MBA-FPX5006_AdlerMichelle_Assessment2-2

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1 Business Strategy Michelle Adler MSN RN PMHN-BC Capella University MBA-FPX5006: Business Strategy Dr. Connie Brewer November 23, 2023

2 Table of Contents Introduction ..................................................................................................................................... 3 Generic Business Strategies for UnitedHealth Group ..................................................................... 3 UnitedHealth Group’s Business Strategy ........................................................................................ 4 UnitedHealth Group’s Business Model ........................................................................................... 4 UnitedHealth Group’s Corporate Strategy ...................................................................................... 4 UnitedHealth Group’s Corporate Structure and Management Systems .......................................... 5 UnitedHealth Group’s Strategic Fit ................................................................................................. 5 References ........................................................................................................................................ 6

3 Introduction 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. Michael Porter developed a set of strategies that businesses use to gain a competitive advantage: cost leadership, differentiation, and focus (Porter, xxxx). Using the VRIO framework for internal environment analysis and combining PESTEL analysis and Porter’s Five Forces framework for external environment analysis, strategic business leaders can develop and implement a strategy that can improve performance and result in a competitive advantage. This report will summarize the VRIO, PESTEL and Five Forces findings and explain the generic business strategies used by UnitedHealth Group. This report will analyze the business strategy used and the company’s business model, analyze the corporate strategy of the company and the overall corporate structure and management systems, and analyze the strategic fit between the business and corporate strategies. This paper will demonstrate UnitedHealth Group’s well-aligned and integrated approach to its operations that has positioned the organization as the largest health insurer in the United States with a market share of over 15% (The Brand Hopper, 2023). Generic Business Strategies for UnitedHealth Group UnitedHealth Group is a healthcare company that was incorporated in 1977 and is based in Minnetonka, Minnesota. UnitedHealth Group was founded on the premise that consumers deserved better options for their healthcare. The organization has developed strong and effective governance practices, including compliance, board diversity and independence, a commitment to ethics and integrity, and an emphasis on data security and supply chain management. UnitedHealth Group’s principles of ethics and corporate governance outline the behaviors and responsibilities that provide the foundation for their actions, how they protect entrusted data, and the expectations they set for their suppliers. These practices ensure that UnitedHealth Group is working to achieve its mission of helping people live healthier lives and helping make the health system work better for everyone. UnitedHealth Group uses a hybrid approach that combines Porter’s cost leadership, differentiation, and focus strategies to create a unique approach that aligns with the company’s competitive healthcare environment. The cost leadership strategy involves producing goods or services at the lowest cost possible. This can be achieved by reducing production costs, optimizing supply chain management, and minimizing overhead costs. The differentiation strategy involves creating a unique product or service that is different from what is currently available in the market. This is achieved by offering better quality, unique features, and superior customer service. The focus strategy involves targeting a specific market segment or niche and is achieved by offering specialized products or services that are not widely available. UnitedHealth Group integrates deep clinical expertise with data and analytics capabilities to build health benefits, pharmacy, technology, and financial services businesses that drive

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4 innovation in the healthcare system. The organization utilizes a comprehensive, value-based care delivery network that connects primary, specialty and surgical care with behavioral and pharmacy services to reach more than 100 million people. The company continuously strives to give consumers more choice, more simplicity, more value, better outcomes, lower costs, and greater value for everyone (UnitedHealth Group, 2022). UnitedHealth Group’s Business Strategy Michael Boyles (2022) defines business strategy as “the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market”. An effective business strategy guides the organization in creating value for its customers, employees, and stakeholders. The organization’s business strategy helps align it offerings to its corporate strategy. UnitedHealth Group’s Annual Sustainability Report (2022) outlines the following five strategic growth opportunities that represent how the company can help every person who interacts with the healthcare system every day: value-based care, health benefits, health technology, health financial tools, and pharmacy services. The organization recognizes that the success of the company lies in creating long-term value for its stakeholders and strives for strategic, long-term growth embedded in its businesses. UnitedHealth Group’s Business Model A business model defines the company’s products or services, the markets that it serves, how it produces and delivers the products or services and the customer value proposition. UnitedHealth Group has a segmented market business model with customer segments that have slightly different needs. 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. UnitedHealthcare provides health coverage, Medicare plans, short-term health insurance, and Medicaid plans for individuals and families. It also offers health management and global health solutions for employers, healthcare providers, brokers, and consultants. Optum combines clinical expertise, technology, and data to empower people and providers with the guidance and tools they need to achieve better health through value-based care, pharmacy care services, and technology-enabled services. UnitedHealth Group’s customer base includes employers, governments, and individuals. The company’s products and services are easily accessible. The company is committed to innovation and UnitedHealth Group is a well-known and respected brand in the healthcare industry (UnitedHealth Group, 2023). All of these factors give the organization a strong competitive advantage in the healthcare industry. UnitedHealth Group’s Corporate Strategy While a company’s business strategy aims to improve the competitive advantage and expand the market share of the business, the corporate strategy is broader and more strategic, and focuses on building sustainable profitability and stability for the organization. UnitedHealth Group’s corporate strategy focuses on four sustainability priorities:

5  Helping to build a modern, high-performing health system – through partnerships and core growth strategies, UnitedHealth Group is working to deliver a more sustainable health system for this generation and the next.  Healthy environment – recognizing the impact climate change has on human health, UnitedHealth Group is committed to minimizing its carbon footprint because it believes that a health planet is the foundation of a healthy society.  The organization’s people and culture – UnitedHealth Group is committed to building a diverse, equitable and inclusive culture where innovation and compassion fuel its impact on the people and communities it serves.  Responsible business practices – UnitedHealth Group’s 40-year history of strong and effective corporate governance enables it to grow and operate ethically as it works to improve the health and well-being of its customers. UnitedHealth Group started out as a company that processed insurance claims for physicians’ offices in Minnesota and has expanded its product and service lines over the past 40 years to become the largest health insurer in the United States owning products and services along the healthcare and well-being vertical. UnitedHealth Group’s business strategy supports its corporate strategy and allows the organization to build sustainable profitability and stability. UnitedHealth Group’s Corporate Structure and Management Systems 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. UnitedHealth Group’s global and local presence is a valuable and rare resource amongst its competitors. 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. UnitedHealth Group offers a wide range of products and services, employs vertical integration by operating two business entities that provide complementary products and services, and has global alliances throughout the world in both the production and delivery of the products and services and on the receiving end as consumers. UnitedHealth Group’s Strategic Fit Strategic fit refers to an organization’s ability to ensure that its operations and strategies align to support the corporate strategy and achieve the organizational goals. UnitedHealth Group’s business strategies and corporate strategies are aligned to meet the organizational goals and fulfill the organization's mission of helping people live healthier lives and helping make the health system work better for everyone. The organization’s transition to value-based care provides higher-quality outcomes for patients, more fulfilling experiences for physicians, and lower costs throughout the healthcare system.

6 References Boyles, M. (2022). What is business strategy and why is it important? Retrieved from: https://online.hbs.edu/blog/post/what-is-business-strategy 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. (2022). UnitedHealth Group: 2022 sustainability report. Retrieved from: https://sustainability.uhg.com

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