Annual reports are documented and published by an organization or an entity covering the financial events and development of the organization for the past one year. According to numerous business scholars, accountability is a significant factor that needs consideration in developing a company or organization report. Business reports highlight the events, particularly the financial reports and milestones of the enterprise. The target groups could be the employees, clients and potential clients, interior and exterior investors, and the authorities.
Throughout the annual report, every important business event should be described, highlighted, and analyzed. The events are primarily analyzed to provide the authorities with a snapshot of what the industry has gone through and achieved in a particular period (usually one year). The report’s contents include a set of actions that an industry or firm took in a given time, and these actions are a way through which the industry attains its goals and objectives. Besides outlining the activities, a report provides the authorities and potential investors with the results of the measures taken to achieve a particular goal (Stanko, Zeller and Batstone 12).
Businesses reports, however, give out the same content. No matter what the type of firm involved, the annual report displays the same theme. A report determines the scope of the development, getting the correct information on finance and commercial activities and drawing the conclusions of the actions taken throughout the year.
The typical components of a formal report include the activities, success, challenges, and the finances of the industry. The activities occupy the first part of the documented reports. The activities build up from the introduction of the industry history and past events. Also, the highlighted activities in the report should comply with the intention and desires of the organization. The annual report of an industry should also emphasize the success of the enterprise, often achieved in that year and compared to the previous years (Stittle 25, 27).
The financial part of the report suggests what the company should do to improve. Also, the company gets a rough idea of its progress and can predict its future income. Investors gain interest in the financial part of the annual report. The financial part also helps investors from other organizations or identities to identify an investment opportunity.
In this case study, we are going to analyze the report of the welding industry around the world. The report includes the market trends, available products, trade, safety and health risk issues, technology, market forecast, and market environment. Many economic activities should be highlighted in the annual report. The business could be marked by dates, final financial metrics, and other relevant financial figures.
Welding is a process that involves joining metals. The methods of welding highly depend on technology in the world. However, this industry will always develop and change. Also, the technology is always changing in a rapid manner. Many social activities depend on the welding. With the burden on the shoulders of the welding industry, then, a rapid evolution could be experienced on this side of a business. The welding industry tightly revolves around four components: metals, filler metals, heat source, and airtight conditions.
The welding industry began back in the year 1750, with a simple process known as forge welding. The forge welding involved hammering two or more hot metals until they join to make a single metal structure.
Industry reports are relevant in the business industry in one way or another. Under this heading, we shall discuss the importance and purpose of the annual report in the welding industry. First and foremost, the welding industry has excellent opportunities for investors and entrepreneurs.
Business reports are relevant in the sense that they document the progress of the industry. Also, the market report or annual report provides the means that people interested in investing in the welding industry use to compare financial periods, financial growth, and project details. However, data could be collected in different ways such as memory or mastering the economic trends for a couple of years, but annual reports play a significant role in the accuracy of data.
Data provided by the annual report gives a platform that may act as a future reference for practical actions and reliable decisions. In most cases, companies in the industry use annual reports to identify which product did well in the industry and even measure the success of primary items in the market. For example, Lincoln Electric, a leading welding product manufacturer, experienced a significant business expansion during the World War II. Putting car manufacturing into a halt and tightly focusing on welding ship hulls marked the turnaround of Lincoln Electric.
The other importance of an annual report is a paper trail. Since the annual report could help interested investors to make critical decisions, it helps keep a record of the past. The records could document various industrial activities: sales plans, appointments, budgets, and annual plans. The paper trail is an important part of the annual report. The paper trail will be the most important thing to support the industry’s ability to grow and develop.
It is a custom that an annual report should be documented and presented to the public because the stakeholders (in the industry) and the government agencies need to foresee and identify the possible outcome of the industry in the future. The idea of using the annual report to predict the future result of an industry is referred to overview. The records and annual reports have helped many companies learn the importance of data analysis and presentation.
Annual industry reports provide the security for a businessperson to expand his or her business with the assistance of a corporate label. Reports also give the authorities a platform to measure the magnitude of expansion needed or business. Companies that have invested in the welding industry get an idea of the status of the competition in the market. Reports are useful in explaining to an investor the reasons for his or her association. The trends in the records, if positive, could help build a good reputation for the industry to other potential investors.
In summary, annual, industry reports are necessary due to the following reasons:
Reports help in the documentation of the industry process.
Provide accurate data or information that is relevant to the welding industry development.
Gives a clear picture of the industry’s potential to grow.
It helps the companies in the welding industry to balance productions and sales so that resources are optimized.
Defines the industry’s role in the society and its objectives in a clear way, therefore, helping the companies involved to focus their hard work and inventions towards a particular goal.
Methodology and Analysis
Research methodology could be defined as the theoretical analysis of statistical methods that could help give meaning to a certain set of data. In this case, we use the secondary method to analyze the data collected from various companies in the welding industry. First, the method of data collection plays a significant role in data analysis. Even though this case study tightly depends on the data collected in different ways, I will discuss the methods of collecting data appropriately.
The method explained below is called the primary data collection. Primary data collection is a branch of sample survey: the principles and the methods of collecting and analyzing from a finite or infinite population (Linda 1). Many activities are done throughout the year in the welding industry, but the method or technique of data collection should be accurate and reliable to give accurate results.
Before collecting data, preparation is an important step to follow. First, we set the objective of the survey. The goal of the study clearly defines the goals of the survey. For the annual report in the welding industry, the goal is to find financial status that will support economic prediction and paper trail of the industry. What is needed and how the results will be utilized is crucial. These objectives should commensurate with the available resources in terms of money, manpower, and the time required for the availability of the result (less than one year).
Data to be collected: it is good practice to verify that all the data are relevant to the purpose of the survey and that no essential data are omitted. These data include the financial metrics and other relevant information that needs a place in the annual report. The collection of data could vary in many ways. The following forms are appropriate depending on the type of research.
Direct observation and measurement (Recording).
In the case of an industry, where the numerical analysis is heavily involved, direct observation, and measurement could be suitable for use. John Stittle states “Direct observation and analysis is an ideal method as it is usually more objective. It is free from memory lapse and subjectivity of both respondents and interviewers” (25).
Data analysis is a more sensitive part of the process. As discussed above, annual reports could be used to predict the future of the industry. This way, the financial analysts should incorporate the best method of analysis so as to come up with an accurate result. The results of an analysis are always subjected to some uncertainty because only a fraction of the data has been measured. The availability of errors could also reduce its usability.
A selection of an appropriate analysis method is important in data analysis. The size of the data, the procedure of collection and estimation of the data parameters along with their margins of error are some of the significant problem analysis that should receive the most careful attention. Some designs for the selection of a sample are available, and a judicious selection will guarantee safe and reliable estimates.
The analysis should be finalized by a summary of the conclusion. The following are a summary and analysis of the data:
The collection of data.
Editing of data: it helps in amending recorded errors or eliminating data that are inconsistent.
Data entry or tabulation of the data: after editing, the data collected is registered, and other methods to record the data are prepared.
Analysis: this step of the analysis should be done carefully and repeatedly to ensure that the degree of accuracy or precision is high. The analysis could be done using different methods of calculation of financial analysis. Mathematical formulas are used to give the desired results and information.
Growth and Development Patterns in the Welding Industry
Growth and development apply to most visions and missions of a company. The growth and development of the welding industry depends on the commitment of firms involved. Growth means that a particular company or business expands its assets or productivity. Development of an organization means that an enterprise strives to improve its quality of products and services. For example, Lincoln Electric’s growth and development was as a result of the management system adopted by the Lincoln brothers. The Lincoln brothers introduce a series of innovative management systems (Butler 25). The Lincoln brothers set a new trend in the welding industry by creating new standards and creating new products.
The welding industry has gradually developed since its birth in 1750 AD. It has grown from the simple procedure of hammering hot metals to the very new welding processes that are more advanced and reliable. In 1886, Eli Hu Thomson invented the resistance welding. Eli Hu Thomson also introduced other electrical welding processes that made it easier to join metals.
The industry of welding achieved growth and development in the following ways:
New products development.
Gradual increase in technology
Lincoln Electric produced both consumable and welding equipment to its customers. It has sold more consumables than welding equipment cutting products.
After 1997, the company achieved part of its global strategy by opening other branches in Shanghai, along with joint ventures. Lincoln Electric completed an acquisition of Indalco Company and Uhrhan & Schwill Company. These companies were primarily for a different purpose compared to the Lincoln Electric primary objectives (the practice of diversity and product mix). Lincoln Electric practiced the diversity and variety, and that is why the company grow and develop day by day. The efforts of businesses to outshine one another has significantly impacted the development and growth of the enterprise.
The growth and development of the welding industry picked up because of businesses ventures and business operations worldwide. Lincoln Electric acquired South America’s leading manufacturer of welding products (Messer Soldaduras de Venezuela). The South America’s company primarily focused on the production of consumable products. In 1995, the company hit one billion dollars due to its management policies and healthy employee relationships. Because of the Lincoln’s human resource policies, the company rose from being the leading manufacturer in America to the primary manufacturer of welding products globally. The company’s human resource and incentive system led to productivity advancement.
Strategies for success in the welding industry were as follows:
Innovative Human Resource Policies and Management Systems
Considering the Lincoln Electric Company, James F. Lincoln was known for his management policies that improved the employees’ morale and will to work. Both the Lincoln brothers believed that capitalism could not improve the production in the company, rather, it will create a classless business structure in the organization. The management team provided the right rewards for individuals that performed well in their tasks. This way the employees’ motivation was nurtured and, therefore, every employee worked hard to fulfill the organization’s mission and vision. Many companies in the industry have adopted the method of healthy management policies. With excellent skills in management, many firms in the welding industry gained the momentum to develop and mark a top position in the competition. The Lincoln brothers’ management style ensured that the employees worked in an extremely entrepreneurial environment. The healthy and suitable working environment provided appropriate working conditions for employees and workers. Hence, the industry experienced gradual development and growth due to increased productivity.
Technology and Development.
Numerous reports indicate that companies in the welding industry spent 2% or more on R&D (Research and development). Award-winning engineers manage the companies dealing in welding products. With the knowledge in technology and excellent skills, companies create a competitive atmosphere. New markets were introduced as a result of outstanding R&D productivity. Due to the amount of time taken for research and development, companies expanded their market by introducing new welding consumables and products. With R&D, new products get favor in the market and replace the old-fashioned products. In the case of Lincoln Electric, outstanding R&D gave the company pride for being the best company in the welding industry. Clients from all over the world termed the group as “The Welding Expert.”
Product mix involves the production of a variety of goods and services. Lincoln Electric was the first company to produce both consumables and arc welding equipment. The benefit of providing a range of material gave leading companies the advantage to dominate the welding industry. With a variety of products on the market, the companies could provide welding solutions rather than just manufacturing individual products.
We know that marketing strategies are important in business, marketing ensures that welding products gain popularity in the industry. For example, Lincoln’s products were introduced in 86 countries through marketing and product awareness. Besides, the company offered advice to its customers, creating a healthy relationship with the clients. In its annual report, the company indicated that it had a competitive advantage due to its highly trained marketing and sales technique.
Design and Production.
As a result of outstanding research and development, the companies introduced new products and services that were unique and different from previous ones. Lincoln Electric was able to expand their product diversity in its production through design and development. The companies in the welding industry have embraced technology and have applied modernization to most of the products in the market.
Through rapid development, companies gained a considerable amount of net revenue and profits. In the graph below, a comparison between the 2005 and 2014 revenue charts show the impact of development on the income for large competitors in the market.
1: in $ millions
It is evident that a business report is necessary and relevant for welding companies and its stakeholders. Stakeholders are the people who have interests in the industry and its operation, they need to get information on the activities undertaken by the corporation including the financial usage. Business reports give stakeholders all this information in a summary. Various companies will also require the report to know about the changes and improvements that need to be made. The report shows the net worth of industry and, therefore, a particular company will be able to measure its performance using the report and compare it with the previous fiscal years. Competitors use the annual reports to gauge their place in the enterprise world. Lincoln Electric prowess in the market was analyzed with the help of annual reports of the past and compared to other companies in the same welding industry.
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