Conseco was incorporated in 1979 as a life insurance holding company, with the sole business activity of raising capital. It has grown over time to become one of the leading sources of insurance, investment, and lending products in the United States. Conseco has approximately $95 billion in managed assets, 13 million customers, and 14,500 employees. The firm is ranked 231 on the Fortune 500 list, with revenues of $8.3 billion in 2000. This case not will answer four questions pertaining to Conseco Inc.
1. Conseco management emphasizes a strategy of growth by acquisitions for the first 20 years of the company's life. Critique this approach, identify the advantages and disadvantages associated with this strategy?
A. Increase Market Share
Through acquisitions, Conseco can gain greater market share very quickly. Acquisitions of other companies has expanded Conseco's business into other geographical locations. For example, Codelinks a subsidiary of Conseco, is based in India, given them the opportunities to do business there.
Acquisitions strenghthens their market position and offers new opportunities for competitive advantage.
B. Increase Customer and Sales
Acquisitions increases a companies customer base and sales. When Conseco acquired Green Tree, it believed extensive cross-selling opportunities existed between entities. Conseco could tap into Green Tree's extensive customer database with a full line of insurance products, new business sales would surely benefit. Also, Green Tree finance products would be compatible with Conseco's, so they would benefit from their customers. Acquisitions increases a companies customer base and sales.
C. Increases Technology/ Reduces Costs
When a new company is acquired, technology and information is combined. Combining operations with a rival can fill resource gaps, allowing the company to do things, which the prior companies couldn't do alone. Also, a good acquisition may offer considerable cost-saving opportunities. For...