UnitedHealth Group SWOT Analysis
Strengths
UnitedHealth benefits from its ability to acquire earnings, without failing in the face of constantly changing economic and insurance cycles by taking high risks and building diverse product portfolio. The company strength is derived from its difference of plans, information tools, funding mechanisms and specialty products along with its ability to adapt to changing markets. These strategies and approaches of UnitedHealth add to its competitive edge.
UnitedHealth Group describes itself as a diversified health care company. It offers a wide range of differentiated products from which its employers, consumers and providers benefit and provides a notable improvement in comparison to other products.
For secure sustainable profitability, the UnitedHealth Group is slowly but surely changing its product mix high risk to higher margin fee products.
The major strength of the company lies in its ever-growing huge customer base. For example, at the end of 2002, its direct served customers were about 48 million, which meant that there was a 5.5% growth during the year 2001.
Weaknesses
With expansion, the sales, general and administrative expenses to the company are increasing. The total SG&A costs of the company were 17.1%, as a percentage of operating revenues where as there were 8 basis points rise in third quarter of year 2003 in comparison to the last quarter. This was because of the past IT initiatives and adaptation of new technology by its customers.
The company is greatly dependant on the U.S market and derives almost all of its revenues from there. Due to fluctuations in economy and the uncertainty of the American markets, the company is exposed to huge risks.
Opportunities
UnitedHealth Group is continuously increasing its market share through mergers and acquisitions. These activities add to the revenues, modify portfolio of the company. The company invest its profits and benefits from its positive cash flows.
UnitedHealth Group has increased its services; coordinating organ transplants, running clinical trials for drugs and supplying medical instruments and devices. The company now also provides home-care services for the elderly.
UnitedHealth Group is just a minor player in some sectors despite its large size and diverse operations. For example in the healthcare insurance sector the company serves about eight million people which is just seven percent of the market and the company by taking effective measures can seize further growth opportunities.
Threats
UnitedHealth Group faces several threats that can change its market share and growth rate. First of all the current economic recession can causing the increases in costs and expenses while increasing the pressure for decreasing the prices. The impact of recession and inflation in the United States was greater than the general inflation rate. This has increased the pressure from the consumers and customers for cutting down the prices. These factors along with strong competition, cause serious threats to the market share and growth of the company.
The recent acquisitions and mergers of the company have also increased the overall risks to the business.
Another threat is the complex state and federal rules, laws and regulations faced by the UnitedHealth Group that are conversely affecting its growth.
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