Rev. January 30, 1997
Christopher Loch and David Paul Grant prepared the original version of this case (S-DS-87, Revised 5/90) under the direction of Professor Michael J. Harrison, Stanford University. It is based on an earlier case by Karlyn Carnahan.
Professor Steven C. Wheelwright, Harvard University, prepared the abridged case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 1991 by the President and Fellows of Harvard College and by the Board of Trustees of the Leland
Stanford Junior University. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard …show more content…
Backed by its parent’s resources,
Golden Gate launched an inntensive marketing campaign and precipitated a price war in an attempt to gain market share from Manzana. Manzana fought back, and by 1988, the two companies were in a virtual tie for first place in the property insurance market.
In 1989, Manzana was acquired by Banque du Soleil, a multinational financial services company, and new management was installed. Attention was directed towards tightening the company’s underwriting standards, regaining market share, and reducing operating expenses. Less profitable lines of insurance were discontinued entirely, and operations at branch offices were reorganized on a geographic basis in order to improve the company’s responsiveness to agents and make the company more market-driven.
Manzana operated through a network of relatively autonomous branch offices in California,
Oregon, and Washington. It treated each branch as a separate profit and loss center, with the authority to underwrite insurance, collect premiums, and settle claims within its territory.
Like many insurance companies, Manzana did not deal directly with the public. Instead, its sales force consisted of about 2,000