This website uses cookies to ensure you have the best experience. Learn more

Business Analysis: Benetton Group S.P.A.

2181 words - 9 pages

1 - INTRODUCTION
For the purpose of this paper, I selected Benetton Group S.p.A. (the company), an Italian company that manufactures and markets fashion apparel in wool, cotton and woven fabrics as well as leisurewear. The company prepares its consolidated financial statements (FS) according with the International Financial Reporting Standards (IFRS) adopted by the European Union. Since 1989 the company has been listed in the New York Stock Exchange (NYSE) and required to comply with the Security Exchange Commission (SEC) Act of 1933 and 1934. As the non-US issuer, the company was obligated to provide a full reconciliation of its annual reports from the IFRS to the Generally Accepted in the United Stated Accounting Principles (US GAAP). The filing had been completed with the SEC on a Form 20-F. But in 2007, the SEC released all non-US issuers from the Form 20-F filing obligation (SEC, 2007). As the consequence, the company’s last reconciliation was provided on the Form 20-F for 2006 annual filing. After 2007, the company has not referred to US GAAP reconciliation in its annual financial reports.
The reconciliation from the IFRS to the US GAAP shows that accounting for the same line item under two standards can create financial statement differences. Those differences have material impact on the measurement of the net income under both standards. But to decide if differences are significant or material, first one should understand the concept of materiality. Next, one should find a reconciling adjustment with a martial effect on net income. Then, one should analyze what has led to the creation of the adjustment, and to calculate the amount that affects the net income (Street et al., 2000).
2 - CONCEPT OF MATERIALITY
Materiality is an important concept for any decision making and for properly analyzing financial statements. The concept has been discussed over the years on the worldwide arena. The International Standards on Auditing (IAS) as well as the Financial Accounting Standards Board (FASB) refer to the materiality as the magnitude of an omission or misstatement of financial information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been influenced or decision affected.
After analyzing definitions on materiality under various standards, it seems as if none of the standards provide specific materiality guidelines. They only stress the importance of accountants’ judgment as the core of decision making. To set the right materiality threshold, the professionals should consider many variables, such as relative size of the item to its assigned bottom amount, the item’s effect on the net income and the size of the entity.
Generally, the Big Four’s auditing policies indicate that for an item to be material, an auditor should consider a gross or net unrecorded difference of pretax income to exceed five percent. The five percent materiality...

Find Another Essay On Business Analysis: Benetton Group S.P.A.

Benetton - History and Present Structure

4373 words - 17 pages textile manufacturing facilities[5]. Benetton Sportssystem is the fastest growing division of Benetton group and it already represent 21,3% of turnover[6]. With 55% of its sales realised in North America, it is also much less focused on Europe[7]. While Benetton Sportssystem was still in connection with its original business, in the 1990s Benetton diversified into areas which were rather far from it, like retailing or

A definition for "Marketing" Essay

2638 words - 11 pages ". Benetton is the "world leader" in the design, production, and selling of unique informal attire for both genders from first born till middle age. The clothing ofcourse consist of a wide variety of colors and is mostly recognized as knitted garments and casual. In addition to their traditional image, in 1997, Benetton merged with a "Sportsytem" (S.p.A). This new stock added new ranges of brands like Nordica, Rollerblade, and Prince, all of which

Case analysis benetton

2511 words - 10 pages ". Benetton is the "world leader" in the design, production, and selling of unique informal attire for both genders from first born till middle age. The clothing ofcourse consist of a wide variety of colors and is mostly recognized as knitted garments and casual. In addition to their traditional image, in 1997, Benetton merged with a "Sportsytem" (S.p.A). This new stock added new ranges of brands like Nordica, Rollerblade, and Prince, all of which are

United Colors of Controversy: Shock Value in Benetton Advertising

2604 words - 10 pages sell merchandise (Ehrenreich 25). The Benetton campaign is a classic example of what is known in the marketing business as "branding": attaching to one's product a sensibility that, it is hoped, consumers will want to acquire for themselves (Davis 9). Nike isn't just sneakers, it represents youth and athleticism. Marlboro likewise transcends selling cigarettes, and represents a stereotype of masculinity. Mercedes-Benz is a symbol of wealth and

Why we go shopping?

1474 words - 6 pages different definitions of consumption, especially focus on experiential consumption. The other part will show how the Benetton Group architect and develop their brand portfolio through experiential marketing theory. 2. What does consumption focus? Consumption is an action of using up a resource to consumer. However, there are different views on why consumer use up. In order to know the need of customer better, it is necessary to analyze the different

taboo of tomorrow

1064 words - 5 pages Taboo of Tomorrow Luciano Benetton along with his two brothers first established Benetton in 1965. Initially, Benetton was only for making coloured sweaters, however, the business soon expanded to include all clothing apparel and is now a flourishing business with more than 2 billion dollars in yearly revenue. How did this business reach such a dominating position so quickly? The answer came when the Benetton group hired Oliviero Toscani in 1984

Marketing and Ethics (United Colors of Benetton)

1864 words - 7 pages to incorporate a sense of familiarity and family in each business sector. Because Benetton is largely managed by members of the Benetton family, the company can easier sustain the intimate communication network that many U.S. companies attempt to develop by organizing individual departments into teams.      Maintaining Luciano Benetton’s ability to transform “sweaters into messages, shirts into signs, and jeans into

A detailed investigation into a specific genre of print-based advertising

2586 words - 10 pages have achieved their main objective and that was to get the issue of child poverty out in the open, and they proved that an effective way to make the British public more aware of these social issues was through the use of shock tactics.Yet, with companies such as Benetton which is now a multi-million dollar business, it could be said that with its shock campaigns of the past headed by Oliver Toscani, it was abusing its corporate influence over

Controversial Advertising

3044 words - 12 pages (2000): Advertising. Fourth Edition. Glasgow: McGraw-Hill. Wilson, Neil (1995): A Study Of The Relationship Between Benetton And Its Franchisees And The Impact A Controversial Campaign Can Have On The Association And On Company Sale. Aberystwyth: University of Wales, Centre for Business Studies.

Compare and contrast the supply chain management approaches take by H&M, Benetton and Zara

2717 words - 11 pages . The company has 100 designers who work with 50 pattern designers and around 100 buyers and budget controllers creating a team of 500 people working together to balance H&M's components of business concept - quality and fashion at a low price (www.hm.com, 2007). Such design of this very first stage of product creation indicates that design deportments in Benetton and H&M are organised in a cell layout that "allocates dissimilar machines

Analysis on Benetton’s Advertisements

1775 words - 7 pages successful advertising campaign. Questions were raised on why they did it? I believe that Benetton’s advertisements are criticised because they are associated with merchandising. Benetton is not in the business of raising social conscience; it is selling clothing. This devalues whatever message any advertisement ever tries to tell us because it is associated with money. Other problems with Benetton’s ads are the

Similar Essays

Business Analysis Of Pt Group

3306 words - 14 pages - Joint managing director & CEO (India) (Source: Airtel annual report 2013) 33 Chapter 4 SWOT analysis BT group Strengths 1. Provides excellent products and services to customers and various organizations. 2. Has a large market share in fixed line and broadband service. 3. Has developed a good customer relationship management system. 4. Has business in over 170 countries. 5. Has done advertising using leading newspapers, magazines and

Tata Group Analysis Business In Latin America Fiu Business In Latin America Assignment

582 words - 3 pages . Ratan gave a speech to the senior officials of the group companies on the changes in the external environment. In order to make sure that the groups companies followed the change, Ratan created the Tata Business Excellence Model. With this model, companies’ in the group were evaluated on a yearly basis on seven criteria: leadership, strategic planning, customer and market focus, information and analysis, process management, human resource focus

Strategic Business Analysis. Considering The Potential Acquisition’s Profitability Of The United Biscuits By The Finsbury Food Group

2753 words - 11 pages Untitled The aim of this assignment is to consider the potential acquisition's profitability of the United Biscuits by the Finsbury Food Group. Finsbury Food Group is one of the leading UK manufacturers of cakes and breads. The company's aim is to build a bakery business operating in the growing sectors of large markets to generate profitable growth for customers. The focus is to support two key consumer trends- health and

The Benetton Group Essay

1537 words - 6 pages Founded in 1965, the Benetton Group started with limited resources that necessitated the strategy that ultimately resulted in rapid international growth. Since the beginning, Benetton concentrated on devoting its skills to the design and manufacture of quality clothing instead of providing direct consumer retailing. Benetton established a competitive advantage by establishing its brand as the best-known Italian apparel manufacturer