Statement on company's activity - Essay Example

The various categories of users mentioned above lead to a real problem in preparing the report. Any annual report is mainly addressed to the members of the board, but also to other shareholders and business partners, to any financial analyst, employees, and, of course, the competition and journalists. This is one of the reasons many managers rather present only the very simplified information, as required by law, and nothing more. Of course, as a downside, companies are oftentimes accused that they use different communication and readability tools in order to draw the attention on the good parts and minimize, on the other hand, the bad ones.

Indeed, the thematic structure of a report can be a very important element: it can emphasize some parts while leaving the others partially undeveloped or simply in the shadow. Still, as different categories of users look for different facts, the danger of neglecting some points of view is real. Although many think of the annual report as a financial one, this is only one of the points that need to be addressed in the statement. Among the other points of interest, an annual report should include the company's activities, important issues, challenges, goals, long and short term strategies.

These details are important, as they help not only the stockholders, but also the potential customers, to understand the effectiveness of past plans, but also the degree of credibility of other future ones. In fact, this is also helpful for the companies themselves; as a research conducted in UK shows, "those companies which most clearly communicated their strategy and market opportunities in 2006 outperformed the FTSE 100 in the subsequent 12 months". In fact, everybody expects to hear clear stated purposes and achievements, as honesty and straight forwardness are the real guarantees of the company's credibility and success.

The importance of the annual report is obvious and undisputable; this is why, in order to be effective, it has to be coherent and credible, highlighting all the important elements of the business. As no company can really exist on today's market without proper planning, the market strategies have to be clearly stated as well. It is only obvious that the way this information is presented to the audience is of a huge importance; even so, different groups of audience are likely to have very different reactions to it.

For example, no investor would even take into consideration working with a company that hasn't got its market strategy clearly stated; on the other hand, this information can be used as a weapon against the company itself, by the media or by the concurrence. Even if we leave aside all the exterior dangers, there is, still, an inside major one: that of preparing and presenting this part of the report in an unfavorable or inconsistent manner. A coherent presentation will allow the investors to understand what is the company really using the money for, but it is also a way of proving the company's abilities to break through on the market.

As the annual report reflects the company's success, it is only normal that the managers try to make it look as good as possible. Oftentimes, financial analysts accuse the companies of issuing "too many bland statements", action that makes their annual report