Cigna (CI) SWOT Analysis / TOWS Matrix / MBA Resources
Insurance (Accident & Health)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Cigna (United States)
Based on various researches at Oak Spring University , Cigna is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, wage bills are increasing, geopolitical disruptions, increasing energy prices, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , there is increasing trade war between United States & China, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Cigna can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cigna, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cigna 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 Cigna can be done for the following purposes –
1. Strategic planning of Cigna
2. Improving business portfolio management of Cigna
3. Assessing feasibility of the new initiative in United States
4. Making a Insurance (Accident & Health) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cigna
Strengths of Cigna | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cigna are -
Ability to lead change in Insurance (Accident & Health)
– Cigna is one of the leading players in the Insurance (Accident & Health) industry in United States. Over the years it has not only transformed the business landscape in the Insurance (Accident & Health) industry in United States but also across the existing markets. The ability to lead change has enabled Cigna in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Cigna is one of the most innovative firm in Insurance (Accident & Health) sector.
Operational resilience
– The operational resilience strategy of Cigna comprises – understanding the underlying the factors in the Insurance (Accident & Health) 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.
Cross disciplinary teams
– Horizontal connected teams at the Cigna 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.
Learning organization
- Cigna 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 Cigna is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Cigna emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Cigna
– The covid-19 pandemic has put organizational resilience at the centre of everthing Cigna does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Insurance (Accident & Health) industry
– Cigna has clearly differentiated products in the market place. This has enabled Cigna to fetch slight price premium compare to the competitors in the Insurance (Accident & Health) industry. The sustainable margins have also helped Cigna to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Cigna in Insurance (Accident & Health) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Insurance (Accident & Health) industry
- digital transformation varies from industry to industry. For Cigna digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cigna 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.
High brand equity
– Cigna has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cigna to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Cigna in the Financial sector have low bargaining power. Cigna has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cigna to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Cigna has one of the best training and development program in Financial industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses of Cigna | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cigna are -
Ability to respond to the competition
– As the decision making is very deliberative at Cigna, in the dynamic environment of Insurance (Accident & Health) industry it has struggled to respond to the nimble upstart competition. Cigna has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Cigna 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.
Products dominated business model
– Even though Cigna has some of the most successful models in the Insurance (Accident & Health) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Cigna should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Cigna 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 Insurance (Accident & Health) industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of Cigna, it seems that company is thinking out the frontier risks that can impact Insurance (Accident & Health) industry. 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.
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 Cigna supply chain. Even after few cautionary changes, Cigna is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cigna vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Cigna needs to have more collaboration between its sales team and marketing team. Sales professionals in the Insurance (Accident & Health) industry have deep experience in developing customer relationships. Marketing department at Cigna can leverage the sales team experience to cultivate customer relationships as Cigna is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of United States, Cigna needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Cigna ‘s star products
– The top 2 products and services of Cigna still accounts for major business revenue. This dependence on star products in Insurance (Accident & Health) industry has resulted into insufficient focus on developing new products, even though Cigna has relatively successful track record of launching new products.
Lack of clear differentiation of Cigna products
– To increase the profitability and margins on the products, Cigna needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, Cigna has high operating costs in the Insurance (Accident & Health) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cigna lucrative customers.
Cigna Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Cigna are -
Better consumer reach
– The expansion of the 5G network will help Cigna to increase its market reach. Cigna 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Insurance (Accident & Health) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cigna 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. Cigna 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.
Creating value in data economy
– The success of analytics program of Cigna has opened avenues for new revenue streams for the organization in Insurance (Accident & Health) industry. This can help Cigna to build a more holistic ecosystem for Cigna products in the Insurance (Accident & Health) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Cigna can improve the customer journey of consumers in the Insurance (Accident & Health) industry by using analytics and artificial intelligence. It 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Insurance (Accident & Health) industry, but it has also influenced the consumer preferences. Cigna can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Cigna 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cigna 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cigna is facing challenges because of the dominance of functional experts in the organization. Cigna can utilize new technology in the field of Insurance (Accident & Health) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cigna in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Insurance (Accident & Health) industry, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cigna 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 Cigna to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Cigna can develop new processes and procedures in Insurance (Accident & Health) 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.
Learning at scale
– Online learning technologies has now opened space for Cigna 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cigna can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Cigna External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Cigna are -
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. Cigna needs to understand the core reasons impacting the Insurance (Accident & Health) 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 Cigna business can come under increasing regulations regarding data privacy, data security, etc.
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. Cigna 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cigna in Insurance (Accident & Health) industry. The Insurance (Accident & Health) 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.
Easy access to finance
– Easy access to finance in Insurance (Accident & Health) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cigna can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Cigna 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 Insurance (Accident & Health) industry regulations.
Shortening product life cycle
– it is one of the major threat that Cigna is facing in Insurance (Accident & Health) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Cigna in the Insurance (Accident & Health) sector and impact the bottomline of the organization.
Consumer confidence and its impact on Cigna 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 Insurance (Accident & Health) industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cigna 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 Cigna prominent markets.
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 Cigna.
Increasing wage structure of Cigna
– 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 Cigna.
Stagnating economy with rate increase
– Cigna 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 Insurance (Accident & Health) industry.
Weighted SWOT Analysis of Cigna Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Cigna 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 Cigna 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 Cigna 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 Cigna 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 Cigna needs to make to build a sustainable competitive advantage.