Billabong Business Report

Billabong Business ReportBillabong was constituted in Queensland as a private fraternity in 1973. In 2000 it was listed on the Australian Stock Exchange (ASX), becoming a public company with shareholders. Over the social classs it has established functions across 4 continents with distribution to over 60 countries worldwide. Billabong has firmly established its brand at home and abroad with its focus on innovative yet operable products. Acquisitions of different brands such as Von Zipper, chemical element, Nixon and Honolua return helped the troupe diversify their product range. The caller-up has managed to remain competitive in a receding globose prudence in the past year aided by untroub guide growth sales in the Europe and Australasian sectors. Billabong employs over 1750 staff world-wide and has a truehearted allegiance to all their stakeholders in terms of integrity and governance. (Cory, 2008, website)IntroductionFounded on Australias Gold margin in 1973 by surf er and surfboard shaper Gordon and Rena Merchant, Billabong has since established itself as a prominent Australian icon. The Company sprang from humble beginnings, with the couple designing boardshorts in their flat overlooking Burleigh Heads, cutting them out on the kitchen dining table and then carting the finished product around to the local surf shop to sell. Gordons no frills, practical approach to boardshort manufacturing paid dividends, as Billabong grew steadily until his humble homespun factory literally burst at the seams. (Pacificshop, 2006, website) From those inauspicious early days the Company has grown rapidly to become a publicly listed transnational company. Today, Billabongs core handicraft is the design, production, marketing, distribution, wholesaling and retailing (through shops and agencies owned by the Company) of surf, skate and skiing apparel accessories and eyewear. This report is an analysis of Billabong Internationals military control framework.Busin ess Model and Organisational FrameworkBy the 1980s, Billabong had firmly cemented its place in Australian surf culture and was international expansion was in its sights. The Companys first international operation was established in the the States in 1983, followed by New Zealand in 1985 and Europe in 1987. A range of other international operations were established in subsequent years, with japan opening in 2000 and Brazil in 2001.Through the 1990s the surf industry grew exponentially and professional person surfing gained a newfound respectability. The Company also followed its core customers into other boardsports markets, including skate and snow, where it replicated its proven business model. By the close of the decade, Billabong had been restructured to capitalise on the growing global opportunities in all boardsports sectors.The restructure fix up the foundation for an initial public offering in Australia in mid 2000. The move saw the Companys shares publicly listed on the Au stralian Stock Exchange in August of that year.Shortly after the public float the Company demonstrated its growth plans with a number of acquisitions including Von Zipper sunglasses brand and the emerging Element Skateboards brand.The successful integration of those businesses saw the Company add to its stable of brands in following years, with Honolua Surf Company acquired in January 2004, Kustom footwear and Palmers Surf in folk 2004, a controlling interest in the beach culture airport-retail business in November 2005 and Nixon watches and accessories in January 2006. Other businesses were also established, including the Element footwear range, the California-based Beachworks retail business and various branded concept stores around the world. (Global Village Partnerships, 2009, website)Business Mission/VisionBillabong Internationals values remain consistent with its foundation objectives, which take ona commitment to brand protection and enhancementthe manufacture of design-rel evant and functional productsmarketing in the core boardsports channels such as sponsorship of events and athletes, as well as advertise in selected print mediato expand into new geographical marketsto expand the product range, partiallyicularly in the core board sports and youth fashion marketsthe professional information of staff and ongoing customer service and relationshipsand to deliver returns to shareholdersLeadershipGordon Merchant has consistently had a hands-on role in the designing, marketing and sales of for the Company and brand. He currently sits on the board of directors along with Derek OHYPERLINK javascriptHYPERLINK javascriptNeill the CEO, and Paul Naude the Executive Director. The other board members consist ofTed KunkelMargaret Jackson ACAllan McDonaldColette PaullTony Froggatt(Billabongcorporate, 2009, website)fiscal Position jibe to Billabongs full year financial report, the Companys profit for the year ended31st June 2009 was $160.2 million. This was down 9 .2% from the same period last year. This is largely in line with the decline in the global economic activity over the past year. The decrease in net profit meant that earnings per share was also down 11.2%.Although net profit decreased, in that location was a rise in sales revenue. This was largely due to new acquisitions made by the Company and the adverse movement of the Australian dollar against other study currencies such as the US dollar and the Euro.Operations in North America felt the heaviest impact from the economic slowdown. However, this was offset by strong sales growth is the South America sector. Europe was the star performer, with an closely 24% plus in sales revenue. Australasia also managed sales revenue gains of almost 8%, largely helped by the resilience of the Australian retail market and supported by the governments economic stimulus packages.Given the lack of retailer confidence, the take up slowdown in consumer spending in various global economies and the extreme volatility in exchange rates, the Company has performed reasonably well. The forecast for the coming year seems to be conservative in light of the current uncertainty of the global economy. Europe and Australasia are predicted to remain stable, and despite the initial reduction of forward orders in the US, there are promising signs of a recovery. (ONeill D, 2009, website)Human Resources and Stakeholder ManagementBillabong International has a diverse group of stakeholders that both influence and are impacted by the operations of the Company. These include employees, shareholders, business associates, athletes, suppliers, opinion leaders and customers.Billabong International employs over of 1750 staff worldwide, with the greatest concentration of staff in Californias Orange County, Australias Gold Coast and Hossegor in France. Employees are the main stakeholders in any company and building and maintaining relationships with employees is vital to maintaining effective relation ships with business partners, customers and the community.Staff are encouraged to expand their skills and potential, and have access to and receive support for further training and to experience opportunities. Programs for managers to develop vital skills with an emphasis on innovation, planning, leadership and teamwork are a focus of the business. The Company also has guidelines and policies for remuneration to ensure a fair approach to rewarding employees. The Company also has a consultative committee comprising staff representatives and senior managers to talk about issues and consider improvements to the workplace.Billabong International is also committed to act uping business in an ethical and socially responsible manner. This is defined in employee work agreements that effectively form a code of ethics that governs acceptable workplace practices. The Companys corporate governance policy states that the maintenance of all environmental, social and health and safety issues is to be the responsibility of the hop on of Directors.As a public company listed on the Australian Stock Exchange Billabong International is required by law to hold an Annual universal Meeting of shareholders to discuss the Companys business. The Company also addresses shareholders at least twice a year to update trading conditions and provide a forward business outlook.The Company also consistently interacts with stakeholders through the staging of events around the world. These range from the elite World Championship Tour professional surfing contests, through to professional skate and snow competitions and a range of junior and amateur surf, skate and snow events.At a supplier level, the Company undertakes regular factory visits to conduct audits. During these audits, workers from the shop floor are randomly selected for interviews to help understand workplace standards. Large posters outlining Billabongs supplier Code of Conduct are fixed to high write locations within factorie s to ensure workers are aware of their rights.Multi-stakeholder meetings that bring together staff from the Companys geographically diverse regions are also held twice annually. These provide a gathering to discuss the direction of the business and gain a better understanding of the motivation that drives business decisions.International Nature of the BusinessFrom its origins in Australia nearly 30 years ago, Billabong has evolved into a global business that operates on four major continents. Its name-Billabong International Limited-now reflects this focus and the promotion and protection of its brands and name are a major component of the business around the world.The original market for boardshorts and wetsuits was limited in its size, so Billabong (along with several other similar companies) looked to expand their product range to include clothing and accessories. Originally, these were manufactured in Australia. The drivers for Billabong included the need to expand to new and l arger markets in order to increase sales and profits, improvements in technology that led to better production and communication, and the advent of global consumers because of the increasingly popular surf culture and lifestyle. This is essentially a global strategy using global branding in that the same, standardised product is sold in all markets. Deregulation of markets and government influences had minimal impact on Billabong.Billabong also achieved economies of scale through its increase in production, as well as some cushioning of the economic cycle-having operations in both hemispheres, which have opposite seasons, allows the development of products to suit spend in Australia, which can then be sold in the Northern Hemisphere four months later.The globalisation of Billabong was achieved throughseeking cheaper sources for manufacturing (in Hong Kong and China)-factories were established to produce garments for sale in Australiaexporting and distributing in the United States (initially in surf areas, such as California)exporting and distributing in France and then in the rest of Europeestablishing operations in the United States, France, Japan, New Zealand, Canada, Hong Kong and Brazil that are responsible for importing, distributing and wholesaling Billabong products. This is a form of contrasted direct investmentthe acquisition of other businesses so that they became all owned subsidiaries of Billabong. This occurred with Element and Von Zipper-these companies retain their name (brand) but are wholly owned and controlled by Billabonglicensing, which allows distributors and some retail outlets to use the Billabong name as part of their operations.There are several key areas which are important in the management of a business at a global scaleFinancial Exposure to foreign exchange is a concern for all global companies as well as methods of payment and credit risks. However, the establishment of operations and distributors in various countries ensures that Billabong is in a position to access borrowed funds from overseas if required.Operations In order to reduce production costs the majority of Billabongs manufacturing occurs in China. This is a form of outsourcing and strict procedures are in place to ensure quality control. Billabong has offices in Australia (Queensland, New South Wales and Victoria), the United States (California), France, Japan, New Zealand, Canada, Hong Kong and Brazil. By adopting a global web approach and using subsidiaries, Billabong can move products more easily, avoid some government regulations, be closer to its markets and customers, and avoid some foreign exchange risks.Employment Relations Billabong needs to be aware of differences in labour laws and cope with pressures relating to minimum labour standards. The Company also must stick to to the global standards covering factory inspections (on general human rights and environmental issues) and laboratory tests.ConclusionThe original Billabong bu siness focused on gear for local surfers, sooner diversifying into clothing and accessories for surfing, snow skiing and skating. Billabong now has over 2200 product lines and is the leading surfwear brand in Australia with its products being distributed in more than 60 countries internationally. Despite the eschaton and gloom of the current economic environment, Billabong has managed to largely steer clear of any major short-comings, enjoying success in most of its global sectors. From a small backyard operation in 1973 to todays multi-national publicly floated company, Billabong is certainly an entrepreneurs dream come true.