Billabong Company Overview - Case Study Example

Introduction Business analysis refers to an activity that is performed in the process of running a business, and it entails mastering the needs that are within the business as well as the solution to those problems. For any business to thrive in the world today, it should ensure that it undertakes a very detailed and intensive analysis (Grundy, 2006). This ensures that the business is strong enough to stand for competition with other rival companies. It also helps the company or the business to increase its effectiveness and efficiency as far as its production is concerned. Moreover, another significance of business analysis is the aspect of the importance of all the information that is acquired after the analysis. It will enable the firm to focus on the future and predicts the trends, come up with ways of improving its operations as well as make appropriate decisions, which are beneficial to its success. Some of the solutions that the analysis comes up with includes the components of developing systems, improvement of some of the processes in the business, changes in the organization, some strategic planning as well as development of policies governing the organization. It represents a very important tool as far as the running of the business is concerned (Narayanan & Fahey, 2005). This is because it aims on the identification of the changes that are needed in the organization and then gives room for solution identification in order for the organization to reach its goals. It involves a number of planning as the development process requirements so that the management can be able to set the priorities right and appropriately manage the changes. It also enables the management to describe all the technologies needed for collection of all the things required in a project from the stakeholders. It also gives the stakeholders a detailed plan to enable them understand well all the requirements and the ways of implementations. It is very instrumental in enabling the verification of the solutions in the organization’s proposal. Billabong Company This company bases its operations in the international level. The international limited company was set up way back in the year 1973. Two people initially stabled it in the gold coast Australia as a partnership. The two were shapers of surfboard and surfer Gordon merchants (Bruce, 2008). The company also deals with the production of sport like the skateboard and snowboards. They were initially shaping and designing these board shorts at their home, whereby they would use their kitchen table to cut them. Then they would walk to a nearby surf shop and do the final finishing. It is through that the business got to its next level. This is because of the numerous attractions that came from the other surfers in the neighbourhood. In addition, the quality of their work was a boost to the attraction it got from the surfers. The company expanded and started dealing with supply of the products to about sixty countries. One of its greatest strategies to advertise its products is sponsorship of the sport activities through out the world. Through this, their products have gotten great chances of market. It actually started it operation in Australia and later the director who is still the head of the company expanded its operations to Europe, USA and Japan by the year 1980. The company even before its expansion would follow it customers to their destination to seek more market. That is why by the year 1980, it was strong enough to expand to other places (Bruce, 2008). Current market position The journey to the company’s market expansion started in the year 1908. This is whereby after it was fully serving in Australia, it had to expand its market to the other parts of the world. Initially its greatest target was in the northern part of America. This is because that is one of the areas where it most customers came from. This means that they really enjoyed the products of the company. Its sales were also growing at an alarming rate a factor that brought the need for it expansion. The company was even granted the license to work in New Zealand South Africa and Japan where so many people were really enjoying its products. By the year 1990, the company’s products were already on high demand forcing the company to follow its customers with the establishment of new branches. One of the factors that greatly contributed to the growth of the market in these places was because skating was getting to be more professional. This meant that the company’s products like skating board, wake and snowboard were on high demands. It was by the end of that particular decade that the company was listed among the famous and very reliable companies that supplies good quality sports equipment internationally. In the year 2000, the company was already set for the public sales of their shares. This move led it to be listed among the best companies in the security exchange in the whole of Australia. The advantage of this to the company was the fact that it got an opportunity to grow even more because its finances were increased. Currently, the company’s market is very grown because it is serving internally with sales of $1.67 at the end of 2009 financial year. Much of the sales are distributed as wholesale. Then the whole sellers distribute the products to the retailers. Financial Summary of the company Year to Jun NPAT Rep $M NPAT1 Adj $M EPS c EPS chg % PER x PER rel All Ords x PER rel Sector x DPS c Yield % Franking % ROE % 2008A 176.4 176.4 81.3 5.4 10.3 1.0 0.8 53.0 6.3 100.0 22.2 2009A 152.8 159.5 71.7 -11.8 11.6 0.5 1.0 45.0 5.4 47.0 13.6 2010A 146.0 146.0 57.8 -19.4 14.4 1.4 0.2 36.0 4.3 50.0 12.0 Future growth opportunities The grow rate of the company has been alarming. Actually, it is not only having expansion of its market in terms of its products but also in terms of the percentage of its shares in the market and also new branches opening. In other word, the company has great plans to expand further in other parts of the world. It has been adding new brands very frequently and this means that with the growth in the technology it is even working harder in its technology position to come up with better brands. It has been expanding its market by introduction of new types of products. The year 2007 new businesses were established but with a different product range as compared to the previous. One of the products introduced was the footwear. The introduction of these products meant new market or rather growth in its market. The company is also dong online market. This is one of the strategies done the year towards the end of the year 2009 with an aim of improving the company’s future market. This is because people are able to purchase the products online and then they wait for the delivery of the products without necessarily travelling to the factory. This is a very important marketing strategy especially for the future because technology is also dynamic. In today’s world, much of the purchases especially when involving far distance parties will be done online and so the company had the future in mind by the introduction of such strategy (Olson et el, 2005). The future opportunity of the company to grow is also improved by the fact that the company deals with sports equipments. Sports are always taking place and many other countries are even embracing sports like skating by setting up special artificial skating ground for the sports. This means that their products will actually get more markets due to that fact. Another great opportunity for its growth is the self-advertisement it does by sponsoring the sport activities (McWilliams et el, 2005). This is whereby the sports equipments are likely to be bought in the company as a way of promoting it products. The need for the company to saturate its products globally and expand its brands by innovations is another very important way for the company to experience growth in the future. The company has also aimed at adhering always to all of its core values. As a result, many people have gained much confident with its products hence creating a platform for it to expand in the future. Products, Brands & Competitors The company specialized in a wide range of products; it initially started with sport products and specifically the skating boards. In its early days, the specialization was to shape the equipments and then take them for furnishing (Grant, 2008). It has been dealing with very many brands of the skating boards. It deals with surf wear products, apparels for sports and accessories for snowboard, skate and surf market. It has also diversified its products range to include footwear products. Initially it was producing very simple surfers later; a great improvement in the brand that the company was producing was noted. The improvement in the brand was also in a way that it also touched the area of durability due to the use of triple- stitching a very good technique that was actually innovated by the director himself. Currently then following are more other products the company distributes and markets in wholesale and retail; accessories, wet suits, eyewear, hard goods and sport boards with the main distribution being in These products are available in more that one hundred countries in the whole world. The company has a number of competitors both in the international and in the local level. However, it has one advantage over most of the competitor. The major competitors are two companies namely Nike and Quicksilver (Grant, 2008). Billabong is at a better position than its competitor quicksilver in terms of its Geographical location. This is because where it is situated the imports from the America are majorly based on the company’s production. Its diversity in terms of the company’s location enables it to overcome the challenges that come with the seasons this is because the company’s branches are very widely spread and so there is not particular point the company is without sales. In addition, its sales are very superior as compared to the quicksilver in terms of distribution because its pre-ordering system is much better. It also has better company’s departmental stores as well as their own stores for storage purposes. Another very important competitor in the Rip curls company. This company together with the quicksilver competes with the company in terms of the brands of the sport apparels. Other companies of which it compete against in terms of brand includes the Nike, Puma and the Adidas. The company has been able to beat most of these companies in term of the sales it makes as far as the total percentage is concerned. In the whole continent of Australia for instance, the total sales of the company amount to about 30% of the total sales of the products it deals with. In the northern part of America, the company is the largest seller of the products, which means it beats all other companies. Comparison with the competitors (Chan et el, 2005) P/E (x) EPS Change (%) Dividend Yield (%) Company Code Last Price Mkt Cap 07A 08F 07A 08F 07A 08F Billabong International BBG $8.28 $2,100M 15.1211 13.7000 -19.3600 4.5000 4.1200 4.7000 Kathmandu Holdings KMD $1.22 $243M 616.6667 9.9000 n/a 4000.0000 4.2000 5.0000 Gazal Corp GZL $2.01 $121M 9.9375 n/a 42.1000 n/a 6.9200 n/a Vmoto VMT $0.11 $55M -18.1818 n/a -41.2200 n/a 0.0000 n/a GLG Corp GLE $0.32 $24M 2.1995 n/a 267.9200 n/a 0.0000 n/a SWOT analysis This kind of analysis capitalizes on the opportunities and the strengths that a business has. It also shows threats and the weaknesses that any business is likely to face. It presents the company with very goods strategic options for improving the business or the company. The analysis is divided into two parts namely the internal analysis and the external analysis. External analysis entails the weaknesses and the strengths of the company while the external entails the opportunities and the threats of the business. The following is diagram that shows how the SWOT analysis achieves situation analysis of a given company like the Billabong Company (Peter, 2007). Situation Analysis  /   \             Internal Analysis       External Analysis / \ / \ Strengths    Weaknesses    Opportunities   Threats | SWOT Profile The strengths of a businesses involves its advantages, the things that the business is doing very well as far as its field is concerned and its key areas which are performing very well within that particular company. A company dealing with computers is likely to have strengthens if it is dealing with the modern model of electronics. The weaknesses represents the areas that are not doing so well and needs to be improved the areas that are currently being done very badly. A computer dealing company could have good electronic bur its sales and marketing strategy could not be good (Thompson, & Martin, 2005). Therefore, that factor could represent a very strong weakness to the business. The opportunities of the business represent the factors that give the company a better opportunity to stand in competition with other companies of the same calibre. It represents the areas where the company’s competitors are not performing well. An example could be the way in which a company packages its products as compared to other companies in line with it. Threats of a business include the obstacles that the organization faces, they are also the areas that the competitors companies do well as compared to the company. Such threats include better human resource management in terms of better salaries. SWOT analysis for Billabong Company Billabong Company, like any other company has a very detailed SWOT analysis, which is as follows. A. Internal analysis a. Strength Billabong Company has a number of strengths that have really helped it to withstand the competition in the market world. One of the greatest strength with the company is the use of liquid cash. Though it has greatly invested in other properties, it has a great flow of liquid cash which enables it to take care of the emergencies when need arises and that is why it is able to spread to other parts without strain in terms of capital. It has a great hierarchy of management. This has enabled it to run smoothly, it has very great knowledge of brands which it produces enabling it to stand in the competition platform with other companies. It has very well trained staff amounting to about 4500 and a very good share of the market whereby like in the whole continent of Australia for instance, the total sales of the company amount to about 30% of the total sales of the products it deals with. It also has a very good image as far as the name of the company and its products are concerned in the whole world. b. Weaknesses The company has really dealt with its weaknesses. The only weakness it has is the issue of poor employee retention. This is because the other companies provides better working environment in terms of payment hence it loses its employees to these companies. B. External analysis a. Opportunities One of the opportunities it has is the fact that the world is adopting and greatly getting involved in the sports like skating. As a result, new markets are opening for the company to venture. Another opportunity is the dynamism the people of the world are showing in terms of preference. This is whereby it new brands are getting ready market, also the fact that it has diverse range of products. b. Threats One of the threats the company is facing has to do with the rate taw which other competitor companies are joining the market. The threats mainly coming form great companies like Nike and quicksilver. Another threat is the emergence of new technologies in the market for the production of the same products. The company finds it is a serious threat because of the fact that the technology is changing very frequently. This is because some of the machines that were being used were faced out very easily. Conclusion Billabong Company is a company that bases its operations in the international level. The international limited company was set up way back in the year 1973. Two people initially started it in the gold coast Australia as a partnership. It is however operating at an international level. It deals with very important products but it specialized in a wide range of products. It occupies a large market share in the world as far as the skating sport equipments are concerned. Its SWOT analysis shows that it has better opportunities as compared to the competitors. Reference Bruce, M. (2008). Back to Billabong. Cambridge: Cambridge University Press. Chan, K., Chen, C. & Cheng, L. (2005). Ranking Research Productivity in Accounting for Asia-Pacific Universities. Review of Quantitative Finance & Accounting, 24(1) 47-64. Grant, T. (2008). International directory of company histories. Oxford: Oxford University Press. Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229 Hill, C. & Jones, G. (2007). Strategic Management: An Integrated Approach, 8th Ed. California: Cengage Learning. McWilliams, A., Siegel, D. & Van Fleet, D. (2005). Scholarly Journals as Producers of Knowledge: Theory and Empirical Evidence Based on Data Envelopment Analysis. Organizational Research Methods, 8(2), 185-201.  Narayanan, V. & Fahey, L. (2005). The Relevance of the Institutional Underpinnings of Porter's Five Forces Framework to Emerging Economies: An Epistemological Analysis. Journal of Management Studies, 42(1), 207-223. Olson, E., Slater, S. & Hult, G. (2005). The Performance Implications of Fit Among Business Strategy, Marketing Organization Structure, and Strategic Behaviour. Journal of Marketing, 69(3), 49-65. Peter, F. (2007). The practice of management. New York: John Wiley & sons. Thompson, J. & Martin, F. (2005). Strategic management: awareness and change, 5th Ed. California: Cengage Learning EMEA. Read More