Lidl Grocery Store Example For Free - Free Essay Example

Sample details Pages: 8 Words: 2531 Downloads: 4 Date added: 2017/06/26 Category Marketing Essay Type Case study Tags: Future Essay Did you like this example? The UK grocery market is a highly competitive and saturated market with thousands of competitors. Demand is distinct for being price elastic such is the nature of the market. This makes it notoriously difficult to make any advances on market share (Burt and Sparks, 2003). Don’t waste time! Our writers will create an original "Lidl Grocery Store Example For Free" essay for you Create order Since entering this market in 1994, Lidl have become deeply entrenched with over 600 stores at its disposal which expresses the phenomenal success that they have achieved (Lidl 2012). They are now a formidable competitor feared by the other major supermarkets. The big four supermarkets in the UK such as Tesco and Asda have now endured a decrease to their market share, as the discount supermarket Lidl has made gains (Butler, 2015). Brinded (2015) outlined that as of May 2015, Lidl had accomplished a record market share of 3.9% with an 8.8% increase in sales. Such displays of growth are very much owed to the marketing strategy implemented by Lidl. Fifield (1998, p.27) defines marketing strategy as the process by which the organisation translates its business objective and business strategy into market activity. He also emphasises the importance of executing plans quickly in response to various market changes. Lidl as will be explained has executed this definition to great success. This essay will analyse the marketing strategies devised by Lidl and will also propose suitable recommendations to enhance the marketing strategy to sustain financial performance and UK expansion, with a brief insight into the enormous challenges encountered by Lidl. Barriers to Entry With the price per majority of products being relatively small it is crucial that stores sell a high volume with great variety. Therefore a large and repeat buying consumer base is crucial for any long term success (Oliver, 1999). Such a rigid outline for success means that the barriers to entry are quite formidable. Stigler (1968, p.67) categorised barriers to entry as a cost of producing that must be borne by firms seeking to enter an industry but is not borne by firms already. Of course Lidl was and still is a massive supermarket in Germany from the 1980s and was recognised throughout other European countries but it was completely diverse to the stores in the UK which made Lidls introduction a risk. It doesnt seem cynical to suggest that there also exists a long established oligopoly whose economic dominance makes the market even more challenging to infiltrate (Blythman, 2008). BBC (2006) support this view by reporting in 2006 that Tesco, Asda, Sainsburys and Morrisons controlle d 74.4% of the market. This oligopoly means that there are higher barriers of entry, requiring significant capital to overcome. It has also fostered extreme levels of customer loyalty which is a complex obstacle in itself to overturn. Such dominance translates to quite high profit margins when compared to discount stores. Ferrell and Hartline (2014) identified capital, advertising, government regulations and adequate infrastructure as the primary barriers to entry in a market which is oligopolistic. Marketing Strategy incorporated by Lidl From their European operations Lidl had already amassed a substantial budget, giving it the economic strength to establish a corporate base in the UK market. However initially Lidl did not aim to match supermarkets such as Tesco for store size as they recognised that their brand simple wasnt reputable enough in the UK for such an aggressive strategy. They operated on a financial scale below that of the larger supermarkets which helped them to systematically build their operations from a small and solid foundation. Aaker and Mcloughlin (2010) distinguished four key principles needed to ensure a successful marketing strategy. These were strategic analysis, innovation, multiple businesses and sustainable advantage. Lidls marketing strategy was extremely competent at orchestrating these principles as interpreted below; Strategic Analysis- Lidls rise to prominence during the financial crisis was a massive example of how strategic analysis benefited their marketing strategy. Senior an d Swailes (2010) were adamant that for any successful marketing strategy the information needed to be accurate and timely. In specific they pinpointed environmental triggers of change which encompasses, political, economic, social, technological, legal and ecological factors. Lidl regarded the financial crisis as an opportunity and began to stock greater numbers of cheaper products. Most notably middle class consumers who before the crisis would not have shopped at a discount store were attracted by the cheaper prices of products. This stimulated an uplift in customers, leading to a massive increase in sales. It is evident that Lidls marketing strategy is identifiable with that of the evolutionary approach, whereby reacting to changing market conditions by launching initiatives has been a success (Fifield, 1998). Johnson and Scholes (2000) believed a SWOT analysis was an efficient method of enhancing any marketing strategy. While a SWOT analysis portrays the financial crisis as an o pportunity it would also highlight major weaknesses so that they can be confronted. Poor reputation and brand image would seem to be Lidls major weakness with Connolly (2008) exposing poor working conditions and minimum wage throughout the UK stores. This illustrates that there are areas which Lidls marketing strategy did not address. Innovation- Although simplistic, Lidl incorporated a basic standard of store interior where stock was commonly placed in bulk on pallets with minimal or no additional services such as a butchers which is a familiar service in most supermarkets. It is apparent that Lidl have relied heavily on the framework of the generic strategy of cost leadership. Porter (1985) presented this strategy as one where a competitive advantage is engineered by minimising costs and lowering prices. This has been cardinal to Lidl capturing market share, whilst producing considerable profits. This strategy has also been successful for huge multinational companies such as Ry anair who can offer greatly reduced prices by maintaining a low standard of service. As can be seen with Porters (1985) generic strategies matrix, Lidls marketing strategy achieved optimum success as they had a broad market scope to aim at. Figure 1. Porters Generic Strategies Matrix (Porter, 1985 p.12) Multiple Businesses- Lidl was already a major force in mainland Europe and therefore had massive capital to sustain large scale expansion into other countries. The marketing resources were present and availed of in an ambitious marketing strategy where Lidl would operate below the level of the larger supermarkets, aspiring to build themselves up eventually to that pedigree. Hooley et al (2008, p.289) commentated that marketing assets and capabilities have potential for exploitation. Lidls marketing strategy utilised the assets of the company to allow them to continuously grow without any cash flow shortages. Sustainable Advantage- Higher quality consumables that can matc h the quality of household brands primarily stocked in the major supermarkets has attracted a larger range of consumers. Moreover it has provided an effective competitive advantage which diversifies Lidl. Small, unknown brands mean that Lidl can comparatively sell at a much lower price than what is demanded from market leading brands. Durrani (2015) highlighted that in 2012 alone Lidl had spent ÂÂ £21 million on advertising activity, another key factor in the effectiveness of their strategy. In contrast to Porters theory of cost leadership, it must be appreciated that this strategy in isolation does not sell the product. McCarthy (1960) constructed the marketing mix which gives a much more definitive portrayal of how to produce sales. From the above analysis it is clear that Lidls marketing mix which as McCarthy (1960) outlines involves product, pricing, place and promotion worked with emphatic success. Recommendations for Future Interestingly it has been contested that much of Lidls success has been owed to the financial crisis of 2008. While this does demonstrate Lidls competency at processing information and intelligent decision making, they now must be proactive and plan for the future. It is likely that they will again exist in a strong economy where consumers will be more inclined to spend on luxury brands and in stores such as Marks and Spencers. With the grocery market being so dynamic and volatile it is crucial that Lidl engage in further market research to identify exactly what consumers want so that the company can be improved to accommodate for these demands. If done so correctly customer loyalty will be retained. Oliver (1999, p.33) has discovered that the net present value increase in profits that results from a 5% increase in customer retention varies between 25% and 95% in 14 different countries. With regards to this information it would be advisable for Lidl to engage in loyalty schemes whe re repeat buyers are rewarded with discount and exclusive offers. However it is a complex task to estimate factors such as consumer spending as explained by Dekimpe et al (2010, p.29) who states that predicting aggregate consumer spending is vitally important to marketing planning, yet traditional economic theory holds that predicting changes in aggregate consumer spending is not possible. This demonstrates how challenging it is to make accurate assumptions. As proposed by Chisnall (1995) it would be recommendable that Lidl should execute multiple sourcing on a wider scale whereby a larger variety of suppliers are contracted. He explained that this would secure expansion as it would limit the consequences of a main supplier defaulting. Brand repositioning is the possibly the most important recommendation to ensure Lidl continue making substantial market gains. Burt (2000) noted that although discount stores can potentially make significant gains it is essential that for long term success their brand image must be improved. It was revealed by igd (2015) that the UK market on March 31st was worth ÂÂ £177.5 billion, an increase of 1.7% from the previous year. An indication that consumers may begin to expect greater quality, which could leave Lidl surplus to requirements. To reinforce the need to improve the brand image Ross Millar, the managing director of Lidl Scotland (Lidl 2012) revealed that 63% of customers interviewed agreed that if they had more money they would buy better quality food. It is clear that Lidl will have to improve the quality of produce that they source. Further large investment is required to modernise store interiors with additional services needed to be established. This will not only increase revenue due to diversification but as mentioned above the brand image will be vastly improved. Lidl will be transformed from the perception of being solely a discount retailer to being a one stop shop where consumers can purchase all of the groceries that they plan on purchasing. Furthermore a popular feature of larger supermarkets is online shopping whereby by customers can make online orders for home delivery. It has been a huge success for Tesco which has also boosted its brand image. For Lidl to continue to compete with the larger supermarkets in the future and to prosper, they too must develop an online shopping service. Such is the age we now live in where spending is heavily dictated by technology it would be naÃÆ'Â ¯ve of Lidl to ignore such an opportunity (Burt and Sparks, 2003). It also promotes brand awareness. Blackman (1975) suggested that corporate social responsibility (CSR) is another factor which many large multinational companies are having to introduce as it ranks highly in priorities demanded by stakeholders in the 21st century. Lidl have already began to source fair trade products, but they must do a lot more as consumers now expect fresh produce and a range of ethical products. Drucker (1984) was of the view that CSR will influence consumer behaviour greatly as it is increasingly in the interest of society. However Boulstridge and Carrigan (2000) maintained that price, quality, brand familiarity and value were still the key factors that controlled consumer spending. Conclusion Lidls marketing strategy has been as innovative as it has been opportunistic, which reflects the position it now finds itself. Ferrell and Hartline (2014, p.17) stated that marketing strategy is a plan for how the organisation will use its strengths and capabilities to match the needs and requirements of the market. It is apparent that Lidl have executed their marketing strategy to maximum effect, exploiting an opportunity in the market with exceptional financial performance as a result. Lidls ascendency is summarised by Fuller (1999, p.3) who defines marketing success as satisfied consumers and concurrent profit for the firm. Lidls performance as a direct result of their marketing strategy firmly reflects this concept, which is testimony to all that they have achieved. However just as change brought Lidl success, it must be acknowledged that it can usher in collapse. Lidl have constructed a vast infrastructure in the UK that will allow them to pursue even more market share. The st rategies that they deployed in the past seven years may no longer be adequate so it is vital that they continue to evaluate their environment and make decisions accordingly. Brand awareness and changing brand perception is the most vital area for the future marketing strategy as it will determine continued customer loyalty. Lidl now undoubtedly have the platform to become a market leader in the long term future if they continue to fuel growth by reacting to the ever changing consumer demands which has helped them climb to such a prosperous position. Structural inertia must not be allowed to breed, with moving forward the primary focus. References Aaker, D.A., McLoughlin, D. (2010) Strategic Market Management: Global perspectives. West Sussex: John Wiley Sons Ltd. Blackman, J. (1975) Social responsibility and accountability. New York: New York University Press. Blythman, J. (2008) The rise of Lidl Britain during the credit crunch. Telegraph. [online] Available from: https://www.telegraph.co.uk/news/features/3637902/The-rise-of-Lidl-Britain-during-the-credit-crunch.html Connolly, K. (2008) German supermarket chain Lidl accused of snooping on staff. The Guardian. [online] Available from: https://www.theguardian.com/world/2008/mar/27/germany.supermarkets Boulstridge, E. and Carrigan, M. (2000) Do consumers really care about corporate responsibility? Highlighting the attitude gap. Journal of Communication Management, 4 (4), pp.221-245. Brinded, L. (2015) Aldi and Lidl are crushing Britains supermarkets. Business Insider. [online] Available from: https://uk.businessinsider.com/kantar-worldpanel-data-aldi-and-lidl- market-share-2015-6 Burt, S. (2000) The strategic role of retail brands in British grocery retiling. European Journal of Marketing, 34 (8), pp.874-889. Burt, S. and Sparks, L. (2003) Power and competition in the UK retail grocery market. British Journal of Management, 14 (3), pp.236-253. Butler, S. (2015) Grocery price falls hurting UK supermarkets. The Independent. [online] Available from: https://www.theguardian.com/business/2015/may/06/grocery-price-falls-hurting-all-uk-supermarkets-kantar Chisnall, P.M. (1995) Strategic Business Marketing. 3rd ed. Hertfordshire: Prentice Hall International Limited. Dekimpe, M.G., Fornell, C. and Rust, R.T. (2010) The effect of customer satisfaction on consumer spending growth. Journal of Marketing Research, 47 (1), pp.28-35. Drucker, P. (1984) The new meaning of corporate social responsibility. California Management Review, 26 (2), pp. 52-64. Durrani, A. (2015) Lidl calls ÂÂ £50 media review. Campaign. [online] Availabl e from: https://www.campaignlive.co.uk/article/lidl-calls-50m-media-review/1351383 Ferrell, O.C. and Hartline, M.D. (2014) Marketing Strategy. 6th ed. United States if America: Cengage Learning. Fifield, P. (1998) Marketing Strategy. 2ND ed. Oxford: Butterworth-Heinemann. Fuller, D.A. (1999) Sustainable Marketing: managerial-ecological issues. California: SAGE Publications Inc. Hooley, G., Nicolaud, B. and Piercy, N.F. (2008) Market Strategy and Competitive Positioning. 4th ed. Edinburgh: Pearson Education Limited. Igd (2015) UK grocery retailing. [Online] Available from: https://www.igd.com/Research/Retail/retail-outlook/3371/UK-Grocery-Retailing/ Johnson, G. and Scholes, K. (2000) Exploring corporate strategy. Harlow: Pearson education. Lidl (2012). [online] Available from: https://www.lidl.co.uk/en/659.htm McCarthy, E.J. (1960) Basic marketing: a managerial approach. Homewood: Richard D. Irwin Inc. Oliver, R.L. (1999) Fundamental issues and directions f or marketing. Journal of Marketing, 63 (3), pp.33-44. Porter, M.E. (1985) Competitive advantage. New York: Free Press. Senior, B. and Swailes, S. (2000) Organizational Change. 4th ed. Edinburgh: Pearson Education Limited. Stigler, G.J. (1968) The organisation of industry. Chicago: University of Chicago Press.

Walmarts Sustainable Business Development - 1666 Words

Walmart’s Sustainable Business Development The purpose of this paper is to introduce you to the role of sustainable business philosophies and practices of Walmart as well as looking at Walmart’s strategic management perspectives and what type of impact and influences they have on the external forces in the industry. While also focusing on Walmart’s concept of value creation applied to SBD (sustainable business development) and their strategies. Defining Sustainable business philosophies are a system of fundamental or motivating principles that a business handles in different areas of operation based on the actions or beliefs of that business. â€Å"For businesses to have a sound business philosophy is the cornerstone of a successful business† (Burney, n.d). The businesses philosophy is usually the company’s mission and vision statement, which explains the company’s overall goals and their purpose of being in business (Burney, n.d.). Mission statements are a guide for a company to develop and implement a corporate sustainability strategy and are usually incorporated in a company’s sustainability report (Epstein Buhovac, 2014). Sustainable business practices are when a business initiates environmentally-friendly operations internally and externally to become a sustainable organization and to reduce their environmental footprint by cutting down on waste (Belcher, n.d.). Strategic management perspectives are how a company views and solves important issues in order to reachShow MoreRelatedSustainability and Walmart1602 Words   |  7 Pagesï » ¿ Walmart Stores, Inc. Strategic Initiative Preston Burrell, Sue Ford, Ketia Francois, Chris Hiniker, George Lance FIN370 July 29, 2013 Laura Haase Walmart’s Strategic Initiative Strategic planning is a goal of most if not all companies that exist. Some may use this form of planning on a small scale and meet about things such as improving satisfaction ratings or improving the company’s website. Others meet about larger goals that can change and improve the image and brandingRead MoreAn Understanding Of Corporate Social Responsibility1343 Words   |  6 PagesEthics and their applied application by a multinational corporation (MNC) like Walmart. This report is based on the case study ‘Walmart: Love, Earth ®Ã¢â‚¬â„¢ which identifies key points which are the criticism faced by the multinational corporation (MNC), business practices that are/were unethical and which ethical theories did/ do they violate and why do MNCs like Walmart address their social and environmental impacts. The case study is very important as it outlines the way the MNC works and the differentRead MoreWhy Sustainability Is Now The Key Driver Of Innovation1374 Words   |   6 Pages In a Harvard Business Review (HBR) article, â€Å"Why Sustainability is now the Key Driver of Innovation†, the contributors argue against the common view: that as businesses become more environmentally friendly they become less competitive and profitable (Nidumolu, Prahalad, Rangaswami, 2009) The contributors go on to say that companies who initiate environmental sustainability will develop competencies that competitors won’t be able to match and that ultimately, â€Å"sustainability will always be an integralRead MoreWal Marts Business Level Strategy1478 Words   |  6 Pagessources of cost advantage does Wal-Mart rely upon to execute its business-level strategy in the U.S.? Provide evidence for your answer. Introduction: Walmart one of the largest chain stores has a famous mantra â€Å"Ever Day Low Prices† has been attracting millions of customers around the world with their value chain activities. Walmart has lots of cost advantage and strategies over its competitors. Walmart has been able to execute its business level strategies with lot of success, and efficient policiesRead MoreWalmart : Behind The Scenes1183 Words   |  5 Pagespart of life the average person more than likely has little knowledge that pertains to Walmart’s success and business culture. This paper will guide one through the history of the organization, why Walmart is successful, what could threaten or open new opportunities, and how might they hold a competitive advantage. History To fully understand Walmart’s business one should first study the history of Walmart’s retail company. Born in 1918, Sam Walton married his wife Helen Robson while serving inRead MoreSustainability Strategy For Walmart Wal Mart2465 Words   |  10 Pagessustainability a core of its operations and business model. In my role as the leader of the global sustainability effort, I will identify untapped potential of the sustainability initiative and create strategic plans and solutions that would make sustainability an integral source of value creation. I have created a detailed framework of my proposed plan that includes the following points: i) Internal Research and Development Center ii) Sourcing Sustainable Alternative Products iii) Collaboration acrossRead MoreObjectives Of A Sustainable Business Participates1831 Words   |  8 PagesA sustainable business participates in environmentally friendly activities to ensure that all processes, products, services and manufacturing activities adequately address ongoing environmental concerns while still producing a profit. A business is sustainable if it has a minimal negative influence on the environment, community, society, or economy. Businesses are green if they incorporate principles of sustainability into each of its business decisions and activities. The business supplies environmentallyRead MoreSustainable Solutions11923 Words   |  48 PagesRunning head: SUSTAINABLE SOLUTIONS 1 Sustainable Solutions Paper Katherine Kem DBA Strategy Dr. Robert Hockin, Instructor February 21, 2010 Running head: SUSTAINABLE SOLUTIONS Sustainable Solutions Paper Walmart has some of the best supply chain methods in the market, and is working to become an industry leader in sustainability. Despite this, there is much criticism of this ‘giant’, and an in-depth look of their organization from a sustainable lens will review their successes, failuresRead MoreCorporate Social Responsibility Evaluation For Wal Mart Stores Essay2025 Words   |  9 PagesScott, former CEO of Walmart, pledged that one day the company would only use renewable energy, that it would eliminate waste, and it would sell environmentally sustainable products (Gunther, 2015). Although Walmart has not reached this goal yet, it has made great progress during the last decade. Throughout this evaluation, I examine Walmart’s current corporate social responsibility policies, evaluate the impact of such policies, and recommend a plan to improve the CSR policies and their impact on societyRead MoreCas e Study : Supply Chain Management1028 Words   |  5 PagesSUPPLY CHAIN MANAGEMENT IN RETIAL INDUSTRY: CONCEPTS, STRATEGIES AND WALMART CASE STUDY Mian Wang CID: 01090728 Imperial College Business School, MSc Management ABSTRACT With the rapid increase of operation cost and fast development of E-commence in today’s retail industry, traditional operation management models are antiquated. Companies attempt to enhance competitive capacity through management innovation, and an increasing amount of attention is paid to their supply chain management for

Prostitution The Uncontrollable Vice Essay Example For Students

Prostitution: The Uncontrollable Vice Essay There are women who search for love, and there are those that search for money. Today, the term woman simply denotes ones sex. It does not define her character, morals and values, or even her profession. However, this was not always the case. At the end of the nineteenth century and beginning of the twentieth century, during the Progressive Era, there was a drive for reform. Various social problems became targets for investigation and intervention: child labour, juvenile delinquency, corruption in city government and police departments, and prostitution. These things were newly discovered social problems; the only differences during this period were the new assumptions, strategies, and expectations of a broad organization of activists. Progressive reform actively decided to take more of a role in regulating the social welfare of its citizens, and those private and public spheres of activity could not be disentangled. Prostitution was an issue that underscored the relationship between home life and street life, wages of sin and low wages of women workers, double sexual standards and transmission of venereal disease. The late nineteenth century response to prostitution revealed the competing ideologies within Progressive reform activity over social justice and social control. Most attempts to deal with prostitution have consisted almost exclusively of more or less vigorous attempts to suppress it altogether by forcing the closing of brothels, and by increased police activities against individual prostitutes and against those individual places, such as taverns, where prostitutes frequently solicit. This paper seeks to prove that the reformers were unable to stamp out prostitution during the end of the nineteenth century and the beginning of the twentieth century for a variety of factors. First, I will look at why women in the late nineteenth, and early twentieth century became prostitutes. The gender differences between sex roles will be analyzed in relation to prostitution. Finally, the various failed attempts to abolish prostitution will be discussed. Legally prostitution is often defined as the hiring out of the body for sexual intercourse. Some say that the exchange of money does not need to take place. Albert Ellis, one well-known sexologist and author would define prostitution as, A woman or a man engaging in sexual relations for non-sexual and non-amotive considerations. This definition would therefore include girls who trade their sexual favors for food, entertainment or other gifts. Each individual may have different views as to what a prostitute is or how they feel about them. During the late nineteenth century and early twentieth century reformers, for example, wanted to eradicate prostitution. It was looked at as the cause of all evil and poverty, among other things. But, it was over the place, girls supplying their bodies for the males high compulsion to satisfy their sexual desires. Canadas industrial development equipped many women with outlet for their skills and energies in addition to the home and other work places. With all the improvements in transportation and communications, growth of the cities is the availability of new consumer goods provided in an age of national growth. However, with all of this came economic and social tensions. Most Canadians were concerned with the presence of certain ethnic groups, poverty in the cities and an increasing crime rate. With this new found awareness of social problems, came the belief that by identifying and classifying problems the nature of the world could be reformed to insure a moral, civilized society. There are many reasons why one would choose upon a career of prostitution. They range from quick money to language barriers (most girls were foreign born or their parents were foreign born), from curiosity to alcoholism. Most prostitutes are believed to have started at a young age and despite much talk about white slavery, no cases were ever found of a women unwillingly detained in a brothel. Up until about mid way through the twentieth century a large percentage of all the women engaged in prostitution were professional prostitutes, registered or widely known to be such, and often working in brothels. .uacacf40a50e8713db012ba7fd96b8734 , .uacacf40a50e8713db012ba7fd96b8734 .postImageUrl , .uacacf40a50e8713db012ba7fd96b8734 .centered-text-area { min-height: 80px; position: relative; } .uacacf40a50e8713db012ba7fd96b8734 , .uacacf40a50e8713db012ba7fd96b8734:hover , .uacacf40a50e8713db012ba7fd96b8734:visited , .uacacf40a50e8713db012ba7fd96b8734:active { border:0!important; } .uacacf40a50e8713db012ba7fd96b8734 .clearfix:after { content: ""; display: table; clear: both; } .uacacf40a50e8713db012ba7fd96b8734 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .uacacf40a50e8713db012ba7fd96b8734:active , .uacacf40a50e8713db012ba7fd96b8734:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .uacacf40a50e8713db012ba7fd96b8734 .centered-text-area { width: 100%; position: relative ; } .uacacf40a50e8713db012ba7fd96b8734 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .uacacf40a50e8713db012ba7fd96b8734 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .uacacf40a50e8713db012ba7fd96b8734 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .uacacf40a50e8713db012ba7fd96b8734:hover .ctaButton { background-color: #34495E!important; } .uacacf40a50e8713db012ba7fd96b8734 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .uacacf40a50e8713db012ba7fd96b8734 .uacacf40a50e8713db012ba7fd96b8734-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .uacacf40a50e8713db012ba7fd96b8734:after { content: ""; display: block; clear: both; } READ: Atomic Bomb Essay A the 1916s Unemployment Commission had observed, working girls seemed to be unable to stick out jobs for more than a few months, and many were so frivolous and irresponsible that they were justifiably dismissed. .

Law Of ASIC v NSG services Pty Ltd (2017) †MyAssignmenthelp.com

Question: Discuss about the Law Of ASIC v NSG services Pty Ltd (2017). Answer: Introduction The decision laid down by Federal court in the leading case of Australian Securities and Investment Commission v NSG services pty ltd[1] is a landmark case which was decided on 30th March 2017. The leading case establishes the civil penalty action that is taken by Australian Securities and Investment Commission for the violation of the best interest duty established under section 961 (B) of the Corporation Act 2001 and also in evaluating the nature of the best interest duty that is imposed under the Corporation Act 2001. The decision is very significant from the point of view that the duty to act in the best interest is imposed upon the advisor who is providing advice to their retail clients. Facts Prior understating the basis upon which the decisions of laid down by the federal court, it is first important to understand the background facts on the basis of which the preset case is raised. In 2012, there are two statutory changes that are brought in, that is, Corporations Amendment (Future of Financial Advice) Act 2012(Cth) and the Corporations Amendment (Further Future of Financial Advice) Act 2012(Cth) which are considered as the Future of Financial Advice reforms[2]. The Corporations Amendment (Further Future of Financial Advice) Act 2012(Cth) is the enactment that has established an obligation of best interest under Part 7.7A, Division 2 of theCorporations Act 2001(Cth).[3] Now, because of the said enactments, a duty of best interest is imposed upon the people who provide personal advice to its retail clients. The duty that is enshrined under Part 7.7A, Division 2 of theCorporations Act 2001(Cth) (section 961 (1) (2)), is not an exhaustive list and there are various statutory duties that are incorporated in the same, for instance[4]: Section 961-B-F establish duty to act in the best interest of the client; As per section 961G A duty to furnish advice to the clients is only imposed upon the advisers when the advisor would reasonably conclude that the advice so provided is appropriate to the clients; In the said case, the best interest of FoFA is under scanner and the obligations of the licensees and advisors are taken into account. The case laws establishes as how the licensees and the advisors are not able to comply with their duties to furnish best interest of their clients.[5] The facts submit that an Australian Financial Services Licensee (NSG) is under the tasks of providing advice regarding the life risk insurance and superannuation products. The advice is normally provided by the authorized representatives of the representatives of the NSG. NSG has provided personal advice to their client and it was alleged by the ASIC that when furnishing such personal advice, the NSG is in violation of section 961B and section 961G of the Corporation act 2001[6]. Thus, on the basis of these facts, there were few contentions that were raised by Australian Securities and Investment Commission. The main contentions of Australian Securities and Investment Commission Based on the said fact, the Australian Securities and Investment Commission has initiated pecuniary penalties, declaratory relief and costs proceedings against NSG. The proceedings were initiated by Australian Securities and Investment Commission in mid 2016. There are several contentions that are raised by the Australian Securities and Investment Commission against the NSG Services Pty Ltd and the same are submitted herein below: It is submitted that when NSG Services Pty Ltd representatives were providing advice to its retail clients, then, at that time, they fail to meet the statutory requirements that are mentioned under section 961B and 961 G of the Corporation Act 2001 because of which the retail clients entered into arrangements that were unsuitable. Costly and result in un-required financial arrangements. Violation of section 961L of the Act There are various instances where it was found that there is violation of section 61L of the Act. the same are: One of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person C, Person D on 15th July 2014. one of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person E, on 15th July 2013 and 20th August 2013 meetings respectively. Also, one of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person F, on 24th November 2014. Also, one of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person G, on 15 July 2014. Also, one of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person H, on 20 August 2013. Also, one of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person A, on 19July 2013. Also, one of the representative of NSG failed to take reasonable steps and violated section 961B (1) and section 961G of the Act when furnishing advice to Person B, on 20August 2015. Thus, it is submitted that when the representations were furnishing advice to their retail clients at that time they did not take reasonable steps to make sure that the best interest obligation towards their retail clients are met and thus they are in violation of section 916L of the Corporation Act 2001. That there is violation of section 961K (2) of the Act That the representatives (other than authorized representative of NSG) are in violation of section 961K (2) of the Act. It is submitted that one representative of NSG (Trinh) violated section 961B (1) and section 961G of the Act when furnishing advice to Pearson A (client of NSG) on 19th July 2013 meeting. Also, there is violation of section 961K (2) of the Act when the representatives (Ozak) violated section 961B (1) and section 961G of the Act when furnishing advice to Pearson A (client of NSG) on 20th August 2013 meeting. Thus, some of the representatives of NSG Services Pty Ltd who were not the authorized representatives of NSG Services Pty Ltd failed to comply with their best interest obligations and thus were in violation of section 961K (2) of the Corporation Act 2001. It is submitted that all the allegations that are raised by the Australian Securities and Investment Commission, that is, violation of section 61B, 961G, 961L and 961K of the corporation Act 2001 were accepted by NSG Services Pty Ltd[7]. Both NSG and Australian Securities and Investment Commission have applied to the court for declarations by consent[8]. It is now first important to analyze the provisions of section 961 of the Corporation Act 2001 that are applicable in the given scenario. Section 916 of the Corporation Act 2001 - Observations by the court Before analyzing the decision that laid down by the Federal court, there are two important observations that are made by MOSHINSKY J. The same are[9]: That the duty that is imposed under section 961 B (2) must be treated as a safe harbour for the advice providers. This implies that if the advisers are able to prove that all the statutory requirements that are mentioned under section 961 B (2) of the corporation Act 2001 is comply with then the advice providers has comply with his duty to look for the best interest of his retail clients. The court observed that the main concern of section 961B is that procedure or the process that is to be comply with by the adviser prior furnishing advice which must be in the best interest of the client. But, section 961G of the Corporation act contains the substance or content of the advice. On the basis of the above two observations, the court has tried to interpret the two meaning of section 961B of the Corporation Act 2001. It was submitted by the court that the functions that are attributed by section 961B (1) and section 961B 2) are different in nature. The core duty to serve best interest is served under section 961B (1) of the Corporation Act 2001 whereas the statutory defense is provided under section 961 B (2) of the Corporation Act 2001. Both the sections are affected in the manner and the process in which the advice is furnished by the advice provider. The court submitted that the correct and justified interpretation of section 961B of the Corporation Act 2001 is that it deals with the manner and the process in which the advice is furnished. The basic interpretation that is provided by the court to interpret section 961 of the Corporation Act 2001 is that: That the steps that are laid down in section 961B (2) mainly deals with the process within which the advice is furnished and is not concerned with the outcomes that results from such advice; That section 961G of the act is different from section 961B of the Act. Section 961B deals with the process within which the advice is furnished and is not concerned with the outcomes Decision by the Court The main reasons for the decision that are made by the court are[10]: That the client advice process that is adopted by NSG is complied very quickly. Because of the quickness the clients are not able to reflect on the advice so furnished proper its implementation. Because of this quick procedure the information that is provided to the clients was found to be insufficient in nature; There are various obligations that must be comply with by the representatives of the NSG prior providing advice to their retail clients however, the regulatory and the legal obligations that must be required to be followed are not provided to the advisors neither NSG has provided with proper training to their representatives which has ultimately has resulted in the violated of their statutory obligations. The advisors who are representing NSG while furnishing advice to the retail clients are representing NSG, but, NSG has not laid down any kind of review analysis of such representatives (substantial or regular). There were instances when few internal audits are conducted by NSG but whenever any advisor has been found to be in contravention of the statutory provisions of the Corporation Act, then, there were no disciplinary actions that were taken by NSG against such defaulting advisors. The external audits of NSG are carried out by third parties. These audits identify the issues relating to the provisions of advice. But, the advice which is so furnished by the external auditors were not comply with of followed by the NSG. Neither any changes that were addressed or implemented by the external auditors were ever given heed[11]. The court also observed that the compliance policies that are adopted by NSG were also not adequate as per the given circumstances. No regulator or legal duties that must be furnished by the representatives were quoted in the compliance policies of the NDG, if any. Even if complaints are received by the NSG regarding any irregularity, still, no action is ever taken up by NSG. Considering all the above acts that are carried out by the NSG and its representatives while catering advice to its retail client, it has been observed by the court that the duties to act in the best interest as enshrined under section 961B of the Act are not comply with resulting in violation of the duties. Thus, the federal court was right in imposing penalties over NSG for its violation of statutory obligations. References Case laws Avoca Consultants Pty Ltd v Millennium3 Financial Services Pty Ltd (2009) 179 FCR 46, ASIC v NSG services Pty ltd (2017); Australian Securities and Investments Commissionv Newcrest Mining Ltd(2014) 101 ACSR 46 Legislation Corporation Act 2001 Online Material ASIC (2017) ASIC v NSG services Pty ltd (2017) (online). Available at: https://download.asic.gov.au/media/4210761/17-100mr-asic-v-nsg-services.pdf. Accessed on 26th September 2017. Federal Court of Australia (2017) ASIC v NSG (online). Available at: https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2017/2017fca0345. Accessed on 27th September 2017. Soljo and Walsh (2017) UNRAVELLED: RECENT DECISION ON FOFA ADVICE PROVISIONS ASIC V NS (Online). Available at: https://www.allens.com.au/pubs/fsr/170505-unravelled-02.htm. Accessed on 27th September 2017. Turks Legal (2017) Federal Court finds first breach of best interests duty (online). Available at: https://www.turkslegal.com.au/sites/default/files/Case_ASIC%20v%20NSG_.pdf. Accessed on 27th September 2017. Vrisakisand Zhou (2017) The Best Interests Duty: Process Or Outcomes? (online). Available at: https://www.herbertsmithfreehills.com/latest-thinking/the-best-interests-duty-process-or-outcomes. Accessed on 26th September 2017.