MBA-FPX5006_AdlerMichelle_Assessment1-1

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1 Strategic Process and Analysis Michelle Adler MSN RN PMHN-BC Capella University MBA-FPX5006: Business Strategy Dr. Connie Brewer November 19, 2023

2 Table of Contents Executive Summary UnitedHealth Group ....................................................................................... 3 AFI Strategic Planning Framework ................................................................................................. 3 Internal Environment Analysis ........................................................................................................ 4 UnitedHealth Group’s VRIO Analysis ........................................................................................ 4 External Environment Analysis ....................................................................................................... 5 PESTEL Analysis of UnitedHealth Group .................................................................................. 5 Five Forces Analysis of UnitedHealth Group ............................................................................. 7 Leadership’s Role in the Strategic Planning Process ...................................................................... 8 Recommended Course of Action ..................................................................................................... 9 References ...................................................................................................................................... 10 Appendices .................................................................................................................................... 12 Exhibit 1: VRIO Analysis .......................................................................................................... 12 Exhibit 2: PESTEL Analysis ..................................................................................................... 13 Exhibit 3: Porter’s Five Forces Model ...................................................................................... 14

3 Executive Summary UnitedHealth Group UnitedHealth Group Incorporated is a diversified healthcare and well-being company in the United States that was incorporated in 1977 and is based in Minnetonka, Minnesota. According to Yahoo! Finance, UnitedHealth Group is the leader in the healthcare industry employing over 400,000 full-time employees. UnitedHealth Group is the largest health insurer in the United States with a market share of over 15% (The Brand Hopper, 2023). The employees of UnitedHealth Group drive the company’s mission to help people live healthier lives and help make the health system work better for everyone. UnitedHealth Group is known for its clinical expertise and leads the industry in advanced technology, data, and health information. UnitedHealth Group is made up of a diverse team around the world dedicated to making healthcare work better through two distinct and complementary businesses: UnitedHealthcare and Optum. UnitedHealthcare offers a full range of health benefits, enabling affordable coverage, simplifying the healthcare experience, and delivering access to high-quality care. Optum delivers care aided by technology and data, empowering people, partners, and providers with the guidance and tools they need to achieve better health (UnitedHealth Group, 2023). According to the organization’s 2022 Annual Report, UnitedHealth Group’s competitors include Cigna, Elevance Health Inc., Humana, and Blue Cross and Blue Shield of Michigan Mutual Insurance Company. In 2022, UnitedHealth Group reported $320 billion in total revenues and served over 150,000,000 unique individuals. This business report will provide an objective analysis of the internal and external environments of UnitedHealth Group using VRIO analysis, Pestle analysis, and Porter’s Five Forces analysis. AFI Strategic Planning Framework Businesses use a strategic planning framework to achieve long-term success and sustained competitive advantage by helping to prioritize the organization’s efforts, effectively allocate resources, align stakeholders and employees on the organization’s goals, and ensure that those goals are grounded in fact and not just based on a hunch. An effective strategic planning framework allows an organization to identify its strengths and weaknesses, identify external stressors, and develop a strategy that is aligned with its goals and objectives. Rothaermel (2021) describes the AFI strategic planning framework as a model that consists of three strategic management tasks that help organizations develop and implement a strategy that can improve performance and result in a competitive advantage. The three tasks in the AFI framework involve analysis, formulation, and implementation. The first task involves analyzing the overall strategic management process by assessing the organization’s internal and external environments. The organization’s internal strengths and weaknesses can be analyzed using the Value Chain or VRIO Framework. The external stressors can be analyzed using the PESTEL or Five Forces analysis. The analysis step in the AFI framework is a critical part of strategic planning because it helps capture the current state of the organization. In this step, the organization identifies the areas in which it excels and the areas that need improvement and helps the organization identify market opportunities and opportunities for growth.

4 The second task involves formulating a business strategy, corporate strategy, and global strategy. The organization’s business strategy helps its leaders to set organizational goals to create value and give the organization a competitive advantage. The corporate strategy helps the organization to document the intended direction the business is headed and identify the actionable steps needed to reach its goals. The global strategy helps the organization identify its plan to expand across the world and increase global brand awareness. The third task involves implementing organizational design, corporate governance, business ethics, and strategic leadership. In the final phase of the AFI framework, the organization identifies how it is going to put the strategy into action. This is where the organization identifies the resources needed, develops action plans, and monitors the progress being made by the organization. The ultimate goal of the AFI framework is to improve the organization’s performance and give the organization a competitive advantage (Rothaermel, 2021). Internal Environment Analysis UnitedHealth Group identifies several resources that are integral to maintaining the organization’s competitive advantage. They include financial resources, employees, patents, distribution network, and global and local presence. Internal environment analysis provides an organization with the ability to assess its internal strengths and weaknesses during the strategic planning process. Internal environment analysis can be done using the VRIO Framework or Value Chain Analysis. This report will use the VRIO Framework for UnitedHealth Group’s internal environment analysis. UnitedHealth Group’s VRIO Analysis The VRIO Framework identifies certain types of resources to be the basis of a competitive advantage. Rothaermel (2021) describes resources that are key to superior performance as those that are V aluable, R are, costly to I mitate, and O rganized to capture value. If an organization’s resource or capability is not valuable it results in a competitive disadvantage. If an organization’s resource or capability is valuable but it is not rare it results in competitive parity. If an organization’s resource or capability is valuable and rare but easy to imitate it provides only a temporary competitive advantage. If an organization’s resource or capability is valuable, rare, and difficult to imitate, but it is not organized to capture value it results in an unused competitive advantage. When a resource is valuable, rare, difficult to imitate, and organized to capture value it provides the organization with a sustainable competitive advantage. (What is VRIO?, 2021). Financial Resources: UnitedHealth Group is listed as the most profitable company among major national healthcare insurers in 2023. UnitedHealth Group’s gross profit for the twelve months ending September 20, 2023, was $360 billion, a 14.24% increase year-over-year. UnitedHealth Group’s financial resources are valuable, rare, difficult to imitate, and organized to capture value. UnitedHealth Group’s financial resources provide the organization with a sustainable competitive advantage. Employees: UnitedHealth Group was named to Forbes’ list of America’s 500 Best Large Employers for 2023 (Schwarz, 2023). UnitedHealth Group was ranked seventh on the 2023

5 LinkedIn Top Companies List in the United States (Hilgers, 2023). UnitedHealth Group employs individuals highly trained in clinical operations, technology, and data analytics. UnitedHealth Group supports a workplace that promotes career mobility, diversity, and learning and development. UnitedHealth Group’s employee resources are valuable. Their focus on attracting highly trained, diverse individuals makes the employee base rare. UnitedHealth Group’s is dedicated to promoting career mobility, focused on an employee culture that values individuals and provides strong work-life balance, and committed to learning competitors. UnitedHealth Group’s talent management initiatives are well organized and support a workplace that supports career growth and employee satisfaction. UnitedHealth Group’s employee resources provide the organization with a sustainable competitive advantage. Intellectual Property Rights: UnitedHealth Group’s patents are an extremely valuable resource. These resources are rare, and competition will find it very difficult to imitate. UnitedHealth Group is organized to capture value in this area and has potential to further expand this resource. These resources provide UnitedHealth Group a strong competitive advantage. Distribution Network: UnitedHealth Group’s distribution network is valuable and rare. The organization’s competitors also have a flexible distribution network and share some of the suppliers. UnitedHealth Group’s distribution network is fully utilized by the organization. Currently this resource keeps the business running and provides a temporary competitive advantage. UnitedHealth Group would benefit from expanding their distribution network in a unique way that is not currently used by competitors and would be costly for competitors to imitate. This would then allow the organization’s distribution network to provide a strong competitive advantage rather than just keep the business running. Global and Local Presence: UnitedHealth Group’s global and local presence is a valuable and rare resource amongst its competitors. This resource can be imitated by UnitedHealth Group’s competitors, but it would be at a relatively high cost. UnitedHealth Group is one of the most diversified companies in the industry making this resource organized to capture value. UnitedHealth Group’s global and local presence provides a strong competitive advantage. External Environment Analysis External environment analysis provides an organization with the ability to assess the external stressors impacting the organization and the industry during the strategic planning process. External environment analysis can be done using the PESTEL method and Porter’s Five Forces Analysis. PESTEL Analysis of UnitedHealth Group The PESTEL method of external environment analysis assesses the political, economic, social, technological, environmental, and legal factors that could affect an organization and the industry that the organization operates in (Rothaermel, 2021).

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