Using older versions of Outlook for Mac in business environments
What happened is that Microsoft switched the HTML editor in Outlook to Microsoft Word running in the background. At the moment, all you can do is drag the corners of the inserted image to resize it.
Expect changes to occur in Outlook's interface in upcoming updates. If you want to be influential on those changes, join the Insider program in AutoUpdate and choose the Fast option. To launch AutoUpdate use the Help menu in Outlook and choose Check for Updates.
Be aware that if you choose the Fast option you will be able to interact directly with Microsoft as they make changes to the interface. You'll need to have the time to provide business-like feedback to Microsoft, get large downloads for updates, and expect to run into problems and new bugs that need to be fixed.