to succeed in a rapidly changing Health Care Plan sector across several nations.

Economic

A country’s economic growth and needs to receive are influenced by economic indicators, including inflation, the volume of funds, the interest rate, the economic outlook, and the business cycle. In addition, competitor standards are a micro-environmental characteristic that affects a firm’s ability to compete. Therefore, macroeconomic data like rate of increase, hyperinflation, and industry economic trends may help Aetna Inc. estimate worldwide growth in the industry name, sector, and the firm itself.

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Social

The capacity of Aetna Inc. to fulfill the demands of evolving client requirements is one of the company’s immediate prospects. In addition, the organization responds fast to demographic developments in healthcare. The healthcare sector is defined by shifting customer requirements, and Aetna’s capacity to adjust to these shifts presents an opportunity. The company’s regional growth is another potential for Aetna Inc. Finally, and the planned mergers are Aetna Inc.’s third chance. The corporation has the financial clout and reputation for attracting and carrying out mergers.

Technological

The pricing model and competitive dynamics of an industry may be swiftly dismantled by technology relatively quickly. To stay ahead of the competition and maintain a competitive advantage, businesses must stay on the cutting edge of technology to avoid falling behind and becoming obsolete shortly (Shtal,2018). When considering technological influences, it is important to remember that a company’s profitability may be highly influenced by how much technology impacts the expenses they incur.

Michael Porter’s Framework

Aetna Inc. has threats of new entrants in the healthcare industry. As new companies enter the health insurance market, Aetna Inc. is under pressure to reduce its prices, reduce expenses, and offer new approaches to add value to consumers (Goyal, 2020, p. 5). Aetna Inc. must handle these concerns and establish effective obstacles to preserve its competitive lead. Concerning the bargaining power of suppliers in the Health Care Plan market, almost every company relies on many suppliers. As a result, leading suppliers might condense Aetna Inc.’s market boundaries.

The company is also affected by the bargaining power of buyers. Consumers may be picky bunch, and they aim to buy the highest goods at the lowermost possible pricing point. As a result, Aetna Inc.’s long-term profitability suffered. Aetna faces threats of substitute products or services. When new products fulfill consumers’ requirements in various ways, it’s hard for firms to make money. New products with unique value propositions are at risk of being replaced by similar products and services. There is a rivalry between current and former customers in the company. The industry’s total revenue will be lowered because of the strong rivalry between the present firms. Aetna’s Health Care Plan offerings face a lot of rivalry from other providers. This rivalry harms the company’s long-term profitability.

Aetna Swot Analysis

Aetna Inc. is a major player in its field. Yet, according to the SWOT analysis, Aetna Inc. has managed to preserve its leading position in the industry. The table below shows the key aspect of Aetna’s Inc. SWOT analysis.

Strengths
  • Strong dealer community.
  • Strong brand portfolio.
  • Automaton of activities.
  • Good returns on capital.
Weaknesses
  • Requires more investment in new technologies.
  • High attrition of workforce.
  • Not very good at product demand forecasting.
Opportunities
  • New customers from online channel.
  • New trends in consumer behavior.
  • Technology.
  • Stable cash flow provides investment opportunities.
Threats
  • Raising pay level adds pressure to profitability.
  • Rising prices of raw materials.
  • Increasing trend of isolationism.

References

The external environment ‐ Leading Change: A conversation with Ron Williams. (2022). Web.

Goyal, A. (2020) A Critical Analysis of Porter’s 5 Forces Model of Competitive Advantage.

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Shtal, T.V., Buriak, M., Ukubassova, G., Amirbekuly, Y., Toiboldinova, Z. and Tlegen, T, (2018) Methods of analysis of the external environment of business activities.