Strategic Plan for State Farm Insurance
State Farm is regarded as one of the largest providers of property, casualty, and auto insurance in the United States based in Bloomington, Illinois. The Company was founded to provide automobile insurance by George J. Mecherle in 1922, specializing in the provision of auto insurance mostly for farmers. Our Insurance portfolio later expanded to include insurance coverage for homeowners, life assurance, banking, and related financial services. State Farm’s expansion into banking and mutual funds began in 1999 when State Farm Financial Services, FSB first opened as a subsidiary of State Farm Mutual Automobile Insurance Co. The bank offers standard banking services such as savings and checking accounts as well as money market accounts. This strategic plan incorporates the company’s mission and vision in chatting the way forward for the future. It serves to coordinate the operations of the organization allowing accountability and transparency to all stakeholders. The success of this plan requires its integration into the company’s short term planning and decision-making processes. Figure 1 in the appendix shows the strategic planning process for State Farm.
This strategic plan reaffirms the vision and mission of the organization, prioritizes the accomplishment of its mission, and reiterates the company’s values (Stallworth Williams, 2008).
This is the foundation of the company’s existence, purpose, and targeted objectives. State firm’s mission is:
To help people manage the risks of everyday life, recover from the unexpected, and realize their dreams
This mission statement is a reflection of the organization’s intent to prioritize the needs of its customers by managing their daily risks. Continued focus on this mission in strategic management decisions will be a vital component for business growth.
This is a statement of State Farm’s future aspirations. The company’s vision for the future is:
To be the customer’s first and best choice in the products and services we provide.
The organization vision for the future is to rely on the support of its loyal customer base to transform it into a trailblazer in the insurance and financial services industry
State Farm’s success is founded on its values of quality service and relationships, mutual trust, integrity, and financial strength.
The company’s main business objective is the provision of automobile, property, and casualty insurance services. State Farm was ranked 39th in the Fortune 500 list of companies, 2020. Our chief competitors include American International Group and American Family Insurance Group. The company has over 19000 agents with over 58000 employees.
A SWOT analysis reveals the dynamics of State Farms internal business environments as follows:
These are internal factors the company can rely on to address its weakness and fend off competition. They include:
These are factors within the company’s internal environment which have a limiting effect on the company’s capabilities (Zain & Kassim, 2012). The SWOT analysis is useful in strategic management as it enables determining the company’s weaknesses and putting in place measures to mitigate adverse effects. State Farms Weaknesses are as follows:
These are factors within the company’s external environment that can contribute to its growth and development or otherwise (Ibrahim & Harrison, 2019). They include:
The SWOT analysis determined State Farm to have multiple strengths including a wide distribution network and strong brand equity. It also revealed stiff competition to be a key threat to the organization’s continued profitability with new entrants incorporating technology in business models. The company’s strategic goals, therefore, have to facilitate its long term profitability and continue to enhance its brand as follows:
State Farm has to customize its insurance and financial services to the needs of consumers. This can be achieved through customer participation in the form of focus groups in the research and development process. The company can rely on online and social media communication to obtain feedback from customers in this regard.
State Farm should explore the international market as a growth and profitability strategy. The organization needs to open outlets in overseas markets in Europe and Asia. This will function to expand the company’s customer base and obtain a competitive advantage.
Corporate Social Responsibility
State Farm has to intensify its corporate social responsibility by addressing all stakeholder concerns as it focuses on its mission of enabling customers to “recover from the unexpected”. It has to stay true to its tagline of “like a good neighbor, State Farm is there”. The organization has to have a robust CSR department that enables the company to champion socially conscious efforts (Goel & Ramanathan, 2014). This will have the desired effect of strengthening the organization’s brand through philanthropic efforts that engage both its employees and diverse members of the community.
State Farm Insurance operates in an environment marred with challenges such as stiff competition, social trends, and the potential for a catastrophic natural disaster. This strategic plan aims at channeling the company’s strategic decisions toward warding off competition by investing in research and development to come with new products that appeal to new younger consumers. The company should continue to leverage the power of its brand through creative branding, community development, and marketing strategies as a means of sustaining profitability.
Goel, M., & Ramanathan, M. P. (2014). Business ethics and corporate social responsibility – Is there a dividing line? Procedia Economics and Finance, 11, 49-59. https://doi.org/10.1016/s2212-5671(14)00175-0
Ibrahim, E. B., & Harrison, T. (2019). The impact of internal, external, and competitor factors on marketing strategy performance. Journal of Strategic Marketing, 28(7), 639-658. https://doi.org/10.1080/0965254x.2019.1609571
Stallworth Williams, L. (2008). The mission statement: A corporate reporting tool with a past, present, and future. Journal of Business Communication, 45(2), 94-119. https://doi.org/10.1177/0021943607313989
Zain, M., & Kassim, N. M. (2012). The influence of internal environment and continuous improvements on firms competitiveness and performance. Procedia – Social and Behavioral Sciences, 65, 26-32. https://doi.org/10.1016/j.sbspro.2012.11.086
Zevnik, R. W. (2004). The complete book of insurance: Understand the coverage you really need (1st ed.). SphinxLegal.
State Farms Strategic Planning Process
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