ACCT11-100 be found in the Textbook: Chapters 1

 

ACCT11-100 ACCOUNTING FOR
DECISION MAKING

group Industry Analysis

WEEK 1:  TASK 2

** Further reading and background
information for this topic can be found in the Textbook:  Chapters 1 & 14. **

 

 

HAVE YOU SET UP AN ACCOUNTING FOLDER
on OneDRIVE?

Each class you will be completing in-class tasks and work
towards your assignments.  To ensure you
don’t lose any of your work, we suggest to save everything onto your OneDrive
which accessible from any computer on or off campus.

 

 

 

IN CLASS TASK #2:  Group Industry analysis

Resource: IBISWORLD
(Bond University Library – electronic resources)

The objective of the group industry analysis is for
students to collect, discuss, evaluate and analyse the key financial and
non-financial information for the industry they have chosen.

You will gain a thorough understanding of the accounting
information at the industry level and how that information is used in the
decision making of large publicly listed organisations in Australia.  You will access a number of databases and
other resources to assess the industry’s overall performance and report your
findings as well as recommendations for future success.

During the semester, you will be collecting company-related
information on the individual companies within the industry. This background
industry information will create a foundation for the individual component.

About IBISWorld

Australia’s largest provider of
industry-based research

Since the
early 1970’s, IBISWorld has been providing thoroughly researched, reliable and
current business information that is considered invaluable to many businesses
and other users. IBISWorld is dedicated to provide information by expert
analysts who research economic, demographic and government data so you don’t
have to. They provide valuable insights on Australia’s 500 industries, its top
2,000 companies and its key business environment indicators, so you can make
superior business decisions and plan for the future.

Whatever the
industry, IBISWorld knows about the company and its competitors. Whether you
require a better understanding of predicted market conditions; whether you need
a clearer picture of supply and source industries; or whether you just want to
keep abreast of competitor activity within the industry, IBISWorld’s concise
yet comprehensive reports will keep you well-informed.

The ANZSIC
collection analyses industries at the class level offering the latest content
on 500 industries. Each report consists of 30 to 40 pages of key statistics and
analysis on market characteristics, operating conditions, current and forecast
performance, major industry participants and more.

Students will
find it very useful to access the IbisWorld database to analyse their industry
and associated companies.

To access IbisWorld:

1.   
Visit Bond University’s
Library homepage.

 

2.   
Click on Search &
Find -> Electronic Resources ->
Fields of Study -> Business (or
follow the link below Ctrl + Click)

 

Electronic Resources | Bond University Library

 

Fields of Study -> Business

 

3.   
Choose IBISWorld Industry Research Reports from the list of resources.

 

4.   
Login with your Bond
username and password (off-campus login).

 

5.   
You will be logged in to
the IbisWorld database homepage under Bond University’s subscription.

 

6.   
Search for your industry
(e.g. Mining, Retail etc.) You may wish to choose a sub-industry category if
you want your report to be more specific (e.g. Media -> Free-to-Air
Television Broadcasting in Australia).

**
DOWNLOAD THE PDF REPORT FOR REFERENCE IN LATER WEEKS **

7.    Collect information relevant to your industry by answering
the following questions:

About
the industry:

1.        
What industry/industries does your company operate in?

Domestic Airline

2.        
What sub-industry category could you use that would provide
a deeper analysis of the main activities for your company? (e.g. Woolworths
-> Supermarkets and Grocery Stores in Australia – G4111).

·    Type your company name in the search field and see what
options come up. Choose one to use for your analysis.

Domestic Airlines in Australian –l4902

3.        
Who are the main competitors?

·    Are these the same companies as your teammates are
analysing? What are the similarities and differences?

(Name 3 of each as you think of
them throughout the task)

Qantas. No other main competitors.

4.        
What are the key economic drivers in this industry?

·    Discuss with your group members how these drivers affect
the performance of the companies in the industry? (e.g. crude oil prices affect
costs in airlines).

Domestic tourist visitor nights, Real household
discretionary, income, aircraft kilometres flown, international travel to
Australia, world price of crude oil, and consumer sentiment index.

 

Industry
performance:

5.     
Make notes and discuss the current performance of the
industry. What factors are affecting the industry? Are they having a
positive/negative impact?

–       Domestic tourist visitor nights are expected to rise in
2017/18 – Increase in travels

–       Real household discretionary is expected to fall – If
this reduced then this will mean that there is less money to spend on travel
resulting in less flights.

–       Number of aircraft kilometres flown is expected to
increase – this increases revenue

–       International travel to Australia is expected to rise –
this results in more domestic flights

–       Crude oil price is expected to increase – this increase
fuel costs cutting into overall profit

–       Consumer sentiment is expected to decline – this reduces
the amount people travel

Industry
outlook:

6.   
Make notes and discuss the future outlook for the
industry. What factors are most likely to affect the future performance of the industry?
Will they have a positive/negative impact?

Profits are expected to grow slightly over the next five
years as industry operators keep capacity in line with demand, and continue to
reduce costs.

7.   
What phase of the life cycle is this industry in? What
does this mean?

Mature stage

This means that the company
consolidation level of economic importance is stable

 

Products
and markets:

8.   
What are the products/services offered by this industry?
Download the relevant chart.

88.5% of virgins products and services are from passenger
flights. 64.8% of that is full fare and business passenger transport while the
remain 23.7% is low fare passenger flights. They also are involving in Freight
transport 4.1%. 7.4% are other services which contain a wide range of 30
different fields. Some include tourism, gyms, cooking oil, wood chipping, olive
growing, and plastic bottle manufacturing.

9.   
How are the major markets split up? Download the relevant
chart.

The major markets is split into 4 sub categories. The
largest being Domestic leisure with 55.1%, followed by domestic business being
27%.

10.  Does this industry rely heavily on
international trade?

Not heavily, however international
tourist do use domestic flights to explore Australia. It isn’t heavily
dependent on it but it does help the industry.

Competitive
landscape:

11.  Analyse the competitive landscape for your
industry:

·      Market
share concentration?

Since the domestic airline is control between 2 dominant companies
it exhibits a high level of concentration. Due to the large amount of money
required to run an airline having a high level of concentration is apparent in
almost every contrya

·      Key
success factors?

·      Cost
structure?

·      Basis
of competition?

·      Barriers
to entry?

·      Industry
globalisation?

 

Operating
conditions:

12.  Analyse the operating conditions for your
industry:

a.   
Capital intensity?

b.   
Technology and systems?

c.    
Revenue volatility?

d.   
Regulation and policy?

e.   
Industry assistance?

 

Key statistics:

13.  Based on the key statistics provided, what is
your overall view of the industry. Would you currently look at investing in
your company from what you know? Would your teammates?

GROUP
DISCUSSION:

Discuss
what you have found about your company and the industry in which it operates
with your group members. 

·      What
similarities and differences have arisen? 

·      Why
might this have occurred?

 

®       This task
will provide a foundation and background
for your Assignment. 

®       You should
type up the answers to the questions within this document and save it for
future reference.

®       Many of the
items you are exploring in this task we will revisit in the weeks to come!