Economic & Business Drivers
The words alone of economic and business drivers give me a sense of bewilderment at present however through capitalising on the information that has been provided I know that this can Identify what you see as the firm’s key economic and business Drivers.
The key economic and business drivers used by China Outfitters Holdings limited are for the purpose of laying a foundation for future growth
- Investments in Brand Companies
Using a multi-branding strategy, the company believes that this is the key to sustainable development and growth. As part of the company’s objectives over the past five years it has shown that the benefits of attaining Brand companies such as MCS allows for the increase of sales from the self-owned brands of the company. In addition to brand procurement investments the company owned brands allows China Outfitters Holdings Limited to sponsor sporting and cultural events and film and television works to further enhance brand awareness. This helps demonstrate the history and culture of the brands and the lifestyles characterized by the brands.
- Business Digitalisation
China Outfitters Holdings Limited being a Chinese company is in the transformative phase within the Retail industry where traditional retails are being substituted by new retail through the combination of science and technology. With the emerging of new technologies was can see that the customer experience is not only being enhanced but is also having to be remodelled to adapt to the new retail models. In 2018 a new strategy was launched for digitisation driven retail terminal empowerment. The digitalisation was applied to various business processes and procedures of the company that would allow the optimisation of the operation processes and the improvement of operational efficiency.
- Logistic warehousing
Over the past couple of years, the company has increased its investments in logistics warehousing allowing the company to adapt to the new logistics warehousing model. 2017 saw the introduction of the Radio Frequency Identification (RFID) chips into the product tags of their products and the installation of the RFID identification and reading equipment into warehouse in Shanghai and Guangzhou. This has made the process of manual operation to contactless and mass scanning of full containers and improving the efficiency of goods received and dispatched in the warehouses.
These three economic drivers will allow the company to expand its operations to attract new customers and activate existing customers and improve the consumption experience through the use of the digital systems thus implementing measures that will further enhance the competitive of the company in the Chinese Apparel industry.
Using the Annual Reports and China Outfitters Holdings Limited website plus other various internet sources I was able to conclude that what I saw as the economic drivers of the company matched with the information that was provided. Connecting the key accounting drivers to the economic and business drivers was a little confusing at first as I was seeing the same in both sides. Once I realised that the drivers actually intertwined with each other the unravelling of information was easier to navigate.
Working on the expected future growth of China Outfitters Holdings Limited I went back to basics and followed Martin’s example in Chapter 5 of the study guide to see how the book value of a firm’s NOA is driven by changes in its level of sales; and by the changes in the amount of NOA that would be needed to be put in place to generate the RMB ‘000 of sales (1/ATO).
| 2015 | 2016 | 2017 | 2018 | |
| 1/ATO = NOA/Sales | 0.80 | 0.89 | 0.82 | 1.27 |
As can be seen in this the NOA to Sales show us that in 2018 that 1.27 RMB were used to generate 1RMB of sales.
How successful would I describe the firm? Why?
China Outfitters could be classed as a firm that has been successful over the years. With a market that can expand with the demand for a better product and the emphasis placed on what range of clothing it markets I can see the firm developing into an even better company. However, with that in mind consideration must be given for the economic impact that is happening at the present moment. With the Trade and Tariff wars between the US and China the company will need to be on the guard as to how to further advance their business prospects.
How much do I really understand about what is really go on with China Outfitters Holdings Ltd?
Over the past couple of months my head has been around understanding this company. I can honestly say that even now some of the aspects of this company I have yet to understand. I could ask more questions and still be digging to find the answers. The main thing I got from this company that with its fixation on the upper class male contingent there has been no discussion as to why the female industry has not be targeted as well. My consensus here is that the male market is a priority and as such the emphasis will be to produce those items that will draw the type of market that the company wants to focus on.
You ask how do I feel at this point of time with the analysis?
I feel that I have been on the Titanic and hit that iceberg and now watching the ship sink while I have been thrown a life jacket to stay afloat. There have been times over the past couple of times where I have been treading water and other times starting to sink. It looks like the boat has come and now I can safely go on knowing that the end is near. The old row, row, row your boat gently down the stream just came to mind I’m sure that mine was rapids not a stream for this assessment. Am I confident about what I have done here? Through the many days of ups and down I can see that this has been a challenge. Trying to get my head around forecasting will be my next hurdle. I’m not sure of the verdict that will come out of my findings.
ACCT13017 - Financial Statement Analysis 