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 - – cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, 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 recruit top talent
– Aetna Communication is one of the leading recruiters in the industry. Managers in the Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Aetna Communication are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
High switching costs
– The high switching costs that Aetna Communication has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Operational resilience
– The operational resilience strategy in the Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Aetna Communication has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
Lack of clear differentiation of Aetna Communication products
– To increase the profitability and margins on the products, Aetna Communication needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Aetna Communication needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
Slow decision making process
– As mentioned earlier in the report, Aetna Communication has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Aetna Communication even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A), in the dynamic environment Aetna Communication has struggled to respond to the nimble upstart competition. Aetna Communication has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Aetna Communication has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
Low market penetration in new markets
– Outside its home market of Aetna Communication, firm in the HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Aetna Communication has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) should strive to include more intangible value offerings along with its core products and services.
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 -
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.
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.
Learning at scale
– Online learning technologies has now opened space for Aetna Communication to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
Leveraging digital technologies
– Aetna Communication can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Aetna Communication to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Aetna Communication to increase its market reach. Aetna Communication will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
Loyalty marketing
– Aetna Communication has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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 -
High dependence on third party suppliers
– Aetna Communication high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
Shortening product life cycle
– it is one of the major threat that Aetna Communication is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
Consumer confidence and its impact on Aetna Communication demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Aetna Communication can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Aetna Inc.: Managing Inherent Enterprise Risks Through Stakeholder Management (A) .
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.
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.
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.
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 .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Aetna Communication in the Strategy & Execution sector and impact the bottomline of the organization.
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.