Managerial Accounting

Teacher: Katherine Yuen

An MUM Analysis of

Li Ning Organization Limited

Published by

Group 5

Xavier Chen

Calista Chan

Shelter Xin Chyr

George Bathroom

Ng Yi Long

Section G6

Articles Page

About Li Ning3

Managerial Accounting Concepts4

Price Structure Analysis4

Cost-Volume-Profit Evaluation 11

Summary 17

Sources 20

Sortie 21

Document 21

Li Ning, former Chinese gymnast and founder of Li Ning Company Limited

Regarding Li Ning

Li Ning Company Limited is a significant Chinese athletic company which is founded in 1990 by a former Chinese language gymnast called Li Ning. It is at present listed among China's " 500 Most effective Brands” with a present value of 12. 734 billion RMB. Their very own wide range of items includes sporting activities apparels, shoes or boots, accessories and equipment. The organization has a extensive distribution network mainly through outsourcing its manufacturing operations to dispenses. Besides, they are doing have directly managed Li Ning retailers. Currently, the operation of Li Ning is primarily in the China market, even though it has open up flagship shops in Singapore and the Usa. Goals of Li Ning

The Company's aim is to record larger business in Chinese suppliers. A large a part of this market share was previously dropped to the fierce competitors such as Nike and Adidas. However , having its explosive growth in revenue these several years, Li Ning managed to oust Adidas for being the second most popular wearing brand in China. Last season, Li Ning's market share i visited 14. 2% while Nike was at 13. 9%. Nike remained by top location with sixteen. 7% of market share. Currently, Li Ning is looking into building about this success by simply expanding businesses and using the Li Ning brand to international icon status. This can be seen by way of a recent attempts to capture worldwide market share. Because of low cost showing off products, the business enterprise model of Li Ning is more likely to be revenue-generating instead of profit-generating. As such, to be able to capture much larger market share in China, Li Ning needs to increase its sales volume level.

Managerial Accounting (MA) Concepts

In this statement, we uses managerial accounting concepts to analyze how Li Ning has become able control their cost effectively in the bid to boost revenue and thus maintaining it is goal of capturing much larger market share in China. Both topics which usually we will be focusing on are: 5. Cost Structure

* Price Volume Revenue Analysis

Price Structure Research

Types of Fixed and Variable Expenditures

Using the findings through the various economical reports of Li Ning, we have recognized the fixed and varying costs to get Li Ning. They are summarized in Physique 1 under.

Fixed Expense| Varying Expense

* Depreciation & Amount * Rent * Research and Development * Note down of arrays * Auditor remuneration * Consulting 5. Travelling and entertainment * Advertising (80%) * Determine 1 Representative and employee benefits (80%)| * Expense of inventories 5. Transportation and logistic * Advertising (20%) * Movie director and staff benefits (20%)| Figure several

Figure a couple of

General Tendencies

From the graph in Determine 2, the whole costs of Li Ning from 2005 to 2009 has been by using an increasing tendency, since equally variable and stuck expenses happen to be increasing. Changing expenses will always be much higher than the fixed expenditures. In addition , adjustable expenses have been completely increasing quicker than fixed expense in recent years, as apparent by the improved separation between the two range graphs through the entire years. In Figure 3, the percentage boost of both equally fixed and variable expenditures has been increasing from 2006 to 08 with a razor-sharp drop during 2008 to 2009. This kind of drop might be attributed to the global recession which caused many organisations to seek cost cutting means to merge their profits. Another reason might be that of the Beijing Olympics 2008 when ever Li Ning...