Blue Shield of California SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Blue Shield of California
Blue Shield of California follows CEO Paul Markovich as he navigates the challenges of running one of the largest not-for-profit health care insurers in the United States. The case begins with a history of health insurance in the US, beginning in the 1870s and working through the origination of modern day health care in the 1920s. It then analyzes the modern day industry before diving into the challenges faced by Blue Shield of California today. The case examines the potential advantages and disadvantages of acting as a not-for-profit health insurer and compares the model to for-profit insurers. Then, the case moves into a discussion on challenges and dilemmas facing the insurer today. Can affordable care organizations be the key to Blue Shield's ability to compete with HMOs, such as Kaiser? The case then discusses how Blue Shield prepared to enter the California exchange, as well as how the organization considered shifts in its business model to account for an influx of new customers. Finally, the case finishes with two industry-wide questions. First, are Medicare and Medicaid the key to growth in an increasingly competitive environment? Second, given the high level of industry consolidation, how big should Blue Shield of California be to effectively offer services to all of it's members, but still provide high quality care?
Swot Analysis of "Blue Shield of California" written by Matthew Saucedo, Robert Chess includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shield Blue facing as an external strategic factors. Some of the topics covered in Blue Shield of California case study are - Strategic Management Strategies, Personnel policies and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Blue Shield of California casestudy better are - – supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, technology disruption,
central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Blue Shield of California
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Blue Shield of California case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shield Blue, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shield Blue 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 Blue Shield of California can be done for the following purposes –
1. Strategic planning using facts provided in Blue Shield of California case study
2. Improving business portfolio management of Shield Blue
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shield Blue
Strengths Blue Shield of California | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shield Blue in Blue Shield of California Harvard Business Review case study are -
Training and development
– Shield Blue has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Blue Shield of California 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.
Cross disciplinary teams
– Horizontal connected teams at the Shield Blue 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.
Low bargaining power of suppliers
– Suppliers of Shield Blue in the sector have low bargaining power. Blue Shield of California has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shield Blue to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Shield Blue digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shield Blue has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Shield Blue 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 Blue Shield of California - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Shield Blue has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shield Blue 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.
Analytics focus
– Shield Blue 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 Matthew Saucedo, Robert Chess 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.
Highly skilled collaborators
– Shield Blue 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 Blue Shield of California HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Shield Blue is present in almost all the verticals within the industry. This has provided firm in Blue Shield of California case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Shield Blue is one of the most innovative firm in sector. Manager in Blue Shield of California Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Shield Blue in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– Blue Shield of California firm has clearly differentiated products in the market place. This has enabled Shield Blue to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Shield Blue to invest into research and development (R&D) and innovation.
Weaknesses Blue Shield of California | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Blue Shield of California are -
Lack of clear differentiation of Shield Blue products
– To increase the profitability and margins on the products, Shield Blue needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Blue Shield of California 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 Shield Blue has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Blue Shield of California 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 Blue Shield of California can leverage the sales team experience to cultivate customer relationships as Shield Blue is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Blue Shield of California has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shield Blue 's lucrative customers.
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 Shield Blue supply chain. Even after few cautionary changes mentioned in the HBR case study - Blue Shield of California, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shield Blue vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Shield Blue has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Shield Blue, firm in the HBR case study Blue Shield of California needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Shield Blue 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 - Blue Shield of California should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Blue Shield of California, in the dynamic environment Shield Blue has struggled to respond to the nimble upstart competition. Shield Blue has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Shield Blue is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Shield Blue needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shield Blue to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Shield Blue 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.
Opportunities Blue Shield of California | 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 Blue Shield of California are -
Building a culture of innovation
– managers at Shield Blue 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 Leadership & Managing People segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shield Blue can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Shield Blue can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Shield Blue can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Blue Shield of California 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shield Blue 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, Blue Shield of California, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shield Blue 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.
Developing new processes and practices
– Shield Blue can develop new processes and procedures in Leadership & Managing People 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.
Manufacturing automation
– Shield Blue can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shield Blue to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Shield Blue to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Shield Blue 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shield Blue is facing challenges because of the dominance of functional experts in the organization. Blue Shield of California 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.
Creating value in data economy
– The success of analytics program of Shield Blue has opened avenues for new revenue streams for the organization in the industry. This can help Shield Blue to build a more holistic ecosystem as suggested in the Blue Shield of California case study. Shield Blue can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Shield Blue 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Shield Blue can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Blue Shield of California External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Blue Shield of California are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shield Blue in the Leadership & Managing People industry. The Leadership & Managing People 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Blue Shield of California, Shield Blue may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing wage structure of Shield Blue
– 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 Shield Blue.
Consumer confidence and its impact on Shield Blue 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.
Technology acceleration in Forth Industrial Revolution
– Shield Blue has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Shield Blue needs to keep up with the evolution of technology in the Leadership & Managing People 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 Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shield Blue can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Shield Blue in the Leadership & Managing People sector and impact the bottomline of the organization.
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 Shield Blue.
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. Shield Blue 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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Shield Blue needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Shield Blue business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Shield Blue can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
Weighted SWOT Analysis of Blue Shield of California 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 Blue Shield of California 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 Blue Shield of California 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 Blue Shield of California 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 Blue Shield of California 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 Shield Blue needs to make to build a sustainable competitive advantage.