Environmental And Social Impacts Of Premier Investments Operations

Part A

In the past many years, CEOs of the organizations were   placing more focus on holistic reporting of the activities of an organization rather than the simple reporting, which is required by the Accounting Standards. The report below discusses the suitability reporting framework for the premier investments and various facts associated with it. Premier investments operate in the range of retail fashion chains throughout the country. The brands of the organization comprise of Smiggle, Portman, Jean, Peter, Jay Jays, Jacqui and Dotti.

Answer 1

The investment decisions of Premier organization take into account factors of economic, environmental and societal impacts and the management. The organization is trying hard to comply with the local laws and regulatory needs as a minimum and is also making representations to the authorities if they consider that policies and practices of the government undermine the policies of the organization. It is the policy of Premier Investments’ to support the social investments, which contribute towards the sustainable development objectives of the communities and countries in which they operate. This clearly shows that working in partnership with the professional social developments organizations and government agencies for ensuring the investment, addresses the material issues in a rigorous manner with the positive impacts on society. The investments are increasingly focused on the development of the local capacity and initiatives, which deliver social and economic returns for the local communities and host government. The positive impact of the investment has helped the organization earn many awards. The award recognizes the good operational performance and the high level of investments and impact beyond any compliance. However, there have been times when the organization has faced some loss of primary containment events of higher consequences. These incidents are characterized as unintended processes safety events with the severe consequences. These comprise of multiple fatalities and widespread environmental impact. The organizational integrates the process safety protocols in the safety reviews of the projects. Such review offers assurance that some material issues have been determined and are being managed through the lifecycle. Safety cases are in places at all the operated installations. Such safety regimes are aligned with the regulated standards of the country. This mainly shows the best practice and reveals that the organization is committed to implementing the cases at all of the operated areas. The aim of the organization is to reduce the negative impact year by year with the stated policies of the continuous improvements to the low reasonably practicable.  Periodic reviews of operation performance are done for determining where improvements can be made. The organization manages the operations in accordance with the policies of reducing the impact to as low as the reasonable practices. This comprises of a focus on the effective designing, effective operation and responsible usage.

Social impacts like workers’ right, poor conditions and long hours are still issues of concern. The enhanced awareness and concern of the stakeholders have led to gradual responses from the fashion industry for improving on the environmental and social impacts. The environmental impacts associated with fashion chains are wastewater emission, solid waste production, and depletion. For reducing the social and environmental impacts of the organization throughout the lifecycle, corporate social responsibility policies are to be developed (Yadlapalli & Rahman, 2016).

Answer 2

Part B

The four main GRI disclosures relevant for the Premiere Investments organization are

1. Materiality: This point reveals that report should show the organization’s economic, environmental and social impact assessment. In financial reporting, materiality is very important and it is considered as a threshold for influencing the economic decisions of those   using the financial statements of the organization. The concept of the threshold is important in sustainability reporting but, it is concerned with a wider range of the impact and stakeholders. Materiality for the sustainability reporting is not much limited to the topics of sustainability. Determination of the materiality for the sustainability report also comprises of considering economic, environmental and societal impacts which cross the threshold in affecting the ability to meet the requirements of the present without any compromise of future needs. Premier Investments’ does take care of the material standard of its accounting reporting. The organization discusses internal and external factors that determine where is the information is a material which comprises of organization’s mission and strategy expressed by the stakeholders. Assessment of the materiality takes into account the basic needs expressed in the international standards and agreements with which the company is expected to comply with. The internal and external factors are considered by the organization while evaluating the importance of information for reflecting the economic, environmental and social impact.
2. Stakeholder Inclusiveness: According to GRI guidelines, the organization needs to determine the stakeholders and explain in the report how it has responded to their expectations. Premiere investments do define its stakeholders as entities or individuals which can reasonably be expected to be affected by the activities of organization and services and, whose actions can be expected to affect the ability of the organization for successfully implementing the strategies and achieving the objectives. For a report to be assured, the process of the engagement of the stakeholder is documented. Whenever the stakeholder engagement process is utilized for the reporting purpose, they need to be based on the systematic accepted approaches. The complete approach needs to be sufficiently effective for ensuring that the information of stakeholder are understood properly
3. Suitability Context: As per GRI guidelines, the report needs to show the organization’s performances in the wider context of sustainability. Information of performance is placed in the context by the organization. Reports made by the managers of the organization reveals the broad concept that are associated with the sustainability factor. This involves discussion on the performance of the organization in the context of the limits and the demands that are placed on environmental and social respective spectral levels. The organization reports on the employee wages and social benefit level are respect to nationwide minimum and median income levels and the capacity of the social nets for absorbing the ones in poverty and those living close to the poverty line.
4. Completeness: This guideline says that the organization needs to convert the material topics and indicators for reflecting the economic and social impacts and also for enabling the stakeholders for meeting the reporting of the organization’s performance. The organization does encompass the dimensions of the scope and time. Though, they are still trying hard to utilize the guideline for referring the practices in information collection and whether the presentation of the information is reasonable and appropriate(Global Reporting, 2011).

Answer 3

The performance of Premier Investments has been hard earned by the processes that are put in place by the Board members against the background of the extremely challenging environment. The recent performance files of the organization reveal that in Australia, issues like the cost of living pressures, unemployment and higher level of debt exist against the poorly managed transition from the boom of mining, volatility in the equity markets, prices of commodity and relative instability of the political environment in the past years. The ability to deliver continuous strong performance and outperforming the relative to the competitors is the main outcome of the excellence in the implication of the retail disciplines and consciously taking actions. Premier Investments have reported a net profit of 103 million dollars approximately in the year 2016. This result comprises of the contribution of the premier retail. The organization is having proven record of acquiring outstanding results whatever the state of the operating environment.

• In 2016, the organization has delivered record sales.
• Smiggle international is continuously expanding with the substantial potential upside
• Premier retail has clear growth strategy that is successfully being delivered with the capacity and flexibility
• Premier retail is having the outstanding senior management
• The organization retains its strong financial position with the strength of the balance sheet

The major growth of the organization is coming from Smiggle and peter brands. The organization discloses very authentically about the environmental performance in its annual report following the guidelines of GRI

Myer: On the other side, Myer is seeing a hit of the low share price. There is increased risk of acquisition. According to the reports, the consumer backdrop is clearly challenging as the retailers are experiencing a slowdown in sales over the year. Myer is currently offsetting tough environment and is stabilizing earning through a combination of the shift to concessions and improved price realization. While there are more cots out available still sustained sales growth is very critical for the company. However, the organization has stabilized its comparable store sales base within the torrid environment for discretionary retailers. The organization is also trying to exploit and leverage the amount of customer data and insight within the Myer loyalty program that shows a significant and strategic asset in the digital environment.  

Both Premier Investment and Myer shows deep reports regarding the environmental performance, however, Premier investments being more successful has more accurate and relevant data for revealing than Myer.

Answer 4

The widespread compliance with the GRI guideline by the Australian retail business mainly benefits the potential investors and shareholders of the organization.

• The report will be able to avoid the selection, its omission which is reasonably likely to unduly or inappropriately influence the decisions or judgments by the readers.
• The report will be including both favorable and unfavorable results which can influence the decisions of the stakeholders in the proportion of the materiality.
• Reports will distinguish between the actual presentation and the reporting organization’s interpretation of the information.
• Stakeholders that will be using the reports would be able to compare the information reported on the economic and environment performances against the past performances of the organization and its objectives.

The study reveals that it is important for an organization to follow GRI’s guideline for effective accounting. When changes occur within the boundaries, scope, and content it is important for the organization to restate current disclosures along with the historical data. This mainly ensures that the information and the comparisons are reliable and meaningful over the time.

Answer 1

Major Costing associated with the ongoing operations of the Smiggle and Peter Alexander are: property taxes, insurance costs, rent, salary payments, utilities, material cost, labor cost, commission

Answer 2

Cost behaviors of the major costs determined above in the requirement are:

• Fixed Cost: Property tax, rent, salary payment, utility expenses
• Variable Cost: Direct material, piece rate labor and commission

Answer 3

Break even analysis is mainly considered as the most important and essential tool for the study of the cost and profit relationships at various levels of input and outputs. The break-even analysis mainly enabled the management structure of the operational strategies of the organization. The managers of the finance in the organization can utilize the BEP analysis for the purpose of estimating the profits at various kinds of levels of the output. The mangers in the organization are not just interested in knowing at what certain level the operational activities will have break-even point, in fact they are more interested in knowing the estimation in respect of the operational level which might yield the optimum profits. For the befit of the mangers this analysis can in establishing the review of the pricing policies. In the case when management people contemplated for the decrease in the price of the product, then the mangers can utilize the relationship for analyzing what changes in the sales volume would mainly be important for the compensation of the price enhancement.

Answer 4

Strategic priorities	Objectives	Measures
Financial	Being financially Strong	• Growth and expansion                  • Improvement in Cost Structure	• Output per head             • ROI, ROCE          • Unit Cost
Customer	Delight The Customer	• Positioning of the brand •  Stores have real-life experience • Catalogues having rich content	•Corporate Image •Share of market •Customer Satisfaction Survey results
Internal	Operational Excellence	• Minimizing the storage and the transportation cost •  Reports of market research	• Production Defect rate • Time to market the next generation of products •  Benchmarking Index
Learning And Growth	Motivated workforce	• Training program              • Sharing of the ideas and experiences	• Information availability Index   • Skill and technology Measures

The balance scorecard of the organization offers integrated scope of the organization’s strategies and on the other side, performance measures reveal whether the company is successful in implementing the strategies or not.

• Financial: For financial understanding, measures like unit cost and Output per head in terms of ROI and ROCE have been considered. They are efficient measures as they will help in determining the growth and expansion and improvements in the cost structure.
• Customer: for understanding the customer index share of the market, customer satisfaction index will be the beneficial measures. These measures will help in achieving a strong position of the brand in terms of the customer.
• Internal Efficiency: For the purpose of understanding operational excellence, measures like production defect rate and benchmarking index will be helpful. The measures will give knowledge about the reports of the market and the operational deficiencies
• Learning and Growth: For understanding the motivated workforce index, measures like information availability index, and skill measures will be beneficial. These measures will help in achieving the training targets and experiences

Answer 1

1. Calculate the number of blast wash, faded wash, and ripped and scuffed finish sales that will need to be made to:
   1. Break-even

	Blast wash	Faded wash	Ripped and scuffed
Selling price	$30.00	$30.00	$35.00
Variable overhead	$4.00	$3.00	$6.00
Fixed Cost	540000	540000	540000
BEV units	BEV units = Fixed Cost/ Selling price – variable cost p.u	BEV units = Fixed Cost/ Selling price – variable cost p.u	BEV units = Fixed Cost/ Selling price – variable cost p.u
BEV units	540000/ 30-4 =                                20769 units	540000/ 30-3 =  20000 units	540000/35-6 = 18620 units

1. Achieve an after-tax profit of $350,000 (provide workings)

	Blast wash	Faded wash	Ripped and scuffed
Selling price	$30.00	$30.00	$35.00
Variable overhead	$4.00	$3.00	$6.00
Fixed Cost	540000	540000	540000
Profit	350,000	350,000	350,000
Units sold	FC+ profit / S.P. p.u. – V.C. p.u	FC+ profit / S.P. p.u. – V.C. p.u	FC+ profit / S.P. p.u. – V.C. p.u
Units sold	=148333.3	=32962.9	=30689

Answer 2

There are so many reasons which reveals how organization’s break-even point can be increased. One main reason is the increment in the fixed cost of the organization. Fixed cost like rent and salary if increased will automatically enhance the break-even point. Second main reason is the changes in the contribution margin. any kind of decrease in contribution will increase the break-even point. Contribution margin is the sales minus the variable costing and variable expenses. An enhancement in the variable costing in coming time without any corresponding increase in selling price will cause the contribution margin to reduce. Any type of decrease in the prices of sales, will also affect the break-even analysis. Another main factor of concern of the change in the product mixtures and the service mixture which are being delivered by the organization.

Changes in BEP

1. Increase in fixed cost: Earlier, the fixed cost was 540000 suppose because of rent enhancement, the fixed cost increases to 600000, so now the BEP will be:

	Blast wash	Faded wash	Ripped and scuffed
Selling price	$30.00	$30.00	$35.00
Variable overhead	$4.00	$3.00	$6.00
Fixed Cost	600000	600000	600000
BEV units	BEV units = Fixed Cost/ Selling price – variable cost p.u	BEV units = Fixed Cost/ Selling price – variable cost p.u	BEV units = Fixed Cost/ Selling price – variable cost p.u
BEV units	600000/ 30-4 =                                100000 units	600000/ 30-3 =  222222 units	600000/35-6 = 20689 units

1. Increase in variable cost: earlier the fixed cost was 4;3;6 respectively. Now suppose because of enhancement, the variable cost increases to5:4:7 respectively, so now the BEP will be:

	Blast wash	Faded wash	Ripped and scuffed
Selling price	$30.00	$30.00	$35.00
Variable overhead	$5.00	$4.00	$7.00
Fixed Cost	540000	540000	540000
BEV units	BEV units = Fixed Cost/ Selling price – variable cost p.u	BEV units = Fixed Cost/ Selling price – variable cost p.u	BEV units = Fixed Cost/ Selling price – variable cost p.u
BEV units	21600 units	20769 units	19285 units

The illustrations above reveal the changes in the BEP because of changes in the varied factors which can increase the BEP.

Conclusion

The study successfully assesses the understanding of the learning outcomes. The study explains and evaluates the concepts behind the management decision-making process, which are associated with the efficient allocation of the business resources. The GRI guidelines for Premier investments reveal that the company should involve employees in decision-making and the information should be shared transparently with them for efficiency. The other parts of the research study conclude that the costs associated with the organization can change the decision-making planning of the organization any time. For effective running of the business, proper planning of BEP analysis is needed so that organization can plan the required units it has to sale and the desired profit they expect. Any kind of change in the fixed costing or variable costing can change the planned quantity sales and can affect the cost structure and with that the accounting system of the organization. For proper management finance managers of the organization needs to analyze the BEP for the organization at regular intervals for analyzing the company’s situation in respect of the market.

References

Global Reporting. (2011). Sustainability Reporting Guidelines. Retrieved from Globalreporting.org: https://www.globalreporting.org/resourcelibrary/G3.1-Guidelines-Incl-Technical-Protocol.pdf

Yadlapalli, A., & Rahman, S. (2016). Social Reporting Using GRI Disclosures: A Case of Apparel Industry. Springer.