FNSINC601 Apply Economic Principles to Work in the Financial Services Industry Case Study Assignment

This case study will assess skills and outcomes associated with providing financial information.

To indicate that you have achieved the elements of competency listed in this unit you must evidence the following skills and knowledge:
Skills requirements include:

-communication skills to:
• determine and confirm work requirements, using questioning and active listening as required
• liaise with others, share information, listen and understand
• use language and concepts appropriate to cultural differences

-well-developed research skills such as:
• accessing and managing information
• interpreting documentation
• coordinating tasks

-highly developed numeracy and IT skills including:
• identifying and using statistical models
• accessing and using identifying and using applicable knowledge systems, spreadsheets and databases
• using internet information

-recording, gathering and consolidating financial information

-problem solving skills to identify any issues that have the potential to impact on work outcomes and to develop options to resolve these issues when they arise

-organisational skills, including the ability to plan and sequence work

Required knowledge:

• economic theories and valuation of assets
• financial modelling techniques and tools
• industry/company financial markets, products and services
• relevant legislation and statutory requirements and industry codes of practice
• techniques and tools for evaluation and interpretation of research data
• the economic and political climate relating to the financial industry

Case study -

Background - The Financial Services Firm

The firm of Bracken Ridge Financial Services is a prominent financial services firm based in Bracken Ridge, Brisbane.

The firm provides financial advice for investors.

You are a member of the financial management team and specialized in giving financial advice to the potential investors entering into a new market.

The client

The Australian market is dominated by oligopolies in retailing, mining, car rental, banks, insurance, fast foods, and petrol and so on. Government regulatory bodies such as the ACCC are trying to crack down the price collusion between the members of oligopolies.
Mr Entrepreneur is the Managing Director of North Point Ltd. The management of the company is planning to enter a sector of the financial services market where they can gain at least twenty per cent of the market share. Mr Entrepreneur has heard about monopolies, duopolies and oligopolies but wants to understand fully these markets and, most importantly, he wants to know the role of government and regulatory bodies.

Your task in this case study is to:

a. Select any large company that is currently operating in the Australian financial services industry such as a bank or building society, insurance company, accounting firm, mortgage broker, stock broker or financial advisor and enjoying a large share of the market.

b. Prepare a written report including the following:

1. Briefly outline the industry sector/financial market in which your chosen company operates. What are its main products or services?

2. How would you describe the company you have chosen - a monopoly, oligopoly, duopoly, confusopoly or something else? Explain each type of market structure and give reasons for your answer.

3. Outline briefly the key features of common economic theories that relate to the financial services industry in general or to your chosen market sector in particular.

4. Describe briefly the current economic and political climate relating to the financial services industry sector that your chosen company operates in.

5. Describe the changes taking place in the market structure in this industry, including (if applicable) changes such as nature of products, mobility, freedom of entry and exit, price control, etc.

6. Explain the effect of interest rates and foreign exchange rates on the competitiveness of the company you have selected.

7. What new entrants (if any) there have been in the industry in recent years that you are aware of.

8. Are there other products in the current market that are close substitutes for the ones provided by your chosen company, and if so, list them and explain how will this affect the operations of an oligopolistic company?

9. What are the consequences for small business when a large company enters into the industry?

10. Briefly explain the roles and objectives of the three major financial services industry regulators that come under the banner of the Council of Financial Regulators in Australia.

11. Describe briefly the key features of relevant legislation, statutory requirements and industry codes of practice that would affect your chosen company's operations.

12. Identify and briefly describe techniques and tools for evaluation and interpretation of research data.

13. Any other matters you consider relevant to the industry that you have selected.