Swot Analysis Abstract

SWOT ANALYSIS 9

SwotAnalysis

Abstract

Inthe current competitive world, it is imperative for organizations tocarry out SWOT analysis. SWOT is an acronym that represents thestrengths, weaknesses, opportunities and threats that face anorganization. The strengths and weaknesses represent the internalfactors of an organization that the management have control. Theopportunities and threats represent external factors that are withoutthe control of management. After conducting the SWOT analysis, themanagement should match the strengths to the weaknesses of theorganization. Besides, the management should place resources to takeadvantage of the opportunities and reduce the impact of threats(Sadler, Craig, 2003).

Thefollowing report presents a SWOT analysis of the Blue Cross and BlueShield Association. The analysis revealed the various strengths,weaknesses as well as the opportunities and threats. The reportrevealed that the association’s key strengths lay within theleadership functions. However, various weaknesses were revealedwithin the controlling, organizing as well as the planning functionsof management. Besides, the analysis revealed a favourable externalenvironment comprising more opportunities than threats (Lynch, Lynch,2008).

Internalweaknesses and strengths

Internalweaknesses and threats are an analysis of factors within theorganization, and that affects the performance of the Blue Cross andBlue Shield Association. The organization has control over thefactors since they are within its operations, and it is imperative toidentify its strengths and weaknesses. Consequently, the organizationcan match the strengths against the weaknesses to improve itsperformance and meet the customer’s needs (Birkinshaw, 2004).

Leadership

Theleadership of the association serves as strength. The essentialleadership characteristics of the founders such as Justin Kimball areperception. Specifically, the founders were able to identify marketgaps in the insurance industry and later created an organization thathas lasted for decades. More so, the efforts of the founders have ledto wealth creation opportunities through employment. Consequently,the management should follow the founder’s traits as a motivationin ensuring the success of the organization (Sadler, Craig, 2003).

Controlling

Thecontrol of the organization serves as a major weakness of the BlueCross and Blue Shield Association. First, the financial statementsindicate that the association has incurred increasing lossesattributable to non-controlling interest. Consequently, the profitmargins of the association declined and resulted in net loss marginsof $5million, $ 6 million and 0.91 Million in the years: 2012, 2013,and 2014 respectively. The losses emanate from the inability tocontrol the increase in new claims as well as competition.Specifically, the management seems to have lost control of theorganization`s activities regarding adherence to the insurancepolicies. For example in the year 2012, the organization was accusedof hoarding finances in its reserves for its non-profit outfits. Theloss of control is a hindrance to the achievement of the mission toenhance access to affordable and quality healthcare services throughthe provision of appropriate healthcare schemes. The lack to observeinsurance policies has the potential to place the Association intolegal issues that may affect reputation as well as profitability. Asan example, the Association was accused of over-concentration onprofitability as opposed to quality and affordable services (Lynch,Lynch, 2008).

Planning

Organizationalplanning is also referred to as forethought. It involves thinking andorganizing the activities required to attain the organization`s goal.The planning of the organization serves as a weakness. Specifically,the management is aware that the organization has a mission toenhance the access to affordable and quality healthcare servicesthrough the provision of appropriate insurance schemes. Besides, themanagement is aware that the organization aims at adhering totransparent and accountable guidelines when offering the insuranceplans to its clients. It, therefore, serves as a weakness to observecontradictory plans such as breaking insurance policies by hoardingfinances in the association’s reserves. The plans of the managementserve as a weakness since they make the organization to work againstits values (Jeffs, 2008).

Organizing

Organizingfor the Blue Cross and Blue Shield Association seems weak. Themanagement has a problem in reorganizing the Association toaccommodate significant changes in regulations. For example, in theyear 1986, the association’s tax-exempt status was revoked by thegovernment. Consequently, the organization was slow at the structuresto accommodate the new tax status. It was accused of the Seattletimes for violating various insurance policies in the United States(Wood, 2003).

ExternalOpportunities and Threats

Theexternal environment provides an outline of factors that are withoutthe control of the organization that affects its operations. Theporters five model is used to analyse the external environment inwhich the firm operates. The model entails a broad analysis of thebargaining power of suppliers, the risk of entry of competitors, thebargaining power of buyers and the threat of substitutes. It isimperative for the organization to have a glimpse of the externalconditions affecting its performance to ensure effectiveness andprofitability. Upon the identification of external factors, theorganization should align its processes and structures in a mannerthat creates smooth operations to ensure competitiveness as well assurvival in the industry (Pereira, 2013).

BargainingPower of Suppliers

Thepower of suppliers is an important determinant of the success of anorganization. However, in the case of Blue Cross and Blue ShieldAssociation, there are few suppliers and consequently, their power isminimal to affect profitability (Minutes, 2015).

Riskof entry by potential competitors

Theentry of potential competitors serves as a threat to theprofitability of any organization. The insurance industry withinwhich Blue Cross and Blue Shield Association operates indicatesminimal risk of entry by potential competitors. However, the existingcompetitors exert pressure to the Association (Pereira, 2013).

Bargainingpower of buyers

Thebargaining power of buyers is an important determinant of the successof the insurance industry. In cognizant of the power held by thebuyers, the Blue Cross and Blue Shield Association has a mission toincrease the quality of insurance services to attract and maintainthe consumers of health services. Consequently, the Associationshould maintain high-quality services by minimizing the variouscriticisms of the quality of its services. Specifically, it isadvisable for the management to reduce non-observance of theinsurance policies as well as malpractices such as hoarding of funds(Wood, 2003).

Threatof substitutes

Thethreat of substitutes is high for the Association due to theexistence of fierce competitors such as the United Health Group. Suchsignificant competitors have the ability to duplicate the variousservices as well as offering high quality enough to affect theprofitability of the association (Jeffs, 2008).

Intensityof rivalry among competitive firms

Theintensity of rivalry is high in the insurance industry. Specifically,although there are few competitors they have the necessary financialmuscle. A good example is the United Health Group. The competitor hashigh cash and cash equivalents as well as assets. Besides, thecompetitor has a history of upward moving revenues compared to theAssociations staggering revenues. Consequently, the United HealthGroup serves as a great competitor in the insurance industry. Theassociated financial muscle serves as a threat to the survival of theBlue Cross and Blue Shield Association. The key source of competitionemanates from the nature of insurance services. The survival of anorganization depends on the ability to attract and maintain customerloyalty that heavily relies on the capacity of an organization toconduct marketing as well as offer affordable services (Lynch, Lynch,2008).

Macroenvironment forces

Macroenvironment forces are external and essential to the survival of anentity. The importance of macro forces emanates from the inability ofthe organization to control their effects. It is imperative for anyorganization to keep track of macro changes. The ability of anorganization to forecast the occurrence of macro events enables themanagement to plan efficiently and reduce the effect of the eventsupon materialization (Sadler, Craig, 2003).

Globalforces

Globalforces are international trends that define how organizationsinteract with their customers. Global forces cause uniformity thatfurther increases competition. In the insurance industry, the advancein technology is a significant global power that requiresconsideration in the strategic plan of the Blue Cross and Blue ShieldAssociation. Specifically, information can quickly pass from one edgeto the other and easily affect the profitability of the association.For example, the competitors in the insurance companies have thecapacity to utilize fast moving information for adverts andmarketing. On the other hand, the malpractices of the organizationcan quickly reach a broad range of customers and significantly affectsurvival (Birkinshaw, 2004).

DemographicForces

Demographicforces serve as an opportunity for the Blue Cross and Blue ShieldAssociation. The reduction in poverty levels implies that there ismore income among the households. Besides, it also indicates thatmore people can afford to have insurance services. It is imperativefor the management to forecast the needs of the upcoming generationand identify the future service gaps within the insurance industry.The increase in the aging population serves as an opportunity tocreate insurance products for the old people.

Politicaland legal forces

Theinsurance industry is faced with ever changing political and legalforces. The constant change serves as a threat to the survival of thecompany. The political forces create new regulations regarding taxand insurance policies. It is imperative for the association tomaintain a flexible organizational structure to ensure the ability tomake quickly, restructures as a way of complying with the newpolitical and legal forces.

Technologicalforces and changes

Theconstant change in technology has changed the world to a globalvillage. Consequently, technological changes serve as both anopportunity as well as a threat to the organization. As anopportunity, technology serves as a means to relay faster informationto customers. Besides, it is much easier to monitor competition byaccessing the customers. Besides, the fast flow of information servesas an opportunity to reach to new markets in efforts to expand theAssociation. Technology has contributed to increased competition andreduced the cost of information. Specifically, customers can obtainmore information about a company’s services. They are also able tocompare information from competitors before making their purchasedecisions.

Socialforces

Socialforces in the insurance industry present an opportunity for the BlueCross and Blue Shield Association. The current population is composedof a high-risk-taking and very informed young generation with theappropriate knowledge about the importance of insurance. For example,the emergency of travel insurance. The Association can take advantageof the new social force to create more relevant services to thecurrent generation.

Evaluatingthe SWOT analysis

Theabove analysis has indicated that the Blue Cross and Blue ShieldAssociation is faced with more internal weaknesses than thestrengths. The analysis has identified substantial strengths in theleadership emanating from the founders of the Blue Cross and BlueShield Association. However, key weaknesses exist in the controlling,planning and organizing functions of the association. The weaknessesoriginate from the inability of the management to counter externalchanges in the insurance industry specifically in the area ofchanging regulations and insurance policies. After the tax-exemptstatus of the association was revoked, there is a record ofincreasing criticism regarding breaking the laws and a compromise ofquality. It is advisable for the management to relax the structuresin the association to enable quick decision making for the vastchanges in the external environment

Theexternal environment has indicated to favor the Blue Cross and BlueShield Association by presenting more opportunities than the threats.The analysis has associated the outer environment with a littlebargaining power of suppliers and a minimal risk of entry by newcompetitors. However, the study has revealed potential competitionfrom the existing competitors. The bargaining power of buyers hasproven to be quite high necessitating the need to maintain quality.Besides, the threat of substitutes has also been identified assubstantial in addition to the intensity of rivalry among competitivefirms. In overall opportunities have been identified in demographicforces, technological forces as well as social forces.

References

Birkinshaw,J. M. (2004). Strategicmanagement.Cheltenham, UK: Edward Elgar Pub.

Jeffs,C. (2008). Strategicmanagement.Los Angeles: SAGE.

Lynch,R. L., &amp Lynch, R. L. (2008). Strategicmanagement.Harlow: Financial Times Prentice Hall

Minutes,5. 5. (2015). Management&amp marketing, 1 porter`s five forces.Place of publication not identified: Primento Digital.

Pereira,A. C. (2013). Portersfive forces.Place of publication not identified: Grin Verlag.

Sadler,P., &amp Craig, J. C. (2003). Strategicmanagement.London: Kogan Page.

Wood,M. B. (2003). Themarketing plan: A handbook.Upper Saddle River, NJ: Prentice Hall.