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The Business Environment | Report

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Added on  2020-04-01

The Business Environment | Report

   Added on 2020-04-01

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Running head: AUDITING THEORY1Auditing Name:Institution:Date:
The Business Environment | Report_1
AUDITING THEORY2Flight CentreExecutive SummaryThis report analyses the business environment that Flight Centre operates under. As a listed company in the air ticketing industry, there are various challenges that the company is faced with. This report shall look into the the company’s strengths, weaknesses, Opportunities and threats as well as PEST analysis, porters five analysis and other factors that affect the company both internally and externally. It shall also look at the business risks of the company, ratio analysis in comparison with the industry average and the strategies that the company uses in the market.
The Business Environment | Report_2
AUDITING THEORY3Table of ContentsPart 1 Understanding Nature of the entity..................................................................................4Introduction................................................................................................................................4Part 2 - Understanding the Industry...........................................................................................5Part 3 – Understanding the legal environment...........................................................................6Part 4 Understanding external environmental factors................................................................8PEST analysis.........................................................................................................................8SWOT analysis.......................................................................................................................8Porter Five analysis................................................................................................................9Other factors.........................................................................................................................10Part 5 – Understand objectives, strategies and Assessing Business Risks...............................10Part 6Ratio analysis..................................................................................................................12Part 7 – Understand management and Governance.................................................................13Conclusion................................................................................................................................14References................................................................................................................................15
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AUDITING THEORY4Part 1 Understanding Nature of the entityIntroductionFlight Centre is was founded in 1981 and is headquartered on Queen Street in Brisbane. The company is an air travel company and it is the largest retail travel outlet in Australia. The company’s business operations include hiring consultants in major cities around the world to organize flight holidays, travel insurance, visas, car hires, cruises and more to its clients(Lipczynski, 2008).. Flight Centre operates a 24 hours call center that attends to clients all over the world. The company’s new strategy which is dubbed click and mortar approach, entails augmenting a growing online presence into its physical shop fronts in a bid to offer multi-channel services. This creates a high level of efficiency for the company that enables it to increase its bottom line.The company’s has invested a lot in setting up its online system together with building shops in other cities around the world. the company has launched an investment vehicle known as Little Argas that will be used to scale innovative travel tech and other travel related start ups. The company has put a lot of funds to fund research in ideas and building new products for the company(Montgomery, 2013). In 2015, the company used 114 million Australian dollars in investing activities while in 2016, the company used 290 million Australian dollars for the same purpose of investments. This is a significant increase, that should translate to more profits in the future. Flight center used up 166 million dollars in 2015 as stated in the financing part of the cash flow. In 2016, however, the figure decreased to 110 million dollars for the purposes of financing. This means that the company did not take up a lot of loans in 2016 which is not a good sign to the shareholders. The company’s use international financial reporting standards
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