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DETAILED DESCRIPTION
Taken from the Sunday Times, 23 January, 2011 (Interview with Mikael Ohlsson):
“Mikael Ohlsson (Global Boss of IKEA) has pushed the world’s biggest furniture retailer to record
profits, despite the recession”.
“IKEA, the world’s No 1 furniture retailer, has just posted record profits, up 6% to 2.7 billion Euros
on revenues up 7.7% to 23.1 billion Euros. The privately held group now has 280 warehouse
stores across Europe, North America and Asia, and aims to open up to 15 new outlets a year”.
“Because when the economy is tough, the need for a beautiful home remains, and value
consciousness goes up” beams Ohlsson, “And that’s our strength”.
“Sustainability is now a priority”
“The way ownership is structured allows IKEA to reinvest profits and focus on long term growth, so
there is no obsession with short term results, and no threat of takeover. The whole goal is that
IKEA should stand free from banks and investors, and be really long term. That’s one of the
reasons I like it – the aim is to satisfy customers, not stock markets. And we haven’t paid a
dividend for five years”.
Taken from Annual Summary:
The following website link provides you with a copy of the Annual Summary for IKEA:
http://www.ikea.com/ms/en_GB/pdf/Welcome_Inside_2010.pdf
“We continue to learn from, and develop with, co-workers, customers, suppliers and other partners
in 41 countries”
“Over the years, we have learnt that saving money and the environment usually go hand in hand
and rarely conflict with each other”.
“A growing IKEA needs to pay a lot of attention to staying lean and simple. Therefore, we have
launched an extensive programme for a lower cost structure at IKEA, where the gains will be reinvested
in lowering prices to our customers even more”.
“”We continue to focus on the many people with limited resources, and that means we keep
improving the prices to our customers by constantly striving to lower costs. During the past 10
years, we have lowered our prices by 2 to 3% per year, on average”.
“IKEA is always about working together – customers, co-workers and suppliers”.
“We are always ‘on the way’ and constantly see possibilities to improve for the future”
Press Release Source:
The following website takes you into the recent press releases for IKEA:
http://www.ikea.com/gb/en/about_ikea/newsroom
Requirements:
Examine the annual reports of IKEA with all the
financial statements included (at least 3 financial years) towards the following points:
1. Examine these reports and then make the appropriate financial assessment on it to see how
far in your view it appears to contain the desirable characteristics of financial reports as outlined in the textbooks. (You must show all workings, that is to analyze the financial performance and risk position of this company as disclosed by its financial statements and explain ratios calculated for at least 3 financial years). 50-60%
2. Given the focus of IKEA on the customer, the drive to reduce costs, concerns for the
environment and sustainability issues, and the emphasis on “customers, co-workers and suppliers” working together, You are required to:
Discuss, using relevant academic literature to support your arguments, the potential for using
strategic management accounting concepts and techniques to help promote and facilitate IKEA’s ambitions for the future.Prepare a written report on your findings and present them on your assignment and provide a practical example regarding their accounting and financial implications. 40-50%
This project will entail a detailed discussion and
financial/accounting and managerial accounting application on the proposed alternative
strategies on financial ratios and the data derived by the financial statements and will focus
mainly on the view and the opinions of the management team regarding managerial
accounting/costing policies.
You are encouraged to obtain information about IKEA from the press and media.
Limits:
– Use ebsco database and firstline. Do not use textbook sources. Do not use more than 4 websites as sources.
– At the first section use ratios (activity, liquidity, profitability,ebitda, etc), horizontial and vertical analysis.
– At the second section you can make a comparison to a competitor
– Recommended textbook: Michael Jones “ACCOUNTING”, 3rd edition or most recent edition
John Wiley & Sons
– Keep it simple. I do not have a background in accounting
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