Active insurance, Inc.

Case Description: The primary subject matter of this case is strategic management and the organizational decisions related to growth in small businesses. Secondary issues examined include: selecting a growth strategy (internal growth vs. external options); organization culture issues; and the implementation of competitive (focused differentiation) and functional strategies in a service organization. The case has a difficulty level appropriate for junior/senior business students who have completed business core requirements. The course would also be appropriate for graduate business students at the master degree level. The case is designed to be taught in one class hour and is expected to require approximately one hour of outside preparation by students. Case Synopsis: Jeff Ryan, owner of Active Insurance, Inc., faces an important decision concerning the future growth of his business. Ward Stevens, the owner of Ward Stevens Insurance agency, is considering retirement has talked to several individuals, including Jeff, about acquiring his company. Jeff has discussed the possible acquisition with his accountant and together they have several concerns about the potential transaction Jeff's primary concern is the difference in the business models used by the two companies. Jeff started Active Insurance ten years ago and the agency has grown steadily to the point that it currently employs fifteen agents. Jeff has worked hard to make Active Insurance a customer-oriented firm and has established policies that make it easy for customers to visit his office and to access products and services. Additionally, Jeff uses agency management software and has implemented several innovative personnel policies that he believes are key to his success. Jeff is committed to training and development and is proud of the fact that he has taken a progressive approach to managing his business. In contrast, the Stevens agency is a more traditional, slow changing company. The company is well established, with eighteen agents who operate with a great deal of autonomy. However, the agency has not grown materially for a number of years. Mr. Stevens has not updated his operational or personnel practices since he started the firm and does not get involved in the day-to-day functions of the agency. Customer service, employee training and outside financial advisors all receive low priority from Mr. Stevens. His management philosophy is "if it isn't broke, don't fix it". So Jeff has to decide. Does he make the acquisition and deal with the operational and cultural differences in the two firms or does he forget the acquisition and focus on internal growth?.