1. The United Services Automobile Association (USAA) is a Texas-based diversified financial services group of companies which includes a Texas Department of Insurance regulatedunincorporated, reciprocal inter-insurance exchange and a Fortune 500 financial services company offering banking, investing, and insurance to people and families that serve, or served, in the United States military. At the end of 2011, there were 8.8 million members. 2.5 million of the total of 8.4 million members were subscribing members who have about $7–8 each on deposit with the exchange to guarantee its financial capabilities. The company reported a surplus of $19.3 billion in 2011. USAA was founded in 1922 by a group of U.S. Army officers to self-insure each other when they were unable to secure auto insurance due to the perception that they were a high-risk group. USAA has since expanded to offer banking and insurance services to past and present members of the Armed Forces and their immediate families 2.
b) Threat of New Competitors
High capital requirements mean a company has to spend a lot of money to be able to compete in the market. High capital requirements positively affect Ex USAA. If a strong brand is essential to compete and new competitors will have to improve their brand equity to compete effectively. Strong brands have a positive impact USAA Ex If the existing players have the best geographical location, new competitors will have a competitive disadvantage. Reducing geographic factors positively affect USAA Ex It takes time and money to build a brand. When companies have to spend resources to build brand, they have fewer resources to compete in the market. These costs positively affect USAA Ex. When the learning curve is high, new competitors have to spend time and money studying the market before to compete effectively. High learning curves positively affect profits Ex USAA If barriers are high, it is...