To discuss whether investors should invest Adairs or not. There are several accounting and financial analyses according to Adairs 2016/2017 annual report. For this report, there are three sections will be discussed which are business strategy analysis, financial Analysis and Accounting Analysis respectively.
For business strategy analysis ,this part pays attention to discuss Adairs industry and company analysis. Then using the five forces framework to narrate the competitive forces. After that, company’s competitive and corporate strategy will be discussed .At last, SWOT analysis would be evaluated for the company’s strategy.
For accounting analysis, in this part,there are several questions will be explained. First, identifying the accounting policies and the application of Adairs Limited. Second , Why Intangible Assets considered as the key accounting policy for Adairs? What the relationship between the accounting policy and the business strategies of Adairs? Thirdly, which parts should be used judgement of management. At last, what the advantages and disadvantages compare Adairs and competitor by using accounting policy regarding intangible assets.
For financial analysis, to begin with Ratio Analysis, including profitability, assets efficiency and financial Management. Then, analysing the impact of macro factors and performance for Adairs. Finally, there is a cash flow analysis and discuss a number of cash flow management problem.
Business Strategy Analysis
This section performs a business strategy analysis for Adairs Ltd. This section shall analyse both the industry for Adairs and the company. From the industrial perspective, this section shall analyse the macro environmental factors following the PESTEL model, and the competitive environment using the Porter’s Five Forces model. From the company perspective, this section shall analyse the strategy of the company and performs SWOT analysis of the company. This section shall discuss the prospect for growth for the industry and the company.
Adairs Ltd is a major supplier of domestic furnishing products in Australia through physical stores and online channels. The company operates more than 150 stores across Australia and New Zealand with recent expansion into foreign market (Adairs Limited, 2017). From a broad level of classification under the GICS industry group, Adairs falls in the retailing industry (ASX, 2017). On a narrow classification based on Adairs’s main product and target market, the company falls in the Manchester (linen) retailing industry (Lo, 2016). This section shall discuss the environmental factors and competitive forces focusing primarily on the narrow industry where possible.
Macro Environment Factors
This section shall discuss the impact from political, economic, social, technological, environmental and legal factors on the industry in which Adairs operates. The international political factors do affect the industry because different steps in the value chain of the industry locate in different regions in the world. The primary growing and manufacturing suppliers locate in Southern East Asia. The recent unstable political environment in Thailand, Myanmar, and Philippine are likely to increase the cost of the industry. The economic factor is not favourable, yet stable for the industry. The industry performance is closely linked to household discretionary income, which grows slowly for