Introduction
State farm insurance refers to an association of companies that render financial and insurance services (Kyle, 2005). It is a dominant industry player and holds a large chunk of the market compared to its competitors. It ensures cars and homes in America and Canada (Wilkinson, 1988).
State farm initially dealt with insurance of cars only but later incorporated farmers later in their business. The success of this company was in tandem with its support by farmers who were thrilled by the low premiums. State Farm later went into banking and financial services. The firm also ensures homes and assures life.
The chairman of the board is Edward B. Rust, Jr, who also is the chief executive officer. There have been five chief executive officers since its inception in 1922.State Farm has 67,000 who are employed permanently and 17,000 agents.this large pool of employees caters for the 77 million policies and the 1.9 million banking clients that State farm covers. The firm also ensures more than 40 million vehicles going by the estimates of the year 2005. One example of state farm insurance companies is the American Automobile Association which has been successful in rendering insurance service in America. This research paper will find out about the services provided by this company, its history, its response to competition, its personnel management and the business strategy it uses.
Discussion
American Automobile Association
This company was started in 1902 and it has fifty million members. It was set up because the founders believed there were no good roads or highways that catered for cars. It was founded on the principle of no profit and it is a lobby group that provides car insurance. It derives its membership from nine motor clubs that are local and regional. Together they form a very influential organization.AAA has created many programs that enhance drivers’ safety.
Services
The major services that AAA provides are ones that are of an emergency like towing and tire changes (Elsman, 2005).These are services that are handled at the local level. Automotive servicing by the AAA clubs covers the metro areas. The surplus areas are covered by privately owned towing companies.AAA clubs issue Tour Books to members and also do hotel ratings. Their offices also sell automobile insurance.
AAA has been known to lobby against rules and regulations that support a better environment. The firm is known to be hostile against the environment because of its advocating for more cars that would in turn lead to pollution and excess use of fuel (Elsman, 2005). As a result there have emerged competitions that provide almost the same services that AAA provides. However they are different to AAA in terms of their stance on environment conservation. An example of a competitor is the Better World Club which provides the same services as AAA. Better World Club also gives discount for vehicles that are fuel-efficient. It is also a major contributor to environment conservation through its donations to different environmental groups (Wilkinson, 1988).
AAA’s strategy of fending of competition has been its latest attempt by the California branch to create awareness for the hybrid type of vehicles which are operated on a plug in basis.
Personnel management
American Automobile Assurance Company has a strategic human department which seeks to have the best and the most qualified employees and therefore it has a stringent recruitment policy. As a firm that has a large pool of workers which consists of permanent employees and field agents it develops clear disciplinary and reward policies. The human resource management department balances between the personnel needs and the firm’s mission to achieve its goal. According to Legge (2004) “AAA has a corporate strategy of increasing automobile insurance by 10 percent over a two year period”. To achieve this AA A able to satisfy its employees and at the same time maintain a perfect functional strategy.
Conclusion
This paper discusses what state farm insurance is and also considers one example which has formed the basis of the discussion. From the discussion in this paper the services that this firm offers which mainly include road towing are discussed. Although AAA is a lobby organization, it has to keep itself afloat and one strategy it uses is dealing with competition.The paper explains why the firm is facing stiff completion and how it is dealing with it. As it is well explained in this paper, the firm is not keen on promoting environmental conservation and the competition has noted this and moved in to exploit this by promoting the use of vehicles that are environment friendly.AAA has tried to counter this with the promotion of the hybrid type of vehicles.
References
Elsman, R. (2005). “Making Sure Training Doesn’t Fall Flat”. A journal Incentive. New York: Princeton University Press 169 (8): 23-28.
Legge, S. (2004). Human Resource Management: Rhetorics and Realities (Anniversary ed.). Basingstoke: Palgrave Macmillan.
Wilkinson, A. (1988). “Empowerment: theory and practice”. Personnel Review. New York: Oxford University Press 27 (1): 40–56.