State Farm Insurance - Essay on Company Overview

2021-07-05 19:53:03
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Wesleyan University
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Essay
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State Farm is a United States company that offers insurance and financial services and products to its customers. The organization's mission is to provide its clients with high-quality goods and services at a fair price through establishing an understanding partnership that honors their customers' interests and goals. The firm's long-term goals and objectives are to ensure the company and its stakeholders have a secured and profitable future in their relation (Stephen, 2010). To make sure that the business grows at a manageable pace and to always help in building the society by taking part in community building programs such as helping the less fortunate.

Strategy formulation is the process by which organization determines the actions they would take to ensure that they attain their goals and objective (Wheelen & Hunger, 2017). The top management team often formulates most of the strategies that are utilized by State Farm Insurance. However, before the team decides on the strategy, they would employ they usually conduct various external and internal analysis that allow them to know of the views of its customers, employees, and the public. This thus enables them to formulate strategies that account for the interests of all its stake holders by considering their different opinions and suggestions. The auto insurance service was the first insurance service offered by State Farm and as the firm grew it introduced other forms of insurance covers such as home policies, and different life insurances such as disability, health, business, and retirement covers. The organization is currently working on widening its market by venturing into other markets, for example, the young population and that of the multicultural individuals. This move will enable the company to attract more customers thus widening its market.

The growth in the number of individuals between the ages of 20 to 35 years is what mainly caused State Farm to look into how they can create insurance policies that would be relevant to the youths thus encouraging them to take insurance covers. On the other hand, the increase in cultural diversity of people living in the United States caused by the increase in the number of foreigners migrating and settling into the nation is what motivated the company to create insurance covers that focus on the multicultural market. The organization plans to create unique value to these markets by ensuring the customers get insurance covers that are relevant to them and by making sure the insured customers understand policies of the insurance cover and the importance of the insurance cover to them.

Some of the resources and capabilities required to ensure these are such as skilled personnel team who can relate with the individuals in the targeted market. A team of employees with bilingual and multicultural skills will, for example, ensure that the company creates an understanding relationship with its different foreign clients. The company would also create a strong customer to business relationship by employing skilled youths to aid in selling their ideas to the young generation. This would be effective since the similarity in interests between the individuals in the targeted market and the organization personnel would make the communication process easy since both parties understand each other. According to Farris (2017), an effective information gathering system that would allow the organization to learn more about their customers' interests is also a resource that is necessary for the company. The system would enable the organization to accurately predict the consumer trends in their targeted markets thus allowing them to set strategies that would attract new customers and retain the old ones.

To State Farm capturing value is equally as important as creating value. This is because the organization knows that through capturing value they will ensure the firm remains competitive thus allowing it to actualize its goals and objectives. Some of the methods utilized by the enterprise in capturing value and sustaining its competitive advantages are such as the conducting of benchmarking practices. By comparing itself with other competing insurance companies like Geico Insurance, Allstate Insurance, and Progressive Insurance the enterprise gets to know how they can make their products and services more attractive to the customers in the market (Farris, 2017). The firm utilizes market analysis methods for instant the SWOT analysis in identifying its weaknesses and strengths. This allows them to effectively implement policies that ensure they capitalize on their strengths and actualize on their weaknesses. The organization also encourages their customers to give them feed backs and suggestions relating to the services and products they offer to them. This allows them to understand their customers better and thus provide goods and services that meet their needs.

The business strategy used in managing State Farm is the differentiation strategy. This approach usually involves the creation of products and service that have distinctive attributes to the ones produced by the other firms in the market. The utilization of this strategy has enabled the enterprise to offer innovative and unique products and services that have attracted a lot of customers to the firm. The strategy has also allowed the business to be a market leader and price setters since its innovativeness and high rate of customer approval have forced many companies to copy their ideas. However, the increase in the number of organizations imitating their ideas has led to an increase in competition thus causing the company to lose some of its customers.

Corporate strategies are the different way by which companies create value by investing in various activities in their line of business. State Farm Insurance often utilizes corporate strategies such as vertical integration and strategic alliance in ensuring that the organization maximizes on the output of their different activities. By using vertical integration, the firm has expounded on its initial auto insurance cover policy by introducing other insurance policies thus allowing their customers to get various insurance covers from the same company. The introduction of numerous relating insurance policies has allowed State Farm Insurance to increase its revenue since they have different avenues from which they can enhance their income. Vertical integration has also allowed the organization to minimize their risks by spreading their risks through investing on multiple projects. A strategic alliance is the forming of a partnership relation between independent companies with the intent of accomplishing a particular goal (Wheelen & Hunger, 2017). State Farm Insurance has formed numerous strategic alliances with various companies, for example, Humana and Blue Cross Blue Shield which offer health services. The partnership has enabled the firm to improve on the insurance services and products it offers and also actualizes its goal of assisting the less fortunate.

According to Wagner III & Hollenbeck (2014), competitive Advantage usually ensures that firms retain their customers. Some of the competitive advantages that State Farm Insurance has over its competitors are such as skilled employees who offer high-quality services to the businesses customers. The organization has numerous resources which facilitate its various operations of the firm such marketing and conduction of market research. The charges of the company's different services and products are fair as compared to that offered by other companies thus enabling the enterprise to attract more customers. The organization has also been able to create a competitive advantage by providing differentiated insurance services that are in line with the interest of its clients.

State Farm Insurance Organizational Chart

STATE FARM C.E.O

STATE FARM BOARD OF DIRECTORS

INSURANCE BRANCHES REPRESENTATIVES

INSURANCE BRANCH ACCOUNTS REPRESENTATIVES

 

References

Farris P Wilson. (2017). Progressive Insurance. Darden Business Publishing Cases, 1-12.Wagner III, J. A., & Hollenbeck, J. R. (2014). Organizational behavior: Securing competitive advantage. Routledge.Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.

Stephen Sandy (2010). State farm insurance. White Creek Press.

 

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