Relevance Of Insurance Policy In International Purchasing

1.1 GENERAL OVERVIEW OF THE STUDY
In any organization or industry involved in international purchasing, insurance policy is very inevitable as it protects the organization from uncertain occurrence in the course of purchasing abroad.
The relevance of insurance policy in international purchasing will no farfetch help an organization involved on the need to minimize and/or eliminate risk that are certainly involved in purchasing abroad.
According to Nweke (2000:307) because the natural instinct to survive is embedded in man, he reacts to avert such dangers threatening the successful movement of goods, this is applies to organizations involved or that are into international purchasing. This calls for an insurance policy. In addition, when goods are carried from one part to another they are exposed to risks such as cargo loss, damage, delay etc.
Nweke (2000:307) sees insurance as a device aimed at reducing the chances of a risk, when it happens, reducing the extent of its damage and providing the affected persons with compensation. The insured is indemnified when put in the position he was before the occurrence of the risk.
Madu and Chukwuma (2003: 216) defines insurance as a contract whereby a person called the insurer agrees in consideration of money paid to him called the premium by another person called the insured, to indemnify the lather against loss resulting to him on the happening of certain events. The policy is the document in which it is contained.
Insurance policy, as it relates to international purchasing, the specified extent must have some element of uncertainty about it; the uncertainty may be either as in the case of life insurance in the fact that, the happening of the event depends upon accidental causes. An insurance may be further defined as a contract where by a person called the “INSURER” agrees in consideration of money paid to him “Premium” by another person called the “INSURED” to pay the a sum of money or its equivalent on the happening of a specific event.
Chilaka and Amanze (2008:201) defines insurance as a system whereby the burden of financial loss due to some specified but uncertain event is reduced, insurance is all about pooling or spreading of risk. With insurance, the risk of business in international purchasing is borne by many instead of one organization or individual.
International buying and selling is faced. With legion of risk that require proper management if it is to be successful.

1.2 STATEMENT OF PROBLEM
Strictly, this project is on the relevance of insurance policy in international purchasing using Unilever Nigeria Plc Aba as case study. The problems are stated thus;
1. Though the organization engage or practice insurance policy, but the appropriate department that should handle insurance policy is not there. In other words it is being handled by the finance department.
2. In addition the person currently handling insurance policy for the organization was not always, on seat to be interacted with.
3. Unilever Aba does not cover insurance policy in all supposed area of their business abroad.

1.3 PURPOSE OF THE STUDY
The general purpose of this study is to make an indebt investigation in the following areas.
a. The ascertain the effect of insurance in the operation of the organization.
b. To find out the type of contracts, or goods insured by Unilever Aba.
c. To find out the extent to which the Unilever ensures its imports.
d. To ascertain the extent of losses if any Unilever incure through damage, losses, thefts.
e. To as certain how best to reduce high losses through good documentations.

1.4 SIGNIFICANCE OF STUDY
The need for this study cannot be over emphasized. Little or no attention has been given to the relevance of insurance policy in international purchasing in our industries today. However, this study would be a source of great importance to any company undergoing insurance function and international purchasing. It will also reveal to companies not practicing insurance on the need to do/so especially those companies that are into purchasing goods from outside source(s) the work when completed would serve as reference materials to other scholars in the field of study. To the researcher this work is a requirement for the Award of Higher Diploma in Purchasing and Supply and without this research, this certificate will not be awarded to her. Also it will serve as an empowerment for the acquaintance of skills and knowledge for future research works.

1.5 RESEARCH QUESTIONS
a. Does the organization actually recognize the need for insurance policy.
b. If so what (type) of insurance policy does the organization cover.
c. Is international purchasing part of Unilever Aba operations.
d. What are the effects of insurance policy in international purchasing.
e. Are all kinds of risk associated to international purchasing insurable.

1.6 STATEMENT OF HYPOTHESIS
These hypothesis are viewed and designed towards the attainment of the organizational goal through investigation on the problems associated with it.
H0: Insurance policy is not necessary for the successful operation of international purchasing.
H1: Insurance policy is necessary for the successful operation of international purchasing.
H0: The relevance of insurance policy in international purchasing is not beneficial to Unilever Nigeria Aba.
H1: The relevance of insurance policy in international purchasing is not beneficial to Unilever Aba.

1.7 SCOPE OF STUDY
For proper appreciation of the relevance of insurance policy on international purchasing, this research would have covered all firms involved in international purchasing. This is not possible due to the fact that the researcher is a student and may not have the much needed resources to carryout such as all complex research. To this effect, the researcher decided to concentrate in the relevance of insurance on international purchasing in Unilever Plc Aba. With the believe that whatever the situation is in Unilever will be used to generalized the situation in all the firms that engaged in international purchasing.
In this regard, the researcher will interact with the purchasing, international business unit, finance and administrative units respectively.

1.8 LIMITATION OF THE STUDY
In the cause of carrying out this research work, the researcher noticed some limiting factors which constraints an elaborate work on the activities of Unilever Nigeria Plc Aba with respect to international purchasing. Some of the limiting factors are; time, finance and inadequate information.
TIME: It look the researcher serious previous time in sourcing for books to which references were made as well as time in visiting the firm understudy.
FINANCE: This is yet another limiting factor to this research because the researcher as a student who is dependent is not financially strong to meet all financial requirement that is required in gathering information for this research work, like photocopying of materials, transportation to Unilever Nigerian Plc Aba, where she needed to get most of the necessary information for the success of this research work.
INADEQUATE INFORMATION
Most of the information needed for the research work was not made available to the researcher as the company under study consider them as secretes to business operations.

1.9 OPERATIONAL DEFINITION OF TERMS
a. INSURANCE: This is a contract where by a person called the “Insurer” aggress in consideration of money paid to him called “Premium” by another person called the “Insured” to indemnify the later against loss resulting to him on the happening of certain events.
b. POLICY: A Policy is a predetermined guide established to provide direction in decision making.
c. INSURANCE COMPANY: An insurance company is a company where individuals or organization go and insure their business or other things against uncertain occurrence.
d. RISK: Risk is defined as the probability of an unfortunate occurrence.
e. INSURER: This is a person or company to which the insured insures himself or his business.
f. INSURED: This is a person insuring himself or his business.
g. PURCHASING: This is a process where by an organization defines that need for goods and services, identify and compare supplies and suppliers available to them, negotiate with the source(s) of supply, make contracts and place order and finally receive inspect and pay for the goods and services delivered.
h. INTERNATIONAL PURCHASING: This is the sourcing and purchase of goods and services from another country.
i. INSURABLE RISK: These are those risk that can be insured against.
j. UNINSURABLE RISK: These are those risk that cannot be insured.