Blog #2 - External Strategic Environment for my future employer

            For this blog, I’d like to look out how the Porter’s Five Forces and environmental factors affect Cigna, the company I will be joining after graduation.

Cigna is interesting because it is a mature company operating in a highly regulated industry which is B2B and B2C. Global trends such as an aging population and increased disposal income have shaped certain healthcare products they offer (ex. Medicare Advantage) but what has been most interesting to track is how the recent elections have brought spotlight to the healthcare insurance market. Bernie Sanders’ push for Medicare for All would have great implications for a company like Cigna if the policy could go through but planning for policy changes is exceptionally hard given how the political system works in the United States. Political forces are important to consider but I think its important to consider the likelihood of them being disruptive. Therefore I agree with the point made in the piece from “Competitor Analysis: Understand Your Opponents” that it is important to look at the strength of a given factor and how it changes overtime. During an unpredictable election period, I would imagine that Cigna revisits an environmental force like politics frequently to determine its current threat.  

               In relation to Porter’s Five Forces which is also mentioned in the “Competitor Analysis: Understand Your Opponents” excerpt as well as the lecture, it is interesting to look at the threat of new entrants. When I think about Cigna broadly and traditionally, I think about how new entrants is not a big threat to the company due to the consolidation within the industry, the difficulty to maintain margins and high regulatory barriers that make it hard to set oneself up. I do not believe that firms in other industries have a great chance of offering substitutes in the market but when people are given options, which they aren’t always with health insurance, there is strong competition among rivals.

I recall from a Cigna recruiting event that the company wants to be viewed as a health service company, rather than a health insurance company which directly relates to the question of “which industry do you operate in?” In defining themselves this way, the Porter’s Five Forces now look different because they are competing with Pharmacy Benefit Management due to their Express Scripts division, for example and offering of insurance services abroad. This makes me think that it would be helpful for a company to use several Five Forces Models which roll up to an overarching one to remain organized.

Finally, I agree with the idea from McKinsey’s article on “The Global Forces Inspiring a New Narrative of Progress” that while globalization has occurred, localization is important for being effective in a new market. Cigna’s largest non-US market for membership is South Korea. Offering Cigna there would be much different than in a setting where large health insurers offering private insurance is commonplace, such as in the United States.  This difference is something that would justify why an individual Five Forces Model for international offerings would be helpful.