Anthem Incorporation Harvard Case Solution & Analysis

Anthem Incorporation Case Solution 

Strategic Analysis

    Strategic analysis analyzes the overall industry as well as it includes the company’s internal and external environment and the firm’s capabilities. This analysis usually comprises of Porter’s Five Forces and SWOT Analysis.

Industry Analysis Using the Porter’s Five Forces Model

Rivalry among the Industry Members

    There are numerous players in the United States, which are supposed to be the Anthem’s direct competitors. As there are over 125 companies in the health insurance industry however, there are three main players including United Health Care, Anthem Incorporation and Kaiser Foundation. Furthermore, these major stakeholders hold almost 30% of the market share and the other players have nearly 3% only. Moreover, the competition is based on price and on a variety of services and products to be served to the customers. Since the information regarding the health care insurance is readily available and clients can easily stay up to date,therefore, it can be said that the competition is not based on differentiation, but it is based on prices and variety provided to the customers.

Threat of New Entrants

    The industry’s major market share held with three giant companies including Anthem incorporation and other members have such a small market share as stated above. Furthermore, the US government changes rules and regulations regarding the health care industry constantly which confuses the existing players of the industry. In addition to this, the main playershave achieved economies of scale and their learning and experience curve significant.

    Therefore, in this case, it would be quite difficult for the new entrants to enter in a confused and saturated industry and capture a significant market share. Therefore, it can be concluded that the threat of new member is lowafter considering the above facts and figures.

Threat of Substitute

    Health care insurance is a prerequisite for every citizen of the United States as the government has made laws, which restrict every citizen to maintain health insurance and there is no substitute for medical insurance. Therefore, it can be said that the risk of substitute is low for the industry members.

Bargain Power of Supplier

    The industry members are not giving anything tangible to their customers, as a result this creates a question that who are the suppliers for this industry. The answer is insurance companies have contracts with health care providers including Doctors, Physicians, Hospitals and other health care providers which care for these insurance companies’ customers. However, as far as the power of the suppliers is concerned, it can be summarized that they possess a low bargaining capability as there are numerous health care providers, which negotiate with these insurance companies to get more customers, which ultimately increases their overall profit.

    Furthermore, big companies like Anthem Inc. enjoy a huge cost benefit from their suppliers as they have strong bargaining power over their suppliers because of their enormous customer base. Conclusively, it can be said that the industry players enjoy a positive bargain power over their suppliers.

Bargain power of Buyer

    The customers of this industry enjoy a significant bargaining position since there are roughly 125 insurance companies which are competing with prices and a variety of products. The customers have numerous options to buy the products from and to choose from and the information regarding these products and services is readily available. Therefore, it can be said that the buyers’bargaining power is quite significant and high enough for this industry. (Goldberg, nd)

Competitiveness Evaluation through SWOT Analysis

Strengths

    Anthem’s main strength is its size as the company is among the main players in the industry and it is of huge size, which enables it to exploit opportunities easily. Moreover, the company has a strong customer base and sufficient assets to compete in the industry. Furthermore, the company has consistent cash flows and profitability, which encourage investors to invest in it. The company also has a strong employee base and high returns and it has favorable relations with the government, which allows it to know about the future policies and regulations..........................

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