Caledonia Products Integrative Problem Essay

The following observation will describe the decisions made by a financial analyst who is working for the capital budget department at Caledonia Products. The organization has asked Team B to evaluate the potential risk involved in an upcoming transaction and identify several options in how to proceed. Because this is the team’s first assignments dealing with risk analyzes the team has been ask to further explain the details. The organization analysis will focus on free cash flows, projection of cash flows, projects initial outlay, cash flow diagram, net present value, internal rate of return, and if the project should be accepted. Why focus on project free cash flows Team B believes that Caledonia should focus on the project’s free cash flows and not the accounting profits. Evidence exists that the accounting profits will be earned by the project because there is a positive cash flow to the shareholders. With any investment there is the expectation that there will be an increase to the firm’s cash flow. Free cash flow is the total cash available to creditors who have invested their monies to finance the project. Accounting profits includes costs such as depreciation, interest, and taxes to run a business therefore it should not affect free cash flows. The project free cash flows range from year zero to year five and illustrate how much Caledonia Products will benefit if they choose to take on this project. Projection of project in years one through five There is annual working capital requirement of $100,000 to initiate the project. The incremental cash flows for the project in years one through five shows increase. For each year, the total investment in net working capital will be equal to 10% of the dollar value of sales for that year. In year one free cash flow is $2,100,000 in year two $3,600,000, which means fist year increase of $1,500,000, and it is about 53% increase. In year two 23% increase and year three to four decreases of 28%, and in year five free cash flow is $1,560,000, which means 43% decrease. Year-1:$2,100,000 Year-2:$3,600,000 Year-3:$4,200,000 Year-4:$2,400,000 Year-5:$1,560,000 Initial outlay This project’s initial outlay includes the necessary capital needed to purchase fixed assets and ensure they are in operating order to start the project. Cost of new plant and equipment: 7,900,000 Shipping and installation cost: 100,000 Initial working capital required to start the production: 100,000 8,100,000 The initial outlay for this project is $8,100,000 Cash flow diagram $3,956,000$8,416,000$10,900,000$8,548,000$5,980,400 ($8,100,000) Net Present Value and Internal Rate of Return Unit Price x units sold 1:$21,000 2:$36,000 3:$42,000 4:$24,000 5:$15,600 Therefore, NPV = $94,575.83 NPV Values for Years 1: $18,260.90 2: $27,221.17 3: $27,615.68 4: $13,722.40 5: $7,755.98 The Internal Rate of Return (IRR) = 12.61% Project Conclusion Deciding on whether to follow through with a project is done by evaluating either the internal rate of return or net present value. According to Investopedia, â€Å"All other things being equal, using internal rate of return (IRR) and net present value (NPV) measurements to evaluate projects often results in the same findings† (Investopedia, 2013). If comparing one project to another, the one with the higher rate or return would be the more favorable one. In this instance several projects were not compared, and the IRR is below the current discount rate, which makes the project not feasible. The problem with IRR, however, is that it does not take into account changing discount rates. As market conditions and other factors change, so does the IRR. Net Present Value (NPV) on the other hand, takes changing rates into account and is a calculated using very complex formula taking many factors into account for each stage of the project. If the Net Present Value is calculated to be above zero, or positive, it is considered to be feasible, and the project should be accepted. Our calculations show the NPV in each year to be positive and believe that the project in this case should indeed be accepted. References: Investopedia US, A Division of ValueClick, Inc. . (2013). Internal Rate Of Return – IRR. Retrieved from http://www.investopedia.com/terms/i/irr.asp#axzz2HtkRBF6q

From Bretton Woods to Global Finance

Eric Helleiner’s paper, â€Å"From Bretton Woods to Global Finance: A World Turned Upside Down,† discussed the major causes of the globalization of financial markets, were surprisingly attributed to the Bretton Woods system that opposed a liberal, international financial order. In addition, Helleiner also expounded how the states played an essential role in the globalization process despite the widely-believed fact that they were not major factors in the global development of financial markets.In general, the central issues discussed by the author were the actual processes of globalization and how com/the-causes-of-the-collapse-of-the-bretton-woods-system/">the Bretton Woods system brought about a global process that it never intended to create. His central argument was that the state played three major roles that caused the rise of global financial markets. In addition, he also argued that the Bretton Woods system unknowingly helped the creation of these markets due it s system of trade and finances. Before he outlined his arguments, he first discussed the process of the development of the Bretton Woods system.First was that capitals controls were established to protect the new macroeconomic planning mechanisms from speculative financial movements that could disrupt the equilibrium. Second, due the increase in expenditure, the state was not capable of allowing their citizens and corporations to move funds abroad to avoid being taxed. Third was that the local financial regulatory structures established during the 1930s and 1940s would collapse if the domestic borrowers and savers were given access to the markets of finance abroad.Lastly, the state had to be protected from â€Å"hot money† or illegal transactions and financial flows that were caused by political motives and moves towards legislation. Meaning to say, under the Bretton Woods system, access to international or foreign markets were limited during that time because it did not bene fit the state as much as it did the foreign markets. In addition, the system also believed that a liberal financial order was not compatible with system of exchange rates and liberal trading system that were considered as highly stable.Speculative or uncertain financial flows were one of the major causes of disturbances in foreign exchange rates. In trade, capital movements threatened to force painful and adverse adjustments on the current account which was less flexible and as a result would raise the demands for protectionist measures. In other words, financial liberalism was sacrificed in order to pave the way for a liberal trading order and stable exchange rate that were vital to the growth and development of a country.However, the Bretton Woods system was significantly changed after the globalization of financial markets. Helleiner noted that that the post possible causes of the emergence of global financial markets were market pressure and the significant advancements in techn ology. In terms of technology, the various advancements and creation of highly sophisticated devices made moving money around the world much easier and less costly. In terms of market however, Helleiner noted five causes.These included: the restoration of the market confidence and the assurance that international financial transactions were safe; the swift expansion in the demand for international services in the market which happened alongside the growth of multinational corporations; the OPEC states’ deposition of major surplus funds in international banking markets; the beginning of floating exchange rates which prompted markets to diversify their assets; and the last was that conservative local markets pressured the financial operators to the international stage in order to keep up with the rising competition in the domestic markets.Although Helleiner did not discount the roles that technology and market pressure played in the globalization process, he also argued that th e states also played key roles. These roles are: the states’ failure to implement effective controls, its liberalization activities, and the prevention of major financial crisis. He noted that during that time, when the U. S.rejected abolished the Bretton Woods system of capital controls and created a liberal financial order, European countries and Japan, failed to implement control measures that would counteract America’s new stance due to the major costs it entailed. As a result, most countries also adopted a more liberal financial order similar to the U. S. The states’ second role, which was the liberalization of the market, Helleiner argued, involved the enabling of domestic banks and corporations to operate offshore or internationally.This eventually disrupted the fixed and controlled exchange rates that were established by the Bretton Woods system. Lastly, Helleiner claimed that the states prevention of major financial crises, such as the United States res cue of the Franklin National Bank in 1974 and Mexican debt in1982, eventually paved the way for countries, which were regulated by the Bretton Woods system of capital controls, to embrace a more liberal financial system in order to avert a crisis.In short, Helleiner vividly illustrated how the Bretton Woods system contributed to its own undowing. In general, all of the author’s points were very true as Helleiner made use of actual historical events to substantiate his claims. While the Bretton Woods system of capital controls was effective during that time, it only had temporary effects. Today, the market is too diverse and too flexible to be controlled by a single regulating system.Moreover, I also believe the fact that the states, due to their dependency on international financial flows during that time, unknowingly played crucial roles in the globalization of financial markets, which eventually resulted in a free market that is being enjoyed by most parts of the world toda y. In addition, I also believe that international trade and globalization are essential factors in the growth and development of any country because it involves penetrating markets all over the world.In short, the Bretton Woods system can be considered truly obsolete and should never be implemented again especially today as the global market is highly volatile and is subject to various changes. The placement of capital controls under the Bretton Woods system also means limiting the capabilities of the market, which would prove to be disadvantageous in the future. References Helleiner, E. (2007). From Bretton Woods to Global Finance: A World Turned

Marketing Environmental Analysis

PEST, SWOT and Porter’s five forces analysis are three very useful tools for both identifying the threats and opportunities in general and competitive environment and setting up company’s marketing strategy. What are PEST, SWOT and Porter’s five forces and their usefulness. PEST is an acronym for political, economic, social and technologic. 1. The political area has huge impact on the operation of the firms(e. g. tax, business law, political stability) 2. The economic condition can also directly influence the general performance of the company(e. g. conomy depression, interest rate, exchange rate, inflation rate) 3. As for social factors, by fundamentally determining the target market, it can also be essential for the success or failure of strategies. (e. g. religion, culture, demographic issue) 4. Finally, the technological factors are becoming the majority for mostly organization, which can increasing the benefit as well as decreasing the time and cost. (e. g. the pace of technologies change, incentive of technology) Usually prior to competing SWOT, PEST helps to spot the four elements for better understanding the macroenvironment faced by firms. After analyzing the four factors, it is important for company to identify the key drivers for change, thus focus on that to shape its strategies. Meanwhile, by scanning the general environment, co. can therefore also detect weak signals that make the discontinuity of the environment, which may fundamentally change the competitive environment (Johnson et al, 2011). Ginter and Duncan (1990) argue that macro-environment analysis can act as an early-warning system by giving org. time to anticipate opportunities and threats and develop appropriate response. SWOT is structured planned method used to evaluated strengths, weakness, opportunities and threats. By using matching and converting, company can either find or develop their competitive advantages. Matching is used to find competitive advantages by matching the strengths to opportunities. Converting is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. Porter's five forces analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter at 1979. More precise than PEST, it helps the industrial organization to illustrate the competition intensity in competitive environment (microenvironment) thus decide the attractiveness of specific market. Combining three analysis In corporate strategies level, all three of them can be used to audit the marketing environment in order to get a systematic, critical and unbiased appraisal of its operation. (where is the co. now, where does the co. want to go and how should the co. rganize its resources to get there) In business strategy level, it also important that because of the increasingly rate of change in market environment, three of the analysis need to achieve contingent approach to shape the strategies to avoid overcome by competitors. Example: PEST e. g. construction firm: operating on narrow profit margin, react to change I interest rate. Johnson &Johnson: baby-care product, react to change in birth rate, thus change the target market to adult female(being kind and gentle to woman’s skin as well as that of babies) SWOT A consultancy firm S: Reputation, expertise W: Unable to deal with multi-disciplinary assignments because of size or lack of ability O: Well established position with a well defined market niche T: Other small consultancies looking to invade the marketplace Five forces Coca-cola: Present a detailed analysis of the various positioning strategies that may be pursued by a firm (20 marks). What are the keys to successful positioning (30 marks)? 1. Positioning is to shape the org. o suits the preferences of customers and lead to high consumer loyalty thus building a powerful brand. 2. Market mix, perceptual map 3. There are two levels of positioning strategies: a. Business level strategies (Brand positioning) Business level strategies are positioning the org. among other org. It is market oriented and can be either market-wide or directed at a particular market (niche approach). b. Generic business strategies (Porter)— (competitive advantages) 4. Key to successful market positioning a. A well-positioned brand should appeal to the particular needs of a customer segment because a differential advantage proposition is created. b. There are four key dimensions for a successful positioning: Clarity, Consistency (Favorability), Competitiveness (differentiation), Credibility (Explain†¦.. ) c. In order to evaluate the effectiveness of brand-positioning strategies, there are three components we need to consider: intended position, actually position and perceived position. Perceived position is the most important, which will lead to the above-normal performance of the corporate. According to research, benefit positioning and user position is more effective than feature positioning and direct benefit positioning is more effective than indirect benefit positioning (Fuchs et al, 2009). d. To keep the brand equity, repositioning is very important. We need to realize that positioning is a ongoing process. Competitive advantage is positioning of a single offering in relation to a unique set of potential customers and competitors. For an organization to achieve consistently above-normal market performance, it must create a sustainable competitive advantage (Aaker, 1989). The logic of SCA is that a buyer to purchase offering X, the buyer must perceive the expected utility to him of that offering exceeds the value to him of any alternative solution, that is it must create superior value for its customers. The basis of competitive advantage is increasing the benefit receive by the customers or decreasing the cost. Which lead to different strategic focus on either low cost or differentiation (additional product benefits). So competitive advantages can be porter’s generic strategies or market orientation. (explain†¦. )

DQ1 Essay Example | Topics and Well Written Essays - 250 words - 2

DQ1 - Essay Example The court system in the United States is dual comprising of the state courts and the federal courts. Unlike the traditional system of organization where power is central, these systems work side by side with exclusive jurisdiction. There are several courts each having its own structure and procedure. The court system is very open. Any person can present a dispute in court at any time. Contrary to traditional organizations where all the decisions concerning the organization are made at the helm, the court system resolves disputes within its jurisdiction without consulting with the Supreme Court. In addition, the court system is a defender of human rights. They are important in protecting basic rights such as freedom of speech and equality to all. The courts encourage right to speech that is inhibited in the traditional organizations systems. Furthermore, the court is different from traditional organizations because they ensure that the system of governance is federal. A federal system limits the power of government by sharing and dividing power between other states. This distribution of power is important as it prevents tyranny (Howard,

International Marketing Essay Example | Topics and Well Written Essays - 2500 words - 4

International Marketing - Essay Example The company acquired Land Rover in the year 2000 from BMW and Jaguar cars in the year 1989. Presently the company is employing more than 25000 employees. Net income of the company is ? 1.215 billion. The next portion of the study has been divided into two sections. The first section will deal with the discussion of the marketing mix for the Evoque product of Jaguar Land Rover for targeting the low end customers at the entry level. The second section deals with discussing the marketing mix of the premium Evoque product in order to target the high end customers for competing with the products like BMW X3, Audi Q5 etc. Marketing Mix of Evoque Cars of Jaguar Land Rover Marketing Mix is considered as one of the most important business tools which help in determining the four P’s involved in the planning of marketing strategy. The four P’s include Product, Price, Place and Promotions. This marketing mix will help in providing set of policies on the basis of mentioned four Pâ €™s so that it can act as an essential marketing strategy for influencing the purchase decision of the customers. The main reason behind any business’s success includes a long procedure in which achieving success depends upon marketing. The success linked to marketing depends upon different marketing strategies and all these marketing strategies include 4 P’s of marketing. The marketing mix of Evoque vehicles of Jaguar Land Rover will provide the best possible way of mentioning all the essential elements in marketing. The implementation of marketing strategies in an appropriate manner is important for the achievement of success in the operational market. The marketing mix will give the combination of various important marketing strategies planned by Jaguar Land Rover (Belohlavek, 2008). Each of the four P’s is important for planning such a marketing mix, which would be able to attract the customers easily towards the organization. It will help in determining the profit potential of Jaguar Land Rover meant for separate target segments. a) Marketing mix for targeting low end of the market Product Product means those goods or services which are provided to customers by the organizations. There are different elements connected to the products which help in attracting the customers (Masterson and Pickton, 2010; Hobbs, 2011). The Range Rover Evoque has brought sensational design to the world’s leading marques. The excellent power train technology along with the compact foot prints help in delivering high performance along with reduced carbon dioxide emissions and fuel consumption as compared to any other Range Rover model (Jaguar Land Rover, 2013b). The products are styled with such desirability which cannot be matched by any rival. The Evoque provides various facilities like accurate and fast steering. The ride is such that it possesses the capability of absorbing the imperfections present in the road surface. The vehicles are perfec t while exploring the city by means of power, high performance and excellent design at the finger tips. There are unique models, all present in 5 door version: Prestige, Pure and Dynamic. Only Dynamic is present in the Coupe Version. Customer research is known as one of the key elements in developing or planning the most effective marketing mix. The knowledge of an

STRATEGIC FAMILY THERAPY Essay Example | Topics and Well Written Essays - 750 words

STRATEGIC FAMILY THERAPY - Essay Example The problematic family development formulation utilizes three models; structural model that focuses on flawed family levels, the cybernetic model and the functional model, which is concerned with how a family member develops symptoms to govern others (Yarhouse & Sells, 2008). Goals for therapy formulation imply that strategic family therapy focuses, not on personality or relationships, but it relies on strategies with a focus on the problem at hand to achieve therapy goals. Condition for change formulation focuses more on action-keeping motivation high and resistance low-to facilitate change. Normal family development is concerned with changing a dysfunctional family structure to a more functional one through examination of the family structure (Yarhouse & Sells, 2008). Reasons for picking the Strategic Family Therapy Theory for the Case of Joe and Beth My counseling style focuses on identifying the root course-symptoms-of a family’s current problem and offering solutions that help fix the problem. Therefore, the Strategic Family Therapy is an excellent choice in as far as the case of Joe and Beth is concerned. There is a need to cure the symptoms or courses of Joe’s infidelity, which is strategically the root course of the problem the family is experiencing. Additionally, Joe seems to argue that, his infidelity-the symptom-is unintentional. How it fits into the theory’s definition of â€Å"normal family development† The Strategic Family Therapy theory disregards the normality concept of family development. However, at some instances, such as Haley and Madanes model, the concept of normality is held with emphasis on distinct family boundaries (Yarhouse & Sells, 2008). It considers therapy as a way in which families can be able to change solutions in the event that they are not working. Therapy should be neutral and be able to alter a dysfunctional family structure and create one that is functional without placing expectations on memb ers. The counseling and therapeutic techniques employed for this case fit into this definition and concept in the sense that; there is a common belief that families always make common but imprudent efforts solve the problem facing them, as is in the case of Joe and Beth. This results in positive feedback loop that worsens the problem (Yarhouse & Sells, 2008). Therefore, a viable option to make is to identify the rules governing the loop, the feedback loop itself and change the rules and the loop. Because of the Strategic Family Therapy, the family is given an opportunity to examine the structure of their own family and be able to better the structure. How it fits into the theory’s development of behavior disorders Strategic Family Therapy theory development of behavior disorders utilizes three models; structural model that focuses on flawed family levels, the cybernetic model-runaway reaction loops and the functional model, which is concerned with how a family member develops symptoms to govern others. Focus is on the effect of the solutions attempted by the family with respect to the problem at hand (Yarhouse & Sells, 2008). Additionally, focus is on the relationship that exists between Joe, Beth and their two sons and how marital and unresolved conflicts in the family aggravate the problem. The counseling style used fits into the theories development since it focuses on the on the symptoms of a problem and how they are developed. Joe and Beth’s Family goals for therapy The first therapy goal for Joe and Beth’s family would be to identify the reasons for Joe’s unfaithfulness. This is a crucial goal for this family’s therapy since the problem they are currently facing is because of it.

Project Management (organizing a talent show) Essay

Project Management (organizing a talent show) - Essay Example Second section presents critical reflection of team work, key skills of project managers and skills and competencies gained during the project. Last section critically discusses the four articles on Project management from academic journals that are related to the study area focused during the project management task. Table of Contents Section No Title Page No Critical Evaluation 1.1 Introduction 1.2 SWOT Analysis 1.3 PESTLE Analysis 1.4 Gantt Chart 1.5 Cost Volume Profit Analysis 1.6 Summary Critical Reflection 2.1 Introduction 2.2 Team Work 2.3 Leadership 2.4 Skills and Learning 2.5 Summary Critical Discussion 3.1 Evaluation of Journal Articles Critical Evaluation 1.1 Introduction This section is an endeavor to critically evaluate the significance and implications of four out of the ten techniques namely SWOT analysis, PESTLE analysis, Gantt chart and CVP analysis in managing the project. The analyses of these tools and techniques would then be made part of the subsequent presentat ion to discuss their validity. From an objective point of learning, the study and utilization of these techniques is not only critical to educational domain but also crucial to existing practices in the industry. 1.2 SWOT Analysis SWOT Analysis is an instrumental subjective tool to identify the internal organizational factors, Strength and Weakness, and external factors, threat and opportunities to best align the organization with its strategic objectives and identify the best possible scenario for operation by augmenting the decision making process as guide reference and not with precision. Although it is a much acknowledged and widely used tool in industry, but Fine (2009) has questioned the limitations of SWOT analysis to effectively determine the strategic objectives and course of actions to be adopted by any organization. Wikipedia (2011) pointed that it is quite possible for an organization to overlook certain key facts and view the overall scenario as quite simple since the t ool lacks precision in its application. Because of its simplicity to become a mere list of facts, Cartwright (2002) suggested carrying out further analysis and research for determining the relation between negative and positive factors and how they affect each other, their magnitude and their significance in comparison to that of competitors. Piercy and Giles (1989), is of the view that categorizing facts in internal and external factors is a subjective exercise and may not deal with inherent uncertainty prevailing in the market. According to Pickton and Wright (1992), since the tool is subjective in its application, there is strong probability that accomplishments may be categorized as strength, threats as opportunities and weaknesses as decisions. As a counter argument, Coman and Ronen (2009) stressed that SWOT analysis is an effective tool to build a company’s strength, maximize opportunities, reverse its weaknesses and overcome threats. He further adds merits to the capab ility of this tool for effectively identifying the core competencies of the company. Felton (2004) goes on adding that it is not the failure of the effectiveness of a tool to present good analysis rather failure of applying it effectively. Besides the inherent limitations associated with SWOT analysis and criticism by many authors questioning its

Business Professional Interview Question Assignment Essay - 1

Business Professional Interview Question Assignment - Essay Example He felt an atmosphere of wonder himself and confessed that what struck him the most was the manner by which the crew delivered personalized customer service. Ihsan: In my observation, there exists a sense of responsibility in everyone and my immediate subordinates talk to me with comfort. Often, they move with unreserved behavior of showing their real concerns as much as all the others act similarly for the sake of healthy relations. Ihsan: As far as I can recall, yes. There was a time when in about two quarters, the restaurant was infrequently visited by customers, the reason being that a nearby store launched a new interesting item in their menu, one similar to our fish fillet meal which caught the attention of many. Somehow, this incident led us to cut costs with certain resources and about three of the anticipated promotions were on pending status. Ihsan: I discuss with them future plans of growth for the company so that I can stimulate their imagination toward the brighter positive side of things. This way, I believe that they can visualize opportunities and be guided back to their original drive or passion for work. Actually, I have also tried giving my potential workers a treat in a fancy restaurant and in my favorite vacation spot where I gathered them for a light chat. Those who nearly decided to leave normally delight and look for more bonding moments especially when I narrate my inspiring account of Albaik’s humble beginnings and the philosophies I have lived by to keep the business in the mainstream. Ihsan: Yes I would. I think that is one great way of getting to know my people better. However, besides the reward system, I would equivalently bring up discussion of issues that deserve sanction to be fair and

How Does Language Define Who We Are Essay Example | Topics and Well Written Essays - 750 words

How Does Language Define Who We Are - Essay Example For instance, the English that one uses at home is poles apart from the language one would employ in ones workplace or educational institution. This is because when a person is around his family or friends, i.e. around people who are intimate with him and have known him for a length of time, the mask that one wears to the outside world slips away and an individual feels no need to hide behind a facade of formality. This natural and daily transition that one makes from formal mode to casual mode, might appear strange when studied from a distance but if one were to observe closely, it would be seen that this is universal behavior where even the most formal of people will be seen using an entirely different type of English when in informal surroundings. Another point worth noticing is how individuals for whom English is not their mother tongue, speak it. There is a common perception amongst people that those who speak accurate English, free from any grammatical errors, are gifted with greater insight, depth of perception, logic and common sense and have comparatively superior education and wisdom than those who speak, as Tan puts it, "broken" "fractured" or "limited" English. This case is discussed at great length by Tan who gives the example of her own mother. Tan's mother reads the Forbes report, listens to Wall Street Week, converses with her stockbroker and reads Shirley McLain's novels (p.258). All these prove that she is a woman of above-average intelligence and her command over English language is better than most people, even better than those whose mother tongue is English. Unfortunately, Tan's mother's speaking powers are slightly weak and she tends to speak English that is grammatically poor. As a result, she faces great difficulty in her day to day life as most people in public places such as banks, restaurants and hospi tals ignore her or are rude to her. For them she portrays the image of a woman who is unable to understand and pick up simple rules of a simple language. It is due to this that once, even her daughter, despite knowing of her mother's reading habits and talents, thought of her as somehow lacking in wisdom. As Tan writes, "I was ashamed of her English. I believed that her English reflected the quality of what she had to say. That is, because she expressed them imperfectly, her thoughts were imperfect" (p.259). It cannot be denied that basic judgments about people are made based on a lot of factors, not the least of which is the person's language. A person who uses well-crafted sentences, employs all manner of embellishments or better still, uses difficult words, is considered to be highly learned, professional and someone with hordes of intellect. Perri Klass, a pediatrician by profession, related just such an experience from her personal life in her witty essay "She's Your Basic LOL in NAD." She relates how she came to adopt the medical jargon that her colleagues used in their daily communication while discussing patients' medical condition. Klass relates her initial sense of awe at hearing all those acronyms and how even the complicated LOL turned out to be nothing more than "Little Old Lady" (p.98) but sounded extremely professional nonetheless. Klass recounts how she happily used these words despite knowing that at times they were nothing but deliberate

Insurance Industry in Australia and Acts of Parliament Essay

Insurance Industry in Australia and Acts of Parliament - Essay Example In essence, the insurance industry in Australia offers insurance services to Australians in three major categories, which are: health insurance, life insurance and general insurance. Moreover, the insurance industry in Australia falls under the financial services sector. The above three categories of insurance are regulated by different acts of Parliament. In accordance with Australian pieces of legislation, the major Acts of Parliament that regulate the insurance industry are: (i) The Life Insurance Act (1995), (ii) The Insurance Act 1973 and (iii) The Corporate Act. The government bodies that enforce the above Acts are: â€Å"The Australian Taxation Office (ATO)†, â€Å"The Australian Securities and Investments Commission (ASIC)†, â€Å"The Superannuation Complaints Tribunal (SCT)† and â€Å"The Australian Prudential Regulation Authority (APRA)†. This paper provides a report on how the insurance industry in Australia is regulated by the relevant Acts of Parliament. A law in Australia entails an Act passed by the Federal Parliament as stipulated in the Australian Constitution, Acts passed by Legislative Assemblies and State Parliament, Ordinances created in relation to territories, Australian common law and statute laws (Australian Governement Comlaw 2009: 1). General insurance in Australia The main legislation that regulates general insurance in Australia is â€Å"The Insurance Act 1973 (Cth) (Insurance Act)†. General insurance in Australia is divided into: (i) liability insurance, and (ii) property insurance. A further categorization of liability insurance has the classes of: worker’s compensation, motor insurance (better known as Compulsory Third Party (CPT)), public liability insurance, insurance for business and professional indemnity. In addition, a further categorization of property insurance has the classes of: travel insurance, home and contents insurance, and motor vehicles comprehensive insurance (Gray 2010: 1). Life insurance in Australia In the Australian insurance industry, life insurance is basically divided into the categories of: superannuation investment, life insurance and disability income insurance. The major acts that govern superannuation investment in Australia are: (i) The Superannuation Industry (Supervision) ACT 1993, and (ii) Financial Services Reforms Act 2002. The â€Å"Superannuation Industry (Supervision) Act 1993† is legislation on all the rules of compliance in the insurance industry. In essence, the Act looks into issues that involve: fund accounts and administration, enquiries and complaints, investments, fund management regulation and operation of the vast superannuation funds and setting up penalties for insurers who do not perform in relation to the rules stipulated in the Act. This Act registers all the superannuation trustees in Australian insurance industry. Additionally, all the trustees who seek registration must be qualified in risk management, financial and technology issues and have skills in management profession. On the other hand, the â€Å"Financial Services Reform Act 2002† is an Act that provides standardization in the insurance industry in relation with the financial industry. Essentially, it determines if a license to operate a fund should be given a particular superannuation fund trustee. The major roles of the â€Å"Financial Services Reform Act 2002† are, firstly, providing license to dealers who are to provide insurance services or products; secondly, determine