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.

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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).

6 Political Factors: UnitedHealth Group is a globally diverse organization that operates in the United States and internationally. There are several political factors that impact the organization and the healthcare industry. The political factors include:  Government corruption as it relates to regulation of the healthcare industry.  Trade regulations related to healthcare.  Anti-trust laws related to healthcare plans.  Pricing regulations as it relates to the healthcare industry. UnitedHealth Group can better position itself to respond to these political factors by investing in lobbying efforts to influence healthcare policy in a way that benefits the organization and the healthcare industry. UnitedHealth Group can partner with government agencies and other organizations to deliver healthcare services. UnitedHealth Group can continue its strong commitment to compliance and ensure it is fully compliant with all relevant laws and regulations both domestic and international. UnitedHealth Group can work to maintain a positive public image and build strong relationships with key stakeholders by engaging in corporate social responsibility initiatives and responding proactively to any political controversies impacting the healthcare industry. Most importantly, UnitedHealth Group should incorporate political analysis into its strategic planning process to position itself to respond effectively to political factors impacting the organization. Economic Factors: UnitedHealth Group’s global operations present several economic factors that impact the organization and the healthcare industry. The economic factors include:  The type and stability of the economic system in UnitedHealth Group’s countries of operation.  Efficiency of local and global financial markets.  Economic growth rates.  Discretionary income.  Unemployment rates.  Interest rates. UnitedHealth Group can better position itself to respond to these economic factors by focusing its efforts on improving efficiency and reducing costs to keep prices competitive and diversify its offerings to cater to a wider range of economic groups. UnitedHealth Group can continue to invest in research and development to create new products or services that meet changing consumer needs. UnitedHealth Group should include continuous market and economic research into its operations to position itself to respond effectively to economic factors impacting the organization and the healthcare industry. Social Factors: UnitedHealth Group is impacted by social factors related to the demographic environment in which it operates. The social factors include:  The skill level of the individuals living in the area where the organization operates.  The education level and education standards in the healthcare industry.  The gender roles and culture in the community.  Attitudes toward health and wellness. UnitedHealth Group can better position itself to respond to these social factors by focusing on understanding these factors and leveraging their scale and reach to invest in initiatives that will allow them to work effectively and efficiently in the demographic environments they operate.

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7 Technological Factors: UnitedHealth Group is a technology leader in the healthcare industry but there are still impacts related to operations, distribution, communication, and marketing that affect the organization and the healthcare industry. The technological factors include:  Technology’s impact on product offerings.  The speed of technology dissemination. UnitedHealth Group can better position itself to respond to these technological factors by continuing to invest in emerging technologies and continuing to innovate in areas like remote patient monitoring, predictive analytics, and personalized healthcare. Environmental Factors: UnitedHealth Group is an organization that is committed to a healthy environment. The environmental factors that could affect the organization and the healthcare industry include:  Weather impacting delivery of care and workplace operations.  Attitudes toward ecological products.  Recycling requirements in the local and global operational environments. UnitedHealth Group can better position itself to respond to these environmental factors by investing in renewable energy resources for its operations, promoting telehealth to reduce travel- related emissions, and integrating environmental sustainability into its corporate strategy. Legal Factors: The legal factors that might impact UnitedHealth Group and the healthcare industry include:  Anti-trust laws in the healthcare plan industry.  Intellectual property laws.  Consumer protection laws.  Employment laws.  Health and safety laws.  Data protection laws. UnitedHealth Group can better position itself to respond to legal factors by maintaining a robust legal team and ensuring compliance with all applicable laws and regulations. Five Forces Analysis of UnitedHealth Group Michael Porter’s Five Forces model identifies five key competitive forces to consider when analyzing an organization’s external environment and formulating a competitive strategy (Rothaermel, 2021). UnitedHealth Group, as an existing organization in the established healthcare industry, needs to focus its efforts on minimizing the constraints of strong forces and maximizing the weak forces. The Five Forces model focuses on the following key competitive forces: threat of entry, power of suppliers, power of buyers, threat of substitutes, and rivalry among existing competitors. Threat of New Entrant: The threat of new entrants in the healthcare industry is relatively low due to high barriers to entry, including regulatory requirements, high capital investment, and the need for specialized knowledge and expertise (Adamkasi, 2019). Threat of Substitutes: The threat of substitutes in the healthcare industry is relatively low due to the specialized nature of services and products. The rise of telemedicine and home healthcare

8 services could serve as a substitute for traditional healthcare services. For UnitedHealth Group to maintain a strong competitive advantage it should focus its efforts on improving its presence in the areas of telehealth and home health. Bargaining Power of Suppliers: The power of suppliers in the healthcare industry is considered strong. The healthcare industry relies upon individuals with clinical expertise, technological expertise, and strong data analytic experience. The American Hospital Association estimates that 100,000 registered nurses have left the workforce during the past two years and another 610,388 reported an intent to leave by 2027 (American Hospital Association, 2023). This shortage will strongly impact the healthcare industry. Bargaining Power of Buyers: The power of buyers in the healthcare industry is considered strong. As the healthcare industry continues to grow the market continues to become more competitive and consumers have more options for their healthcare. For UnitedHealth Group to maintain its strong competitive advantage in the healthcare industry, it will need to continue to diversify its product offerings and contain costs to remain attractive to healthcare consumers. Competitive Rivalry: Competitive rivalry in the healthcare industry is strong. The healthcare industry in the United States is constantly growing. UnitedHealth Group faces tough competition from competitors that include Cigna, Elevance Health Inc., Humana, and Blue Cross and Blue Shield of Michigan Mutual Insurance Company. However, UnitedHealth Group has consistently held a dominating presence in the healthcare industry. UnitedHealth Group currently holds a 15% market share in the healthcare market in the United States. To continue to hold a strong competitive advantage in the healthcare industry, UnitedHealth Group must continue to focus on strategies that improve its ability to maintain the strong presence it currently has in the industry. Leadership’s Role in the Strategic Planning Process The role of leadership in the strategic planning process is significant and multifaceted. Leadership is the essential foundation for establishing a strategic plan for an organization to follow to have a strong competitive advantage in the industry (Jabbar & Hussein, 2017). Strategic leaders start by developing the mission, vision, and values of the organization. To develop and implement the organization’s vision, leadership must formulate strategies that will allow the organization to gain and maintain a strong competitive advantage. According to Rothaermal (2012), an organization’s vision defines what the organization wants to accomplish, an organization’s mission defines how the organization will accomplish it, and the values guide how the organization pursues its vision and mission. To be effective, an organization must support its vision and mission with strategic, actionable commitments. Building ethics into the strategic planning process is a key consideration for leadership to ensure that every aspect of the organization is ethically aligned. UnitedHealth Group’s mission is to help people live healthier lives and help make the health system work better for everyone. UnitedHealth Group’s values of integrity, compassion, relationships, innovation, performance, and inclusion guide the organization in fulfilling its mission.

9 Recommended Course of Action UnitedHealth Group is a leader in the healthcare industry with a strong commitment to its mission of helping people live healthier lives and helping make the health system work better for everyone. UnitedHealth Group has a strong competitive advantage in the healthcare industry. To maintain its strong competitive advantage and continue to grow within the industry UnitedHealth Group should continue to focus on expanding value-based care models that focus on patient outcomes and invest in preventive care and wellness programs to help members stay healthy and reduce healthcare costs. UnitedHealth Group should continue to diversify its services to meet the changing needs of its members locally and globally. UnitedHealth Group should continue to advocate for policy changes that support growth and sustainability in the healthcare industry and continue to invest in employee development. By continuing to focus on fulfilling its mission of helping people live healthier lives and helping make the health system work better for everyone, UnitedHealth Group will continue to be an industry leader for years to come.

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10 References Adamkasi. (2019). Porter’s Five Forces Analysis of UnitedHealth Group. Retrieved from: https://www.porteranalysis.com/porters-five-forces-analysis-of-unitedhealth-group American Hospital Association. (2023) Study projects nursing shortage crisis will continue without concerted action. Retrieved from: https://www.aha.org/news/headline/2023-04- 13-study-projects-nursing-shortage-crisis-will-continue-without-concerted-action Hilgers, L. (2023). Here are the 2023 LinkedIn Top Companies. Retrieved from: https://www.linkedin.com/buisness/talent/blog/talent-strategy/linkedin-top-companies Jabbar, A.A. & Hussein, A.M. (2017). The role of leadership in strategic management. International Journal of Research – Granthaalayah 5 (5), 99-106. Retrieved from: https://core.ac.uk/download/pdf/144791687.pdf Rothaermel, F. (2021). Strategic management (5 th ed.). New York, NY: McGraw-Hill. Schwarz, A. (2023). America’s Best Large Employers. Retrieved from: https://www.forbes.com/lists/best-large-employers/?sh=1c229d587b66 The Brand Hopper. (2023). Leading healthcare UnitedHealth Group way: Group’s impact on the industry. Retrieved from: https://thebrandhopper.com/2023/03/04/leading-healthcare- unitedhealth-group-way-impact-on-the-industry/#google_vignette UnitedHealth Group. (2023). Our Businesses: Innovating, collaborating, discovering. https://unitedhealthgroup.com/people-and-businesses/businesses UnitedHealth Group. (UNH) (2023). Profile. Yahoo Finance. https://finance.yahoo.com/quote/UNH/profile?p=UNH UnitedHealth Group. (2022). UnitedHealth Group: 2022 annual report. Retrieved from: https://www.unitedhealthgroup.com/investors/annual-reports.html

11 What is VRIO. (2021). What is VRIO? Retrieved from: https://www.intrafocus.com/2021/07/what-is-vrio

12 Appendices Exhibit 1: VRIO Analysis UnitedHealth Group VRIO Analysis V Valuable R Rare I Costly to Imitate O Organized Financial Resources Yes Yes Yes Yes Employees Yes Yes Yes Yes Intellectual Property Rights Yes Yes Yes Yes Distribution Network Yes Yes No Yes Global & Local Presence Yes Yes Yes Yes

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13 Exhibit 2: PESTEL Analysis UnitedHealth Group PESTEL Analysis P Political  Government corruption as it relates to regulation of the healthcare industry.  Trade regulations related to healthcare.  Anti-trust laws related to healthcare plans.  Pricing regulations as it relates to the healthcare industry. E Economic  The type and stability of the economic system in UnitedHealth Group’s countries of operation.  Efficiency of local and global financial markets.  Economic growth rates.  Discretionary income.  Unemployment rates.  Interest rates. S Social  The skill level of the individuals living in the area where the organization operates.  The education level and education standards in the healthcare industry.  The gender roles and culture in the community.  Attitudes toward health and wellness. T Technological  Technology’s impact on product offerings.  The speed of technology dissemination. E Environmenta l  Weather impacting delivery of care and workplace operations.  Attitudes toward ecological products.  Recycling requirements in the local and global operational environments. L Legal  Anti-trust laws in the healthcare plan industry.  Intellectual property laws.  Consumer protection and e-commerce laws.  Employment laws.  Health and safety laws.  Data protection laws. Exhibit 3: Porter’s Five Forces Model

14 UnitedHealth Group Porter’s Five Forces Model Threat of New Entrant - LOW The threat of new entrants in the healthcare industry is relatively low due to high barriers to entry, including regulatory requirements, high capital investment, and the need for specialized knowledge and expertise. Threat of Substitute - LOW The threat of substitutes in the healthcare industry is relatively low due to the specialized nature of services and products. The rise of telemedicine and home healthcare services could serve as a substitute for traditional healthcare services. Bargaining Power of Buyers - STRONG The power of buyers in the healthcare industry is considered strong. As the healthcare industry continues to grow the market continues to become more competitive and consumers have more options for their healthcare. Bargaining Power of Suppliers - STRONG The power of suppliers in the healthcare industry is considered strong. The healthcare industry relies upon individuals with clinical expertise, technological expertise, and strong data analytic experience. There is currently a shortage of nurses and doctors that will strongly impact the healthcare industry. Competitive Rivalry - MODERATE Competitive rivalry in the healthcare industry is strong. The healthcare industry in the United States is constantly growing. UnitedHealth Group faces tough competition from competitors that include Cigna, Elevance Health Inc., Humana, and Blue Cross and Blue Shield of Michigan Mutual Insurance Company. However, UnitedHealth Group has consistently held a dominating presence in the healthcare industry. UnitedHealth Group currently holds a 15% market share in the healthcare market in the United States.

MBA-FPX5006_AdlerMichelle_Assessment1-1

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