Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
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Case Study Description of Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System
This is an MIT Sloan Management Review article. The way health care is billed in the U.S. system is part of the reason costs are so high. WellPoint, one of the largest providers of health care benefits and insurance in the U.S., is using analytics to change its provider payment system. The goal: promote a health care system based on value, not the volume of services. This Data & Analytics Case Study takes an in-depth look at how WellPoint went from idea to implementation, working with physicians and IT staff to build its Enhanced Personal Health Care program.
Swot Analysis of "Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System" written by Michael Fitzgerald includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wellpoint Analytics facing as an external strategic factors. Some of the topics covered in Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System casestudy better are - – increasing household debt because of falling income levels, technology disruption, geopolitical disruptions, central banks are concerned over increasing inflation, increasing commodity prices, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is increasing trade war between United States & China, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wellpoint Analytics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wellpoint Analytics 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System can be done for the following purposes –
1. Strategic planning using facts provided in Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System case study
2. Improving business portfolio management of Wellpoint Analytics
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 Wellpoint Analytics
Strengths Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wellpoint Analytics in Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System Harvard Business Review case study are -
Highly skilled collaborators
– Wellpoint Analytics 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Leadership & Managing People field
– Wellpoint Analytics 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 Wellpoint Analytics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Wellpoint Analytics 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
– Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System firm has clearly differentiated products in the market place. This has enabled Wellpoint Analytics to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Wellpoint Analytics to invest into research and development (R&D) and innovation.
Training and development
– Wellpoint Analytics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Wellpoint Analytics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wellpoint Analytics 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.
Organizational Resilience of Wellpoint Analytics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wellpoint Analytics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Wellpoint Analytics 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.
Effective Research and Development (R&D)
– Wellpoint Analytics 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Wellpoint Analytics is present in almost all the verticals within the industry. This has provided firm in Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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.
Successful track record of launching new products
– Wellpoint Analytics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wellpoint Analytics 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.
Operational resilience
– The operational resilience strategy in the Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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.
Weaknesses Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System are -
Skills based hiring
– The stress on hiring functional specialists at Wellpoint Analytics 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.
Interest costs
– Compare to the competition, Wellpoint Analytics 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.
High cash cycle compare to competitors
Wellpoint Analytics 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System, is just above the industry average. Wellpoint Analytics 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.
Slow to strategic competitive environment developments
– As Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System HBR case study mentions - Wellpoint Analytics 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.
Slow decision making process
– As mentioned earlier in the report, Wellpoint Analytics 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. Wellpoint Analytics 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.
Low market penetration in new markets
– Outside its home market of Wellpoint Analytics, firm in the HBR case study Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Wellpoint Analytics supply chain. Even after few cautionary changes mentioned in the HBR case study - Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Wellpoint Analytics vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Wellpoint Analytics is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Wellpoint Analytics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wellpoint Analytics to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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 Wellpoint Analytics 's lucrative customers.
Lack of clear differentiation of Wellpoint Analytics products
– To increase the profitability and margins on the products, Wellpoint Analytics needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System | 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System are -
Creating value in data economy
– The success of analytics program of Wellpoint Analytics has opened avenues for new revenue streams for the organization in the industry. This can help Wellpoint Analytics to build a more holistic ecosystem as suggested in the Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System case study. Wellpoint Analytics can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Wellpoint Analytics 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.
Buying journey improvements
– Wellpoint Analytics can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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.
Loyalty marketing
– Wellpoint Analytics 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.
Better consumer reach
– The expansion of the 5G network will help Wellpoint Analytics to increase its market reach. Wellpoint Analytics 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wellpoint Analytics is facing challenges because of the dominance of functional experts in the organization. Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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.
Using analytics as competitive advantage
– Wellpoint Analytics 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wellpoint Analytics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Wellpoint Analytics 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.
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 Wellpoint Analytics in the consumer business. Now Wellpoint Analytics can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Wellpoint Analytics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wellpoint Analytics 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 Wellpoint Analytics to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wellpoint Analytics can use these opportunities to build new business models that can help the communities that Wellpoint Analytics operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wellpoint Analytics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Threats Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System are -
Increasing wage structure of Wellpoint Analytics
– 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 Wellpoint Analytics.
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 Wellpoint Analytics in the Leadership & Managing People sector and impact the bottomline of the organization.
Regulatory challenges
– Wellpoint Analytics 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 Leadership & Managing People 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.
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.
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. Wellpoint Analytics 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 dependence on third party suppliers
– Wellpoint Analytics 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System, Wellpoint Analytics 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 .
Stagnating economy with rate increase
– Wellpoint Analytics 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wellpoint Analytics 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.
Environmental challenges
– Wellpoint Analytics 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. Wellpoint Analytics can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Wellpoint Analytics needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wellpoint Analytics 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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 Preparing Analytics for a Strategic Role Behind WellPoint's Shift to a New Provider Payment System 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 Wellpoint Analytics needs to make to build a sustainable competitive advantage.
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