Case Study Description of Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A)
Inherent risks or negatives are a critical element of "enterprise risk management" that must be mitigated or dramatically managed through constructive actions to sustain growth and manage reputation. Set in 2003 as Aetna prepares to settle a landmark class-action lawsuit, this case explores how communications and PR executives work with management to devise an announcement that fully engages the company's key stakeholders in this dramatic break with its industry's position. This case is well suited to courses and modules on crisis management, risk management, corporate communication, and strategic communication. Though written for a business school audience, it would be equally useful for courses in communication or public relations programs. The case asks students to choose from a number of possible communication strategies. It also asks students to relate communication strategy to the company's changing business model, which is demonstrated in detail in the case. The authors interviewed not only the top communication managers at Aetna, but also the CEO, CMO, and corporate counsel and some prominent legal experts. It is ever more relevant as the world of crisis issues management, crisis management, and corporate litigation becomes ever more difficult to navigate.
Swot Analysis of "Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A)" written by James R. Rubin, Barbara Carmichael includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Aetna Communication facing as an external strategic factors. Some of the topics covered in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) case study are - Strategic Management Strategies, Crisis management, Public relations, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) casestudy better are - – there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, technology disruption, talent flight as more people leaving formal jobs,
increasing commodity prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aetna Communication, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aetna Communication operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) can be done for the following purposes –
1. Strategic planning using facts provided in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) case study
2. Improving business portfolio management of Aetna Communication
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Aetna Communication
Strengths Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aetna Communication in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Aetna Communication is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Aetna Communication in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) firm has clearly differentiated products in the market place. This has enabled Aetna Communication to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Aetna Communication to invest into research and development (R&D) and innovation.
High brand equity
– Aetna Communication has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Aetna Communication to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Aetna Communication is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by James R. Rubin, Barbara Carmichael can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Aetna Communication has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Aetna Communication has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Aetna Communication is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Aetna Communication is one of the most innovative firm in sector. Manager in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Aetna Communication is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Aetna Communication is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Aetna Communication
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Aetna Communication does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Aetna Communication has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Aetna Communication in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Aetna Communication has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) are -
Interest costs
– Compare to the competition, Aetna Communication has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) HBR case study mentions - Aetna Communication takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), is just above the industry average. Aetna Communication needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Increasing silos among functional specialists
– The organizational structure of Aetna Communication is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Aetna Communication needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Aetna Communication to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Aetna Communication has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
No frontier risks strategy
– After analyzing the HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), it seems that the employees of Aetna Communication don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Aetna Communication has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) can leverage the sales team experience to cultivate customer relationships as Aetna Communication is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Aetna Communication supply chain. Even after few cautionary changes mentioned in the HBR case study - Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Aetna Communication vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Aetna Communication has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) are -
Developing new processes and practices
– Aetna Communication can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Building a culture of innovation
– managers at Aetna Communication can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Creating value in data economy
– The success of analytics program of Aetna Communication has opened avenues for new revenue streams for the organization in the industry. This can help Aetna Communication to build a more holistic ecosystem as suggested in the Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) case study. Aetna Communication can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Aetna Communication can use these opportunities to build new business models that can help the communities that Aetna Communication operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Aetna Communication can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Aetna Communication can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Aetna Communication in the consumer business. Now Aetna Communication can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Aetna Communication can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Aetna Communication in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Aetna Communication has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Aetna Communication to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Aetna Communication can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Aetna Communication is facing challenges because of the dominance of functional experts in the organization. Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Aetna Communication can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Aetna Communication.
Increasing wage structure of Aetna Communication
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Aetna Communication.
Regulatory challenges
– Aetna Communication needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Aetna Communication needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Aetna Communication can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Aetna Communication in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Aetna Communication will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Aetna Communication has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Aetna Communication needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Aetna Communication can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), Aetna Communication may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Aetna Communication business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Aetna Communication with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Aetna Communication needs to make to build a sustainable competitive advantage.
