Safeway's 10k Form Analysis - Research Paper Example

The company’s forward looking financial statements and its commitment to quality while expanding perishable offerings influenced my choice. Safeway’s operates in a highly competitive industry where competitors struggle to increase their market control and share. Its strategies of providing products that are tailored to ensure local preferences make it survive the diverse cultures and tastes in the different market segment. The operating strategy of providing value to its customers through stocking high quality products and maintaining high store standards together with the competitive prices makes it preferred by the shoppers (Safeway Inc.

Annual Report 2011, n.d, p.43). Besides, it provides a one stop shopping for busy customers. Competitors include supercenters and club stores, specialty supermarkets, dollar store, drug stores and restaurants. The environmental legislation has also not had adverse effect on the financial results and is not expected to do so because of the company compliance to state and federal laws. Labor relations pose a threat to the company because most of the employees are unionized and work stoppages and disputes could affect their results (Safeway Inc.

Annual Report 2011, n.d, p.14). Moreover, the failure of Safeway’s to achieve cost reductions could further adversely impair the company financial performance. this forces the company to consider altering their product mix to mitigate financial problems. Negative publicity on food safety, quality, and health concern poses a threat of loss of customers and could disrupt production. Moreover, the current economic condition in US and Canada with regard to the uncertain unemployment rate, fluctuating energy prices and demand of discounted products could further affect Safeway’s financials.

Other environmental factors that pose a risk include changing regulation, increased amounts of debt, pending litigations and Information technology risk affects their performance. Question 2 2a) Deloitte $ Touche LLP audited the consolidated financial statement of Safeway’s and the internal controls over the financial reporting (Safeway Inc. Annual Report 2011, n.d, p.34). It issued an unqualified report on the financial statement and on the effectiveness of the internal control. According to the report, Safeway has prepared their financial statements in accordance with the generally accepted accounting principles accepted in the United States and the integrated framework issued by the committee of sponsoring organizations of the tread way commission. 2b) Management analysis and discussion of the financial statement reveals a declining consumer spending because of the current economic conditions.

Consumers are said to change their product mix or shop in discounted groceries to cut down on their expenditure. On the side of income, Safeway is reported to have a net income of $516.7 million in 2011 compared to $589.8 million in 2010 signifying a loss of $1097.5 million (Safeway Inc. Annual Report 2011, n.d, p.22). MD & A further reveals how the economic environment impacted adversely on Safeway’s division (Safeway Inc. Annual Report 2011, n.d, p.22). The sales in 2011 increased by $43.

6 billion while fuel sales increased by $1408.7 million because of the average price increase of fuel per gallon. Besides, the exchange rate fluctuation of Canadian dollar resulted in increase in sales increase by $ 240 million. The number of transactions alos inceresed in 2011 desites the slight