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Essay / Research Paper Abstract
This 3 page paper looks the decision made by Autozone not to prosecute fraudulent general liability claims made against them, despite an increasing number of claims arising. Two relevant and two irrelevant costs are discussed. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEautozone.rtf
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Unformatted sample text from the term paper:
the loyal customers will usually be seen 3 - 4 times a year, unlike supermarket where loyalty results in more regular visits (Gentry, 2008). A decision that has had to
be reviewed over the last year is the way that general liability claims are handled. The firm has seen a rise in the number of general liability claims, it is
estimated that about 10% of these claims are fraudulent (Gentry, 2008). The policy has been to refrain from prosecuting the fraudulent claims when they are identified. There are usually about
6,000 1claims, 50% of which are general liability claims handled by the firm each year, but over the last twelve months this has increased by 30% (Gentry, 2008). The decision
has been to retain the current policy, which is to refrain from prosecuting the fraudulent claims despite the increase. There are costs which are relevant and not relevant to this
decision. The main reason behind the decision is the cost of prosecuting the offenders. This could be high in terms of the potential benefits that the firm would receive.
The prosecuting of offenders may result in a reduced level of fraudulent claims, preventing the offenders from re-offending as well as acting as a deterrent to other who may try
and make a fraudulent claim. However, it has been estimated that the amount that is saved as a result would not be worth the cost that would be involved
in prosecuting the offenders. When looking at this the cost is not given, but can be estimated. If there were 6,000 claims, then 50% for the level of general
liability claims leaves 3,000 claims. If the 10% estimate of fraudulent claims is correct this results in 300 fraudulent claims a year. The cost of prosecuting a single claim is
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