Holiday Inn Strategic Management

Holiday Inn Strategic Management Management can be generally defined as a art and science of getting the things done from others. The previous definition explains that a manager plans and guides a particular work which is done by other people. In this assignment I will be discussing about different strategic management process. Strategic management process is one of the very important management process which are been used by different organisations. Strategy :- Strategy are the resources used by the managers to achieve long term objectives. In simple term, strategies are the ideas which are been used by the management. Strategic management : Strategic management is a conduct of drafting, implementing and evaluating cross functional decisions in enabling to achieve its long term objectives. There are different types of process involved in strategic management :- Marketing is accepted globally as a life blood of any organisation. In this analysis I felt that strategic management is at the same level as marketing which decides the future and prosperity of an organisation. Practicing the management of strategies is very crucial in the competitive world. Successful managers will have to know their business market situation and position and to implement the strategies when required. I kept these objectives in mind and invented some management qualities in myself while doing a research on this topic. I feel that I need more knowledge of the management practices. So in my research on strategic management I had a good understanding of strategic management and practices. Basically the concept of strategic management closely resembles elements of foresights; this means planning a head is a major element in the business. Strategic management is considered as a life blood of any organisation. This assignment on strategic management covers the change and development in the organisation. I have also understood that having a clear idea of strategic management is crucial in todays competitive business world. Companys now a days seek ways to achieve a competitive advantage with other players in the industry that they operate. The environment in which a company operates can provide circumstances where the outcomes may be positive or negative. Many organisational studies have presented numerous theories that help companies in taking new ways in dealing with their operations. Strategic management is one of those important management theories and process that has been employed constantly by any business to address their management and decision making needs. I have chosen Holiday Inn as an example to illustrate the adaptation of strategic management and its process. In this assignment I have written about how holiday inn hotels analyse and critically evaluate the organisation practice to solve the problem connected with implementing their strategies. Main body :- Now I will be giving a short history on Holiday Inn hotel. Kemmons Wilson initially came up with the idea after a family road trip to Washington, D.C., during which he was disappointed by the quality and consistency provided by the roadside motels of that era. The name Holiday Inn was given to the original hotel by his architect Eddie Bluestein as a joke, in reference to the Bing Crosby movie. In 1957, Wilson franchised the chain as Holiday Inn of America and it grew dramatically, following Wilsons original tenet that the properties should be standardized, clean, predictable, family-friendly and readily accessible to road travellers. By 1958, there were 50 locations across the country, 100 by 1959, 500 by 1964, and the 1000th Holiday Inn opened in San Antonio, Texas, in 1968. The chain dominated the motel market, leveraged its innovative Holidex reservation system, put considerable financial pressure on traditional hotels and set the standard for its competitors, like Ramada Inns, Quality Inn, Howard Johnsons, and Best Western. By June 1972, when Wilson was featured on the cover of Time magazine, there were over 1,400 Holiday Inn hotels worldwide. Innovations like the companys Holidome indoor pools turned many hotels into roadside resorts. The company later branched into other related enterprises, including Medi-Center nursing homes, Continental Trailways, Delta Queen and various related enterprises. Wilson also later developed the Orange Lake Resort and Country Club near Orlando and a chain called Wilson World Hotels. The family of founder Kemmons Wilson still operates hotels as part of the Kemmons Wilson Companies of Memphis. Wilson retired from Holiday Inn in 1979. Although still a healthy company, changing business conditions and demographics saw Holiday Inn lose its market dominance in the 1980s. Holiday Inns, Inc. was renamed Holiday Corporation in 1985 to reflect the growth of the companys brands, including Harrahs Entertainment, Embassy Suites Hotels, Crowne Plaza, Homewood Suites by Hilton and Hampton Inn. In 1988, Holiday Corporation was purchased by UK-based Bass PLC (the owners of the Bass beer brand), followed by the remaining domestic Holiday Inn hotels in 1990, when founder Wilson sold his interest, after which the hotel group was known as Holiday Inn Worldwide. The remainder of Holiday Corporation (including the Embassy Suites Hotels, Homewood Suites by Hilton and Hampton Inn brands) was spun off to shareholders as Promus Companies Incorporated. In 1991, Bass launched Holiday Inn Express, a complementary brand in the limited service segment. In 1994, Bass launched Crowne Plaza, a move into the upscale hotel market. In 1997, Bass cr eated and launched a new hotel brand, Staybridge Suites by Holiday Inn, entering the North American upscale extended stay market. In March 1998, Bass acquired the InterContinental brand, expanding into the luxury hotel market. In 2000, Bass sold its brewing assets (and the rights to the Bass name) and changed its name to Six Continents PLC. InterContinental Hotels Group (IHG) was created in 2003 after Six Continents split into two daughter companies: Mitchells Butlers PLC to handle restaurant assets, and IHG to focus on soft drinks and hotels, including the Holiday Inn brand. Business relationship with Gulf Oil In 1963, Holiday Inn signed a long-term deal with Gulf Oil Corporation in which the lodging chain would accept Gulf credit cards to charge food and lodging at all of its hotels (in the United States and Canada). In return, Gulf would build service stations on the premises of many Holiday Inn properties, particularly those along or near major U.S. and Interstate highways. Many older Holiday Inns locations (including some no longer part of the chain) still have the service station properties intact today, either still in operation or closed down. With the exception of a few locations in the eastern U.S., hardly any of the still-open stations are now Gulf outlets. The portion of the agreement which permitted Gulf credit cards to be used for payment of food and lodging at Holiday Inns was copied by competing lodging chains and major oil companies during the mid-to-late 1960s. Most of those agreements fizzled out with the 1973 oil crisis. The Gulf/Holiday Inn arrangement ended around 1982 . The brand name Holiday Inn is now owned by IHG, which in turn licenses the name to franchisees and third parties who operate hotels under management agreements. In January 2002, The Wall Street Journal reported that the company, led by Ravi Saligram, was producing a new 130-room Next Generation prototype hotel to rebuild the brand. It would include a bistro-like restaurant and an indoor pool. The first of these prototype hotels, the Holiday Inn Gwinnett Center, was built in Duluth, Georgia, in 2003. On 24 October 2007, IHG announced a worldwide relaunch of the Holiday Inn brand. The relaunch is focused on delivering consistently best in class service and physical quality levels, including a redesigned welcome experience and signature bedding and bathroom products The first relaunched Holiday Inn is expected to open in the USA in the spring of 2008. The whole relaunch process is planned to be complete by the end of 2010. In September 2008, IHG announced the creation of a new timeshare brand, Holiday Inn Club Vacations, a strategic alliance with The Family of Orange Lake Resorts. As told before strategic management is a set of activities undertaken in the order of time. One of the first tasks in strategic management is environmental analysis. Environmental analysis is the study of an organisations environment to pin point the environmental factors that can significantly influence the organisational operations. It provides a frame work for understanding an organisations environment with the aim of helping to find the key issues and different ways of coping up with the complexity and change. A business organisation operates in an external and internal environment. The factors which influencing the external environment is known as PESTEL. PESTEL stands for political factors, economical factors, social factors, technological factors, ecological factors and legal factors. Analysis:- The political, economical and social context stood as a big challenge for the organisation of Holiday Inn when they entered the market. the holiday inn operations are highly influenced by the policies set by the government in which ever territory or country they operate. Most of the Holiday Inn are controlled by regulations of operations and policies of individual properties. The Holiday Inn group will also focus on concerns such as health and safety employment, laws , worker protection and environment. From my studies I think all these elements are seen in the control of government that authorises licensing of hotels in different states. Being in a business environment they have to abide by the employment procedures and tax obligations where they operate. As the company is widely expanded and well developed they must co-operate with the practices set by political body. After my research I think this company should get full co-operation from the political power to succeed in local an d international market. as many private enterprise when holiday inn was opened the management had very informal sense of direction setting up a few long time goals without implementing proper strategy. How ever by implementing a new scenario in their strategy with set an international competitive advantage in hotel industry as tourist increased every where and the hotel accommodation was in demand after this the management of Holiday Inn realised the need and development of planning strategies. The management achieved a competitive advantage position and enhanced the holiday inn groups performance in relation to its competitor. Company have taken a very good advantage of this point and served this market segment all the time. They have given market what they want according to the expectations. I think by going through company history the Holiday Inn is spread all over the world. This vast expansion is because of its good economical stability. The company has its own concerns involving economic factors. The branches and franchise like Holiday Inn has the tendencies to experience the hard ships in instances where the economy of the respective countries is hit by inflation and changes in exchange rates. Because of the disposable income of the citizens in developed countries the holiday inn group gave prior importance in marketing their business because of the economic stability of these countries. Holiday Inn is a world wide chain and its international functional strategies will always yield profitable returns. The potential customers are from all over the world. It is been noted that the holiday inn company has given the market such as Europe, Asia, America with regards to their social-cultural needs. Holiday Inn, like all other hotels has established a good system in determining the needs of the market. The company uses the concept of product, personality, behaviour of the customer and purchasing to its advantage. Now I am going to talk about the technical factors influencing the company. This is because of the technical advancement due to which the company could reach in a very short span to many people about their various products and service information. Customers can contact Holiday Inn by many means such as emails, telephone, travel agents, website etc. holiday inn is providing their guests with all modern amenities and facilities to their rooms to provide the best accommodation experience. Their hotels all over are fully equipped with modern amenities and technical advancement. The above mentioned study helped me a lot to determine how much the elements of PESTEL were helpful and positive for the development of the company After the analysis of PESTEL and depending upon that outcome I have also carried out SWOT analysis of the company Holiday Inn which gives me exact position of the company in the market. SWOT stands for strength, weaknesses, opportunities and threats. These are the factors influencing the internal environment. SWOT analysis is extremely useful for understanding and decision making for all source of situation in business and organisation. It also provides a frame work for reviewing strategy position and direction of the company. I think it is therefore important to evaluate the environment opportunities in relation to the strengths and weaknesses of the organisation resources. Strengths: as mentioned in the history of the company it clearly states that the Holiday Inn Corporation is a well established organisation and industry leader in hospitality. Holiday Inn is well diversified hotels in the high end, business and mid priced classes in their product mix. Holiday Inn also poses a solid integration features such as owning the companies that manufacture its furniture and has invested in online reservation travel enterprises. It also has easy access to all its customers to get information and also has a excellent reservation system. Weaknesses: according to my research Holiday Inn may be narrowly focused making it susceptible to the down turn in the global economy and other world wide catastrophes that could limit global travel. Holiday inn hotels may also be venerable to employees strikes and crack down on undocumented workers. I think the aggressive expansion policies may put the company in trouble during the global down turn. Some of the branches or franchises do not follow the holiday inn set standards, recruitment process efficient accounting systems. Opportunities:- Holiday Inn corporation is a global pioneer in hospitality industry. Their position is strong financially and they are widely expanding all over the world. They offer an array of distinctive and specialised services to their guests. They also have an opportunity to expand or acquire a cruise line company. The holiday inn corporation should take advantage of emerging markets especially with business clients and mid priced markets. The holiday inn corporation has a strong affiliation with REIT (real estate investment trust) or similar organisation that provides a strong back up for hotels. It has a strong skilled work force all over. Threats: Like all other business, the major threat for holiday inn will be an emergence of a new competitor. The competitors will be more active in promoting the concept of global brand name. Holiday Inn has its own resources to sustain their global brand name. In general the hotel industry faces a threat from internet reservation channels which represents a growing share of hotel room booking. To overcome these threats Holiday Inn has its own centralised reservations system. Looking at strategic direction of the company the mission statement says GREAT HOTELS GUEST LOVE shows that holiday inn makes all efforts to exceed their customer expectation. This statement covers all aspects on hospitality firm in a brief manner. The vision statement and the values of the company states that year after year holiday inn (IHG) and the management will be regarded as the best and most sought hospitality group. From my personal experience while working with holiday inn group I can say that they are following their vision and mission statements. By observing their strategic formulation they have adopted cost leadership strategies. They are one of the lowest cost providers for their product. This makes many customers to become potential and loyal. They have targeted very broad market from high and society to middle and the lower one. While offering this wide variety of offers to the customers they have developed and achieved best value strategy. During my analysis on holiday inn I discovered the difficulties faced by them or in other words we can say their weakness. They faced great difficulties while entering the Asian markets. The reason behind this was they were not familiar with Asian market. To overcome this problem they had to take a strong action plan by signing a joint partnership with Asian hotel firms. This provided them a base to learn about the Asian environment and their establishment. Holiday Inns vision for the future was a property that delivers new levels of customer convenience by extending hotel systems for guest and employee access using the hotels wireless infrastructure. RECOMMENDATIONS :- From my analysis since holiday inn is expanding it is wise to deal with proper authorities in the respective markets where they intend to operate. The company has to accomplish and satisfy all the prerequisites for doing business. The company should also carry out a well conducted market research before penetrating the new segments of market. the company should always obtain relevant information from the target market in addition to the individual customers of organisation. A comprehensive market research is a must before granting a franchise. I think similar research should be made in areas like consumer behaviour and purchasing patterns of the market. Holiday Inn Corporation has to re-evaluate its internal environmental factors like Strengths, Weakness, Opportunities and threats to overcome with a strategic direction adjusting its mission and vision and at the same time maintaining its values. These are the few strategies that holiday inn must adopt to attract more diversified clie ntele. Therefore in order to survive and maintain the brand name holiday inn corporation should be consistent with their excellent service being always innovative. They should also create the role of middle managers and let them to be more innovative. I think the biggest challenge for Holiday Inn is expansion and franchises. The main features of Holiday Inn Corporation should be put as a standard one for the franchisers to follow. Will the franchisers really set the standards followed by Holiday Inn Corporation? What are the efforts that are to be put for the franchisers to follow the standards set by Holiday Inn Corporation? Holiday Inn is also using its technology to its advantage. The interactivity and the real time effects of communication is a good way to find suppliers. CONCLUSION :- Successful strategies always demand a company to choose the market in which their unique capabilities will gain competitive advantage. However the adoptive and incremental context of strategic management means that the company starting point leads the firm to a stable position. Corporate strategies of Holiday Inn have been able to use strategic management to stay in the competition in the global market. I believe that the strategies as well as the leadership styles used by the management of Holiday inn have been the major cause of their competitive position in the hotel market. Though Holiday Inn is considered as a leader in hospitality sector there is a need of flexibility. Slight changes in the market can effect their operations of the business. They should not rely on their past success but instead they should innovative and ready for any future uncertainties. Holiday Inn Corporation focuses on services rather than accommodation itself. I truly agree that the true asset of the organisation is the staff. The staff are the one who represent Holiday Inn hotels through their excellent services. So there is a need to make sure that the staff is always happy with the behavioural integrity of work place. The corporate strategy of Holiday Inn has been able to guide the company from challengers and opportunities that appears in the market environment in order to sustain the competitive advantage. Therefore I think the leaders of the company should continue their style to motivate their employees and become a major asset for the success of the company.

REI Marketing Environment Worksheet Essay

1. Consumer incomes- As consumer incomes change the ability to sell non-essential goods is directly affected. REI sells non-essential goods. If consumer incomes are rising they will have discretionary income and REI should benefit. If Consumer incomes are flat or decreasing REI will see a negative impact on sales. 2. Inflation- Inflation is a measure of the decrease in the value of money. This means that if inflation is increasing it will take more money to purchase the same product. Again with REI they sell non-essential products and would be negatively affected by inflation. Inflation has not been a problem but it is predicted to be in the future so REI must factor this into their sales and marketing strategy. Global Economy How does the current global economy affect REI retail operations? 1. Since REI is not a global company they are less affected by the global economy. They are not immune however as the global downturn affects the U.S. economy as a whole. This in turn does have a secondary effect on REI. 2. Since the global economy directly affects the U.S. economy any downturn in the global economy is going to have a negative impact on the U.S. economy therefore having a secondary effect on REI. This would have the same effect as mentioned in the U.S. economy in part one. Legal and Regulatory Environment What types of legal and regulatory forces affect REI in the U.S.? 1.Federal, state and local regulations and agency’s affect REI as well as every other business. The Federal Trade Commission regulates competition to avoid unfair practices. The Consumer Protection Agency helps protect the  health and safety of consumers. Since REI has many private label products they must make sure that they are safe to avoid lawsuits and huge fines. 2. Since REI is a consumer Cooperative they also have some other regulations that govern how they manage their business. This does give them some tax advantages over the competition but may be a disadvantage when it comes to retained earnings and investments. Socio-Cultural Forces What types of social and culture trends affect REI? 1. REI has built its business on cultural trends. They are very environmentally friendly and very involved in special causes that relate to their business. They market to a special group of consumers that have similar believes and are willing to purchase products to support that believe. This is an example of Relationship Marketing and REI has been very successful with this strategy. 2. REI, according to their website hosted over 750 volunteer events to help the local community and environment. REI started in Seattle which is a perfect market for this type of approach. This market is very socially driven and willing to support companies that also have similar believes with the environment. This also may be a limiting factor when looking at future growth for REI. Especially is the economy takes a further downturn. Technological Forces What type of technology changes affect REI? 1. Changes in manufacturing techniques can have a huge impact. If similar products that REI sells become cheaper from a competitor due to technology advancements it has a direct impact on REI. They will either have to advance with the technology, change suppliers and/or manufacturing, or reduce price and margin to compete. Either way this is a threat to REI. 2. Another example of how technology can affect REI is simply in customer information. Who their customers are, the purchasing habits, personal information, disposable income etc†¦ A company that is tied into this data and uses it as a guide to their marketing strategy will have an advantage  over a company that does not. As a consumer coop REI has the ability to have a more complete data base than a non coop. Competitive forces are also a part of the marketing environment, and we will review those in this unit’s second assignment.

The Other Side of Email

The Other Side of Email Electronic communication has become a part of every aspect of our society and is recognized as being one of the most important and influential aspects of the way we carry out business. The days of anxiously waiting by the mailbox for news from a long distance relative or lover are over. We no longer send cute, labor intensive, hand written letters to relatives, and close ones. Instead, they are sent via e-mails. Email-type technology has made it much easier to contact other people in the same city, and even others around the world. In other words, instead of actually taking the time to write a letter to a friend through the mail, one can send an e-mail that takes about three seconds opposed to three or more days. In the article â€Å"The Other Side of E-Mail,† author Robert Kuttner explains the other side of email and technology, the dark side. Kuttner says that although, technology offers us many conveniences, such as being able to send and receive messages instantly, it brings along many drawbacks, such as privacy infringement. I agree with Kuttner’s thoughts on these downsides of technology. In my opinion, internet and email technology has definitively made our lives easier, but it has put our personal information at risk, significantly limited privacy, and leads to a waste of our time on a daily basis. Kuttner describes several negative effects of messaging technology. First one is that we might waste too much time in the E-mail and our privacy might be compromised. Social networking sites, like Facebook, have gotten users hooked on to the internet as if it were a drug. Almost every person I can think of has a Facebook account now days. A recent survey estimates that more than 85% of all college students use Facebook and more than 30 million users update their status at least once each day. Although, Facebook is a marvelous communicating media, hardly anything gets accomplished there. From personal experience, I have found it to be a massive waste of time that has people from all around the world addicted to it. The new, fancy technology in general is a waste of money and time. College students get caught up in the sweet talks of salesmen, and buy tablets, and other expensive gadgets to allow them to take notes in class etc. however, none of that note taking ever takes place. Most end up playing video games and texting in class, which is a step backward, not forward. Statistics also show that there is a relationship between divorce rates and Facebook, as it conveniently allows couples to stalk one another. Gary Traystman, a divorce attorney in New London, Conn. , said that of the 15 cases he handled in 2011 where co mputer history, texts and emails are admitted as evidence, 70% exclusively involve Facebook. The biggest problem with internet and messaging technology, however, is security. The fact that every bit of information about us is stored on the internet and can easily be stolen is nerve-wracking. Communication sites like Facebook, MySpace have the user’s full name, their date of birth, email ID, and even their phone numbers. All of that information can be accessed with the click of a button. The consequences of that can obviously be extremely dangerous. The internet is also filled with email scammers, and hackers. My uncle was recently scammed via the email. He made an online deal to purchase a car, which turned out to be a scam that took away $15,000 from his bank account. The clever scammer was never caught. That’s just one instance of how upsetting, and demoralizing the internet can be. Email is the main communicating media of the 21st century. When you register for banking or gaming accounts online, or even make online purchases, you are required to enter an E-mail address. If that email account is hacked, which happens frequently, all of your personal information can be stolen. In 2011, Sony’s online gaming servers were hacked, and â€Å"Hackers may have stolen the personal information of 24. 6 million Sony Online Entertainment users†, the company said. More than 20,000 credit card and bank account numbers were also put at risk. † There are many other demoralizing aspects of internet based technology, such as pornography. Children that learn how to use a computer at a young age are introduced to such content at an age that they shouldn’t be. This significantly hinders their future progress and affects their morals. Children adapt a lifestyle of sitting at home, playing with their iPods, Laptops and other internet devices, as opposed to playing sports, spending time with their relatives and family. This has led to a social disaster, especially in the U. S. , where we are so consumed by technology. As final remarks, I believe that the internet and emailing technology have completely revolutionized the world, however, it also led to many serious problems, such as infringement of privacy, wastage of time, and aiding in the leakage of personal information to online hackers. These concerns along with many others make emailing and internet not as divine and marvelous as we may think. Works Cited â€Å"Does Facebook Wreck Marriages? † – Real-Time Advice. N. p. , n. . Web. 31 Oct. 2012. . Haisha, Lisa. â€Å"Is Your Facebook Addiction a Sign of Loneliness? † The Huffington Post. TheHuffingtonPost. com, 13 Apr. 2010. Web. 31 Oct. 2012. . â€Å"Sony Hacked Again; 25 Million Entertainment Users’ Info at Risk. † Wired. com. Conde Nast Digital, 30 Apr. 0011. Web. 31 Oct. 2012. .

How to Conjugate Creare (to create) in Italian

Questions On A Business Case For Sustainability - 2484 Words

Exam II Name: Kaitlynn Poston Answer each question as completely as possible. Each question is worth 10 points for a total of 50 points. The exam is due in the dropbox by noon on Wednesday so I will have time to grade it before the grade reporting deadline. 1. On worksheet #3 you were asked to make the business case for sustainability. Businesses are concerned about making more profit and be more profitable into the future. The items listed on the sustainability PowerPoint could be broken into three categories: cost reduction, increased worker productivity, enhanced market share. Make the business case for sustainability in the light of these three categories. How does each of these fit into the triple bottom line (3BL)? In†¦show more content†¦The triple bottom line concept has changed the way businesses measure sustainability and the performance of policies. The flexibility of the triple bottom line concept also allows businesses to apply the concept in a way that is most beneficial to their specific needs. It can also improve more than just a business’s financial line, it can improve the way people treat others within an organization as well as reduce their negative impact on the environment. The business case for sustainability is to try and prove that while decreasing a company’s environmental impact, they are in turn increasing their social impact, as well as their profits. The goal of the business case for sustainability is to enhance profits, comply with regulations, avoid future litigation, reduce resource use, reduce the waste stream, reduce energy use, increase customer satisfaction, increase employee satisfaction, and the good will of the community. In the past, destroying and polluting may have been good for business and the profit bottom line. But today, businesses that are â€Å"going green,† can save producers money and also be popular with consumers. With the growing demand for green products, major new markets have been created in which eco-entrepreneurs are reaping the benefits. Companies known for proactive policies that support environmental regulations are often positively recognized by customers, employees, regulators, the media and oth ers. Because of their

Essay about Israel - 1022 Words

Israel Israel is a small country in southwestern Asia. It occupies a narrow strip of land on the Eastern Shore of the Mediterranean Sea and is bordered by Jordan, Lebanon, Syria, and Egypt. Israel has four major land regions. They are the Coastal Plain, the Judeo-Galilean Highlands, the Rift Valley, and the Negev Desert. The Coastal Plain is a narrow strip of fertile land along the Mediterranean Sea. The Judeo-Galilean Highlands include a series of mountain ranges that run from Galilee-the northernmost part of Israel- to the edge of the Negev Desert in the South. The Rift Valley is a long, narrow strip of land in eastern Israel, which makes up part of the Great Rift Valley. Israels driest region is the Negev Desert made up of dry†¦show more content†¦Capturing the election is just what he did. He had to make a big decision in the beginning of his new government, which would he deal with first, peace with the Arabs, or peace among the Jews? He decided to make the Shas instead of the Likud his main governing partner. This meant he was going to deal with the Arabs peace negotiating first. His choice to do this, along with his other political party supporters gave him the majority, 75 out of 120 seats in the Knesset (Israeli parliament). This meant that any peace negotiations or any other decisions by him would pass right through the Knesset and easily become a law. His planned strategy to have the majority seats has worked so far. Yet, Barak has failed to discuss any agreements yet with Yassir Arafat the leader of the Palestinian Liberation Organization (P.L.O) in terms of giving up land for peace to the Palestinians. Ahud Barak, although very different in many ways from Netanyahu, believes in some of his ideas such as eliminating terrorism in the Middle East. Barak, who was liked by President Clinton because of his openness to negotiations to make peace, currently looks like a better fit in the Prime Minister role for Israel because he does not object to negoti ation, such as Netanyahu did. He has a somewhat open mind and is interested in the benefit of not only Israel but also the rest of its neighbors as well in terms of making peace with one another. This is what IsraelShow MoreRelatedThe War Of Israel And Israel1017 Words   |  5 Pagesarise when a young country like Israel would ever militarily defeat Egypt. To these powerful nations, such a thought was comedic, but ultimately came into existence at the conclusion of the six-day war in 1967 (June 5- June 10) where Israel defeated Egypt. This victory by Israel ultimately led to the Jewish nation multiplying in size dramatically as it was now four times larger than it was prior to the war. 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Through Israel’s military, the government backing, and their ability to adapt

Concept of Ordinary Income Under ITAA 1997

Question: Describe about the Concept of Ordinary Income for Under ITAA 1997. Answer: 1. Issue The core objective of the given situation is to discuss the relevant statute dealing with the concept of ordinary income and therefore opine on the appropriate tax treatment and income classification of the proceeds received by Peta from the tennis courts sale with special reference to the concept of ordinary income. Rule In relation to the concept of assessable income under ITAA 1997, the following two sections are pivotal. Section 6(5) This includes income that is derived or earned as per ordinary income concept but the statute does not provide details as to which all income sources tend to fulfil this condition and hence could be included in the ambit of this section (Barkoczy, 2015). Clarity in this regard has emerged by referring to the various to the case laws that have opined on this section along with the relevant tax rulings which have pondered on the constituents of the income to be included here. Based on these, common income sources included here are as follows (Gilders et. al., 2015). Personal exertion income As per this, income from indulging in commercially useful activity would result in assessable income usually in the form of salary. Investments income- This is primarily earned in the form of dividends on shares, rent on property or interest on securities or bank accounts. Business income: This is primarily earned from indulging in a business activity by the taxpayer. It is imperative that the activity should not be of isolated nature and also must not be activity classified as hobby under the aegis of TR 97/11 (Woellner, 2014). Section 15(15) This primarily includes proceeds that are obtained from transactions of isolated nature which the taxpayer tends to enact with the specific purpose of deriving gains in mind. The presence of profit motive as the primary reason for enactment of the underlying activity has been established and highlighted in tax ruling TR 92/3 along with the Westfield Limited v. FCT (1991) case (Sadiq et. al., 2015). Application As per the information provided, Peta took ownership of the Kew based house with the following intention in mind. The house would serve as residence for Peta where she would reside with her family. She also intends to derive gains by undertaking construction activity on the tennis courts on which new units would be constructed which would bring in significant gains on liquidation. However, the plan of construction of units had to be aborted as before Peta could implement that, she got an offer from a tennis club which wanted to take ownership of the tennis courts in the backyard and were willing to pay as much as $ 600,000 for the same. However, for buying the courts, they wanted Peta to restore their condition so that they could be used for playing tennis. Peta agreed for the offer as she knew that after spending on the related restoration work , she would gain handsome profits. Thus, with the objective of making profit, she undertook requisite work related to restoration at a cost of $ 100,000. After incurring the same, she was successful in obtaining $ 600,000 proceed from the club. For the above proceeds to be classified as ordinary income, it has to fall within the ambit fo personal exertion, investment or business, Clearly, Peta did not herself undergo any employment or personal exertion and nor were proceeds realised as investment income. Further, no information given in the case remotely hints at Peta conducting any business that deals with restoration of old tennis courts or related activity. This fact is also confirmed by her initial plans to construct units on the tennis court. Hence, the proceeds evidently do not fall within the definition of Section 6(5). Also, it is apparent that the restoration plan was implemented by Peta only driven by the offer from the tennis club and more importantly the gains that she could derive from the sale transaction. In the event, that such an offer was not extended to her, it is highly likely that she would have continued with her earlier plans of construction of units on the tennis court. Hence, there is no doubt that the proceeds of this transaction which is of isolated nature (as Peta is not involved in such a business) and also has underlying profit motive which qualifies it as assessable income but under the aegis of Section 15(15). Conclusion The arguments and related discussion hint to the fact that the proceeds derived by Peta would fall within the ambit of Section 15(15) but would not be termed as ordinary income as defined in Section 6(5). 2. Issue The central objective in the given case is to analyse the various fringe benefits that Alan receives from his employer ABC Ltd and thereby comment on the result FBT liability from the same. Rule Mobile Device With regards to mobile handset being given by the employer, Section 58X is useful which states that if such a device is used by employee only in professional work, then no FBT liability would arise for the employer. Additionally, in wake of the same, any payment of mobile bill by the employer would lead to FBT liability only when the mobile is deployed for personal use by the employee (Wilmot, 2012). School fees School fees for children is an expense which is of personal nature and borne by the employee only. If such fees are instead paid by the employer, then expense fringe benefit would be extended to the employee (Deutsch et al., 2015). Expense fringe benefit Fees (Grossed up value) = School fees expense borne by the employer * Gross up factor The gross up factor used above changes from time to time and also depends upon whether GST is levied on the underlying payment or not (Gilders et. al., 2015). Expense fringe benefit (FBT liability) = 0.49* Expense fringe benefit Fees (Grossed up value) Dinner For any spending on meals extended to employees or clients, which is not arranged within the business premises, the employer would have to bear FBT liability as meal fringe benefits would be extended. There are two separate methods that employer can deploy in this regard as explained below. Actual Method The use of this method is preferred by the employer when the clients do not figure in the invitee list. In accordance with the name, the actual expense of meal is taken into account for computation of tax liability. However, the employer has an incentive in the form of the meal expense that is incurred being of deductible nature which helps the employer in reducing the overall tax liability. However, any such expense done on clients is not deductible for tax and thus when clients are part of invitees, the alternative approach tends to be preferred (Hodgson, Mortimer Butler, 2016). Meal Fringe Benefit Actual Method (FBT Payable) = 0.49* Actual food bill * Gross up factor 50-50 Split Method The use of this method is preferred by the employer when the clients figure in the invitee list. In accordance with the name, only half of the actual expense of meal is taken into account for computation of tax liability. Since, expense done on clients meal is not deductible for tax, hence the employers aim to lower the FBT liability to the extent possible and thereby use this method (Nethercott, Richardson Devos, 2016). Meal Fringe Benefit 50:50 Split Method (FBT Payable) = 0.49* 0.5*Actual food bill * Gross up factor Application Mobile Device The mobile handset provided by employer ABC to Alan is used by him only for professional work and thus Section 58X advocates that no FBT payable for employer in relation to the handset. Further, for the phone bill also, since Alan makes no personal calls, hence it would not be classified as a fringe benefit and hence no FBT on the same. School fees School fees paid by ABC= $ 20,000 It is known that school fess is exempt from GST, hence relevant gross up factor for FY2016 is 1.9608 Expense fringe benefit Fees (FBT payable by ABC) = 0.49 * 20000 * 1.9608= $19,216 Dinner The organisation of the dinner at a restaurant is indicative of the fact that meal fringe benefits have been extended and resultant FBT liability needs to be computed. Total headcount for dinner at Thai restaurant (including associates) = 40 Total food expense = $ 6,600 Expense attributable to the employees only = (1/2)*6600 = $ 3,300 Hence, meal expense paid by employer on behalf of each employee = 3300/20 = $ 165 As the fringe benefit is nominal and lower than the threshold mark of $ 300, hence the employer can escape FBT liability citing the minor exemption benefit clause as per which, benefits below $ 300 are not levied FBT (Sadiq et. al., 2015). Due to a decrease in the number of employee to five, the quantum of the meal fringe benefit would increase to a value greater than $ 300 assuming that no change in the bill amount. Hence, FBT liability could not be escaped now, hence using actual method the FBT would be computed. Meal Fringe Benefit Actual Method (FBT payable by ABC) = 0.49 * 6600 *2.1463 = $ 6,941 GST input credits to the tune of $ 600 paid on the food bill could be used by the employer to lower the tax liability (Barkoczy, 2015). In line with the provided information, even clients are part of the invitees only and therefore the suitable method of deriving FBT liability would be the 50:50 split method as exhibited follows. Meal Fringe Benefit 50: 50 split Method (FBT payable by ABC) = 0.49* 0.5*6600 *2.1463 = $ 3,471 Conclusion Based on the above discussion, it is fair to conclude that FBT liability arise only on payment of school fees and the dinner at the Thai Restaurant. The FBT payable on dinner by ABC keeps on altering based on the headcount of invitees and the inherent composition of the same particularly in regards to clients presence or absence. References Barkoczy,S 2015.Foundation of Taxation Law 2015,7th edn, CCH Publications, North Ryde Deutsch, R, Freizer, M, Fullerton, I, Hanley, P, Snape, T 2015. Australian tax handbook, 8th edn, Thomson Reuters, Pymont Gilders, F, Taylor, J, Walpole, M, Burton, M. Ciro, T 2015. Understanding taxation law 2015, 8th edn, LexisNexis/Butterworths. 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