To discuss whether investors should invest Adairs or not. Thereare several accounting and financial analyses according to Adairs 2016/2017annual report. For this report, there are three sections will be discussed which are business strategy analysis, financial Analysisand AccountingAnalysis respectively.For business strategyanalysis ,this part pays attention todiscuss Adairs industry and company analysis. Then using the five forces frameworkto narrate the competitive forces. After that, company’s competitive andcorporate strategy will be discussed .At last, SWOT analysiswould be evaluated for the company’s strategy.
For accounting analysis, inthis part,there are several questions will be explained. First,identifying the accounting policies and the application of Adairs Limited. Second , Why Intangible Assets consideredas the key accounting policy forAdairs? 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 advantagesand disadvantages compare Adairs and competitor by using accounting policy regarding intangible assets.Forfinancial analysis, to begin with RatioAnalysis, including profitability, assets efficiency and financial Management. Then, analysing the impact of macrofactorsand performance for Adairs. Finally,there is a cashflowanalysis and discuss a number of cash flowmanagement problem.
Business Strategy AnalysisThis section performs a business strategy analysis forAdairs Ltd. This section shall analyse both the industry for Adairs and thecompany. From the industrial perspective, this section shall analyse the macroenvironmental factors following the PESTEL model, and the competitiveenvironment using the Porter’s Five Forces model. From the company perspective,this section shall analyse the strategy of the company and performs SWOTanalysis of the company. This section shall discuss the prospect for growth forthe industry and the company.
Industrial AnalysisAdairs Ltd is a major supplier of domestic furnishingproducts in Australia through physical stores and online channels. The company operatesmore than 150 stores across Australia and New Zealand with recent expansioninto foreign market (Adairs Limited, 2017). From a broad level ofclassification under the GICS industry group, Adairs falls in the retailingindustry (ASX, 2017). On a narrow classification based on Adairs’s main productand target market, the company falls in the Manchester (linen) retailingindustry (Lo, 2016). This section shall discuss the environmental factors andcompetitive forces focusing primarily on the narrow industry where possible.
Macro Environment FactorsThis section shall discuss the impact frompolitical, economic, social, technological, environmental and legal factors onthe industry in which Adairs operates. The international political factors do affectthe industry because different steps in the value chain of the industry locatein different regions in the world. The primary growing and manufacturingsuppliers locate in Southern East Asia. The recent unstable politicalenvironment in Thailand, Myanmar, and Philippine are likely to increase thecost of the industry.
The economic factor is not favourable, yet stable for theindustry. The industry performance is closely linked to household discretionaryincome, which grows slowly for