欢迎来到留学生英语论文网

当前位置:首页 > 论文范文 > Accounting

A business strategy analysis of Sydney Airport

发布时间:2017-04-29
该论文是我们的学员投稿,并非我们专家级的写作水平!如果你有论文作业写作指导需求请联系我们的客服人员

2. Business Strategy Analysis

2.1 Business Activities

Sydney Airport is Australia’s international gateway and primary airport. The airport can be a significant infrastructure in Australia. Through the airport, it connects Sydney to 47 international, 24 domestic interstate and 23 regional destinations (Sydney Airport 2013).

In terms of the division of the business, Sydney Airport (SYD) consists of Sydney Airport Limited (SAL) and Sydney Airport Trust 1 (SAT1) (Sydney Airport 2013). To be specific, SAL is responsible for the operation of the Sydney Kingsford-Smith Airport including the operations of the runways, terminals, retail, car parks, check in desk service and lounges. In addition, The Trust Company (Sydney Airport) Limited (RE) takes the responsibility of SAT1. It is the unit where a SAL share is stapled to. The boards and functions are independent from each other between SAL and RE.

2.2 Analysis of the Economy

In terms of the global economy, GDP can be one of the most important indicators for the economy situation. Based on the data of The World Band (2013), it indicates that the global economy has a smooth growing speed. By that it refers to a positive global economy environment as it is important for the entities which involve international business, such as Sydney Airport.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\3Z8)%HSTO1[G3APCN202A(F.jpg Figure 1 Global GDP (The World Bank 2013)

Secondly, the Australia interest rate is 2.5% (RBA 2014) and the inflection rate is 2.9% (ASB 2014). As it is shown in the Figure 2, the interest rate has been reduced from 2012 and the inflection rate rises relatively. By that it means that the Government decides to encourage the economic growth. Hence, there could be a larger market for Sydney Airport with a positive economic policy.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\7[YX@R$[0[81OMGS4`EVONN.jpgC:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\8FUI79$(A7UR%XOEF0T0NB5.jpg

Figure 2 Interest and Inflection Rate in Australia (RBA 2014; ABS 2014)

In addition, as Sydney Airport conducts its business internationally, exchange rate can pose a significant influence. The exchange rate between AU dollar and US dollar has been reduced from 0.96 to 0.92 in the past year (Xrate 2014). This imply that overseas client of Sydney Airport can have more buying power for the product and service of Sydney Airport .

2.3 Analysis of the Industry

The Porter’s five forces framework can be applied in the analysis of the industry. Firstly, rivalry among existing firms is in a low level. As the largest and only airport in Sydney (PC 2010), it has a dominating position in the industry. This can result from the low concentration within the industry. In short, the rivalry in the industry is low.

Secondly, the threat of new entrants is low. To begin with, the large economy of scale is important barriers for the new entrants as the investment of establishing an airport can be huge. The regulation from the government also limits the planning of an airport in Australia (DIRD 2014). Therefore, the threat of new entrants is low.

Thirdly, the threat of substitute products or services is low. Other alternative transportations including trains, vehicles or boats are much slower. And, other air transportation such as helicopter can be far more expensive and hard to access.

In addition, bargaining power of buyers is low. The switching cost of customers is high as if customers travel to Sydney via other airport the cost will be high.

Finally, the bargaining power of suppliers is low as the switching cost of suppliers is high and there are many similar providers in the market.

Based on the analysis above, it is believed that Sydney Airport is in a dominating position in the industry as the largest airport in Australia. As the only public airport, Sydney Airport is in a monopoly market structure.

2.4 Competitive and Corporate Strategy

Sydney Airport develops its competitive advantages by providing only flight services in Sydney for the airline companies and travellers. In terms of its corporate strategy, Sydney Airport aims to provide world-class airport experience including integrated parking, retailing, checking in and help desk services.

2.5 Future Profitability

It is believed that the future profitability of Sydney Airport is promising. The wild range and high profitable business actives form the basis of its profit. The economic environment is regarded positive. The dominating position in the industry can secure the stable profit. In addition, the competitive advantage of its uniqueness and integrated corporate strategy can improve its profitability further.

3. Accounting Analysis

3.1 Key Accounting Policies

As the Sydney Airport aims to provide top class premium service to its customers as the largest airport in Australia, the effective use of its assets can be the major focus. Based on this point of view, it is accepted that there are three key accounting policies. The first one is plant property and equipment. The second one is intangible assets. The third one is revenue.

3.2 Explanations

To begin with, plant property and equipment accounting policy is important for Sydney Airport as their business actives relies on the use of them. For example, the parking business activity relies on the car park property. In addition, the volume of plant property and equipment is large. Based on the Figure 3 below, it is found that the volume of plant property and equipment is 2556.6 million which is over 23.3% of total assets (Sydney Airport 2013). In addition, fixed assets turnover reflect the efficiency of revenue generation through plant property and equipment.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\X1YS}P$IK(6UZ56TNN`FM15.jpg

Figure 3 Assets of Sydney Airport (Sydney Airport 2013)

Secondly, accounting for the intangible assets is significant as the brand name of the company can be one of the successful factors. This is because that the purpose of Sydney Airport is to provide top class services. The volume of intangible assets is even higher, which is 70.8% of the total volume as shown in Figure 3 (Sydney Airport 2013).

Additionally, revenue is another important accounting policy regarding the complexity of the revenue source in Sydney Airport. According to the Figure 4 (Sydney Airport 2014), revenue is the only source of the income of Sydney Airport. It indicates the structure of the income.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\I9{F@5N7`16~_]A$Z7T_6~2.jpg

Figure 4 Income of Sydney Airport (Sydney Airport 2013)

3.3 Accounting Flexibility

In terms of the plant property and equipment, they are measured at cost less accumulated depreciation and impairment losses according to the annual report (Sydney Airport 2013). Therefore the accounting policy can be flexible as the recoverable amount of the Cash-Generating Unit is possible to be determined by the company. Furthermore, the flexibility also exists where useful lives of the assets can be determined by the company. As it is shown in Figure 5 (Sydney Airport 2013), the difference between the useful lives of other plant and equipment and operational plant and equipment indicates a quite high level of flexibility in this area.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\1WUXNB6ZC4@M_{JNP2U6WYR.jpg

Figure 5 Useful Lives of Assets of Sydney Airport (Sydney Airport 2013)

It is believed flexibility exits in intangible assets accounting policy. Generally, intangible assets accounting requires initial measurement at cost and subsequently (AASB 2009). It highlights that different method will be taken based on whether the useful life of the intangible asset is definite. However, in terms of the brand name of Sydney Airport, it remains uncertain and not found in the Figure 6 (Sydney Airport 2013), which generates the flexibility on estimating recoverable amount for impairment charges.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\TM_VIYHXT3(F]KGL3~9A}7D.jpg

Figure 5 Useful Lives of Intangible Assets of Sydney Airport (Sydney Airport 2013)

In addition, flexibility also can be found in the accounting for revenue. Revenue in the course of ordinary activities is measured at the fair value of the consideration received or receivable (Sydney Airport 2013). However, the revenue can include a range of different type including aeronautical revenue, aeronautical security recovery, retail revenue, property and car rental revenue, car parking and ground transport revenue, interest income and revaluation income. It might be flexible to allocate revenue in different types.

3.4 Comparison to Transurban

Transurban points out that in its annual report of 2013 (Transurban 2013), the plant and equipment have a general expected useful lives are 3 - 15 years. Comparing with Transurban, the useful lives of assets of Sydney Airport have overall longer useful lives. By that it means that Transurban is more conservative about the depreciation of property plant and equipment. Another difference can be found in the terms of the volume. According to Figure 6, the volume of property plant and equipment only occupies 1.8% of the total assets. It is much lower than the percentage in Sydney Airport which is 23.3%. This indicates the business of Transurban does not mainly rely on its property plant and equipment.

C:\Users\xiaomin\AppData\Roaming\Tencent\Users\1206254712\QQ\WinTemp\RichOle\ICEG{TY%AD]$E~_92[K58~D.jpg

Figure 6 Assets of Transurban (Transurban 2013)

In addition, a similar high volume percentage of the intangible assets can be found in both Sydney Airport and Transurban. The percentage in Sydney Airport is 70.8% and it is 80.7% in Transurban based on Figure 6 (Transurban 2013). By that, it indicates that the intangible asset plays a significant role in both of the two companies.

Reference

Australian Accounting Standards Board (AASB), 2009, AASB 138 Intangible Assets, Australia Government, last accessed 24/5/2014 from http://www.aasb.gov.au/admin/file/content102/c3/AASB138_07-04_ERDRjun10_07-09.pdf

Australian Bureau of Statistic (ABS), 2014, Australia Inflection Rate, Trading Economics, last accessed 23/5/2014 from http://www.tradingeconomics.com/australia/inflation-cpi

Department of Infrastructure and Regional Development (DIRD), 2014, Airport Planning & Regulation, Australia Government, last accessed 23/5/2014 from http://www.infrastructure.gov.au/aviation/airport/planning/

Productivity Commission (PC), 2010, Australia’s major airports, Australia Government, last accessed 24/5/2014 from http://www.pc.gov.au/__data/assets/pdf_file/0018/114651/05-airport-regulation-chapter2.pdf

Reserve Bank of Australia (RBS), 2014, Australia Interest Rate, Trading Economics, last accessed 23/5/2014 from http://www.tradingeconomics.com/australia/interest-rate

Sydney Airport, 2013, Sydney Airport 2013 Annual Report, last accessed 23/5/2014 from http://annualreport.sydneyairport.com.au/?iid=88619#folio=OFC

The World Bank, 2013, Global Economic Prospects, last accessed 23/5/2014 from http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1322593305595/8287139-1358278153255/GEP13AFinalFullReport_.pdf

Transurban, 2013, Annual Report 2013, last accessed 25/5/2014 from http://www.transurban.com/files/2013_Annual_report.pdf

Xrate, 2014, US Dollar per 1.00 Australian Dollar Graph, last accessed 23/5/2014 from http://www.x-rates.com/graph/?from=AUD

上一篇:Explain the importance of the ‘true and fair" view of financial statements 下一篇:Explore auditor's professional code of ethics